LANL Manager Avoided $88M Fine

Sunday, August 12, 2007
By Raam Wong, Journal Northern Bureau

SANTA FE— An oversight during last year's change in management at Los Alamos National Laboratory may have helped the contractor that now runs the lab avoid a multi-million-dollar fine.
The Department of Energy's contract with Los Alamos National Security LLC inadvertently omitted some of the agency's own directives concerning the handling of classified material.
One congressman called the omissions a potential "get-out-of-jail-free card" for the lab.
Last month, DOE issued a notice stating that LANS violated directives in connection with an October 2006 incident in which a lab contract worker took home classified documents.
The lab may have dodged a huge bullet: The total maximum fine for all of the violations was $88 million, according to the notice.
The contract has since been updated to include financial penalties for violations of security directives.
Documents taken from the lab by Jessica Quintana— which were discovered during a police drug raid on her Los Alamos mobile home targeting her roommate— concerned the design of nuclear weapons and the methodologies for testing nuclear weapons of the United States and its allies.
In the months after the security breach, LANS asserted that it should not be fined for violating the security directives cited by DOE, according to a footnote in the DOE's notice of violation.
LANS maintained that its contract didn't include the security directives and that the contract instead referred to predecessor DOE orders that did not call for penalties.
It's not clear whether the lab's argument held water with the DOE's National Nuclear Security Administration, which oversees the nation's weapons labs. But in any case, LANS wasn't fined for violating the security rules that were supposed to be in the contract.
The agency's violation notice states that because "NNSA has decided not to impose any penalties" for violating the security directives, the question of whether the lab can be fined for them is "moot."
The NNSA did propose a $300,000 fine for LANS, but for a violation related to the longstanding Atomic Energy Act, not the security measures missing from the contract.
NNSA also is proposing to fine the University of California, the lab's former manager, $3 million.
Even though the Quintana incident took place several months after the June 2006 transfer of the lab's management from the university to LANS, NNSA said UC bore significant responsibility for the evolution of "longstanding deficiencies" the lab's handling of classified information.
NNSA decided to fine LANS on just one violation of the Atomic Energy Act, according to the notice, in recognition of the proactive way in which the lab responded to the Quintana incident.
DOE officials have also noted that LANS was only on the job for a few months before the incident occurred.
Lab spokesman Kevin Roark said Thursday that LANS plans to pay the $300,000 fine soon.

DOE orders
DOE left its security directives out of the LANS contract despite the fact that the Los Alamos operating contract was put out to bid in part because years of embarrassing security and safety lapses under the old management, the University of California.
UC had run the Los Alamos lab since it was created to build the first atomic bomb during World War II.
UC remains involved in Los Alamos operations as part of LANS, a private consortium that also includes Bechtel and other corporations.
The security directives— known as the 470.4 series manuals— were issued in recent years to codify DOE's requirements for protecting classified documents.
NNSA spokesman John Broehm said the manuals could have been left out of the contract due to the complexity of switching managers for the first time in the lab's history.
"Unfortunately, the manuals in question were not included during this transfer," Broehm said in a statement to the Journal. "Once the omission was discovered, they were immediately included and the new contract was updated." The updates were made in January.
The manuals did not include significant new security requirements, Broehm said. Rather, they alerted contractors of NNSA's authority to impose fines for violating security procedures.
The oversight brought criticism in April during a congressional hearing.
"This committee was disturbed to learn just this week that the Department of Energy apparently forgot to put legal requirements in its contract with the lab operator," said Democratic Rep. Bart Stupak, chairman of the Energy and Commerce committee's oversight subcommittee.
Stupak said he feared the omission would hand LANS a "get-out-of-jail-free card."
Last month, Energy Secretary Samuel Bodman sent the NNSA a memo stating that one of the lessons learned from the episode is the need to ensure that DOE directives are "incorporated in the applicable contracts and subcontracts."
He goes on to say that leaving out references to these directives may limit DOE's ability to hold contractors accountable.

Journal staff writer John Fleck contributed to this report