Lab Discovers New Ways to Make Bad Calls
Alan P. Zelicoff, MDIt’s been a couple of very tough months for Sandia Labs with worry over next year’s budget and even New Mexico’s own Congressional delegation warning that cuts to previously invincible largesse are a virtual certainty. That means layoffs and associated economic impacts to the community, further blows to morale at Sandia, and deepening uncertainty about its future mission.
But most of these troubles are of Sandia’s own making as a few items emerging from bureaucratic obscurity are now making clear.
Last week, Sandia settled the wrongful dismissal lawsuit brought by Shawn Carpenter, a talented young computer security expert who discovered hacking into Sandia, Lockheed-Martin and then US Army and FBI computers. Sandia management, in what it later argued in court as its “responsibility to taxpayers” told Carpenter to stop his countermeasures at Sandia’s fence. Carpenter, noting that he was following Sandia’s motto of “Exceptional Service in the National Interest” ignored management timidity and saved countless terabytes of data from falling into the wrong hands, but was fired nonetheless. Against all odds Carpenter prevailed in court winning a $5 million judgment.
With infinite legal resources – footed by taxpayers and with no public accountability – Sandia had already appealed the case, hiring the most expensive law firm in Washington. If nothing else, they could outspend Carpenter and drag the legal wrangling well into the next decade. So why would Sandia settle?
There is only one logical explanation: Carpenter’s case is the least of the lab’s many troubles.
First, there are the lies. Commenting on Carpenter decision in the “Lab News” Sandia president Tom Hunter stated that while appealing the case, “[t]here has been no payment of any penalty”. That’s dead wrong. Massive legal bills aside, after it’s loss in district court, Sandia was required to post a surety bond to cover $5.8 million in potential future awards to Carpenter and has been paying 15% interest since. Do the math and the payments come to nearly $60,000 a month. No penalty? Please. Even at Sandia, that’s real money.
Next, there are regulatory compliance problems. On August 19th, the Small Business Administration reviewed Sandia’s conformity with Public Law 95-507 which codifies Federal requirements for subcontracting with small businesses, especially those owned by women, veterans and minority groups, including mandatory percentages. Sandia flunked and refuses to release the report, hardly the stuff of exceptional service.
Then there are the business practices of the lab. Just a month ago Sandia admitted the failure of its highly touted technical-transfer program by “bundling” its products with that of other DOE labs through Technology Ventures Corporation, the costly venue Sandia has unsuccessfully used to market its technologies to private business. Does anyone seriously believe that real businesses will have an easier time deciphering the value of “bundles” of obscure technologies multiplied fourfold?
Next month, trial begins in $200 million lawsuit against Sandia filed by Nanodetex, a spin-off firm that alleges it was given exclusive rights to transform a key piece of Sandia technology for detecting the presence of toxins from bench-top prototype to a real-world tool for law enforcement and emergency response. But it seems that Sandia failed to deliver critical computer code as specified in the contract. It also tried to sell the same technology to another company.
Sandia denies the charges of course. But if the evidence of recent reckless decision-making is any indication of management’s style, I’d place my bet on Nanodetex.
And then just last Friday, Sandia decided to close its technical library. Hard as it is to believe, the once-premier engineering and science laboratory in the US government will no longer have books, journals, and professional librarians on staff. Instead, it’ll be left to individual scientists to do online searching, even though anyone who does serious research depends on assistance from bona fide masters of library science. Virtually no proceedings of scientific meetings published before 1995 are – or ever will be – on the Internet. It’s as if Princeton and Stanford closed their unique collections and told their faculty that they’re on their own. But they wouldn’t, which is why other institutions remain in high esteem, continually attract new talent and are garnering an ever larger share of national security work that used to be the exclusive domain of the DOE labs.
The lab justifies the library closure as part of budgetary prudence which expends less than 0.2% of lab’s budget. That much could easily be saved by eliminating just 10 managers from the hundreds who occupy 5 layers of supervisory bureaucracy.
And perhaps therein begins the solution: firing the entirety of the top few tiers of managers and replacing them with professionals whose pay depends on fulfilling clear goals that are openly published for public review.
Al, thanks for the article.
ReplyDeleteGussie, thanks for posting it.
A simple question:
If Lockheed manages Sandia in order to make a profit, why would Lockheed let Sandia run the way that Al says it does, and, apropos to LANL as well, why wouldn't Lockheed fight hard for quality work and for WFO funding (the generator of profits?).
The commercial and profit angle of national labs does not make sense to me. It appears as if companies that are successful in making a profit are running national labs in a way that guarantees losing money.
Thanks in advance to anyone who can explain what is going on here.
I posted this one, Eric. I'm glad you liked it.
ReplyDeleteThe idea is to rape and pillage the labs to the exclusive benefit of the top lab executives. If that means destroying the scientific integrity of a lab, so be it.
ReplyDeleteRealize that those at the top levels only need a few years of top line salary to reach their goals of financial security. They won't be around when the consequences of their actions come home to roost.
They got theirs and that is all that really matters these days in America. The rest of us can go out and buy an extra large tube of KY Jelly to prepare for what is about to hit us. There is no common destiny or shared loyalty among the staffs at the NNSA labs any longer. It's really sad to watch this all play out.
here is some information about sandia livermore site, Sandia has been quitely laying people off and the word on the street is that sandia is going to close it up and move projects they want to keep back to new mexico. the HE projects will then move to LLNL and eventually to NTS
ReplyDeleteEric asked a simple question with a simple answer. No offense meant Eric, but I am surprised that you don't already know this.
ReplyDeleteFor most companies, profit = income - expenses. Assuming income is relatively fixed, you optimize expenses in order to maximize profits. Profit is the floating variable.
This is not the case for FFRDC prime contractors and others who have cost plus fixed fee contracts or similar situations. Profit is fixed, and assume income is also fixed (i.e. you can easily estimate how many new dollars will come in). Expenses float to make up the difference.
You see this in the contract language, which usually (maybe always) is based on a best effort (i.e. we’ll try until the money runs out) and not a firm product. People think that the milestones and product matter, but the actual contract language specifies best effort and not product.
WFO etc therefore does not bring profits, or any appreciable profits compared to the large prime contract fixed fee. Suppose you have a DOD or EPA contract at LANL, or even an Exxon contract. I am not sure there is a profit built in at all. If you work more efficiently and the project requires only half the labor you estimated, you don't pocket the rest as profits the way a normal company would.
WFO generates projects that may support some scientists and maybe some whole groups. It does not generate any appreciable profit for the institution.
The only exception is that WFO often generates intellectual property which may be valuable from a licensing standpoint or from leveraging the results of the WFO into a very large program such as TRANSSIMS.
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For 3:03, the salaries and bonuses may be high relative to where they were under UC itself, but I seriously doubt that they are high enough to reach financial security.
Do you really think the salaries etc are high enough for senior people to reach say $5M in investable wealth, let alone to reach what is called “Fuck You” money, which is usually defined as about $10M in investable wealth?
Ah, yes, 9:26 PM. Written like a true blue LANS Man. Why, those pesky WFOs are hardly worth the effort and should just be snuffed out, right? This is a typical attitude from the top floor offices over at the Emerald Palace (aka NSSB).
ReplyDeleteMost of the non-management staff is beginning to feel like they been fucked-over pretty well by the top level LANS Men. You can down play what's happened with the executive salaries all you want but that doesn't change the facts. The pigs at the top are eating very well these days at LANL.
Hey, if you try a little harder upping the NNSA executive bonus maybe you'll be able to reach that coveted "Fuck You" status that you speak of so highly. I'm sure you can make it if you try.
NNSA personnel at LASO receive a 10% annual "retention" bonus to assure that they remain in LA.
ReplyDeleteSounds like Sandia has its fair share of arrogant butt-heads running the joint; the taxpayer once again taking it up the behind while Congress continues to do nothing to curb the enormous waste that's occuring at these labs. Get rid of the blank check for legal costs and you'll take one giant step in promoting common sense and reason. Of course right now none of that exists at SNL, and even less so at LANL. But we all know nothing's going to change, don't we? So grap your ankles and take a deep breath. The nation's bankruptcy is right around the corner, but first comes yours. Leave it up to the best and brightest to f@$k it all up!
ReplyDeleteWent shopping at Trader Joe's this afternoon and started to pick up a box of granola cereal. On closer inspection, I noticed one of the ingredients was hemp seed oil. While the active ingredient of marijuana, THC, was mostly removed from the hemp seeds, the box stated that trace amounts might remain.
ReplyDeleteWith the LANL piss tests now causing immediate terminations you can never be too careful. Your morning breakfast cereal could now very well cause you to lose your job, so be careful what you eat! You can add hemp-based cereals along with poppy seed muffins as items to be removed from your daily diet.
I remember Hunter and Stichman's comments about the Carpenter case in the Sandia Lab News annual coverage of the "state of the labs". These comments only came three months after the trial, and only after employees asked management why leadership wasn't addressing the issue. In fact, they're right here on page 7:
ReplyDeletehttp://www.sandia.gov/LabNews/ln05-25-07/labnews05-25-07.pdf
Any employee with half a brain knows that it is a bunch of BS. The thing is, nobody really gives a shit, as long as the paychecks keep coming, and it isn't them being canned. It's pretty simple. The best way to not get fired is to keep your trap shut, and not question your "leaders".
I would be very surprised if we heard any sort of explanation from management. What the hell are they going to say? Blah, blah blah blah... "We cannot abandon our values"... blah blah blah blah... "One of our values is 'each other'"... blah blah blah blah...
If we do, it seems like it takes Sandia management about three months longer than the local press to formulate a response to their own employees.
Who cares. Just give me my paycheck.
I am grateful for the comments and discussion that have followed from the OpEd of Nov. 1. They have generated a couple of questions and a bit of further thinking on my part.
ReplyDeleteFirst, for Anon. 11/4/07 11:10 PM: Yes, indeed, the Lab News issue which you reference is precisely the source of my remarks about the deeply misleading statements made by the most senior management regarding the Carpenter case (I had referenced it in the original draft of the OpEd but it was cut due to length limitations). Telling lies doesn’t help Sandia’s reputation, credibility and valve proposition anymore than does burning the library books. But what is amazing to me is that given that most of the Sandia Lab News’ readers are far above the mean in intelligence that no one raised the question: just what has (or had) all of the legal maneuvering cost and what will (or would) appeals cost? The issue is now moot as the case has settled, but it was common knowledge that Sandia hired Baker-Botts, the most expensive law firm in DC (it is run by former Sec. of State James Baker) and had the case would its way through the years-long appeals process with motion and after motion and delaying and associated obfuscation, the bills (at nearly $1K per hour – no joke) could easily have run over $1 million. Where was the outrage?
Which brings me to a second point. Like many contributors to this webpage, I am deeply concerned not merely about the survival of the Labs but whether they fully thrive – and key to the latter, of course, is a cutting edge science mission. But (and here’s the uncomfortable part), if Lab staff are worried almost exclusively about keeping their individual jobs, does that not rather undermine the necessary revamping of Sandia (I can’t speak much about LANL since I don’t understand it nearly as well, but I suspect this applies)? What I’m trying to say is that if a substantial cadre of lab technical staff – for example, among the ranks of senior scientists (I once was one) – aren’t willing to criticize the abjectly awful decisions of management (first privately, and then when that fails, publicly), what hope can anyone have of recovering an institutional mission that is something different than what a contractor or even an academic institution can do (and at far lower cost)? I’m sure this is a complex matter, but in the end Edmund Burke’s admonition (and I paraphrase a bit -- “All that is necessary for evil to succeed is that good people do nothing”) would seem to apply. I don’t believe that Sandia or even NNSA management is inherently evil (although they can mistreat individuals who challenge them very badly, arguably with evil intent) but the extant managerial incompetence is manifest.
Finally, to Eric: I am agreement with the response of Anon 11/3/07 9:26PM and would only add that there is little in the way of practical oversight of the labs, making the wastefulness worse. Given that no one is an angel and that money (and probably personal avarice fro time to time) drives what management at Sandia does, when there is a fixed-fee contract (and non-compete protections as well) it is little wonder that there is a large amount of waste at the Labs (a fact I am reasonably confident about) but that managers have little or no motivation to responsibly allocate resources if the annual largesse just keeps rolling in.
This year’s Congressional budget may be very different, and that will of course drive, indeed force, change. But the real question is “what kind of change”? If lab staff are silent (or worse, in denial and merely hoping the problem or threat to individual jobs goes away), a silver lining in this cloud will be lost.
Perhaps as well as most, I understand how expensive and painful it is to have to give up a position at a National Laboratory (and let me be clear here: I could have stayed at Sandia but I chose to leave when I saw that I’d forever be banished into a well-paid position of doing absolutely nothing. The leadership at Sandia didn’t even have the integrity or will to just fire me when I would not stop writing about the destructive foolishness of the polygraph program. But they were perfectly willing to take away my work and move my office – literally – next to my Director, doubtless to keep pressure on me to be inactive). I’m also no saint. But I would hope that there are some folks at the Lab (not everyone; just a vocal few) who will make clear – and loudly if necessary – the mismanagement and malfeasance they observe, and the damage that results. Absent the latter, there may be no hope whatsoever to restore the once valued role played by the Labs, no?
I am more than willing – even hopeful – of being shown to be wrong.
Respectfully,
Al Z.