For immediate release, March 7, 2013
Federal
Official “Cooks the Numbers” in Livermore Lab Management Review;
$44
Million Bonus and Contract Extension Unwarranted, Charge Watchdogs
As the nation
faces sequestration and across the board budget cuts, one federal official has
made “an adjustment to the recommended incentive fee” for the Limited Liability
Company (LLC) that manages and operates the Lawrence Livermore National
Laboratory for the U.S. Dept. of Energy National Nuclear Security
Administration (NNSA). The contractor, Lawrence Livermore National Security
(LLNS), LLC, is a consortium made up of Bechtel National, the University of
California, Babcock and Wilcox, the Washington Division of URS Corp. and
Battelle.
The
just-released NNSA Fiscal Year 2012 Performance
Evaluation Report (PER) shows that the numbers were cooked to benefit the
management contractor after the evaluation had been completed, allowing for an
increased fee award and an extra year, non-competitive extension of the
contract for the LLC. Nuclear watchdogs,
including the Livermore-based Tri-Valley CAREs, are crying foul and calling for
“greater oversight of taxpayers’ money and a more open and transparent contract
process.”
According to
Marylia Kelley, Tri-Valley CAREs’ Executive Director, “The Performance
Evaluation Report clearly states that Livermore Lab management failed to reach
the percentage necessary to reap the awards that were bestowed.” Kelley further
characterized the contract extension and extra money as “inappropriate, if not
technically illegal.”
The report
states that the “Gateway to Award Term” requires a minimum score of “80% earned
incentive fee.” The Livermore Lab
management’s score is listed as “Fail (78%).” Therefore, the “contractor
failed to qualify for an additional year of term [i.e., contract extension],”
according to the PER.
The report
contains an addendum that states in full: “It is noted that subsequent to the
[internal] issuance of the PER that the NNSA FDO [Fee Determining Official]
exercised her authority on December 5, 2012, making an adjustment to the
recommended incentive fee, which resulted in the Contractor earning the award
term.”
The one-paragraph
addendum does not provide a rationale for the “adjustment,” nor does it
disclose in which management performance category the bump up was bestowed. The
Fee Determining Official in question is Ms. Neile Miller, the then-NNSA Deputy
Administrator who has since been named as the agency’s acting Administrator.
The monetary
award to the Livermore Lab management LLC is listed in a PER Summary document as
$44 million out of a total possible fee of $50 million. This financial award is
based on the LLNS, LLC achieving a score of 88% (a full ten percent higher than
the actual score the contractor earned as documented in the PER).
Tri-Valley
CAREs’ Staff Attorney, Scott Yundt, noted that the performance evaluation
process “skews toward excessively high ratings, even without the FDO in
Washington, DC cooking the numbers after the fact.” First, the management
contractor performs its own evaluation. Taking the contractor self-evaluation
into account, the NNSA Livermore Site Office then produces its ratings in the
Performance Evaluation Report, in this case giving Livermore Lab management the
key “Gateway to Award Term” percentage of 78%, or “Fail”.
The 39-page
Livermore Lab PER is rife with examples of management failures and potentially
illegal practices. For example, the report notes “Office of Emergency Response
issues” in which NNSA funding was given for one project at Livermore Lab but
management chose to spend it on something else. “Funding… was used to perform
work not within the project scope, which has caused delays in the projected
completion date and aspects of the work to be reallocated to other
laboratories,” states the PER.
The PER glosses
over the failure to reach ignition at Livermore Lab’s biggest project, the
National Ignition Facility. Yet, it did charge the LLNL, LLC with “a failure of
institutional leadership,” and stated that scientific “discrepancies were left
unresolved well after they became apparent to the Contractor.” The report also noted “the transition to a [legally]
compliant overhead rate structure” at the NIF.
However, the report touts the “execution and completion of the National
Ignition Campaign and a very good job transitioning NIF to routine facility
operations.” Thus, the NIF’s over budget price tag and abject failure to
achieve ignition resulted in a mere $1.3 million reduction in the maximum
available award fee.
Yundt said,
“Tri-Valley CAREs first broke the story of the illegal shifting of overhead costs
from NIF to other projects at Livermore Lab in late 2009. While we applaud that
this noncompliant practice is finally coming to an end, it is outrageous to
think that it has taken more than three years to accomplish this change. Nor
should finally coming into minimal compliance with the law be grounds for
awarding millions of dollars in management fees and a contract extension.”
Kelley concluded,
“It would be more appropriate for the contractor to repay the taxpayers for
some of the $7 billion squandered on NIF rather than give any bonus whatsoever
to the contractor for mismanaging it so egregiously over the years.”
Tri-Valley CAREs
is joined in its critique of the PER process by Nuclear Watch New Mexico, a Los
Alamos Lab watchdog that sued to obtain last year’s Performance Evaluation
Reports. Nuclear Watch’s press release, also issued today, highlights that Ms.
Miller likewise overrode the PER score earned by the Los Alamos management team
to inappropriately offer them an unearned contract extension.
Both Tri-Valley
CAREs and Nuclear Watch call on Congress to investigate the process leading to
the FDO overrides and institute new provisions to increase transparency and
accountability. “Waivers and bump ups that result in additional fee awards and
contract extensions must fully justified and documented in writing,” stated
attorney Yundt. “A scant paragraph with zero rationale or analysis should not be
the grounds on which management of the nation’s nuclear weapons labs is based,”
he concluded.
###
For further information, Marylia Kelley,
Executive Director, or Scott Yundt, Staff Attorney, Tri-Valley CAREs,
925.443.7148
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