SAN FRANCISCO
Regents vote to make a bid for Los Alamos
Northrop Grumman drops out, leaving field to UC and Texas

Keay Davidson, Chronicle Science Writer

Friday, May 27, 2005

Richard Blum (left), Gerald Parsky, UC President Robert C...

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The University of California Regents voted 11-1 Thursday to join the competition for the next contract to run Los Alamos National Laboratory in New Mexico, the nation's first atomic weapons lab.

"We're off and running!" S. Robert Foley, UC's vice president of laboratory administration, told The Chronicle after the midday vote at the regents meeting at UCSF's Laurel Heights campus.

A surprise decision Thursday from would-be bidder Northrop Grumman not to pursue the contract shrank the field from a three-way fight to a two-way battle between goliaths. Northrop Grumman's exit leaves UC with just one competitor, and it's an intimidating one: a joint team from Lockheed Martin and the giant University of Texas system.

The outcome of the competition will determine whether UC -- which has run the Los Alamos complex since World War II under contract to the federal government, until now without competition -- will relinquish control of the lab after several years of security, safety and financial scandals.

Thursday's vote authorizes UC officials to work with three previously announced collaborators, including Bechtel National, the division of Bechtel Corp. that carries out the firm's U.S. government contracts, in competing for the next Los Alamos contract. The contract bid is due at the U.S. Energy Department on July 19, and the winner is scheduled for selection about Dec. 1.

Northrop Grumman gave no specific reason to explain why it dropped out of the competition, but a spokeswoman implied that company officials had reviewed the U.S. Energy Department's final specifications and concluded they weren't sufficiently attractive.

"Based upon its evaluation of the Los Alamos National Laboratory request for proposal, Northrop Grumman Corp. (NOC) has decided not to pursue the contract," the firm said in a statement. "The company continues to be committed to helping the U.S. Department of Energy achieve its overall objectives, but has determined that it can best provide that support through other key programs."

Northrop Grumman's unexpected departure was "a business decision," Juli Ballesteros, spokeswoman for the Los Angeles-based firm, said in a short phone interview.

The remaining partnership bidding for the contract is a daunting foe for UC. Lockheed Martin is a legendary aerospace titan that has been long respected for its management of another nuclear weapons lab, Sandia National Laboratories in New Mexico, and that has many friends and lobbyists inside the Washington Beltway.

As for Texas, its university system is well respected in some areas of the sciences and engineering -- and the state's political clout is enhanced by President Bush's presence in the White House.

But, UC's Foley stressed, "We have a strong team" for developing the proposal.

In recent months some UC backers, including Sen. Pete Domenici, R-N.M., have insinuated that the Department of Energy was writing the bid specifications in ways that would harm UC's chances of winning. The final specifications were issued May 19.

Among the more controversial specifications is one that, some UC backers charge, would undermine pension plans for some Los Alamos staffers, possibly making lab jobs less attractive to new employees.

By contrast, one attractive specification offers a maximum annual reimbursement cap of $79 million, 10 times higher than UC's typical annual fee for managing the lab in recent years.

But at a press conference Wednesday, UC President Robert C. Dynes refused to reveal how the $79 million would be split among UC and its three partners. A Bechtel official also declined to provide details.

The current Los Alamos contract is held by UC and expires in September. UC officials expect that the U.S. Energy Department, however, will extend UC's present contract until sometime in 2006, to provide a smooth transitional period should a new contractor be named in December.

In contrast to a tumultuous meeting Wednesday, which was disrupted twice by student protests and police action, the regents raced through the vote Thursday with minimal comment and unusual speed, dispensing with the issue in only a few minutes.

Before the vote, the sole extended comments were by Regent Richard Blum and regents general counsel James Holst. Both briefly commented on the student protesters' charge Wednesday that Blum has a conflict of interest in voting on Los Alamos matters.

Blum is chair and vice chair, respectively, of the two regents committees that voted Wednesday to recommend that UC join the competition. Those are the finance committee and the "oversight of Department of Energy laboratories" committee.

That creates a conflict of interest, protesters said Wednesday, because Blum is vice chair of the board of directors of URS Corp. of San Francisco, which, they said, stands to earn $25 million a year as part of a five-year Los Alamos contract.

On Thursday, Blum said, "I didn't even know about this contract," which was a tiny part of URS' income.

"It would please me if they (URS) weren't there (at Los Alamos), but I'm not going to tell them what to do," Blum said.

Holst told the regents that in his legal opinion, Blum faced no conflict of interest in voting. Blum "had no role in the award of the contract to URS" and, thus, "does not have a disqualifying financial interest," Holst explained.

Moments later, Blum and all but one of the regents present voted yes.

Thursday's sole nay vote was cast by Regent Gary D. Novack, vice president of the Alumni Associations of UC.

He said he worries that "continuing our relationship with the Los Alamos National Laboratory may defocus UC from its primary mission of teaching, research and service to the people of California."

Only one of the students who protested Wednesday returned for Thursday's meeting -- Will Parrish, a sociology and journalism major who graduated from UC Santa Cruz in 2004. He was upset by the regents' speed in racing through the vote as if they were trying to get unpleasant business out of the way.

"The manner in which this issue was finally decided is representative of the disappointing attitude the regents have toward the students," Parrish said afterward. "These people fundamentally don't have the educational mission of the UC in mind."