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This BLOG is for LLNL present and past employees, friends of LLNL and anyone impacted by the privatization of the Lab to express their opinions and expose the waste, wrongdoing and any kind of injustice against employees and taxpayers by LLNS/DOE/NNSA. The opinions stated are personal opinions. Therefore, The BLOG author may or may not agree with them before making the decision to post them. Opinions not conforming to BLOG rules are deleted. Blog author serves as a moderator. For new topics or suggestions, email jlscoob5@gmail.com

Thursday, February 18, 2016

LANL/LLNL financial risk

How is it that a set of (non-profit) universities would not bid on future contracts to operate LANL or LLNL for fear of some "grand financial risk" given LANS simply faced a reduction in their award fee by 90% for one year related to their WIPP failures?

42 comments:

Anonymous said...

"How is it that a set of (non-profit) universities would not bid on future contracts to operate LANL or LLNL for fear of some "grand financial risk" given LANS simply faced a reduction in their award fee by 90% for one year related to their WIPP failures? "

I am bit confused. A university would take little fee to begin with so even if it got reduced by 90% it would not make much of difference. The point is that there will be a much smaller fee if it is non-profit, which is kind of the point of a non-profit. You see that LANL and LLNL ran for 40-60 years as nonprofits and they ran very very well. In 1999 some corrupt individuals figures out that they could give money to their corporate overlords by making everything for profit. Since that tame it has disaster for the labs and the nation.

Anonymous said...

The risks for non-profit universities running the labs are overplayed by those who stand to lose their cash cow. University management of LANL and LLNL are the best plan forward. The for-profit contractors we have now are an expensive failure.

Anonymous said...

LLCs are essential to any bidding scheme. Direct liability of any bidding entity/partner would be untenable. Simple fact.

Anonymous said...

One of the core tenets of the 2007 -2008 GOCO contract was to pay a meaningful fee that wouuld build up LLC capital over time that the owners would not want to risk by making the same errors UC made operating under the earlier contract. Owners greed would insure management adherence to the contract.

The contact form failed to operate as desired.

With A new contract with little fee will a GOCO will accept no operational risk.

NNSA owns it all. Which is the way it is. Contract or no.

Anonymous said...

Held: "...We need to treat the national laboratories not as profit-maximizing contractors, which they are not, but as strategic partners committed to exceptional service in the national interest..In looking at the broader complex, in looking at our governance approach, I believe – and more importantly Secretary Moniz believes as well – that we need to move to a public interest approach . . . For the past 20 years, we have moved to an approach where there is kind of creeping privatization of the national laboratories. I think that is unwise.  I think, again, the laboratories exist to serve the public interest, not to make profits. And that will affect our structure of the contract mechanisms..."

Anonymous said...

" making the same errors UC made operating under the earlier contract. "

Bull the contract was never about correcting errors UC made, it was about making
money for corporations.

Anonymous said...

Bull the contract was never about correcting errors UC made, it was about making
money for corporations.

February 19, 2016 at 7:16 AM

You have either forgotten, never knew, or are conveniently leaving out, a whole lot of interesting historical facts regarding the transition from UC management to the LLC model. But never mind.

Anonymous said...

Historical facts like the infamous disks that never existed? Ford Mustang? Nanos shutting down the lab under false pretenses, at a cost of hundreds of millions of dollars to the taxpayer, all to make himself look good and the scientists and engineers of LANL look bad? Robert Dynes lamenting "help me help you"? Linton Brooks who promised everyone that privatizing LANL would "realize operational efficiencies"? No, haven't forgotten those facts.

Anonymous said...

The public interest model is the previous model. But things have changed. UC is a shadow of its former self. Regents are self-serving fools that have isolated themselves
There is No state support. UC lacks the skilled people and systems to manage, large complex science.

No one else has core weapons experience. No one will apply who can do it well... instead a bunch of eager, incompetent otherwise unemployable nuclear navy 0-5s will come in an kill it with 10000 rules.



Anonymous said...

The current contract model for LANL and LLNL was conceived by Tyler Przybylek and a small cast of characters who convinced Linton Brooks that bringing in industry partners was the way to go. Having at one time been counsel at Oak Ridge, Przybylek was impressed by Bechtel. Like most Feds, he assumed that plants and labs were the same and never accounted for the scale of multiple programs and technically diverse work. Having never been in the private sector most Feds had long held on to the myth that captains of industry were needed to handle things not science or national security programs. The perfect storm at LANL provoked Senators Hobson and Domenici to give up the resistance to the possibility of changing the UC arrangement.

In truth, from the beginning, any success at LANL has been largely as a result of local effort by scientists and engineers and support staff. UC offered stability and selected lab directors and the labs incorporated their administrative policies and their pension plan and the offer of in-state tuition rates. Other than that, they have provided little else but just the logo and all that it meant was more than any industry partner like Bechtel, BWXT, and AECOM can bring to the table. At least not for $500M in fee since 2006 and at an additional cost in gross receipts tax which LA County and the State will not likely want to give up.

Risk? The notion was that there is very little financial risk associated with the LANL and LLNL contracts. But ironically, the pressure from the NNSA and DOE to impose fines and penalties has increased in proportion to the amount of money paid out for so little return. The LANL WIPP debacle of $31M plus shocked the LANS, LLC as did the separate fines at WIPP itself. That single incident plus the electrical arc flash event ended any chance to keep the failed Pryzbylek experiment alive. More importantly, it will dampen any commercial interest in LANL which may or may not be a good thing. After all, Batelle operates multiple sites in a not-for-profit mode and seems to maintain a positive reputation and employees with high morale.

The genie was let out of that bottle in 2006. The SNL RFP will be a good indicator of what the next NNSA experiment will be.

Anonymous said...

Just posted by the Associated Press dated today:

"The federal government has issued a pair of preliminary notices of violation against two contractors involved in a radiation leak that forced the shutdown of the nation’s only underground nuclear waste repository.

The U.S. Department of Energy said Friday the notices mark the completion of investigations into the 2014 disaster as well as the enforcement process against the managers of Los Alamos National Laboratory and the Waste Isolation Pilot Plant.

The notices cover worker safety violations at the southern New Mexico repository as well as violations stemming from the handling of waste at the lab.

The contractors did not immediately respond to requests for comment."

Anonymous said...

No, haven't forgotten those facts.

February 19, 2016 at 9:32 AM

All of which are completely irrelevant to the claim of "making
money for corporations." But thanks for obfuscating.

Anonymous said...

February 19, 2016 at 10:27 AM

Thanks! I would have said all of that to February 19, 2016 at 7:16 AM if I'd had the energy.

Anonymous said...

LANS had to sacrifice ~$50 million of their award for the WIPP accident with estimated damages of ~500 million? How is this LLC being financially accountable over a non-profit?

Anonymous said...

LANS LLC management is a proven failure. The facts speak for themselves.

What really bothers me is the way the LANS executive team constantly crows about the fabulous job they are doing at LANL. They hand out big raises and perks to their buddies in the executive suite and live in this bizarre, delusional world.

Things have only become worse in most areas at Los Alamos since LANS/Bechtel took over and started collecting their phat annual profit fees. They have been a disaster! Good riddance, Charlie and crew.

Anonymous said...

The size of the fee is in principle independent of the "for profit" and "not for profit" model. The reality is that DOE has pushed risk down to the operating entities. For example, paying settlements to individuals who sue for age or sex or any sort of discrimination is no longer an allowable cost. Generally it is far cheaper to settle, no matter how frivolous the claim, but now the labs either have to take to cost out of fee or risk trial. There are other examples of how these risks have been pushed down, so the fee needs to go up to cover those risks, whhether you are a not for profit university or a for profit llc. Stupid behavior on doe's part. What does matter regarding "for profit" is variable fees, and award terms. They create pressure to maximize fee or get that award term, even if doing so causes the lab to not behave in the national interest. If variable fees and award terms were eliminated it wouldn't matter very much whether the lab was operated as for profit or not.

Anonymous said...

Fee doesn't matter. What has changed is the amount of involvement from the DOE and exploded through its new arm called the NNSA. The GOCO will not come back and a Batelle will not be interested as long as you have dozens of NNSA agencies sticking their nose way too deep in the business of science and the operator. They are incompetent. This is generally why, The GOCO operators abandoned the production plants and it is part of the reason why GOCO will not come back. The other part, specifically for LANL and SNL is that the state and local government will not allow the loss of the GRT. LLC is here to stay. What you need to focus on is how does any operator get aligned to the national interest in an environment where they are constantly trying to cover their behinds because of incompetent administrators.

Anonymous said...

A GOCO is a GOCO, regardless of whether the Contractor is public or private, profit or nonprofit.

Anonymous said...

OK clarification to the 12:39pm since they feel it necessary. A company or institution sanctioned by the government to operate a government facility to the benefit of the government for little or no profit. In the case of some of the production facilities ($1). Now that we are hopefully past that inconsequential conversation... Previous operators had a tacit agreement with the government to operate without the level of government "in your shorts" interference currently seen.

Anonymous said...

A company or institution sanctioned by the government to operate a government facility to the benefit of the government for little or no profit.

February 20, 2016 at 12:45 PM

Well, I suspect you made up the "for little or no profit" part. Unless you can point to an official definition of the acronym and term "GOCO" that says that. I don't think you can.

Anonymous said...

#pedantic

Anonymous said...

Sloppy words = sloppy thinking. Obviously "GOCO" doesn't mean what February 20, 2016 at 12:45 PM thinks it does. Thus his arguments are moot.

Anonymous said...



Can we please go back to hating arrogant scientists at Los Alamos?

Anonymous said...


Well one good thing about keeping LANL for a for profit is that it hurt the scientists so are you happy now 11.09AM?

Anonymous said...

* GOCO (Government-owned, Contractor-operated)

Man you guys focus on the wrong stuff. Lets site some references and argue about useless stuff instead of exploring the true issues. "Since this guy/gal can't give a pure definition (which really doesn't exist more than sited above) to the Acronym let's discount thought. Lame

The point that 12:45 was trying to make is the NNSA is too deep in the contractor's business for anyone to want to take this on for no money. Second point, the state and local governments love the tax revenue.

Both valid points.

I'm more worried about the retirement plan being up for negotiation, again.

Anonymous said...

The most recent NNSA bid opportunity was for NTS and the max fee for this next round was about 50% of the current fee. Considering the known liabilities of LANL, no responsible bidder would consider taking over management for 50% of the max LANS fee. It doesn't matter if it is for profit, not for profit, university led, industry led, or some blended mixture of all options.

The only chance for NNSA to get any valid responses for a new LANL contract will be to go the opposite direction from what they did for NTS, and massively increase the fee. Either that, or agree to hold harmless the new contractor for any and all failures during the term.

Anonymous said...

The only chance for NNSA to get any valid responses for a new LANL contract will be to go the opposite direction from what they did for NTS, and massively increase the fee. Either that, or agree to hold harmless the new contractor for any and all failures during the term.

February 25, 2016 at 10:18 AM

Since neither of these scenarios has any chance of happening, for a variety of very good reasons, what do you predict?

Anonymous said...

Federalize.

Anonymous said...

Also not going to happen. Congress will never give nuclear weapons research to a federal entity. They understand the exhibitions of competence such as the VA, the IRS, HHS (Obamacare), Pentagon massive overruns and corruption, EPA-caused environmental disasters, etc. Not that Congress itself is all that competent, but it takes one to know one. Besides, do you really want to work for the federal government??

Anonymous said...

Lets not focus on improving the management requirements of a future LANS like for-profit contractor, lets "massively increase the fee" so as to dwarf all future accident related financial penalties levied against such a contractor. What a grand plan to inspire contractor ownership and accountability in the weapons complex, and trust within the surrounding NM communities. Not.

Anonymous said...


One of the real reasons that LANS failed was the fee was just too small to manage such a large institute with a such massive cultural problems. They simply did not have the skin in the game. In order for the next entity to really want to do it they need three things (1) A substantially greater fee, (2) The ability to bring down the hammer on the scientists and start clearing house, this would include getting rid of large portions of the workforce. Culture is really no different than other infestations, you have to wipe out everything since even the smallest remaining spots can start growing a new infestation again. Nanos saw this, understood this, and tried to act on this but this but due overwhelming political reasons he could not carry out the plan that would have saved the lab. One big step would be to shut down this dam blog and every other blog that springs up and sign loyalty oaths that you will not criticize lab management in any public. (3) They need to be able to have say on what is to be delivered. In order to drain the swamp there may be a few years where things cannot be delivered and the new contractor should be given time just for this. (4) The contractor should also have the option to leave the contract if certain conditions are not meet, for instance if they are prevented for cleaning house, they should have the option to just leave the contract not questions asked. The door needs to swing both ways on this. NNSA needs to start appreciating just how hard it is to manage LANL and that in the end it was LANL that failed not LANS. Reducing the fee or giving more freedom to LANL is the exact opposite direction of where the labs should be going. What we need now is BTK policy, get rid of all WFO, LDRD, and any external DOE work not directly related to the missions. All this does is allow workers to think they are in charge keep the cultural problems alive and we have seen where these programs have lead LANL.

This is the only way it will work and the same plan should be applied at LLNL. Without these incentives they will not get a single bidder, not one.

Anonymous said...

8:26, a little harsh but some truths. LANS because it is 50% UC did not come in and radically change things. The corporate partners were used in this sense just to keep the lab in UC control which if you ask around, really never had a strong management presence here anyways. The culture at the lab is the same culture it has always been but what you have to realize is that you have multiple necessary cultures at the lab. This whole fee thing that people complain about is a distraction from the real issues. The real issues are simple, you have some people doing science that necessarily need a level of freedom to be successful and you have the majority of people at the laboratory doing high hazard work in nuclear ops and other very dangerous work that need to be held to strong compliance standards. I have personally witnessed the clash of these two ideas at LANL and what I can say is when you have a science based executive team trying to lead both you will always have this failure. You will hear it that only a good scientist with 2 PhDs can successfully lead this laboratory. I agree for science, I disagree for high hazard operations. In fact quite the contrary, for high hazard ops you need a hard nosed, by the book, sh$& kicker. Now, how can this be fixed. Break it up. This is what has happened across the complex and what likely needs to happen at LANL. Lastly, no love for the NNSA. No value added there.

Anonymous said...

It is tiresome to repeat this, but the labs do not generate profit in the sense of a normal company. They generate fee. At Sandia the fee is mostly fixed, at llns/llans it has a variable component (which is a bad thing). If the fee goes to a non-profit operating firm like Battelle or a university they use it for whatever they want --- salaries, private jets, research, whatever. If it goes to a for profit firm like Bechtel, they also use it for whatever they want, with the additional channel of stockholder dividends. But in neither case can the fee be increased by, say, cutting costs like labor or maintenance. The size of the fee (fixed, or if variable, the expected fee) is driven mostly by the perception of risk. Lockheed operates Sandia because they believe it lends them some prestige and perhaps some preferential access to technology (the last hasn't workedd out for them). If they insist on a higher fee that will be driven by the compensation they need to make the benefit exceed the risk. The same will hold true when lans is recompeted. The amount of ink expended on this blog arguing about profit vs non profit is silly and misinformed.

Anonymous said...

8:58am has it right. NNSA should split off the production and dismantlement work and get LANL back to its roots.

Anonymous said...

Risk? Hmm. The contractor shall earn $50 million/year to operate LANL. If the contractor makes a $500 million mistake, we will only cut the contractor's fee by 90% for the year of the $500 million mistake. Sounds like a NM casino dream scenario!

Anonymous said...

February 27, 2016 at 8:58 AM

Gentlemen we are starting to come to a consensus. It is clear that the lab should be split and we agree on this. The science part of the labs is small and has been shrinking for many years, the best thing would be to just to get rid of science from the NNSA labs altogether. If you need science for NNSA, which is a big if, than you could have it at LLNL or Sandia. LANL should be turned into something like Pantex with an industrial type mission. New Mexico would keep the money, the cultural problems would be gone, and the lab would fulfill its mission in spades. Maybe the reality is that we need to face is that we simply do not need any science at the labs. If we really need "science" we could easily contract particular projects for something like 5-10 year terms to universities, it would be much cheaper, more efficient and if anything goes wrong the universities take the blame. As long as LANL or LLNL have scientists than they are vulnerable. Remember the whole Wen Ho Lee, Mustang, disks, and cowboys where about the public's well earned hatred of scientists. Get rid of the scientists and you get rid of the problems. The public can put up with creepy scientists at universities but anywhere else and they are a very risky liability. Again if the labs need science than have it done at a universities for cheaper and better. Universities can hire cleared techs that can do the job 10 times better and 10 times cheaper than any so called scientists at the labs. Explain where I am wrong on this, this is a win win for 95% percent of the stake holders at the NNSA labs.

Anonymous said...

Anti-science rant (again, sigh). No realization that the really meaningful science for nuclear weapons is classified and therefore can't be done at universities, or that it isn't about "cleared techs". Obviously this ignorant fool is a failed LANL or LLNL tech who tried to contribute to the nuclear weapons mission and failed, for whatever reason. Sour grapes, no reason to pay attention to this fool. He wants to be corrected about the fact that he doesn't understand science or nuclear weapons. But, he is sure he is right. Ignorance and arrogance is what you get from cats. I guess he is a cat person.

Anonymous said...

Nice tongue in cheek sarcasm,

Anonymous said...

"Ignorance and arrogance is what you get from cats. I guess he is a cat person."

This is just weird. Cats do not intrinsically have human attributes, they are not arrogant, vain, greedy, or ignorant, they are simply animals. These attributes are something you must project on to cats and are likely your own personal attributes that you projecting.

Now back to to the main point. You are indeed correct that there is classified science that could not and should not be done at universities, however we should still move all the non-classified science out of the NNSA complex, this just adds clutter and confusion to the complex and adds nothing to the mission.

Anonymous said...

It would be interesting to see all the L-cleared scientists scramble to prove their research is related to weapons, just as some people had to do in the late 70's to prove theirs was related to energy. Yes, NNSA is supposed to be about "nuclear security."

And for February 28, 2016 at 8:53 AM, if you don't believe animals have personalities and psychological attributes, you have obviously never had a pet. Or if you have, I pity it.

Anonymous said...


And for February 28, 2016 at 8:53 AM, if you don't believe animals have personalities and psychological attributes, you have obviously never had a pet. Or if you have, I pity it.

February 28, 2016 at 10:37 AM

My cat's personality was most like Nanos but since he weighed 7 pounds it was not big deal.

Anonymous said...

My cats are smarter than Nanos or Melanie. Except for poor young Gemini who is a beautiful calico, kind but a bit of a dim bulb. More like Linton Brooks.

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