Dec 27, 2007

A recursive post on the future of WFO at LANL

From a comment on the LANL Major Player In Nuclear Shift post.

-Gus

_______________________________________________

From http://lanl-the-rest-of-the-story.blogspot.com/2007/11/and-in-next-months-mechanical-and.html

David H. Crandall, NNSA assistant deputy administrator for research, development, and simulation:

"We are moving from a mode where we would tolerate research that doesn't interfere with our nuclear weapons mission to one in which we are encouraging new research that is synergistic to our mission," Crandall continued, adding that researchers outside NNSA will have to pay the full price of using lab staff and facilities.

Quite simple. No more tolerance of "other" WFO. No special overhead rates for WFO.

38 comments:

Anonymous said...

Do you get it yet, Martz? WFO at LANL is dead. "Other" science at LANL is dead. Enjoy your precious pit production program, because that's all you have left at LANL now.

What was it that Doug said?

"Being a proponent of scaled up pit fabrication operations at LANL is Joe's right, but acknowledging the consequences of this future mission at LANL is everybody's responsibility."

Anonymous said...

"Quite simple. No more tolerance of "other" WFO. No special overhead rates for WFO."

Not quite that simple. Take advanced materials development. NWC has an interest. I bet DoD may have similar interests. You create a user "center" for advance materials and process development. Perhaps the lab throws in IGPP and IGPE dollars to support MWC mission efforts in the facility. What is the recharge rate to a WFO sponsor like the DoD?

I think Crandall is narrowing the WFO field; not closing it off.

Anonymous said...

Is there something on the contract that says LANS (and LLNS) needs DOE permission to do WFO? What if they did it in a leased (offsite) facility having a separate (i.e., lower) cost structure not subject to expensive DOE rules and oversight?

Anonymous said...

Yes, you need DOE permission. DOE has been clear WFO is on a non-intefering basis. When DHS stood up, it was able to get an "even basis" access provision in it's WFO with the DOE labs. Presumably done since we are "national" labs, and DHS had no laboratory structure to depend upon.

Anonymous said...

Better yet, 8:39, how about taking the WFO to some other WFO-friendly location where DOE isn't going to be a huge impediment.

Pick a science topic, and I bet I can find a half-dozen companies that are well-qualified to do the work, none of which will suffer from LANL's peculiar dysfunctional quirks and astronomical FTE costs. If you do that, the odds are that some of LANL's former "best and brightest" will be there to work on the project.

Anonymous said...

12/27/07 8:46 PM said:

... When DHS stood up, it was able to get an "even basis" access provision in it's WFO with the DOE labs. Presumably done since we are "national" labs, and DHS had no laboratory structure to depend upon...

DHS WFO is not on a non-interfering basis because Congress made that the law of the land in the Homeland Security Act that set up DHS. DHS's performance record with managing its own labs (EML, Plum Island, etc.) is not stellar.

As far as setting rates for WFO at lower levels than DOE work, that will likely run afoul of the Economy Act of 1932 -- which basically says that executive branch agencies have to spend the money Congress gives them on the things they are tasked to do. Setting up a "subsidy level rate" for WFO would in effect transfer DOE funding to other agencies in violation of the Economy Act. PNNL does have a rate structure that does this for WFO (only one in the complex), but that is expected to get axed in their new contract.

Anyway, when I read Crandall's comment, I conclude he is promoting WFO -- not discouraging it.

Good-day said...

I have an idea!!
Instead of all this speculation about WFO, why don't you-all submit the question to LLNS management!! Surely there must be a process! Or is fear so rampant that you won't ask the easiest of questions?

Anonymous said...

WFO is not dead at LANL. LANL will do more than just pit production. Take a vallium, chill out, maybe get a good night's sleep. The hyperbole, negativism, and exaggeration here gets old, frankly. Just when it appears that the level of discussion was being raised with a few thoughtful, signed posts, the usual anonymous naysayers show up to scare away someone who was actually trying to be constructive.

NNSA is a government agency that is dependent on funding from Congress like anyone else. If our delegation is serious about helping LANL diversify, then they can take concrete action to help. Why not write them and encourage this?

Anonymous said...

I also thought that David Crandall's comments meant that more WFO would be encouraged. The subtitle or tease line for the article was 'With planned downsizing, labs will chase more nonweapons contract R&D'.

That sounds like the editor from CE&N thought that more WDO, NOT less WFO, would result if the plans were implemented.

Just my two-bits.

Anonymous said...

"We are moving from a mode where we would tolerate research that doesn't interfere with our nuclear weapons mission to one in which we are encouraging new research that is synergistic to our mission" (Crandall)

Unfortunately, LANL's mission appears to be getting increasingly constrained. It sounds as if it will mostly involve plutonium production and research with some highly focused supercomputing work thrown in for good measure. If this is, indeed, the mission and NNSA uses it as the standard to qualify acceptable outside work, then the number of outside sponsors is going to be extremely small.

I would love to believe that LANL will be allowed to follow the SNL model from the mid-90's. After all, SNL appears to be doing very well these days. However, if this is to occur, then:

(1) NNSA would need to allow it to happen, and even more important,

(2) LANS would need to actively support it.

Part of LANS support would involve finding ways to reduce our high costs so that more outside work could be brought into the lab. I really have my doubts about that one. It's not in LANS interest to reduce costs at LANL. In fact, it is not too hard to come up with scenarios were LANS might actually benefit by increasing our costs even higher! Regardless of this, a good question to ask both Tom D'Agostino and Mike Anastasio would be:

-------
"Will LANL be allowed to become a diversified lab like SNL, where only about 50% of the activity is NNSA related?"
-------

It's a question that deserves a straight answer. If the answer is no (which I suspect it would be), then the future at LANL appears to be tightly constrained. Mike's recent answer of "I'm your man" to Udall's question as to whether our Director was up to the task of lab diversification is meaningless. It's the specific question listed above that needs to be answered.

We deserve to hear an answer from both NNSA and LANS on this question so that staff can begin planing the remaining years of their careers. However, I doubt that either NNSA or LANS has the required honesty to clearly answer this question. From what I have witnessed, many of those who are interested in this question have already heard an implied answer and decided to vote with their feet.

Anonymous said...

"From what I have witnessed, many of those who are interested in this question have already heard an implied answer and decided to vote with their feet."

The question really is whether or not NNSA/LANS will encourage Los Alamos to become a diversified lab like SNL. Sandia showed strategic thinking when they actively encouraged this years ago, WITHOUT NNSA telling them to do this. I did not (do not) see that at Los Alamos. Crandall's statements and more importantly all actions (words are cheap) say that WFO will not be encouraged. So after 12 years I voted with my feet and left. I was able to bring WFO funding consistently at Los Alamos, and it is MUCH easier now with a much lower overhead.

It is not negative to point out that restricting WFO to NNSA topics does in reality restrict WFO work. For example, how does Udall's alternative energy research suggestions (naive suggestion BTW) get approved with that guidance? Yes, NNSA does approve WFO funding. If you have filled out the paperwork to get WFO money you know this. They get their cut of the overhead too for shuffling papers, of course.

Ask yourself, why would NNSA and LANS encourage vigorous WFO research? LANS gets their fee regardless of the amount of WFO. NNSA's mission is just nuclear weapons. They get little credit for supporting WFO efforts and have clearly indicated that they "tolerate" it at best.

I still hope this trend can be turned around and Los Alamos can be a more diversified lab (an actual national laboratory supporting this country) as NW funding is cut back, so I wish the best of luck to Joe Martz and others in that effort. However, I found a great opportunity personally that does not require me to bet my career on a limited liability corporation and incompetent government agency.

Good luck!

Anonymous said...

The question is "How can LANS/LLNS and NNSA (if it really cares about WFO) make the labs attractive to non-DOE/NNSA sponsors?" Look at the headche both labs have gone through trying to open small BSL3 labs (compared to private or university sites)... How much of a non-DOE/NNSA sponsor's fuding is eaten up by DOE/NNSA specifc rules/regulations, if DOD can do explosives research cheaper in one of its labs, why send their money to LLNL or LANL?

The solution? Nationalize the NNSA National Labs and have then regulated just like other federal R&D centers in the country, but also carve out DOE/NNSA enclaves within the sites where additional DOE/NNSA rules/orders (security, safety, environmental, etc) would apply due to the "special" hazards/concerns associated the work done for DOE/NNSA.

Anonymous said...

I'm sorry, 8:39, but the "solution" is staring you in the face: little to no WFO will be done at LANL. That's the solution.

As others have pointed out, NNSA has no interest in non-NNSA work being done at LANL, and LANS has no economic incentive to try to make it happen -- their fee remains the same with, or without WFO.

Anonymous said...

A fundamental question seems to be evolving from these discussions. If LANS sees no real advantage to growing the non-NNSA work at LANL, then what the heck did SNL see when they launch on this path back in the mid-90's?

Is there something different about SNL management that made them more willing to take this route? Does it have something to do with the fact that a defense contractor, Lockheed, manages Sandia while LANL is run by UC/Bechtel/BWXT (i.e., a corporate culture difference)? Could the difference in attitude be related to the fact that SNL had Director Robinson at the helm acting as a champion for change and we have no such champion at LANL?

SNL could have remained wedded to NNSA work and allowed their lab to shrink, but the SNL managers found advantage in taking another route. Why advantage did SNL managers see in taking this route that our LANS management apparently do not see?

Maybe LANL management is truly "broken" and has no ability to change in the face of a radically shifting environment. Perhaps LANL management has grown too insular over the years. Could it be that we have the wrong Director running LANL given the cards we are being dealt? Perhaps LANS is just lazy and wants to take the easy money and do the minimum amount of work. I don't know the full reasons for LANS reluctance to change the path of LANL, but I would like to hear some reasonable explanations.

SNL found it profitable to change, so why can't LANL?

Anonymous said...

Without leadership there is no real possibility for meaningful change at an institution.

Leadership starts at the top. SNL had a great leader in Director C. Paul Robinson during the 90's. We would have been lucky to snag him if Lockmart had won the LANL LLC competition.

I ask you... does Mike Anastasio inspire anyone at LANL? Anyone at all? How about our latest Dep. Director, Jan Van Prooyen?

I rest my case.

Eric said...

A lot of interesting thoughts in this thread.

Here are a couple more that may be interesting.

1. I have been on both sides of WFO work at LANL. At the moment, I could be one of the Others. I do not plan to be an other shipping funds into the Lab. Why? Because I can get the same work done more cheaply, more reliably, and cheaper elsewhere.

2. As to the difference between SNL and LANL, one way to look at it is "What are the winning strategies of the M&O contractors?" Lockheed feels that it gets a win by developing technologies across a wide spectrum and licensing them. So, SNL becomes an engineering division of a cutting edge engineering company. The companies managing LANL (ignoring UC which has an apparent different winning strategy)get wins by building buildings or cleaning up polluted sites. For such companies, WFO does not appear to be a win. WFO is too far from their core competencies and profit centers. So, at least to me, each M&O contractor is acting in their long term self interest within the constraints of NNSA. The two contractors just have different long term interests. Does this make sense?

Anonymous said...

Change in LANL's path may not be possible given the structures that NNSA inserted into the RFP competition.

LANS partners will be richly rewarded with a "for-profit" fee and executive bonuses if they: (1) make it at least appear that safety and security have been improved, and (2) build pits.

They will be punished if they don't tightly conform to NNSA demands.

It was a different world back in the mid-90s. SNL was managed by DOE and there was more slack in the system for making changes with a DOE lab's direction. All that slack has now been removed from the system via the NNSA's push towards a tightly constrained LLC to oversee their labs.

LANS will do exactly what NNSA tells them to do, and that means our future path is highly directed towards plutonium research and production. There will be no flowering of scientific diversity at LANL because NNSA doesn't want to see that and the new LLC structure won't easily allow it.

The only solution I can envision to change things would be to have Congress decide to rip the weapon labs away from NNSA and hand them over to DOD. That's a radical solution, no doubt, but it's the only one I can foresee that might allow the NNSA labs to become diversified national security labs rather than just tightly constrained weapon labs. It would also allow LANL to get out from under a highly dysfunctional agency called NNSA which is run under a highly dysfunctional Department called DOE.

Anonymous said...

I really think that WFO is good for the weapons program. For instance, LANSCE has been a magnet for bringing scientists and engineers into LANL for a long time. Many of these people have drifted into the nuclear weapons program. Yes, you can bitch about Susan Seestrom as a manager, but the APS thought enough of her to make her a Fellow.

And, from a purely financial point of view, the additional funds from the WFO mitigate the G&A rates.

Anonymous said...

You create a new agency devoted *exclusively* to the production and maintenance of nuclear weapons and then you put LANL and LLNL under this new agency. What did you expect would happen?

It should come as no surprise that LANL's mission has now been narrowed down to plutonium science. At least back in the 90's, LANL was under DOE and not NNSA. It wasn't a perfect situation by any means, but DOE's charter is a lot wider than just maintaining aging nukes.

The die was cast for both LANL and LLNL as soon as NNSA was created. In retrospect, it was a very bad idea.

Anonymous said...

Isn't LANSCE internally subsidized?

Anonymous said...

If he truly said this, Crandall doesn't understand business. He should take an elementary microeconomics course.

In the short-run, an organization (any organization)in a competitive marketplace with demand elasticity (which WFO certainly is)benefits if product revenue recovers anything above the variable cost of the product. The contribution above the variable cost contributes to paying for the fixed costs (in LANL's case, that is overhead). In the short run, any contribution above the variable cost offsets the fixed costs, it need not be full cost recovery. In other words, if a WFO project were to cover all direct costs (variable) and only contribute half of fully allocated burden to the fixed overhead, it would be successful. Ie, Land two of these projects and they contributed the Lab's fixed overhead burden as if one of them was full-cost recovery.

In the long-run, total revenue must cover variable and fixed costs for an organization to succeed. But this doesn't apply at LANL since the full fixed costs are almost fully covered by DOE funding. The surprize is that DOE isn't smart enough insist that LANL aggressivly develop some offsets to the fixed costs by encouraging WFO products at lower than full-cost recovery rates for every product. This is truly baffling.

***Each burden $ above the variable cost contributed by a WFO funded effort frees that same saved dollar to pay for a DOE deliverable!*** Yet they don't do it?

The key marketing element is to anticipate (by pricing experiments if necessary) where pricing above the variable cost should be to generate the greatest total contibution to fixed cost.

Too bad we are hamstrung by irrational full-cost recovery rules written ill-educated dolts in Forrestal. Wish somebody would have stayed awake in Econ 1.

Here is a public challenge to Forrestal. Is there one decent accountant in the whole damn building? Make lie of this discussion.

Anonymous said...

"... none of which will suffer from LANL's peculiar dysfunctional quirks and astronomical FTE costs..."

Nonsense. If you need a brain surgery team, you pay for team of brain surgeons.

If you need a nurse, pay for a nurse, but do not call her a brain surgery team.

The core mission of the Labs is not about BS-engineers doing some neat industrial stuff.

Anonymous said...

5:54

Excellent post, however an observation...

"In the long-run, total revenue must cover variable and fixed costs for an organization to succeed. But this doesn't apply at LANL since the full fixed costs are almost fully covered by DOE funding."

DOE believes WFO can offset their fixed costs. This is most evident in security, with the so-called WN05 account, which is a security tax on WFO, and is calculated together with NA-70 direct funding when looking at a site's total security budget.

Anonymous said...

"If you need a brain surgery team, you pay for team of brain surgeons."

When you get right down to it, you can more than likely buy an excellent team of brain surgeons elsewhere for much less than at LANL.

Anonymous said...

5:54 pm, you made a fatal flaw early on in your discourse - we are NOT dealing with a competitive market place, we are dealing with a political one and not much of a market place at that.

Anonymous said...

"The core mission of the Labs is not about BS-engineers doing some neat industrial stuff." (6:07 PM)

No, but I'll take a good MS-level engineer or scientist doing neat and *useful* stuff any day of the year over prima-donna "pure" scientists who offers no real value to society or to the nation.

Anonymous said...

So why, exactly, was it required that the Lab be managed by a LLC that includes a university?

Surely there was a reason for requiring that? My guess is so that the interests of science would be preserved.

But it looks like the only interest LANS has in the Lab is pure profiteering.

Why bother having the University as part of the deal?

Anonymous said...

" Anonymous said...
"The core mission of the Labs is not about BS-engineers doing some neat industrial stuff." (6:07 PM)

No, but I'll take a good MS-level engineer or scientist doing neat and *useful* stuff any day of the year over prima-donna "pure"
scientists who offers no real value to society or to the nation.

12/29/07 8:02 PM"

Both of these statments are pure bs. Please do not be trolls. Society does need
pure scientists and it does need engineers. A strong lab will have both and other things inbetween. You guys really need to grow up.

Anonymous said...

9:56 AM... There was no requirement in the RFP for either an LLC or an LLC with a University as a member. The RFP only required in H-23 that

"The work performed under this Contract by the Contractor shall be conducted by a separate corporate entity from its Parent Organization(s). The separate corporate entity must be set up solely to perform this Contract and shall be totally responsible for all Contract activities."

It was UC that went the LLC route as stated in the guide prepared by UC Legal for the Academic Council in August 07;

"...the University sought to combine its capabilities as a major public research institution with the expertise of its partner organizations in managing functional areas in operations and administration, notably security, safety, business services, project management, and nuclear facility management. The LLC structure was chosen as the form of legal entity for the two partnerships because it was deemed to offer the most flexibility in the organization and governance of the partnerships, and also because it proved to be particularly conducive to establishing a partnership between the University, as a public institution and an instrumentality of the state of California, and its three commercial partners."

UC could have set up a solely UC owned corporation to run the labs, but would have still been directly liable for issues/problems at the labs.

Instead the LANS/LLNS LLC structure is very similar to a concept VP Foley floated in front of the Regents a few years ago, where a Board of Governors would be set up to oversee the Labs - the Regents didn't like the idea of losing control of the Labs while still having the legal responsibility as the signers of the contracts. I was listening to the Regents meeting on the web, and they tore into Foley. He dropped the concept until the RFP gave him an opening.

An LLC, with the University as a partner, allowed the UC Regents to distance themselves and UC from the labs, limit UC's liabilities, but still allow UC to have some relationship with the science/research done in the labs.

Anonymous said...

The LLC brought astronomical costs in the form of NM Gross Receipts Taxes that could have been avoided under a UC-owned non-profit. Add the GRT to the obscene management fee, increased pension costs, and additional layers of management and the LLC (LANS) has added more than enough costs to sink the LANL WFO ship.

Sandia has been touted as a success in marketing WFO but from my experience running multi-lab programs, they have been successful for one primary reason; Sandia is cheaper than LANL. They don't have any advantage in their personnel vs. LANL's, it's just that the overhead burden on LANL staff is gigantic - LANL burdens WFO to help pay fixed costs associated with LANL's expensive nuclear facilities and LANL also subsidizes big science (LANSCE). As fixed costs increased under LANS, WFO costs also soared -making it more and more attractive for WFO sponsors to contract with lower cost laboratories like Sandia and PNNL.

5:54 PM is spot-on, LANL could compete for WFO better if a separate cost accounting structure could be instituted to encourage WFO but LANS won't make the needed accounting changes simply because they earn their obscene fee whether or not they run LANL's WFO into the ground - LANS managers don't see past their bonuses and their bonuses aren't tied to building WFO in any substantial way.

Anonymous said...

Somewhere in California is a senile 83 year old man who is laughing his head off about how he "stuck it" to the labs.

UCOP's Adm. Bob Foley and his Navy ring-knocker buddies (Linton Brooks, Tom D'Agostino, Pete Nanos, etc.) have helped bring about changes that will result in the conversion of LLNL and LANL into little more than glorified production sites.

Anonymous said...

Let's see if I get this right. Weapon budgets are being cut, but don't bother to try and find a way out by taking on the task of bringing in WFO projects because neither NNSA nor LANS really want to let you do it. They'll sabotage your effort through high costs and stifling bureaucracy.

It sort of reminds me of an evil mouse experiment. If the mouse take the left passage, shock him. If the mouse takes the right passage, shock him even harder.

Pretty soon the mouse will start shaking in fear and be completely incapacitated. At that point, you can throw him in the electric blender and complete the evil experiment. You'll find that the poor mouse's cortisol levels should measure off the charts.

Pinky and The Brain said...

I'm guessing you weren't a mousekateer.

Anonymous said...

An important part was left out of the mouse experiment.

Make sure that the mazes are made of clear Plexiglas so that mice 'A' can look through the evil maze at a nearby cage. There they will see special executive mice, 'B', all being feed rich food on demand and not being force through any mazes to reach a reward. The cortisol level of mice 'B' will be very low. However, unlike mice 'A', the special executive mice in cage 'B' will never be placed into the electric blender at the end of the experiment.

Finally, another class of mice, call them 'C', will be subjected to the evil maze but will decide to simply jump over the walls and escape. Those mice will live a happy life as long as they are smart enough to stay away from cats and mouse traps. If they were smart enough to escape the evil maze, they'll probably do just fine.

Anonymous said...

But what do the really smart mice do?

Same thing as everyday... try to take over the world.

Anonymous said...

A few comments:
The reason for the LLC is to shield UC, Bechtel, etc. from real liability on Price-Anderson, etc. Every year the management fee gets paid and then the LLC's owners (UC et al) extract that money leaving the LLC with no assets. So, in the event that we screw up and leave a big hole in the ground, UC, Bechtel, etc are shielded from liability. So, while the DOE can claim that the limited liability that was provided to the UC under the old contract has been eliminated, the fact is that the LLC is basically judgement proof. So, what did the DOE get for the extra $200M in costs?

As far as WFO, LANL is screwed until something is done about the labor rates. The bloated management structure has got to be fixed. And, the nuclear weapons program has got to start paying its true share of the safety and security costs.

However, given that so much of the talent that could be applied to WFO has departed, it may already be too late.

Anonymous said...

4:59 is exactly correct with the clarification that the total cost of LANS to the LANL budget isn't $200M, it's greater than $1B over the 7 year LANS contract. LANS will cost taxpayers over ONE BILLION dollars in nonproductive costs over the UC's previous cost of running LANL.

Congress needs to hold Bodman and D'Agostino accountable for this astounding waste of Federal funding, so astounding that it perhaps rises to the level of criminal malfeasance. Are you listening, Rep. Udall? This is your chance to stand up for your district; ask the GAO to investigate!

Anonymous said...

Future Senator Tom Udall won't be investigating anything. He'll watch the lab budgets go down, perhaps helping them move downward with his votes, and then exclaim,

"Oh, wow! I told LANS they needed to diversify the lab. None of this financial disaster is my fault!"

Don't kid yourself. We're going to soon realize just how vital St. Pete was to the well-being of Los Alamos County and all of Northern New Mexico. His loss is going to be a real shocker when the concrete reality of his leaving the Senate finally hits next year.