Wednesday, January 25, 2006

The LIM Notes from May 6, 2003

I have received a version of the referenced meeting notes.

-Doug

LIM Notes May 6, 2003
Special Guest: Ambassador Linton Brooks, Acting Administrator,
National Nuclear Security Administration

These notes are not meant to be a verbatim record of the meeting. However, they are sufficiently detailed to provide a very clear picture of the discussions at the meeting.

Pete Nanos:
The SET met yesterday at University House to discuss the path forward. You should know that the SET is hanging in there. We made statements that are important. In the coming time of some uncertainty it is important you know that we are going to hang together as an executive team and take the laboratory through this time.

We are going to raise the bar on any competition that has to do with this laboratory. If someone thinks they can do it better, it will be their paper against our hardware. As UC employees, we will do the utmost in our power to carry through and retain the contract for running this laboratory. It was a very strong meeting.

Now it is my pleasure to introduce a great friend of the laboratory and someone who is very concerned about the people who work here. As soon as the decision was made, he volunteered to come out and address the concerns of the people of Los Alamos.

Ambassador Brooks
I have no slides, and I have no prepared remarks. I do have a strategy that I want to tell you about. Two strategies, actually.

The first strategy is to convince UC to compete for this contract because they bring enormous benefit to Los Alamos. Since we don't know if there is anyone better, we shouldn't throw away what we've got. If UC does compete, it means I have been successful in crafting the terms of the competition to make it clear that while locking in the reforms you are making in the business services, we don't want to forget the importance of mission.

If I get that statement right, and UC competes and loses, then it means there is someone better. If there is someone better, I still win because the country wins.

So my near-term strategy is to get UC to compete. I made it clear in the report that we hope that will happen. The Secretary agrees. In his response to the report he says he "strongly" agrees; he added the word "strongly" to the draft prepared for him. I've met with four of the regents; I will meet formally with the subset of the Regents that worries about laboratory matters a week from Thursday.

UC won't decide to compete until they see what it is they are competing for. In the normal course of things, that would be a long time from now, probably late next year. So we are going to start now developing the criteria.

I don't quite know what I mean by what I just said. I do know that ultimately I want to figure out a way to translate into RFP terms the kind of things like "fostering a culture of peer review" and "encouraging basic research" and "fostering scientific skepticism" and "having an intellectual atmosphere that will attract world-class scientific talent"Š translate from concepts we understand into concepts in a contract document. We will start now figuring out how to do that, probably with some help from the labs but also from someone like the National Academy of Sciences.

I have been urged to put someone good full time on that process; I will do that once I figure out who that is. It is probably someone from DC rather than Ralph Erickson's office.

The other part of the strategy is to make it easy to complete; UC should not have to dig into tuition to fund a bid and I think I know how to do that.

My second strategy is to keep people from preemptively bailing out. We can't keep everyone; I've seen the retention statistics and so have you. But I am hopeful with your help we can convince the talent on which this or any other laboratory ultimately stands or falls to hang in there for awhile and see what happens.

The first part of this strategy is obvious. Through August or September 2005 no one has any particular incentive to leave and you need to help me make them understand that. But I also have to make clear that one of the things you do if you run a world-class scientific establishment is make it attractive for world-class scientists. We must work in a way that gives people a reasonable expectation they are not flying into a cliff in October of 2005.

I have to be careful what I say about the outcome of a competition. I believe UC will be a very powerful competitor. However, there will almost certainly be other strong competitors; we don't know yet who they are.

That's another part of my strategy; convince the UC that some of the mythology they have heard is wrong (e.g. incumbents never winning in DOE contract competitions). One contractor who has won three times is running a laboratory and there are other M&O contractors who have competed and won. Convincing the University should be easy because we are working in an element of fact not judgment.

To carry out my strategy I have to do a couple of things. First, I have to convince first you and then the people who work for you that I am serious about looking out for the interests of laboratory employees. Second, I have to learn from you what it is that I have overlooked in this rudimentary approach I've devised so I can fold it in the strategy.

That's 100 percent of my remarks, now I will go to some of the questions that you have.


Q: Livermore is not part of this process?
A: Let me make sure you understand what we did and did not decide about Livermore. The report said the Secretary decides two things. One, as a matter of principle, neither law nor sound policy requires us to make the same decision about Livermore as we have made about LANL. Secondly, as a matter of practice, we don't have to make the LLNL decision for another year, so we didn't.
Does this suggest some value judgment about relative merits of labs? Were John Browne here he would recall for you the time I had an opportunity, in front of 9 Senators, to rank the national labs. I wasn't dumb enough to do it then and I won't do it now.
It reflects the reality of whatever problems we had in the past at Livermore - like the NIF overrun - the near-term problems uncovered here were not found at LLNL. Since the situations were different, there was no need to make the LLNL decision.
Where will we go on LLNL? One thing that bothers a lot of us is the notion of the two being run by different people. The only way to guarantee you are not in that world is to compete the two physics laboratories as a package. I don't know what we are going to do. A week from tomorrow I will be talking to people at LLNL and it will be a harder discussion. Everyone here knows what I am going to do. At Livermore they don't know because I don't know.
On the one hand, it is entirely consistent to extend LLNL while competing LANL. On the other hand, if you have a competition you have to be open to the possibility that you will get an outcome other than the incumbent.
Mike Anastasio is concerned about the two laboratories being run by different contractors. We may decide it is such a bad outcome we will make the competition two-fold. We will decide this early next year. If we compete LLNL, all the things I said about criteria earlier apply.
That's where we are. I don't like the ambiguity either.

Q: People are already saying they will move to LLNL to remove the uncertainty
A: That doesn't remove uncertainty; it actually adds to it. Good people left this lab and LLNL in anticipation we were going to announce an immediate termination last week. Making such an announcement would have been an extremely stupid thing to do. While not everyone agrees with what we did, we are not extremely stupid. I hope people will not make precipitous decisions they don't have to make until we have the facts. From some of the advance questions, I got the impression people are already looking to move to LLNL. Maintaining two strong labs is important; if too much movement to Livermore happens it would be bad and I hope it won't happen.

Q: I like that you are aggressively trying to get UC to bid, but if you examine the issue at their point of view, they have run the laboratories for all these years as a public service. What can you say?
A: Analogy is every year you are called up for jury duty; next year you have to compete for the privilege and there's an entrance fee (laughter).

That is the point of view of Dr. Atkinson, who will leave in October but he worries about that. If you look at his statement to the Greenwood committee and his public statement, on one hand he wants to compete, and on the other hand he's not sure it's the right thing to do.

I hope that I will be able to convince the University that competition and public service are not inconsistent. I don't know if I will be able to do that.

I hope I will be able to convince the University that as the Secretary and Deputy have said a couple of times, the contributions of the University could be even greater through competition. If you could put behind you the flak of "60 years without competition," the University's contributions would be seen as even stronger and the opportunity for public service even greater.

This is a poor analogy, but a real one. In a sense, I had to compete for the opportunity to serve in the job I am in now at no particular financial benefit to myself. Competition isn't inherently inconsistent with public service.

The other thing is local California politics. There are those who have always wanted to get a state institution out of the business of running a nuclear weapons lab and they're going to be grateful that I gave them the opportunity.

I can get the fee right, the RFP right, and level playing field. But getting around the inconsistency of an ethic of public service and a competition, and the real political influences that the University governing body has to pay attention to, will be a bit of an uphill fight. That's why I'm starting now.

Frankly, three or four months ago, I was afraid UC would have made an immediate decision not to compete. It is now clear they will at least think about it and see if it will be a level playing field.

Q: This is more a comment than a question. I have been in the weapons complex 30 years. When I first came in, it was made up of the blue chip corporations: Dow, ATT, UC. Every time a contract was put up for bid with original contractors, when they were asked to bid, they all walked away. We're the last original contractor.
When Dow ran Rocky, DuPont ran Savannah River, the quality of science and engineering was outstanding. You can't say that now. The last vestige exists here, due to the contractor we have. My concern is that if we oust someone like UC there is a difference about who runs the place.
A: Of course there's a difference. You may be right. I don't want to trivialize the concern. And I really don't want to get into "my science is better than your science" with people who are much better at science than I am.
I will say that you can find people who are fairly impressed by some of the other DOE labs. I will even say, running the risk of getting into the local rivalry, some people thought the world was going to end when Bell Labs and ATT left Sandia, but that doesn't appear to have happened. But I do take the point and it is something we have to be very careful of. But you have pointed out a danger, not an inevitable outcome.
One reason I want to get the criteria right is to minimize the chances of a bad outcome. You are also seeing trends that apply to everyone. When we started in this business we had a good deal less scrutiny. The old Joint Atomic Energy Committee was our oversight and we didn't have the other committees, and the Washington Post.

Q: One thing was puzzling me. We will have 1200 students here this summer. All of the Battelle-run facilities together won't have 1200 students. Is that demonstrated level of academic attractiveness going to count?
A: Yes.

Q: Is anything we will do between now and then going to count?
A: Yes. It is clear that this is a subset of what I said before; that the criteria have to recognize somehow what you just said about academics. Secondly, is the success that the University and the laboratory have had in reforming management and the success the University and lab have always had in the mission going to count? Of course it is. Demonstrated performance has to count.
I can't write in the criteria "demonstrated experience in running LANL" because that excludes competition. But we have to find a way to write criteria to take significant account of what has been done and will be done over the next two years. The Secretary and I have every intention of that happening.

Q: One thing missing in the debate is the uniqueness that LLNL and LANL bring vis-à-vis the stockpile. We have a unique role: certify reliability and safety. If a director has to worry about competing six months from now and we bring him a problem with the stockpile and he has to decide about causing waves, or answer to a board of regents, or a board of directors about the money. What safeguards will there be? Or do you want a businessman certifying the stockpile?
A: No

Q: Now if DOE is unhappy they have to show cause to terminate a contract. If you go to bidŠ
A: Let's get our words straight. We are not terminating the contract. I have been yelled at by a series of congressman, both publicly and privately because we are not terminating. To the Secretary's credit, he indicated early in the process that he had no intention of termination.

Q: Now true. But if you go to the regime that is in front of us, are you saying they will never have to make that decisionŠ
A: Careful. We don't have a specific regime in front of us. But you raise an important point. My belief is that the labs will always be run by someone who is technically competent. It is inconceivable to me that any departmental leadership would accept anything less. How do we deal with the very specific problem you raise? You are asking me to predict the quality of leadership in the department several years in the future.
Difficult but first of all, I believe that at least with this Administrator and this Secretary that the reverse is more likely to be the case. Don't think anyone would contemplate penalizing a contractor for standing up and saying there is a problem with the stockpile. Were I to discover that one of the labs was brushing a problem under the rug for fear of what it would do publicly, that would be more likely to cause the stronger reaction.
That question was sent to me in advance and I was thinking on the plane last night whether there is something I can do contractually to guard against the problem.
If somebody did something appallingly, criminally stupid, would the new contract prevent it? The current contract doesn't prevent appalling, criminal stupidity. We have to depend on the basic competence of the people who run the labs and the department. You are going to have to make it clear all the time, with every Secretary and every Administrator that certifying the stockpile is so important a decision that no one will ever think of shading it for any reason.
I have heard the Secretary talk about stockpile certification in public and private and I know what he thinks. I know what I think. I have no idea who will be running the department five years from now but I'm pretty sure they will have the same attitude or please, God, the Senate would never confirm them.

The question you raise for me is whether there is something I can do in the contract itself to make it clear that failing to certify the stockpile isn't a financial decision to make on financial grounds. If there is, I would like to do it. I will look at it more.

Q: Among the concerns President Atkinson raised was the relationship between UC and DOE. He made a plea on DOE's part for being contributor to some of misperceptions. When you look at how to set up competition, how will you answer UC's concerns there?
A: I talked a little about that with Dick. The Deputy Secretary and I where asked to talk about relationship between UC and lab. We felt it would be dishonest not to acknowledge the contributions of NNSA to the problem. We didn't cover it in same depth but we tried to cover it there and in prepared remarks for the Greenwood committee. The reorganization announced in December and more importantly the clarification of roles and responsibilities that underlie that reorganization, while not a response to LANL, were designed to guard against those kinds of problems.
The new model of contractor oversight, where the focus is on a higher level under Appendix F and relies on contractor assurance systems, is intended to restore that sense of collaboration while still preserving more effective oversight. Whether or not that will be enough to rectify the problems that we missed, and to guarantee we will help catch them before they become a big brouhaha in the future, we don't know yet. We have embarked on fairly major effort and one of the things I worry about is sustaining that and getting it all locked in while I am still here.
I am worried about it. I am doing something about it. I won't be able to tell you until after this competition is over if it was enough. I understand the problem. We're trying to solve it. I just don't know yet if what we are doing is enough.

Q: What role will Ralph Erickson and the local office have in developing the RFP and in evaluating proposals?
A: Because the new model of oversight depends so heavily on the local office, I am reluctant to burden them in the near term with new duties. I expect to have someone in Washington developing the criteria. I will involve Ralph but don't expect to place the burden for doing the work on Ralph. I expect he will be reviewing ideas generated elsewhere rather than pulling people off his day-to-day task.
As far as evaluating the proposals, there is a formal process for doing that. However, it is inconceivable that I wouldn't want the advice of someone who knows more about what LANL is doing than anyone else.


Q: Recognizing this could be viewed as brinkmanship, if UC decides not to compete would you reconsider your decision for competition?
A: Probably not. Tactically, what else am I going to say? (Laughter). You ask me a question with only one answer. First, there is nothing in the involvement I have had with UC to suggest they are approaching this with other than best motives: what's good for the lab and the country. The Secretary also is approaching from that perspective.
Gamesmanship, brinkmanship - neither of us interested in playing.
To answer the broader question, a decision has been made. We could have left ourselves a possibility of reversing it next year. We didn't. The Secretary believes he has made a decision to compete. I don't believe he views it as tentative. Performance matters because what you guys want is for DOE to be saying in 2005 "look at all they've done." But don't think if you work hard and do well we will reverse the decision. That is not in the cards.


Q: Is there a possibility to run a competition amongst people willing to do it for no fee? When I worked at DOE/Rocky Flats they wanted it competed because they thought could be run more efficiently. Rockwell got the job and in the late 70s made a decision, in manufacturing pits, they decided where Dow used to recover plutonium and clean up the garbage, that cost $40/gram. So they packaged the garbage and left it out there. It may have been a good business decision, but it was terrible for the environment.
A: You don't want it to be no fee contract. At a minimum has to be enough fee to allow recovery of your costs, just as costs of UC oversight come out of the fee. The Federal Acquisition Regulations govern what is allowable and unallowable; and you have things the contractor needs to do that are unallowable. That is what you use the fee for.
There is a difference between no fee and no profit. We need to think more about whether or not we should attempt to limit the bidding to nonprofits. My guess is we will have trouble convincing ourselves to go in that direction. After all, we just extended the Sandia contract with a for-profit operator.
Also I am not completely sure the examples you give are related to having a for-profit operator. Any organization is going to want to run the laboratory efficiently and one way you measure efficiency is cost. If a contract increases the profits through direct cost share, it does directly lead to the kind of problem you described. But you don't eliminate those problems through non-profits.
You raise a hugely important question, but I am not sure it is as relevant to this lab as to the complex at large. I will have to think about the implications.
It is certainly true that people made decisions that were reasonable at the time but left us with a huge cleanup legacy.


Q: Think for a moment about the 10,000 people working at this laboratory rather than the contractual process. One thing people like is to have control over their own destiny. What I hear from you is "Šyou have no control, it's a process." I'm not working for the company. What am I working for over the next two and half years if we can't influence it?
A: If I said there is nothing you can do to influence it, I was not as precise as I'd hoped to be. What I said was I don't think you could do anything to reverse the decision to compete. On the other hand, let's pose a world in which the university elects to compete, the science and mission accomplishments represented most recently by Qual 1 [completion of the first certified pit] continue to be at superb level and the reforms that the Director and the University are putting in place take root because of your efforts. You are not subverting the contractual process to suggest you could be pretty confident of how a competition would come out because of your demonstrated record.
Take another view: These are silly reforms undertaken to avoid competition but now there is a competition. And an attitude of "Šwe did it this way under Oppenheimer." And there's a monthly Journal story that requires an explanation by me and by others in Washington. Then competition becomes a more difficult issue.
The idea there's nothing you can do to affect how this comes out is absolutely wrong

Between now and 2005 there is a world of difference between a world in which every few weeks you have to stop what you're doing so you can pull together talking points for me for some latest thing in the New Mexican that was picked up in the Washington clips and a world in which the news is "Senator Domenici announces latest scientific breakthrough."

Q: I agree with that. But for a minute, let's forget the contractual space. One year from now, what three things would you like to say about the lab? As friend and customer, what would you like to say?
A: I would like to continue to be able to say what I have said ever since I've had the job to Congress and officials, "You really ought to get out there, meet the people, see the stuff they're doing. You just have no idea."
Secondly, I would like to be able to say, "You know, they've really turned the corner on these business services things. They are working, as the Secretary once said, to make the business worthy of the science."
Third, I like to be able to say, "You know, I was really panicked that I would have huge exodus of people but they are hanging in there and I appreciated them giving me the chance."


Q: People on the premature retiree list are of the opinion that beatings will continue until morale improves. Are you willing to say that we are not a den of thieves?
A: I said that last time I was here. I've said it to Congress. If you read the last paragraph of my report, and I will attempt to paraphrase it here: The overwhelming majority of Los Alamos employees are honest, hardworking and dedicated people. There are problems, but they are the problems of a few.
I said it in my testimony; the Secretary quoted that in his letter. Everyone in the Department is urged to quote that statement.
Q: It would be a great opportunity to start the healing.
A: I never had the slightest doubt. There were just a few bad apples in a system that didn't catch them quickly enough. The overwhelming majority are solid. It's a bum rap for most people. I will say it again to Congress and to anyone who will listen.

Comments:
I'm told that Brooks did not make a similar pitch to Lockheed Martin.

-Doug
 
Is the bottom line that Doe wanted to make sure that UC participated so they could award the contract to UC?
 
It is clear from the notes that the NNSA wanted UC to bid. At that point, I believe they were worried that UC might not bid (they had not committed) and they might have no bidders. (LBNL had only one bidder) This was pretty early in the process and by the time that LockMart was in, the RFP was well along. Remember NNSA modified the Draft RFP to get another bidder. Lockheed Martin had withdrawn fairly early on. They wouldn't have had to modify the RFP if they didn't want another bidder. I perceived the entire process as tilted toward LockMart while it was going on. Even in this note, it appears he wants to have more than one bidder. I even think this exchange is reasonable given the 60+ year history UC had managing the Lab.
 
You're slowly catching on, Travis. If LM had been allowed to win the contract, we would not have been in a position to convince UC to dump all you long-lived, overpaid actuarial risks, and to also split off the LANL retirement program. Now, we will no longer be contractually obligated to fund a retirement program that suddenly finds itself underfunded. We're home free.

Sweet!
 
Dave,

You live in a Disneyland world. It's not real, but it sure must be more pleasant than reality; otherwise you would not continue to cling to it.
 
DOEGuy brings up a good point. There is no way that UC could have been able to split off all the LANL retirees from UCRP if Lockheed had won.
 
As has been stated several times before, the clearest path to the real answer is to follow the money. In this case, the real problem needing a solution has been the fiscal liability of all these New Mexicans on the UCRS. Voila! New contract with a new LLC. UC can still trumpet their service to the nation, Bechtel et al get their fat profits, and the uppity LANL workers come off the UCRS roster. Sweet! The best part is that the New Mexicans can't register their bitch at the California ballot box. Double Sweet!!

The handwriting has been on the wall for the last few years. It is time to wake up and smell the coffee. And while you're smelling the java, polish the old resume and look for another company to work for/with. That's what I did and I'm much, much happier now. Can you spell l-u-m-p-s-u-m?
 
Lump sum is not the answer for the current retirees, their spouses, and former retirees' surviving spouses. Class action lawsuit might be the answer. Getting it going quickly ought to be everyone's goal. I called the law firm listed in other posts and asked to speak to Sandy. Her hours are, I believe 10-4 our time.
 
I don't think there would have been any difference regarding the splitting off of the LANL portion of the UCRP retirement had Lockeed/Martin won the contract. The purpose of the split off is to get a better estimate of the actual liability and monies to be transferred to the new retirement plan. This would have been true regardless of who won the contract given that the two bidders weren't really UC. It is a convenience for UC to ensure from their perspective that DOE didn't raid the overall UCRP plan. It isn't necessary for them to do this split, but it makes their life easier.
 
computerscience101 said I "live in a Disneyland world". But notice that he didn't refute any particulars of what I said. If you lived through these events I think you would understand the context better. Reasoned arguments on these subjects would fair better than these illogical statements.

I know why a number of people I know have given up on this blog. There is a whole lot of ranting and very little rational discussion. Paranoia and conspiracy theories seem to reign supreme.
 
David,

I'm afraid you could not possibly be more wrong. First, there is no way DOE could have forced UC to split off those UCRP retirees who had retired from LANL had LM won the contract. Second, there is no way they could have forced LM to except those non-contributing retirees into LM's "substantially equivalent" retirement program.

Finally, as others have observed, it is all about money. UC sees an opportunity to relieve the UCRP program of unattractive members, from an actuarial point of view -- the long-lived, healthy lifestyle LANL members. DOE sees this as an opportunity to relieve themselves of the financial obligation of supporting a now underfunded UCRP. If you look at the current UC/DOE contract, page 29, you will see that DOE agrees to fund shortfalls in the UC pension plan arising from economic conditions beyond UC's control.

This was a nasty surprise that was sprung on us; at least is was a surprise to those of us who were foolish enough to have believed DOE's promise that existing retirees would not be affected by the contract change-over.

--Doug
 
Perhaps David is wrong as to the specifics of Doug's argument; perhaps not. The argument is speculative, and if "no way" was truly an expression of irrefutable logic, then one wouldn't ever hear the familiar retort "way." But, IMHO, David is right in observing that, "Reasoned arguments on these subjects would fare better."
 
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