REVIEW OF THE UNIVERSITY OF CALIFORNIA’S MANAGEMENT CONTRACT FOR LOS ALAMOS NATIONAL LABORATORY HEARING BEFORE THE SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS FIRST SESSION MAY 1, 2003 Serial No. 108–14 Printed for the use of the Committee on Energy and Commerce ( Available via the World Wide Web: http://www.access.gpo.gov/congress/house VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00001 Fmt 6011 Sfmt 6011 87736.TXT HCOM1 PsN: HCOM1 VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00002 Fmt 6011 Sfmt 6011 87736.TXT HCOM1 PsN: HCOM1 REVIEW OF THE UNIVERSITY OF CALIFORNIA’S MANAGEMENT CONTRACT FOR LOS ALAMOS NATIONAL LABORATORY VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00003 Fmt 6019 Sfmt 6019 87736.TXT HCOM1 PsN: HCOM1 VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00004 Fmt 6019 Sfmt 6019 87736.TXT HCOM1 PsN: HCOM1 REVIEW OF THE UNIVERSITY OF CALIFORNIA’S MANAGEMENT CONTRACT FOR LOS ALAMOS NATIONAL LABORATORY HEARING BEFORE THE SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS FIRST SESSION MAY 1, 2003 Serial No. 108–14 Printed for the use of the Committee on Energy and Commerce ( Available via the World Wide Web: http://www.access.gpo.gov/congress/house U.S. GOVERNMENT PRINTING OFFICE 87–736PDF WASHINGTON : 2003 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00005 Fmt 5011 Sfmt 5011 87736.TXT HCOM1 PsN: HCOM1 COMMITTEE ON ENERGY AND COMMERCE W.J. ‘‘BILLY’’ TAUZIN, Louisiana, Chairman MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan JOE BARTON, Texas Ranking Member FRED UPTON, Michigan HENRY A. WAXMAN, California CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts PAUL E. GILLMOR, Ohio RALPH M. HALL, Texas JAMES C. GREENWOOD, Pennsylvania RICK BOUCHER, Virginia CHRISTOPHER COX, California EDOLPHUS TOWNS, New York NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey RICHARD BURR, North Carolina SHERROD BROWN, Ohio Vice Chairman BART GORDON, Tennessee ED WHITFIELD, Kentucky PETER DEUTSCH, Florida CHARLIE NORWOOD, Georgia BOBBY L. RUSH, Illinois BARBARA CUBIN, Wyoming ANNA G. ESHOO, California JOHN SHIMKUS, Illinois BART STUPAK, Michigan HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland CHARLES W. ‘‘CHIP’’ PICKERING, GENE GREEN, Texas Mississippi KAREN MCCARTHY, Missouri VITO FOSSELLA, New York TED STRICKLAND, Ohio ROY BLUNT, Missouri DIANA DEGETTE, Colorado STEVE BUYER, Indiana LOIS CAPPS, California GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine MARY BONO, California JIM DAVIS, Florida GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois LEE TERRY, Nebraska HILDA L. SOLIS, California ERNIE FLETCHER, Kentucky MIKE FERGUSON, New Jersey MIKE ROGERS, Michigan DARRELL E. ISSA, California C.L. ‘‘BUTCH’’ OTTER, Idaho DAN R. BROUILLETTE, Staff Director JAMES D. BARNETTE, General Counsel REID P.F. STUNTZ, Minority Staff Director and Chief Counsel SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS JAMES C. GREENWOOD, Pennsylvania, Chairman MICHAEL BILIRAKIS, Florida PETER DEUTSCH, Florida CLIFF STEARNS, Florida Ranking Member RICHARD BURR, North Carolina DIANA DEGETTE, Colorado CHARLES F. BASS, New Hampshire JIM DAVIS, Florida GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois Vice Chairman HENRY A. WAXMAN, California MIKE FERGUSON, New Jersey BOBBY L. RUSH, Illinois MIKE ROGERS, Michigan JOHN D. DINGELL, Michigan, W.J. ‘‘BILLY’’ TAUZIN, Louisiana (Ex Officio) (Ex Officio) (II) 2 VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00006 Fmt 0486 Sfmt 0486 87736.TXT HCOM1 PsN: HCOM1 C O N T E N T S Page Testimony of: Atkinson, Richard C., President, University of California ............................ 60 Brooks, Hon. Linton F., Under Secretary for Nuclear Security and Acting Administrator for Nuclear Security, National Nuclear Security Admin- istration, U.S. Department of Energy ......................................................... 9 Darling, Bruce B., Senior Vice President, University Affairs, Interim Vice President for Laboratory Management, University of California; Accompanied by Anne Broome, Vice President for Financial Manage- ment, University of California; and Patrick Reed, University Auditor, University of California ................................................................................ 64 Friedman, Gregory H., Inspector General, U.S. Department of Energy ...... 43 McSlarrow, Hon. Kyle E., Deputy Secretary of Energy, U.S. Department of Energy ....................................................................................................... 8 (III) VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00007 Fmt 0486 Sfmt 0486 87736.TXT HCOM1 PsN: HCOM1 VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00008 Fmt 0486 Sfmt 0486 87736.TXT HCOM1 PsN: HCOM1 REVIEW OF THE UNIVERSITY OF CALIFOR- NIA’S MANAGEMENT CONTRACT FOR LOS ALAMOS NATIONAL LABORATORY THURSDAY, MAY 1, 2003 HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, Washington, DC. The subcommittee met, pursuant to notice, at 9:40 a.m., in room 2123, Rayburn House Office Building, Hon. James C. Greenwood (chairman) presiding. Members present: Representatives Greenwood, Walden, Tauzin (ex officio), Deutsch, and Schakowsky. Also present: Representatives Radanovich, Markey, Eshoo, Stu- pak, and Udall. Staff present: Ann Washington, majority counsel; Michael Geffroy, majority counsel; Yong Choe, legislative clerk; and Edith Holleman, minority counsel. Mr. GREENWOOD. Good morning. This hearing of the Oversight and Investigations Subcommittee of the House Energy and Com- merce Committee will come to order. We welcome our witnesses and our guests, and the Chair recognizes himself for the purpose of an opening statement. The subcommittee meets today for the third time this year to hear testimony related to the management situation at Los Alamos National Laboratory. Currently operated by the University of Cali- fornia, the lab is one of the Nation’s premiere research facilities on matters critical to our safety and security. Yet, as we have learned in the course of our investigation, the lab has also been a premiere site of serious property mismanagement and even theft. Our February and March hearings concentrated on concerns raised by current and former lab employees about lab procurement and property management systems. I believe the issues identified at those hearings as well as the continued diligence of this com- mittee prompted the unprecedented Department of Energy an- nouncement yesterday that forms the backdrop to this hearing. The DOE announced its decision to put the Los Alamos contract up for competition for the first time in the lab’s 60-year history. This deci- sion is long overdue and one that members of this committee on a bipartisan basis have been calling for for many years. The University of California has operated Los Alamos under con- tract with DOE since 1943. At no time during its long reign as op- erator of the facility has UC ever been faced with the possibility (1) VerDate 11-MAY-2000 08:33 Jul 25, 2003 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 87736.TXT HCOM1 PsN: HCOM1 2 of having to compete for this privilege. Given the length of time UC operated without the threat of competition, it appears that it has been lulled into a state of irresponsible complacency. Let me add that progress has been made to improve the situa- tion. The university has become much more involved in the daily operations of the lab in the past 6 months, and I am pleased with some of its efforts to get lab management back on track by replac- ing much of the senior staff, but it remains to be seen if those ef- forts will effect any meaningful change at the lab. We heard at our last hearing from Joe Salgado, the former prin- cipal deputy director of the lab, who said that Federal money was treated like monopoly money, which is hardly a description of the kind of fiduciary responsibility expected and required of DOE con- tractors. The lab argues that the amount of identified abuse of Federal money is just a drop in the bucket when compared to the lab’s budget as a whole, and that perhaps is why the abuses have not garnered the required attention. I appreciate the point, but this multibillion dollar facility is operated on taxpayers’ money, and as a steward of that money for the American public I am not com- fortable with that explanation. As I have said before, when this same lab is responsible for safeguarding not only taxpayer money but the Nation’s most sensitive nuclear secrets there is little room for error. So I salute the Department’s decision to compete this contract, to identify the best administrator for the lab. These are steps that the prior administration and prior secretaries have been too afraid to take, even in the face of repeated scandal and repeated promises of reform. In the testimony today we will hear from both the De- partment and the university on factors associated with this deci- sion and exactly what will be sought in the competitive process. On our first panel we will hear from Deputy Secretary of Energy Kyle McSlarrow and Ambassador Linton Brooks of the National Nuclear Security Administration. These gentlemen have been in- volved in the decision to compete the contract, and they will ex- plain their rationale for their decision. I look forward to their testi- mony and to learning how DOE will improve its own oversight of UC or its successor. Next we will hear from the DOE Inspector General, the Honor- able Greg Friedman.