 "Photo: LeRoy N. Sanchez")
A Ford Mustang bought on a government credit card. Federal funds being used like "Monopoly money." And a scientist secretly spying for the Chinese government. These, and other allegations of financial improprieties and security concerns that surfaced at the Los Alamos National Laboratory during the last five years, have triggered investigations by the U.S. Congress, the F.B.I. and the Department of Energy.
Blame ultimately fell on the University of California System, which manages the lab for the DOE. The UC System was harshly criticized for poor management that led to security breaches, stolen property and employee abuse of credit card privileges. As a result, two top Los Alamos officials were forced to resign in 2003.
The management shakeup isn't over yet.
Last year, the DOE decided to open up management of the lab to competitive bidding for the first time in the lab's 60-year history when the UC System's contract runs out in 2005. The UT System has expressed keen interest in becoming the next manager of the scandal-ridden Los Alamos.
"It enhances our reputation and visibility nationwide," said Special Advisor to the Chancellor Dan Burck at a press conference in February. Burck is also head of a task force charged with examining a possible Los Alamos bid.
"At this point, we recognize that the Department of Energy and Congress have called for competition, and we continue to prepare as if we will compete," said Chris Harrington, a spokesperson for the UC System.
The UC System began managing Los Alamos during World War II when scientists at the lab began researching nuclear weapons. Los Alamos was thrust into the spotlight when the war ended, and it was revealed scientists there were responsible for creating the first atomic bomb and the two atomic bombs dropped on Japan.
The UC System also manages two national labs in Northern California: Lawrence Livermore and Lawrence Berkeley.
'Intense scrutiny'
Los Alamos still devotes most of its resources to nuclear weapons research and maintenance, and much of this research is classified, said James Rickman, a spokesperson for Los Alamos.
The lab remained scandal-free well into the 1980s, but in the 1990s allegations of security leaks and safety concerns surfaced. The scandals reached a climax when two whistleblowers were fired from the labs in November 2002 when they revealed information about employees using government credit cards for personal purchases and other abuses of lab funds.
The two whistleblowers, Glenn Walp and Steven Doran, were originally hired to stop further scandals from happening after the Wen Ho Lee case in 1999. Lee was a physicist at Los Alamos who was accused of giving sensitive nuclear information to China, but was later exonerated.
The case brought to light problems in security at Los Alamos that were blamed on UC System management.
Almost immediately Walp and Doran, former police officers, were notified about possible problems with employees stealing government property, such as printers, radios and cameras, and were asked to investigate. Additionally, Walp and Doran reported employees using government credit cards to purchase personal items.
After Walp and Doran presented the information to their superiors at Los Alamos and suggested they work with the FBI, they were fired.
"Doran and I were consistently warned that our major job was not inquiry into crime but rather protection of the lab, its image and ultimately the UC contract," Walp said in a congressional hearing.
But when the two took the information about employees abusing lab funds to the F.B.I. and Congress and the DOE became involved, the UC System re-hired them as consultants.
Harrington said UC System officials "instantly began meeting with these two individuals" after the extent of their allegations became known.
The allegations ranged from a Los Alamos employee who tried to purchase a Ford Mustang on a government credit card to smaller personal items purchased with government money, such as expensive knives and camping gear. Questions also arose regarding missing equipment and a "badge" system allowing employees to bill purchases at local stores to Los Alamos.
Jim Fallin, public affairs director for Los Alamos, said employee theft and credit card accusations were "overblown."
"We now know, having lived through intense scrutiny from just about every level of governance, that most everything people have heard and read about were just that: allegations," Fallin said.
Fallin said it was a mistake to fire Walp and Doran and added that Los Alamos has now determined that a lot of their initial allegations were untrue, including the attempt to purchase a Mustang.
"There was no widespread abuse of government money," Fallin said. "When questions first arose, people chose to run with those stories, and the lab was largely silent, because we did not have a business system in place that would allow us to engage those asking questions. That is no longer the case."
It took many months to figure out which allegations were true and which were false, and Fallin said in the end two individuals working at Los Alamos were fired for abusing federal funds. He said the individuals made questionable purchases amounting to about $380,000. After they were fired, Fallin said, items they purchased were put back into the labs to be used appropriately.
"The facts used to fire those individuals were subsequently turned over to law enforcement," Fallin said. He said no criminal charges were filed.
A recent inventory accounted for 99.7 percent of all purchases, Fallin said.
"I think that stands in stark contrast to the lab that couldn't account for things," he said.
But one thing that hasn't changed is the accounting system Walp called ineffective because it could allow employees to get away with purchasing large amounts of inexpensive items with federal funds.
Los Alamos only tracks items that cost more than $5,000 to purchase or construct, unless the item might contain sensitive or classified information, said Linn Tytler, a Los Alamos spokeswoman. The accounting process could allow items costing less than $5,000 to be purchased without being checked by accounting.
"You'll find in most extremely large organizations you don't keep proper inventory of every pen and pencil," Fallin said.
Losing Los Alamos?
Despite action taken by UC System officials in 2003 to salvage their tarnished reputation, such as bringing in new management and personnel, the DOE announced in May they would open the lab management contract up for competitive bidding in 2005.
Afterward, former UC System President Robert Atkinson said during a congressional hearing that he wasn't sure the UC System would compete for the contract, despite their interest in keeping it.
Atkinson also said the National Nuclear Security Administration, which oversees the labs under the DOE, is responsible for some of the oversight problems.
"Originally, no one knew whether they were going to compete or not. We would have liked to continue to put in place aggressive changes in business and management practices," Harring-ton said. Undoubtedly, losing the lab would deliver a significant blow to the UC System's reputation, but when asked about the threat of losing the lab, Harrington said he didn't want to "talk about hypotheticals."
According to Los Alamos officials, the budget for Los Alamos is about $2 billion a year. The UC System receives some money from the federal government and is reimbursed for all operational costs. UC System officials have said they don't make a profit from the labs and even lose money because of tuition benefits they offer lab employees.
"As far as I can see, the University of California doesn't make a profit from running the labs," said Hugh Gusterson, a visiting professor at the Georgia Institute of Technology and author of two books on nuclear laboratories. "It is one of the great mysteries of my research. They get nothing but grief from it."
Gusterson said he suspects the prestige Los Alamos brings to the UC System might be a strong motivation to run the lab.
"By managing the labs, they become players in the national and international scene," he said.
UC System officials maintain it also provides research opportunities for their students, and this is a reason often cited by UT System officials for their desire to bid on the management contract.
"As far as benefits to the UT System, it enhances our teaching and research for the faculty and provides unique educational opportunities for students," said Burck, former UT chancellor, at a press conference in February.
The argument the bid will further research opportunities put forth by the UC and UT Systems is unconvincing, said Gusterson.
"There is very little evidence of it," he said.
Gusterson said when he worked at MIT, although they had no formal relationship with Los Alamos, students there had plenty of opportunities to work at the lab.
Revisions
Looking forward to a year at Los Alamos likely to be consumed by an intense tug-of-war over management, lab officials are defensive of the UC System's work.
"There have been sweeping and lasting revisions made to just about every facet of our business and operational management schemes," Fallin said.
UC System officials appear to be unconcerned about competition the UT System might bring to the table.
"We will have a strong, effective, winning bid in place," Harrington said.
In the aftermath of management scandals, UC System officials have set out to prove they deserve to keep the contract. Los Alamos managers recently reorganized the entire purchase card office and system, created a new chief financial officer position and are close to finishing a "laundry list" of more than 700 business improvement suggestions.
Even Greg Mello, director of Los Alamos Study Group, a pro-disarmament Los Alamos watchdog group, said he would rather see management in the UC System's hands.
"Right now, I prefer for UC to keep the contract, because a new contractor would get a grace period, a kind of honeymoon," Mello said. "During that time a lot of bad things could happen."
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