Scandal at Los Alamos threatens UC contract


Published: Saturday, February 1, 2003 at 6:01 a.m.
Last Modified: Friday, January 31, 2003 at 10:01 p.m.

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BERKELEY, Calif. - A fraud scandal at the Los Alamos laboratory is threatening the storied, 60-year partnership between the government and the University of California that produced both the atomic bomb and the hydrogen bomb.
The university, on the strength of such faculty stars as J. Robert Oppenheimer and Ernest O. Lawrence, has run the Los Alamos, N.M., lab for the government since it was created during World War II as the headquarters of the secret Manhattan Project to build the bomb.
But the scandal has raised questions about UC's management ability and led some members of Congress and other critics to suggest that it may be time to put the contract up for bid. UC's contract expires in 2005, but either side can terminate it at any time.
"I made clear to them that, No. 1, their contract is in jeopardy and, No. 2, one way or another things have to dramatically change with regards to procurement and management of material at the site," said Rep. Jim Greenwood, R-Pa., chairman of the House Energy and Commerce Committee's oversight and investigations panel, which is investigating the lab.
Los Alamos has been rocked by allegations of $2.7 million in missing computers and other property and widespread misuse of lab-issued credit cards, including an attempt by a lab employee to buy a souped-up Ford Mustang for $20,000.
The allegations were compounded by charges of a management cover-up after two internal investigators who reported the thefts were fired in November. In recent weeks, the lab director has stepped down, and other top officials have been reassigned.
Energy Secretary Spencer Abraham has given his staff until April 30 to evaluate UC's performance.
UC said in a statement that it has taken aggressive action to address the shortcomings, including instituting a management shake-up. University officials spent the week in Washington, trying to restore confidence in their management.
In addition to running Los Alamos, UC has managed the Lawrence Livermore weapons laboratory in Northern California since its creation in 1952, largely on the initiative of Los Alamos scientist Edward Teller. But the Livermore contract does not appear to be as seriously jeopardized.
The relationship between UC and the government has had lots of ups and downs over the years, and the labs have been rocked by scandal before - the botched espionage case against Los Alamos scientist Wen Ho Lee, the $1 billion overrun in Livermore's effort to build a superlaser, the 1950s unmasking of Los Alamos scientist Klaus Fuchs as a Soviet spy.
But the latest furor "may be the biggest challenge yet," said Herb York, a veteran of the labs who headed Lawrence Livermore in the 1950s.
Los Alamos has a budget of $1.7 billion and about 7,500 UC employees. Under its laboratory-management contracts with the Energy Department, UC gets $17 million in reimbursement for costs and up to about $18 million in performance-based fees.
The question of whether UC should remain as lab manager has been coming up for years.
After World War II ended with Hiroshima and Nagasaki laid waste by Los Alamos scientists' handiwork, UC was reluctant to continue the partnership. The university has said it manages the labs because the government wants it to, not because UC wants to.
Despite the occasional clash, the contract has never been put out for bid. UC has long maintained that it would not compete if that happened.
With the latest scandal, "clearly there is a growing sentiment among many of our members to put the contract out for open bidding," said Ken Johnson, spokesman for the House Energy and Commerce Committee.
Among potential suitors is the University of Texas, which in December made an unsuccessful bid to run Sandia National Laboratories, and has Bush administration connections.
Removing UC - at a time when the country is contemplating war with Iraq - would be a substantial task. The 15,500 UC employees at Los Alamos and Livermore work on everything from ascertaining if aging nuclear warheads still work to defending against biological or chemical attack.
"You have to think about the good of the program and the benefit to the nation of that program and whether you can move all of the expertise, which you can't," said UC defender Sen. Dianne Feinstein, D-Calif.

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