[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
    A REVIEW OF ONGOING MANAGEMENT CONCERNS AT LOS ALAMOS NATIONAL 
                               LABORATORY

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 5, 2005

                               __________

                           Serial No. 109-45

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

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                    ------------------------------  
                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida             Ranking Member
  Vice Chairman                      HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman           GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee

                      Bud Albright, Staff Director

        David Cavicke, Deputy Staff Director and General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

              Subcommittee on Oversight and Investigations

                    ED WHITFIELD, Kentucky, Chairman

CLIFF STEARNS, Florida               BART STUPAK, Michigan
CHARLES W. ``CHIP'' PICKERING,         Ranking Member
Mississippi                          DIANA DeGETTE, Colorado
CHARLES F. BASS, New Hampshire       JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  JAY INSLEE, Washington
MIKE FERGUSON, New Jersey            TAMMY BALDWIN, Wisconsin
MICHAEL C. BURGESS, Texas            HENRY A. WAXMAN, California
MARSHA BLACKBURN, Tennessee          JOHN D. DINGELL, Michigan,
JOE BARTON, Texas,                     (Ex Officio)
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Eggenberger, A.J., Acting Chairman, Defense Nuclear 
      Facilities Safety Board....................................    18
    Friedman, Gregory H., Inspector General, Department of Energy    13
    Kilpatrick, Michael, Director of Independent Oversight, 
      Office of Security and Safety Performance Assurance, 
      Department of Energy.......................................    23
    Paul, Jerry, Principal Deputy Administrator, National Nuclear 
      Security Administration, accompanied by Edwin Wilmot, 
      Manager, Los Alamos Site Office, National Nuclear Security 
      Administration.............................................     7

                                 (iii)

  


    A REVIEW OF ONGOING MANAGEMENT CONCERNS AT LOS ALAMOS NATIONAL 
                               LABORATORY

                              ----------                              


                         THURSDAY, MAY 5, 2005

                  House of Representatives,
                  Committee on Energy and Commerce,
              Subcommittee on Oversight and Investigations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:12 p.m., in 
room 2322, Rayburn House Office Building, Hon. Ed Whitfield 
(chairman) presiding.
    Members present: Representatives Whitfield, Walden, 
Burgess, Stupak, DeGette and Inslee.
    Staff present: Mark Paoletta, chief counsel; Thomas Feddo, 
majority counsel; Chad Grant, staff assistant; Dwight Cates, 
majority professional staff member; Chris Knauer, minority 
investigator; Edith Holleman, minority counsel; and Turney 
Hall, minority staff assistant.
    Mr. Whitfield. At this time, I will formally call the 
meeting to order.
    Today's subject of this hearing is A Review of Ongoing 
Management Concerns At Los Alamos National Laboratory. I will 
begin with an opening statement, and then we will do the 
opening statements, and then we will be introducing the panel. 
We only have one panel today. Originally we had two, but we 
combined them into one.
    I am going to submit my entire opening statement for the 
record, but I just want to briefly touch on a few points.
    First of all, we had the shutdown of Los Alamos back in 
July 2004 because of the classified removable electronic 
material issue. In addition to that, we had the injury to the 
intern because of a laser mishap. We have had several plutonium 
exposures, the most recent one back in March. We have had 
contract mismanagement. We have had the security--the TA-18 
issue about moving the material out of Los Alamos out to 
Nevada. Bill Richardson was the Secretary of Energy at the time 
that commitment was first made, and we still have not made much 
progress on that. We have had research program delay as a 
result of the shutdown. We have had a culture of noncompliance 
at Los Alamos for some time.
    And I would just like to make the comment that, even though 
it is the first time this has occurred, I am delighted that the 
Department of Energy is issuing a new RFP for the management of 
this facility, because it is quite apparent that there are 
significant issues with the management at Los Alamos.
    I am really looking forward to the testimony today. We will 
be having another hearing after this one in which the 
University of California will be testifying as well as some 
whistle-blowers. But I do want to thank you for being here, and 
I would once again say I am sorry for the brief delay that we 
had because of the votes on the floor.
    [The prepared statement of Hon. Ed Whitfield follows:]

  Prepared Statement of Hon. Ed Whitfield, Chairman, Subcommittee on 
                      Oversight and Investigations

    This hearing will come to order. Today the Subcommittee will review 
ongoing management concerns at the Los Alamos National Laboratory. Over 
the years, this Subcommittee has held numerous hearings to review 
safety, security, and procurement management problems at Los Alamos. In 
2003, we held three hearings to review major procurement fraud and 
incidents of outright theft of government property at the Laboratory. 
These serious problems, like so many other problems at Los Alamos, were 
discovered by hard-working and honest employees at the lab who later 
suffered acts of retaliation from managers that did not want the truth 
to see the light of day.
    At another Subcommittee hearing in May of 2000, Mr. Joe Gutierrez, 
an employee in the audits division at Los Alamos, testified regarding 
acts of retaliation he suffered for revealing that the Lab was not in 
compliance with the Clean Air Act. The Department of Labor determined 
his whistleblower claims were real, and this decision was upheld 
numerous times, in spite of several appeals from the team of defense 
lawyers hired by the University of California.
    Over the years, the Subcommittee has struggled to understand the 
apparent culture of disregard for rules and procedures at Los Alamos. 
Just last month, Los Alamos Director Pete Nanos testified at our 
nuclear facility security hearing regarding his decision to shut down 
the Laboratory after several safety and security incidents in the 
Summer of 2004. In his testimony, Director Nanos referred to ``clear 
signs of a behavioral problem'' among some employees at the laboratory 
who demonstrated a ``disregard for basic safety and security rules.''
    If you review our extensive hearing record on Los Alamos, you will 
find numerous examples that support this conclusion. At today's 
hearing, we will review several additional findings that demonstrate a 
similar disregard for the rules, for instance:

 A February 2005 report from DOE Inspector General Gregory Friedman--
        who will testify on our first panel--found that DOE will not 
        meet its commitments for removing transuranic wastes from Los 
        Alamos because the laboratory ``had not consistently followed 
        approved waste processing procedures.''
 Another February 2005 audit report of the DOE Inspector General found 
        that ``LANL out-processing procedures were not followed by 40 
        percent of the 305 employees included in our sample.'' Thus, 
        there were no assurances that security badges for these 
        employees were turned in, or that classified documents in the 
        possession of these employees were accounted for after they 
        left.
 And just a few weeks ago last March, several employees were exposed 
        to plutonium while working in a confined tank vault. According 
        to an investigation report, these workers were unnecessarily 
        exposed to plutonium because safety technicians failed to 
        analyze the radiation hazard, and failed to implement controls 
        for the hazards they did identify.
    In spite of these recent problems, I do believe that Director Nanos 
has finally gotten the attention of every employee at Los Alamos. 
During the six-month stand-down, the lab conducted a valuable self-
assessment that identified almost 4,000 issues that need to be 
corrected. The purpose of this hearing is to determine whether the 
University of California can finally tackle the problems identified in 
the self-assessment, and turn the tide on the culture of mismanagement 
at Los Alamos.
    However, I am concerned that the laboratory may not maintain the 
momentum necessary to implement the corrective actions that were just 
developed. An even greater risk is that whistleblowers that continue to 
identify problems at the lab will continue to be retaliated against for 
their efforts to correct the culture of mismanagement.
    I look forward to the testimony from today's witnesses. I plan to 
hold a second hearing on these matters in the near future to get the 
views of the University of California as well as several whistleblowers 
from the laboratory.

    Mr. Whitfield. At this time, I would recognize the ranking 
member, Mr. Stupak of Michigan, for his opening statement.
    Mr. Stupak. Thank you, Mr. Chairman.
    Last summer, after decades of internal and external 
reports, congressional investigations and hearings, volumes of 
recommendations for changing the culture and corrective action 
plans that were often not implemented, the director of Los 
Alamos National Laboratory shut the lab down due to a massive 
review and upgrade of safety, security and other processes at 
the lab. The final straw leading to the shutdown was a 
laboratory accident in July involving improper use of a laser 
beam which permanently injured the eye of a graduate student 
working at the laboratory.
    Some of us on this committee which has been overseeing the 
lab for more than 2 decades said it was about time. But this 
action was extremely controversial within the laboratory 
community.
    A group of scientists started a blog in which they rallied 
against Pete Nanos, the current director, for destroying the 
laboratory and complained about retaliation. The blog 
culminated in a petition in February, which I have placed in 
the record, demanding the removal of Mr. Nanos by the 
University of California. Some of the more thoughtful comments, 
however, pointed out that the long-term problems at the 
laboratory are both poor management and bad science and the 
lab's long history of retaliating against anyone who pointed 
out problems. The blog--this one e-mail said: Try to remember, 
one person wrote, Nanos is not the problem. He is our 
punishment. End of quote.
    On January 31, the laboratory reopened. Many problems were 
identified, and more corrective action plans were written.
    On March 4, 2005, an Operational Efficiency Project 
execution plan identified eight major problems which needed to 
be addressed: safety, quality assurance, software quality 
assurance, conduct of engineering, safety basis, operations, 
environmental risk management, and training.
    The question now is, has anything changed? Based on a 
radiation exposure incident that happened in March of this 
year, I am skeptical. Let me describe it.
    In 2003, Don Brown, a contract employee at Los Alamos hired 
to find gaps in the quality control program at Los Alamos, 
found that there was no tank inspection or preventive 
maintenance program at Los Alamos. In fact, it had been 
dismantled years before under a, ``we will fix it when it 
breaks,'' management approach. Brown described this approach as 
fraught with danger.
    On March 3, 2005, his prediction came true. Contractors 
were repairing a leak in one of these tanks that had finally 
broken. The tank, which is 23 years old, held corrosive and 
radioactive liquid waste from TA-55. A weld had given way, and 
at least 300 gallons had leaked out in 2003 before the tank was 
emptied. While scraping out and bagging paint chips and debris, 
three workers were exposed to plutonium 239.
    Why did this happen? The report is in the record, Mr. 
Chairman, but let me highlight the findings. It is a litany of 
unacceptable practices.
    First, radiological hazards inside the tank were estimated 
prior to beginning the work, not reviewed by appropriate health 
physics personnel or confirmed by actual measurements. The 
removal of contaminated paint was not even specified in the 
work package.
    No. 2, the required continuous air monitor was not placed 
inside the tank while the work was ongoing but was outside.
    No. 3, managers did not require a conservative approach 
performing work in a largely uncharacterized environment.
    No. 4, workers were not skilled radiological workers and 
had insufficient training for working in a high contamination 
airborne environment. The radiation technician was not properly 
trained.
    Five, the radiation technician allowed the workers to take 
off their respirators, which were highly contaminated, and 
breathe in the contaminated air. He should have taken steps to 
remove the contamination first by wiping down the respirators.
    No. 6, ventilation was degraded during the work.
    No. 7, the leak itself was preventable if there had been a 
preventive maintenance plan.
    Eight, workers were in a vault, which is a confined space, 
which requires rescue equipment. Although the workers were 
equipped with a rescue harness, the harnesses were not attached 
to the line to remove them from a vault if necessary.
    It is really difficult to know what else could have gone 
wrong.
    Just after the incident, Los Alamos responded to Mr. Brown 
by saying that there was a tank inspection program in place but 
said the sufficiency of its implementation needed to be 
confirmed. However, the investigative report of the March 
incident recommended that a formal inspection and testing 
program be developed.
    Additionally, when our staff asked if the radiation 
technician has been retrained during the shutdown and safety 
procedures, they were told the radiation protection program 
was, ``an essential program,'' so it wasn't part of the 
shutdown and there was no training. Is this the prescribed 
resumption process for essential activities that Mr. Paul 
describes in his testimony?
    Mr. Chairman, I remain skeptical as to whether the culture 
at Los Alamos will really change. Director Nanos may have made 
some mistakes, but if he leaves, as is widely rumored, who will 
pick up the mantle to institute these necessary changes? 
Because the culture at Los Alamos appears to be so poisoned at 
this point--and this blog is just another example of this--it 
is unclear what can be done to truly fix this broken facility. 
Replacing the director and his top mates while allowing the 
status quo culture with the rest of the employees would only 
prolong the wasting of taxpayers' money or, worse, jeopardize 
national security.
    Thank you, Mr. Chairman.
    Mr. Whitfield. Thank you.
    At this time, I will recognize the gentleman from Texas for 
his opening statement.
    Mr. Burgess. Thank you, Mr. Chairman.
    In the interest of time, I will submit mine for the record 
so we can get to the witnesses.
    Mr. Whitfield. Okay.
    [The prepared statement of Hon. Michael C. Burgess 
follows:]
  Prepared Statement of Hon. Michael C. Burgess, a Representative in 
                    Congress from the State of Texas

    Thank you Mr. Chairman, and thank you for holding this important 
hearing.
    This hearing resumes a continuation of the committee's oversight 
regarding Los Alamos and other nuclear facilities. As I expressed in 
the last hearing, I am concerned about the troubling reports regarding 
Los Alamos's safety and security procedures. This important national 
security matter deserves Congress' full attention, and I support the 
Chairman's investigation of this pressing issue.
    At this time in American history, our national security has become 
the most important issue facing our nation. It is critical that we do 
everything within our power to ensure that our nuclear weapons 
laboratories are highly secured and protected. We cannot allow our 
national security to be compromised because of inadequate safeguards. 
The recent security incidents at Los Alamos illustrate that changes 
must be made to guarantee not only the safety of weapons and top 
clearance material, but also the employees.
    Today, I look forward to the opportunity to further review the 
security status of Los Alamos. In the last hearing, I entered into a 
discussion with Director Nanos. While I appreciated his candor, I was 
greatly troubled by his account of a laser injury that occurred in the 
Los Alamos Laboratory. The egregious harm caused by the poor laboratory 
safety procedures at Los Alamos was extremely disturbing. I hope that 
today's discussion will further focus on particular laboratory safety 
procedures that have been implemented to ensure that this type of 
incident will never occur again.
    Again, Mr. Chairman, I thank you for this crucial hearing in which 
we can address some of these essential concerns regarding nuclear 
facilities and the security of our nation.

    Mr. Whitfield. At this time, I recognize the gentlelady 
from Colorado.
    Ms. DeGette. Thank you, Mr. Chairman.
    Mr. Chairman, I will submit my full statement for the 
record as well. I just want to make a couple of observations.
    The first one is that I completely associate myself with 
Mr. Stupak's opening statement. We have seen problems at Los 
Alamos for years now.
    Last summer, Chairman Barton and I went out to the facility 
in Los Alamos and looked at the situation, talked to Mr. Nanos, 
talked to his senior staff. At that time he was relatively new 
in the job, and we were impressed that he was trying to finally 
change the culture at Los Alamos. Since last summer, we have 
seen problem after problem again, culminating in this blog that 
Mr. Stupak is talking about where people are complaining once 
again about the management.
    I agree with Mr. Stupak and I probably think this is a 
feeling held in a bipartisan way on this committee. The issues 
at Los Alamos, some of them are management, but there is a 
pervasive atmosphere there of not understanding what needs to 
happen to bring this facility up to the level it should be, not 
understanding why certain precautions or procedures are 
important, and generally an arrogance among many employees 
there. I don't know how we break that. But I don't think that 
changing management in and of itself, as we have done so many 
times before at Los Alamos, is going to do anything to solve 
the situation.
    So I commend you, Mr. Chairman, for having this hearing. I 
think I can speak for all of us when I say we are tired of 
having these hearings. We would like to see some things change 
at the facility.
    With that, I will yield back the balance of my time.
    Mr. Whitfield. Thank you very much, and I appreciate those 
opening statements.
    [Additional statement submitted for the record follows:]

 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce

    Mr. Chairman, thank you for holding this important hearing. Over 
the past decade, this Subcommittee has held dozens of hearings to 
review DOE management problems, and Los Alamos has been the top subject 
at many of these hearings. This Subcommittee has spent a significant 
amount of time identifying procurement, safety, and security problems 
at Los Alamos.
    However, in addition to our efforts to uncover specific acts of 
waste, fraud, and abuse, I would point out that we have spent much of 
our time trying to figure out why the same management problems keep 
recurring at Los Alamos.
    It seems unlikely that these repeated mistakes are the result of 
any honest misunderstanding of the rules. Too many managers at Los 
Alamos plainly believe they can write their own rules. They regularly 
side-step procurement processes, ignore safety requirements, and simply 
decline to comply with the sorts of security procedures that are 
required of all DOE contractors.
    It also seems obvious that the lab prizes convenience more than 
accountability. A common attitude we've noticed is that problems don't 
exist unless they become too large to ignore. If noticed, problems are 
swept under the rug like embarrassing household dirt. This is nothing 
new, and the rugs at Los Alamos are getting noticeably lumpy. These 
management problems have led to costly project overruns, damage to our 
national security, and serious health consequences for workers. Last 
July a graduate student lost her vision in one eye due to faulty 
practices of a safety manager at a laser lab. And just days after the 
lab's stand-down ended, several workers were exposed to plutonium in an 
underground vault.
    I understand that some of the witnesses today believe that the 
recent stand-down at Los Alamos has helped identify areas for follow-up 
action by the University of California. This might be true, but I don't 
plan to get excited until I can see real improvement at the site. Based 
on our previous oversight work at Los Alamos, I am concerned that the 
lab may return to business as usual and fail to implement the 
corrective actions identified during the self-assessment. In fact, the 
Committee staff has discovered that more than 90 action items from the 
re-start corrective action plan are already past due.
    As I have stated before, I believe the stand-down at Los Alamos was 
necessary, but it was a direct result of the culture of mismanagement 
at Los Alamos. I sent several letters to NNSA Administrator Brooks 
urging him to have the University of California pay for a portion of 
the costs of the stand-down out of its own pocket. I am pleased to 
learn that on April 8th NNSA notified UC that it intends to disallow 
$14 million of these costs. I hope NNSA will follow through on this 
announcement, and collect the entire $14 million.
    I look forward to the testimony from the witnesses today, and I 
also look forward to the next hearing to get the views of several 
whistleblowers at Los Alamos as well as officials from the University 
of California. I thank the Chairman, and I yield back.

    Mr. Whitfield. As you all are aware on the panel, this is 
an investigative hearing, and as is the policy with oversight 
and investigation we take this testimony under oath. I would, 
first of all, ask any of you, do you have any objection to 
testifying under oath today? I would also advise you that, 
under the rules of the House and under the rules of the Energy 
and Commerce Committee, you are advised by counsel. Do any of 
you desire to be advised by counsel today before you testify or 
during your testimony?
    In that case, I would ask you to rise and raise your right 
hand; and I will swear you in.
    [Witnesses sworn.]
    Mr. Whitfield. You now are under oath.
    I would ask that we start the opening statements with Mr. 
Friedman.
    My able counsel tells me we are starting with Mr. Paul. So, 
Mr. Paul, you are recognized for your 5-minute opening 
statement.

   TESTIMONY OF JERRY PAUL, PRINCIPAL DEPUTY ADMINISTRATOR, 
NATIONAL NUCLEAR SECURITY ADMINISTRATION, ACCOMPANIED BY EDWIN 
   WILMOT, MANAGER, LOS ALAMOS SITE OFFICE, NATIONAL NUCLEAR 
    SECURITY ADMINISTRATION; GREGORY H. FRIEDMAN, INSPECTOR 
    GENERAL, DEPARTMENT OF ENERGY; A.J. EGGENBERGER, ACTING 
CHAIRMAN, DEFENSE NUCLEAR FACILITIES SAFETY BOARD; AND MICHAEL 
   KILPATRICK, DIRECTOR OF INDEPENDENT OVERSIGHT, OFFICE OF 
SECURITY AND SAFETY PERFORMANCE ASSURANCE, DEPARTMENT OF ENERGY

    Mr. Paul. Thank you, Mr. Chairman and members.
    I have submitted a written statement. I would ask that it 
be made part of the record, and I will attempt to briefly 
summarize and also respond to some of the comments that were 
made in your opening statements.
    I want to thank the committee for holding these hearings. 
We take these matters at the National Nuclear Security 
Administration and the Department of Energy very seriously. You 
are right.
    Mr. Whitfield. If I may interrupt you just 1 minute. I do 
want to introduce all the panel members for the people who may 
be listening.
    Of course, Jerry Paul is the Principal Deputy Administrator 
at the National Nuclear Security Administration. He is 
accompanied by Mr. Edwin Wilmot, who is the manager of the Los 
Alamos site office for the National Nuclear Security 
Administration.
    We have Mr. Gregory Friedman, who is the Inspector General 
at the Department of Energy.
    We also have with us Dr. A.J. Eggenberger, who is the 
Acting Chairman of the Defense Nuclear Facilities Safety Board.
    And then we have Mr. Michael Kilpatrick, who is the 
Director of Independent Oversight, Office of Security and 
Safety Performance Assurance at the Department of Energy.
    So excuse me, Mr. Paul. And you may proceed.
    Mr. Paul. Thank you, Mr. Chairman, for that courtesy; and I 
hope to have an opportunity to refer to the role that each of 
the members on the panel have played in this. They are heroes 
in my mind. I can assure you, together, all of us in different 
capacities share the concerns that were voiced earlier. These 
are difficult challenges, but every person at this table has 
played a very unique role in trying to remedy some of the long-
standing problems that you referred to and I think that we are 
going to get into during the course of the hearing.
    As I said, we do indeed take these matters very seriously. 
You are right to raise these concerns. Your oversight, this 
committee's oversight is an important part of the reforms that 
are necessary at Los Alamos National Lab. Although I am 
relatively new to the National Nuclear Security Administration 
and this is the first time that I have testified before this 
august body, I am very familiar with the role that this 
committee has played, including yourself and the ranking 
member. In fact, I remember hearing the ranking member say at 
one time a while back that you were frustrated, that you had 
been watching this recurring pattern for 10 years, and over and 
over and over had heard groups of people testifying in front of 
you and say that they finally get it and that now we will make 
the fixes, but it didn't seem like they ever did.
    So it is under that color that I now stand before you and 
say that we have a group here who does finally get it. I am 
very well aware that that rings hollow because of the history 
that the members on this committee have with these matters, but 
I can assure you, to Congresswoman DeGette, that there is no 
sense of--you referred to a sense of arrogance. I can assure 
you that that does not prevail upon those who are sitting 
before you now nor anybody on my team. These people have worked 
very hard, and they are doing a very difficult task under 
difficult circumstances.
    I won't belabor the chronology of events. Every member on 
the dais is very familiar with the CREM issue, with the laser 
issue and what happened on July 16, the shutdown and then the 
resumption process.
    I would point out that the resumption process I think is 
really an historic effort. Is it perfect? No. But never before, 
certainly no other administration, probably no other group of 
people have ever taken on that task to set out and try to 
reform an organization as broadly as they did here with the 
more than 3,000 findings, 400 of which were necessary for 
resumption. My staff alone at the site office and Mr. Wilmot's 
staff was augmented with almost 100 people to task individual 
activities throughout the resumption process. As you know, 
there were consequences as well.
    Now there are limits to the tools that we have available to 
us. We have attempted to manage and oversee--or we have 
attempted to oversee the way that the tools afford us.
    For example, in the fee determination for 2004, the total 
amount of fee that was available is $8.7 million. Ultimately, 
the only fee that was received was about a third of that. We 
made two reductions there. One was a little over $2 million on 
the performance base because we judged their performance on the 
operations to be unsatisfactory.
    Second, Ambassador Brooks invoked for the first time ever a 
conditional clause in the contract that allowed him to exert a 
punitive reduction based on the stand-down itself of 
approximately $3 million.
    As you mentioned, Mr. Chairman, this contract is being 
bid--competitively bid for the first time in over 60 years. We 
also have a challenge to those portions of the costs of stand-
down that we believe are challengeable. There is a notice of 
intent to deny allowability on those, and we are currently in 
the 60-day determination period on that as to two categories.
    But you are also, each of you, right in referring to the 
bigger problem, and that is the culture of noncompliance. We 
are trying to change that culture. The ranking member and Madam 
Congresswoman are correct that it is not as simple as blaming a 
single person, and we spend a lot of time every single day 
trying to figure what are the mechanisms we can use to show the 
leadership to try to change that culture. It is difficult. It 
does take time. I am perhaps not as patient at times as I 
should be, and I sense that the members of this committee have 
lost their patience, and you have been dealing with it for many 
more years than I have.
    I do want to point out, though, that there truly are some 
unsung heroes in this, some of the people on the panel, people 
at the sites. People like Chris Steele, a nuclear engineer who 
heads up the Authorization Basis Team, has done yeoman's work 
and others, people like Fred Bell, who is also an engineer, who 
has worked night and day. Some of those people out there, they 
are exhausted at our site offices trying to wrestle this to the 
ground, get the lab back up and running because of the 
importance of this mission but do it in a safe way and do it in 
a secure way.
    One of the members actually mentioned some of the good news 
here, some of the points of pride here. Being able to move the 
TA-18 material in while all of this is going on is something 
that we are proud about, and I hope we have an opportunity to 
talk about that in more detail. We are still on schedule. In 
fact, we have accelerated the schedule.
    Before we had thought that, due to stand-down, that the 
schedule for removal of all category 1 and category 2 material 
out of TA-18 would slip from September to November. I think we 
are going to get that back to September of this year and have 
all category 1, category 2 material out of TA-18, out of that 
canyon.
    We are on schedule. We are ahead of schedule on that, and 
that has been done in large part through the leadership of the 
gentleman sitting next to me and his team and the focus on this 
committee. I know it is something that you all have focused a 
lot of attention on, and we have tried to be responsive to 
that.
    The hydrotest that took place last month, very proud of 
that. It is a difficult task that required a lot of attention, 
a lot of work, a lot of energy, a lot of resources, and to do 
it safely, securely, in the face of all the other activities 
that had to take place. And also the Mox shipments, being able 
to process the shipment of the Moxley test assembly material in 
the midst of all of this.
    But surely no person would have credibility sitting in 
front of you right now and telling you that this is a perfect 
process or that we can clearly see that we are on the path to 
complete reform. I am not going to make that pledge to you 
because I don't know that that is true. I know that we are 
better than we were, I know that our oversight is better than 
we were, but we had problems. Some of those problems probably 
still exist.
    One of the things that troubles Ambassador Brooks and 
myself probably as much as anything is that we ourselves have 
not been very good, the U.S. Government, at seeing some of the 
problems before other people see them before us. The ranking 
member refers to the incident at TA-50, and I think we are 
going to get into some of the more details. There is an example 
where we thought the resumption--had all of the commitments 
that were in the findings been complied with, we believe that 
event would have been prevented. There were about three of the 
400, however, that touched and concerned that very facility, 
where persons actually signed off that they had made those 
commitments when they really hadn't. So we did not catch the 
fact that they had not met those commitments.
    So I am trying to communicate to you that, although we feel 
as though we have made a lot of progress, we certainly believe 
that we have a lot of work, a long way to go; and we look 
forward to the input that we will get from each of you. I can 
assure you that the National Nuclear Security Administration is 
committed to doing this right. It is absolutely critical to the 
security of this Nation.
    Thank you.
    [The prepared statement of Jerry Paul follows:]

   Prepared Statement of Jerry Paul, Principal Deputy Administrator, 
                National Nuclear Security Administration

    Mr. Chairman and members of the Committee, thank you for inviting 
me to address the current state of security and safety operations at 
the Los Alamos National Laboratory (LANL). Over the past ten months we 
have seen an extraordinary effort by NNSA officials, LANL managers and 
the employees themselves to address serious concerns about safety and 
security practices at the laboratory. Today I intend to describe the 
role that the National Nuclear Security Administration played during 
the stand down and resumption process at the laboratory and offer a 
status report on corrective action plans at the laboratory.

                                HISTORY

    On July 16, 2004, the laboratory director, Dr. G. Peter Nanos, 
suspended all operations in response to two serious events: the 
discovery that two computer disks thought to contain classified 
information could not be located and were assumed to be lost, and an 
industrial accident in which a summer intern was injured by a laser. 
(Ultimately, after exhaustive investigations by the laboratory, NNSA, 
and the Federal Bureau of Investigation, we concluded that the computer 
disks never really existed, the error caused by the improper handling 
of identification bar codes.)
    After the stand down was declared, laboratory managers planned to 
resume activities on a risk basis. All activities at the laboratory 
were placed into one of four risk categories: essential, low risk, 
medium risk and high-risk activities. Some activities categorized as 
essential, such as systems critical to safety at operational 
facilities, were allowed to continue. For all other activities the 
laboratory developed a prescribed process to permit resumption, based 
on the level of risk. For the highest risk level, managers were 
required to conduct a self-assessment, followed by an independent 
readiness assessment by a team of highly qualified individuals. All 
laboratory staff was interviewed by their management, who discussed the 
need for security, safety, and environmental compliance. Many staff 
members had to be trained in the restart process, including self-
assessments, and readiness assessments. During the assessments nearly 
2500 findings and substantive observations were identified throughout 
the laboratory; about 400 of them had to be resolved before resumption 
was allowed. The rest of the findings will be addressed by implementing 
fully resourced plans that may take two to three years to complete. No 
activity or staff member was left untouched by the resumption 
activities. An enormous amount of work was completed before Director 
Nanos announced, on January 31, that the laboratory had fully resumed 
activities, with only a few minor exceptions. It should be noted that 
activities designated as essential were still subject to the resumption 
process. A special emphasis of the resumption involved accountable 
classified information contained on computer disks and other removable 
electronic media, known as CREM. The laboratory had amassed over 80,000 
pieces of CREM over the years, which had created a significant 
accounting problem. During the resumption period, the laboratory 
reduced its inventory of CREM to around 23,000 pieces and developed a 
library concept to manage what remains. Twenty libraries supported by 
13 additional satellite offices were created to control CREM. These new 
libraries are staffed and controlled by well-trained custodians whose 
sole responsibility is to account for the CREM inventories. All CREM 
users and custodians were trained in the new approach to protecting 
classified materials.
    Today, only one program-essential activity associated with 
radiography and hydrodynamic testing has not completed the prescribed 
resumption process. This activity will soon complete its required 
readiness assessment.
    The laboratory has created an Operations Efficiency Project that 
combines the institutional corrective actions being completed to ``get 
well.'' Project management tools are being employed to ensure that it 
receives management attention and can be successfully completed. The 
Operations Efficiency Project is also integrated with Local Corrective 
Action Plans that are being implemented for unique corrective actions 
for each of the major sub-organizations within the laboratory.
    Though the effort of resumption has been truly epochal, much 
remains to be done in order to bring the laboratory up to appropriate 
levels of performance for safety, security, and environmental 
compliance. Our work is not finished.

                     ROLE OF NNSA DURING RESUMPTION

    Even before the stand down, the NNSA had held discussions with the 
laboratory director and his deputy about our concerns about safety 
practices at the laboratory. The NNSA was consulted prior to Director 
Nanos' decision to stand down activities. Throughout the entire period, 
the NNSA was actively involved in all aspects of the resumption. 
Initially, the NNSA enlisted additional resources from throughout the 
Department of Energy, notably the Office of Security and Safety 
Performance Assurance. The Defense Nuclear Facilities Safety Board also 
increased its presence, sending selected experts to assist their site 
representatives. In addition, the full DNFSB Board visited Los Alamos 
during the resumption to assess progress. The Los Alamos NNSA site 
office manager met regularly with the DNFSB site representatives to 
review their concerns. At one point, the NNSA Administrator, Linton 
Brooks, authorized the site office to bring in more than 40 additional 
staff to oversee and assist the resumption process. Federal employees 
were directly involved in self-assessments, readiness assessments, 
training, finding reviews, and decisions regarding resuming activities. 
This was very much a joint activity in which the NNSA site office was 
making decisions and concurring in all safety and security steps along 
the way. Resumption of activities for medium risk and high-risk 
activities required my concurrence. For activities designated as 
essential, either safety or program-based, the federal staff 
participated as a veto member of teams performing these activities. 
Consequently, site office staff were readily available to make real 
time decisions regarding security and safety while in the field. Site 
office staff helped create the resumption plan, assisted in developing 
procedures, participated in training, and lent their operational and 
security expertise to the effort.
    The NNSA Administrator went to Los Alamos on July 19, shortly after 
the stand down was announced, to meet with senior managers at the site 
office and the laboratory and made subsequent visits to monitor 
progress. During the first few weeks after the stand down the Deputy 
Secretary of Energy and Administrator Brooks conducted daily conference 
calls with senior DOE officials and the site office manager to examine 
issues associated with resumption activities.
    As an aside, I should note that the Secretary of Energy expanded 
the stand down of CREM activities to all sites within the Department of 
Energy complex to ensure that proper accounting and control practices 
were in place. These stand downs generally lasted for a few weeks.

                           A BROADER PROBLEM

    While much of the public attention to events leading to the 
laboratory stand down focused on the supposedly missing classified 
media, we in NNSA felt that inattention to safety procedures at the 
laboratory presented a greater problem. Together they led us to believe 
that a culture of non-compliance existed within the laboratory. A 
careful review of leading indicators for operations of hazardous 
facilities, that is, events that are precursors to low probability-high 
consequence accidents, suggested that laboratory performance had been 
declining. Some employees simply were not complying with regulations or 
working with regulatory agencies or bodies, including NNSA and the rest 
of the Department of Energy. It is this culture that we, and the 
laboratory's senior managers, are trying to reverse.

                           IMPACT ON PROGRAMS

    The laboratory is currently assessing the impact of the stand down 
on programs outside of NNSA that are commonly referred to as Work for 
Others, which includes work for the Department of Defense. Though the 
results have not been finalized, preliminary indications are that 
programs such as analytical activities that did not involve operations 
at hazardous facilities were not impacted greatly. During the stand 
down, certain NNSA programs were declared essential from a programmatic 
mission standpoint and allowed to continue. These programs included 
shipments of plutonium to France as part of the mixed oxide program; 
movement of special nuclear materials from Technical Area-18 to the 
Device Assembly Facility at the Nevada Test Site; and the hydrodynamic 
test and radiographic examination of modified weapon components in 
support of the W-76 life extension program. In each of these, crucial 
programmatic milestones were met despite the overall laboratory stand 
down.
    NNSA and the laboratory employed a special process involving 
intensive federal oversight to conduct these programmatic essential 
activities. Project teams were formed with laboratory and federal site 
office staff so that approvals could be obtained on a real time basis. 
Significant compensatory measures were employed where safety and 
security weaknesses had been identified. Senior management, both 
laboratory and federal, were actively engaged.
    Other programs, such as efforts to remove aboveground transuranic 
waste from the Los Alamos Site and ship it to the Waste Isolation Pilot 
Plant were delayed. The shipments to WIPP were renewed early in April 
2005.
    For NNSA programs in general, some interim milestones were missed; 
but the laboratory in many cases believes that major impacts to the 
programs have been avoided. Impacts to other NNSA sites were minimized 
by cooperative efforts between LANL and the other sites. In some cases 
work was shifted to other sites.

                           COST ALLOWABILITY

    This Committee has asked about the cost of the stand down and 
whether these costs are an allowable expense that would be reimbursed 
by the government. Because of accounting procedures used by the 
laboratory, NNSA has been unable to determine precisely what portion of 
the laboratory's expenses are directly attributable to the stand down. 
Laboratory officials, using an accepted estimating technique, 
identified $119 million in labor costs attributable to the stand down. 
The NNSA Service Center reviewed the laboratory records to make its own 
determination and identified a fully burdened upper limit of $367 
million for the stand down costs during the period from July 19, 2004 
to January 28, 2005. The methodology used to develop this upper limit 
uses very conservative factors that could overstate the actual cost of 
the stand down.
    Based on NNSA's review of the terms of the contract with the 
University of California, it is apparent that the vast majority of the 
costs are allowable costs, and thus are reimbursable expenses by the 
government. After consulting with the NNSA Field Chief Financial 
Officer (CFO) and legal counsel, the NNSA site office manager 
determined that the duration of the stand down was reasonable in light 
of the issues faced by the laboratory and the degree of federal 
oversight given to the restart of activities. In fact, I believe that 
the duration was not only reasonable, but likely noteworthy for its 
efficiency.
    Nevertheless, NNSA has questioned the allowability of about 
$14million of costs incurred during the stand down. The questioned 
expenses involve two blocks of money: $6.3 million in small 
subcontractor claims and other incremental costs and $8 million of 
costs for the first two days of the stand down. The site office manager 
has issued a formal Notice of Intent to Disallow these costs and is 
awaiting response from the laboratory. The laboratory has until June 6 
to respond. As this Committee is aware, the Government Accountability 
Office is currently conducting a review of the costs attributable to 
the stand down. They made an initial visit to Los Alamos during the 
week of April 18. NNSA will continue its review of the costs of the 
stand down, and is not foreclosed from questioning additional amounts 
as new information is gathered.

                       STATUS OF ``GETTING WELL''

    Now that the laboratory has fully resumed operations, one of our 
challenges is to ensure that the laboratory follows through on the 
hundreds of corrective actions that remain to be addressed. Many of the 
issues uncovered during the resumption process had been identified in 
previous reviews conducted during the past 10 years. Corrective Action 
Plans from these reviews were prepared but never fully implemented. 
NNSA has provided additional temporary (varies between 30 and 40) and 
permanent staff (approximately 20) to the site office to maintain an 
intensive campaign to verify that the laboratory is performing as it 
has told the NNSA it will. We have just completed an intensive review 
of corrective actions and compensatory measures taken to allow the 
laboratory to resume activities. The review found that only 8 of about 
400 actions were not properly completed. Where issues arose, the 
laboratory took immediate action to remedy them. The federal workforce 
will continue to work closely with the laboratory as it begins 
implementing the Operations Efficiency Project and Local Corrective 
Action Plans. In addition, the Office of Security and Safety 
Performance Assurance will perform an assessment later this summer to 
add to the assurance that activities are being properly performed. The 
NNSA site office is planning a survey this June of all security 
functions.
    Progress is being made in the implementation of the Operations 
Efficiency Project and the Local Corrective Action Plans. The 
Operations Efficiency Project implementation is three weeks behind 
schedule, but important actions have been taken to delve into the way 
in which the laboratory manages and maintains its facilities. The delay 
is of concern, but the groundwork necessary for the Operations 
Efficiency Project to be successful must be established. Poor facility 
management has been a serious problem for many years. Establishing the 
proper roles and responsibilities for facility owners, users, and 
support organizations lies at the heart of many of the operational 
issues of the laboratory. Because fixing these prerequisites before 
fully implementing the Project is so important to its success, the 
delay becomes acceptable. The Local Corrective Action Plans of each of 
the sub organizations with the laboratory are going to be reviewed by 
Assist Teams. The review will look to standardize actions across the 
laboratory and to integrate these recent findings about facility 
management into the planning.
    Current demands upon the Laboratory for completion of programs 
outside of NNSA being monitored by the Administrator to avoid over-
stressing a somewhat fragile recovery process that will continue 
through the next year or two.

                               PROGNOSIS

    Progress to date does provide one the opportunity to be cautiously 
optimistic. We must all keep in mind that the nature of change 
necessary at the laboratory will take several years and much hard work. 
The NNSA remains committed to ensure that the laboratory is successful 
through the vigilance of its federal oversight. Though we have been 
through a very challenging period that we all would have preferred to 
avoid, I am heartened by the creativity, dedication and hard work that 
so many men and women, in both the federal and contractor workforce, 
have shown in addressing these issues and getting Los Alamos National 
Laboratory back on track to fulfill its important national security 
mission.

    Mr. Whitfield. Thank you.
    Mr. Friedman, you are recognized for your 5-minute opening 
statement.

                TESTIMONY OF GREGORY H. FRIEDMAN

    Mr. Friedman. Thank you, Mr. Chairman.
    Good afternoon, Mr. Chairman and members of the 
subcommittee. I am pleased to be here today to testify on the 
results of our work at the Los Alamos National Laboratory.
    In February 2003, I testified before this subcommittee on 
procurement and property issues at the laboratory. At a 
subcommittee hearing in May 2003, I addressed our findings 
regarding the general state of the business systems at Los 
Alamos. And, in short, we concluded that Los Alamos and the 
University of California had not paid adequate attention to 
laboratory business operations.
    Since that time, the Office of Inspector General has 
continued to examine management practices at Los Alamos. We 
found the laboratory has acted to correct several problem areas 
but that certain internal control weaknesses persist.
    In the 2004 report, we concluded that the laboratory had 
improved the management of its purchase card program. The 
purchase card program was the source of a lot of the 
controversy that existed at the laboratory in 2003. 
Specifically, we found that Los Alamos had reduced the number 
of cards in circulation, subjected purchase card transactions 
to multiple reviews, and made approving officials responsible 
for fewer cardholders.
    Despite the laboratory's efforts, my office has issued a 
series of reports and completed several investigations that 
pointed to needed improvements in the areas of project 
management, security and contract administration for which Los 
Alamos, the University of California and the Department have a 
shared responsibility.
    Our report on the Dual Access Radiographic Hydrodynamic 
Test Facility, commonly referred to as DARHT, found that Los 
Alamos had not made full use of available project management 
tools to complete the facility. The laboratory had changed work 
scope, eliminated key elements, and shifted critical activities 
to other programs.
    Furthermore, Los Alamos significantly underestimated the 
cost of various work elements as well as the funds needed for 
project contingencies. The laboratory's ability to complete the 
project on schedule and within budget was adversely affected, 
potentially impeding the Department's Stockpile Stewardship 
Program.
    In the security arena, a February 2005 inspection on 
security and the outprocessing of employees concluded the 
procedures at Los Alamos did not provide assurance that, prior 
to departure, employees turned in security badges, completed 
the required Security Termination Statement, or had their 
clearances and access authorizations terminated in a timely 
manner. Subsequent to completion of our field work, the 
laboratory revised its outprocessing procedure.
    Our 2004 report on subcontract administration found that 
Los Alamos had not effectively managed certain aspects of its 
very sizable subcontracting process. At the time of our review, 
the laboratory had not provided adequate audit coverage to 
determine whether costs were allowable for 93 active 
subcontracts valued at $1.3 billion, nor had it determined the 
allowability of over $9 million in costs questioned by audits 
completed during 2001 through 2003. The laboratory had not 
provided sufficient resources to its contract audit function, 
and it had not established formal procedures regarding cost 
resolution.
    In a joint investigation with the Federal Bureau of 
Investigation, we determined that two Los Alamos employees used 
government funds to purchase items for their personal use, 
including television sets, automobile parts and barbecue 
grills. In 2004, a Federal grand jury returned a 28-count 
indictment for fraud, conspiracy, theft of property and making 
false statements to investigators. Both employees were 
sentenced to confinement and ordered to pay restitution.
    Finally, Mr. Chairman, our 2005 audit on home office 
expenses revealed that the Department will incur unnecessary 
costs to pay for corporate activities at the University of 
California in support of the laboratories. Specifically, the 
Department will pay about $21 million in unnecessary fixed 
costs because of a calculation error made at the time of 
contract award. It will pay about $8 million for work that did 
not benefit government-funded activities, and it reimbursed the 
University of California $880,000 for erroneously claimed 
expenses.
    As you and everyone else is aware, the Department has 
initiated procurement actions to recompete the contract to 
operate Los Alamos. Regardless of the outcome, the Department 
needs to strengthen its contract administration strategy at the 
laboratory. There are six principles which we believe are 
essential to this effort:
    The Department and the National Nuclear Security 
Administration must ensure that its contractors establish 
robust, effective, and reliable business systems; promote 
contractor governance models that adequately protect the 
Department's interests; foster a culture where contractors 
fully understand and honor the very special responsibility 
associated with managing taxpayer-funded Federal facilities; 
promote an environment where both Federal and contractor 
employee concerns can be raised and addressed without fear of 
retaliation; develop quantifiable, outcome-oriented metrics and 
maintain a system to track critical aspects of contractor 
performance; and reward contractors commensurate with their 
accomplishments.
    My office will continue to review the situation at Los 
Alamos as it evolves.
    Mr. Chairman and members of the subcommittee, this 
concludes my oral statement. I would be pleased to answer any 
questions at the appropriate time.
    [The prepared statement of Gregory Friedman follows:]

  Prepared Statement of Gregory H. Friedman, Inspector General, U.S. 
                          Department of Energy

    Good afternoon Mr. Chairman and members of the Subcommittee. I am 
pleased to be here to respond to your request to testify on the results 
of our work at the Los Alamos National Laboratory, one of the 
Department of Energy's most prominent facilities.
    In February 2003, I testified before this Subcommittee on 
procurement and property management at Los Alamos. My testimony 
addressed weaknesses in controls over: property accountability; 
procurement authority, including purchase cards; and, security of 
computers.
    At the Subcommittee's hearing in May 2003, I testified that the 
Laboratory had not given adequate attention to its business operations. 
Specifically, my testimony focused on financial management weaknesses 
at Los Alamos. I pointed out that the Office of Inspector General had 
questioned the allowability of certain costs that the Laboratory 
claimed between Fiscal Years 2000 and 2002, and that weak controls in 
Los Alamos' audit function; payroll and travel approval process; and, 
financial systems contributed to an environment where questionable 
costs could be incurred and claimed.
    Since the 2003 hearings, the Office of Inspector General has 
continued to examine management practices at Los Alamos. In a series of 
reviews, some of which I will highlight today, we followed-up on a 
number of previously identified weaknesses. In some cases, the 
Laboratory had taken appropriate corrective actions. However, in other 
cases, our reports have shown that more work is needed to correct 
problem areas.

                   ENHANCEMENTS OF INTERNAL CONTROLS

    In 2004, the Office of Inspector General performed a follow-up 
review to determine whether the Laboratory had conducted a thorough 
analysis of its purchase card program and had initiated corrective 
action to resolve previously reported weaknesses. In our report, Los 
Alamos National Laboratory's Purchase Card Program Corrective Actions 
(DOE/IG-0644, April 2004), we concluded that Los Alamos had made 
improvements in the management of its purchase card program. Some 
positive steps that the Laboratory implemented included:

 Reducing the number of purchase cards in circulation from 800 to 550;
 Subjecting purchase card transactions to multiple reviews and 
        electronically reconciling to supporting documents;
 Prohibiting cardholders from approving their own transactions; and,
 Making approving officials responsible for fewer cardholders, 
        permitting them to provide additional scrutiny of transactions.
    Although the Laboratory had clearly made progress, we identified 
certain opportunities to further reduce risk of card misuse. For 
example, we pointed out that Los Alamos could clarify guidance 
concerning unauthorized items, automate data analysis techniques, and 
enhance periodic reviews of cardholder activities.

                 AREAS REQUIRING ADDITIONAL IMPROVEMENT

    Our recent work disclosed continuing problems in several key areas 
of Laboratory management. Specifically, we issued a series of reports 
that pointed to needed improvements in the areas of project management 
and security. Further, we identified continuing problems in the general 
area of contract administration, problems for which Los Alamos, the 
University of California and the Department have a shared 
responsibility.

Project Management
    Construction and operating projects are essential to accomplishing 
the Department's missions. Numerous multimillion dollar projects 
support the scientific and technologically-complex work of the 
Department, and many of the projects are unique in the world. Prior 
reviews by my office and others revealed that many of these projects, 
including some at Los Alamos, have been adversely affected by cost 
overruns, schedule slippages, and other management problems. Based on 
our recent reviews at Los Alamos, we concluded that improved project 
management discipline and structure are needed to effectively manage 
the costs, schedules, and scope of key initiatives.
    Our audit report on Dual Axis Radiographic Hydrodynamic Test 
Facility (DOE/IG-0599, May 2003) found that Los Alamos and the National 
Nuclear Security Administration had not made full use of available 
project management tools to complete the facility. As a result, the 
Dual Axis Radiographic Hydrodynamic Test Facility (DARHT) would not be 
completed before June 2004, 15 months behind schedule. The DARHT 
facility at Los Alamos will be the nation's first test facility capable 
of providing three-dimensional x-ray photographic diagnostic 
information on the behavior of weapon parts and the effects aging has 
on a nuclear weapon. Absent underground testing, the facility will play 
a critical role in certifying that the weapons in the stockpile are 
safe and reliable. During the review, we found that the Laboratory had 
changed work scope, eliminated key elements, and shifted critical 
activities to other programs. Los Alamos had significantly 
underestimated the cost of various work elements of the project, as 
well as funds needed for contingency. The Laboratory's ability to 
complete the project on schedule and within budget was adversely 
affected, potentially impeding the Department's Stockpile Stewardship 
Program.
    The audit report on Stabilization of Nuclear Materials at Los 
Alamos National Laboratory (DOE/IG-0659, August 2004) showed that, 
although the Laboratory had made some progress in stabilizing the most 
hazardous fissionable materials, it had not accelerated stabilization 
to the level anticipated. We found that the Laboratory would not 
stabilize materials until 2010, well beyond the original projected 
completion date of 2002. In fact, Los Alamos missed interim milestones 
and project tasks, which could delay stabilization beyond 2010. We 
found that, among other things, the Laboratory had not made full use of 
available tools to effectively manage the project. For example, many of 
Los Alamos' work packages, which were intended to provide the detailed 
guidance for project completion, often lacked milestones and clearly 
defined statements of work. Managers, therefore, lacked an objective 
basis to assess and report on the project's status. By extending the 
schedule until 2010, the Department will incur an estimated $78 million 
in added costs. Additionally, radioactive materials may continue to 
deteriorate and negatively impact the safety and health of workers.
    Our audit report on Transuranic Waste Management at Los Alamos 
National Laboratory, (DOE/IG-0673, February 2005) noted that the 
Department will not meet its commitment for removing transuranic waste 
from Los Alamos and shipping it to the Waste Isolation Pilot Plant. For 
example, based on projections at the time of our review, the Department 
was unlikely to complete removal of the legacy transuranic waste before 
2014--four years beyond the commitment date. We concluded that Los 
Alamos' rapid scale-up of waste operations resulted in operational 
breakdowns. Specifically, operating procedures failed when the 
Laboratory attempted to increase its volume of shipments to the Waste 
Isolation Pilot Plant. As a result, the Laboratory had to revise its 
procedures and retrain personnel on waste processing. The lack of 
progress in disposing of the waste prevented Los Alamos from 
expeditiously reducing the health and safety risk posed by the 
continued above-ground storage of transuranic waste. In addition, the 
total cost of completing the waste disposition project could increase 
by over $70 million.

Security
    One of the Department's national security objectives is ensuring 
that nuclear weapons, materials, facilities, and information are secure 
through effective safeguards and security policy, implementation, and 
oversight. Since the events of September 11, 2001, this objective has 
taken on added importance and required the Department and its nuclear 
weapons laboratories to reassess and strengthen their security posture. 
However, our recent reviews at Los Alamos, one of the Department's most 
sensitive sites, disclosed that weaknesses exist in the protection of 
the Department's critical resources and infrastructure. For example:
    An inspection on Security and Other Issues Related to Out-
Processing of Employees at Los Alamos National Laboratory (DOE/IG-0677, 
February 2005) concluded that the Laboratory's process did not provide 
assurance that terminating employees: (1) turned in security badges; 
(2) completed the required Security Termination Statement; or (3) had 
their security clearances and access authorizations to classified 
matter and/or special nuclear material terminated in a timely manner. 
We found that Laboratory out-processing procedures were not followed 
for more than 40 percent of the 305 cleared and uncleared terminating 
employees included in our judgmental sample. We identified 21 employees 
who retained their security clearances in the Department's data base 
after terminating employment at the Laboratory, 3 of which remained 
active in the data base for over a year. By not following the 
Laboratory's out-processing procedures, there was no assurance that 
terminating employees fulfilled their responsibilities to, among other 
things, account for classified holdings. Subsequent to completion of 
our fieldwork, the Laboratory revised its out-processing procedures to 
address concerns we raised during our inspection.
    In 2004, we completed an inspection on Internal Controls over 
Personal Computers at Los Alamos National Laboratory, (DOE/IG-0656, 
August 2004), which identified continuing weaknesses over classified 
and unclassified computers at the Laboratory. Specifically, we found 
that the Laboratory's listing of Sensitive Compartmented Information 
Facility classified desktop and laptop computers was not accurate. We 
also found that a number of classified desktop computers were not 
entered into the property inventory, and some computers were not 
assigned property numbers. Finally, we determined that the Laboratory's 
Office of Security Inquiries had not been notified about a missing 
component of a computer system accredited for classified use. While 
there was no evidence that the missing component contained classified 
information, a security inquiry had not been conducted because 
personnel did not follow Laboratory policy requiring such notification. 
These weaknesses undermined confidence in the Laboratory's ability to 
assure that computers were controlled in accordance with existing 
property management and security requirements and were adequately 
safeguarded from loss or theft.

Contract Administration
    We have also identified contract administration problems on the 
part of both Los Alamos and the Department. Appropriate contract 
administration is needed to ensure that contractor operations are 
effective and efficient, and that contractors' expenses are allowable. 
Recent reviews by my office have identified areas where Los Alamos and 
the Department have not provided effective administration over 
subcontractor costs, business controls, and home office expenses paid 
to the University of California to support the Laboratory.
    Our audit on Management Controls over Subcontract Administration at 
the National Security Laboratories, (OAS-M-04-06, August 2004) noted 
that during Fiscal Years 2001 and 2002, Los Alamos, as well as Lawrence 
Livermore and Sandia National Laboratories, did not always effectively 
manage certain aspects of the subcontracting process. Los Alamos and 
its counterparts are expected to ensure that Federal funds entrusted to 
their care are expended appropriately, that questioned costs are 
resolved in a timely manner, and that subcontracts are closed when all 
actions are complete. During the subject audit, we found that Los 
Alamos had not provided adequate audit coverage to determine whether 
costs were allowable for 93 active subcontracts with an aggregate value 
of $1.3 billion. Furthermore, 11 completed subcontracts, valued at $68 
million, had not been subjected to close-out audits at the time of our 
review. We also noted that action to determine the allowability of over 
$9 million in questioned subcontract costs remained incomplete. 
Adequate audit coverage was lacking because the Laboratory had not 
provided sufficient resources to the audit function and had not 
established formal procedures and training regarding cost resolution. 
My office is currently reviewing the Laboratory's actions to improve 
audit coverage of subcontractor costs.
    Regarding Los Alamos' administration of business controls, in a 
case that had much public and Congressional interest, we completed a 
joint investigation with the Federal Bureau of Investigation and 
determined that two former Los Alamos National Laboratory employees 
used Government funds to purchase items for their personal use, 
including television sets, automobile parts, and barbeque grills. A 
Federal grand jury returned a 28-count indictment for fraud, 
conspiracy, theft of property, and making false statements to 
investigators. One subject of the investigation was sentenced to over a 
year of confinement and 2 years probation. The second subject was 
sentenced to 6 months confinement, 6 months of electronically monitored 
home detention, 2 years and six months probation, and a $30,000 fine. 
The former employees were also ordered to pay nearly $40,000 in 
restitution.
    In addition, we determined that improvements were needed in the 
Department's administration of its contract with the University of 
California, which operates Los Alamos, Lawrence Livermore and Lawrence 
Berkeley National Laboratories. Under its contractual arrangements with 
the University, the Department committed to pay the University for 
certain corporate activities performed in support of the laboratories. 
Our audit, Department of Energy Contractor Home Office Expenses (DOE/
IG-0676, February 2005), revealed that the Department: (1) will incur 
about $21 million in unnecessary expenses over the 5-year life of the 
contracts with the University because it used an incorrect allocation 
base to calculate the fixed payments for home office expenses; (2) 
inappropriately agreed to provide about $8 million for a percentage of 
the University's operational costs that did not benefit Government-
funded activities; and, (3) reimbursed about $880,000 for erroneously 
claimed expenses and for unallowable expenses such as costs for student 
recruitment.

                               CONCLUSION

    Although the Los Alamos National Laboratory has acted to improve 
controls in a number of areas, our recent work indicates that continued 
emphasis is needed on improving key management processes.
    As you are aware, the Department initiated procurement actions to 
re-compete the contract to operate Los Alamos. Regardless of the 
eventual outcome, the Department needs to strengthen its overall 
contract administration strategies and methodologies at Los Alamos. 
While this must be a multi-faceted effort, there are six integral 
principles which we believe are most important. The Department and the 
National Nuclear Security Administration should:

 Ensure that its contractors establish robust, effective, and reliable 
        business systems;
 Promote contractor governance models that adequately protect the 
        Department's interests;
 Foster a culture where contractors fully understand and honor the 
        special responsibility associated with managing taxpayer-funded 
        Federal facilities;
 Promote an environment where both Federal and contractor employee 
        concerns can be raised and addressed without fear of 
        retaliation;
 Develop quantifiable, outcome-oriented metrics and maintain a system 
        to track critical aspects of contractor performance; and,
 Rate and reward contractors commensurate with their accomplishments.
    To assist the Department in addressing the weaknesses discussed 
today and measure progress towards correcting them, my office will 
continue to aggressively review the situation at the Los Alamos 
National Laboratory and other contractor-operated facilities.
    Mr. Chairman and Members of the Subcommittee, this concludes my 
statement. I will be pleased to answer any questions.

    Mr. Whitfield. Thank you, Mr. Friedman.
    Dr. Eggenberger, you are recognized for 5 minutes.

                 TESTIMONY OF A.J. EGGENBERGER

    Mr. Eggenberger. Thank you, Mr. Chairman and members of the 
subcommittee.
    Congress created the Defense Nuclear Facilities Safety 
Board as an independent technical agency within the executive 
branch, external to DOE, to identify the nature and 
consequences of potential threats to public health and safety 
at the Department of Energy's defense nuclear facilities, to 
elevate these issues to the highest levels of authority and to 
inform the public. The Board is not a regulator but a small 
advisory agency with a staff of approximately 60 technical 
individuals.
    The way that the Board operates is we conduct our oversight 
mission by identifying conditions or deficiencies to DOE. The 
Board provides advice and recommendations to the Secretary of 
Energy primarily by way of letters, reporting requirements, and 
formal recommendations to the Secretary of Energy. Although 
DOE's contractors take most of the actions in response to the 
Board, the Board works primarily through DOE--both the 
headquarters staff and the site office staff.
    With respect to the shutdown at Los Alamos, I would like to 
divide that into three quick parts, if I could. First is, what 
were we doing prior to the shutdown by the director?
    Based on the hazards, it is important to note that the 
Board's primary interests at LANL include plutonium operations, 
processing and stabilization of nuclear materials, the 
potential for nuclear criticality, nuclear waste processing and 
storage, and tritium operations. Nuclear programs overall that 
are also of interest to the Board include integrated safety 
management, which has been mentioned, the authorization bases, 
work control, and quality assurance.
    Prior to the shutdown, again, in January 2004 the Board 
identified deficiencies in the implementation of DOE's orders 
on facility safety that included structured application of 
engineering standards and practices and the use of formal 
design reviews.
    In February 2004, the Board identified the need for a 
revised plan to accelerate risk reduction at LANL through the 
stabilization, repackaging, and disposition of excess nuclear 
materials.
    In May 2004, the Board identified deficiencies in the 
application of integrated safety management for work planning 
and control at several NNSA sites, of which LANL was included.
    In May 2004, again, the Board pointed out a number of 
safety issues at the TA-18 facility, where an over-reliance on 
administrative controls was being used in lieu of engineered 
controls, and the lack of effective operational oversight by 
both NNSA and the Laboratory. This is where the high 
criticality operations were that we talked about earlier.
    Then, in May, we identified deficiencies in the development 
and maintenance of safety bases at LANL.
    Now, the shutdown occurred. What did the Board do? In 
response to the shutdown, the entire Board with its staff went 
to LANL to assess the condition of the nuclear facilities to, 
among other things, ensure that the affected defense nuclear 
facilities were shut down in a safe configuration. We provided 
several observations to NNSA as to the need to adjust any of 
the plant conditions to maintain the safe and stable condition 
during shutdown. We also at that time mentioned that there are 
longer term issues that need to be identified if you want to 
startup.
    Now we have invested considerable staff resources in 
monitoring both NNSA and the laboratory during the resumption 
process.
    As far as our issues are concerned and the resumption 
process, it was mentioned previously that the Operational 
Efficiency Project included a set of subprojects. Our issues--
most of our issues have been rolled up into the Operational 
Efficiency Project. However, there are a few that have not 
been.
    One of them is fire protection upgrades at the site and the 
resumption of certain criticality operations at Technical Area 
18. There is also an effort on our part to reduce the risk at 
LANL with respect to stored materials. That is what is called 
the ``quick to WIPP'' idea, and we are making sure that that is 
continuing with utmost speed.
    Now, with that, we will continue our vigil at the 
laboratory. We do have two site representatives onsite that 
interact on a daily basis with the site office at LANL and also 
report back to our headquarters.
    This is a summary of my testimony, and the entire testimony 
I would request that that be entered into the record. Thank 
you.
    [The prepared statement of A.J. Eggenberger follows:]

   Prepared Statement of A.J. Eggenberger, Acting Chairman, Defense 
                    Nuclear Facilities Safety Board

                              INTRODUCTION

    Mr. Chairman and members of the Subcommittee, I appreciate the 
opportunity to present testimony on the health and safety oversight 
activities of the Defense Nuclear Facilities Safety Board at the Los 
Alamos National Laboratory.
    I would like to first summarize the statutory safety oversight 
mission of the Board, then briefly review the Board's recent oversight 
activities relevant to the Los Alamos National Laboratory and the 
Board's current health and safety focus at that site.

                THE BOARD'S STATUTORY OVERSIGHT MISSION

    Congress created the Defense Nuclear Facilities Safety Board 
(Board) as an independent technical agency within the Executive Branch, 
external to DOE, to identify the nature and consequences of potential 
threats to public health and safety at the Department of Energy's 
defense nuclear facilities, to elevate such issues to the highest 
levels of authority, and to inform the public. The Board is not a 
regulator, but a small advisory agency with approximately 60 technical 
staff.
    The Board's approach to conducting its nuclear safety oversight 
mission is to identify conditions or deficiencies to DOE. The Board 
provides advice and recommendations to DOE primarily by way of letters, 
reporting requirements, and formal Recommendations to the Secretary of 
Energy. DOE can accept or reject the Board's advice and 
recommendations. Although DOE's contractors take most of the actions in 
response to the Board, the Board works primarily through DOE--both 
headquarters and site office staff.
    Operations at DOE's defense nuclear facilities include: assembly, 
disassembly, and dismantlement of nuclear weapons; and maintenance and 
surveillance of the aging nuclear weapons stockpile. Operations at 
defense nuclear facilities also include the stabilization and storage 
of nuclear materials, the deactivation and decommissioning of 
facilities, and the processing and storage of radioactive waste. 
Broadly speaking, the Board provides nuclear safety oversight of DOE's 
defense nuclear facilities from design through construction, operation, 
and decommissioning.
    The Board conducts its safety oversight of DOE-National Nuclear 
Security Administration (NNSA) activities at the Los Alamos, Lawrence 
Livermore, and Sandia National Laboratories; the Pantex Plant, the Y-12 
National Security Complex, the Savannah River Site, and the Nevada Test 
Site. The Board also conducts nuclear safety oversight of DOE's 
Environmental Management activities at these sites as well as the 
Hanford Site, Idaho National Laboratory and Idaho Cleanup Project, Oak 
Ridge National Laboratory, Waste Isolation Pilot Plant, and the Fernald 
and Mound Sites in Ohio. In establishing its safety oversight program, 
the Board allocates its resources based on a number of factors, 
including (1) urgency in terms of any imminent threat to public health 
and safety; (2) potential risk to public health and safety; (3) 
effectiveness of DOE management in managing the risks; and (4) 
timeliness in relation to DOE programmatic or operational goals. In 
assessing priorities, the Board considers issues brought to its 
attention by all sources, including workers and members of the public.
    The Board's jurisdiction covers nuclear safety oversight of DOE's 
defense nuclear facilities and activities. As such, some of the issues 
being discussed in this series of hearings, like those directly related 
to safeguards and security, business management practices, and 
operations in non-nuclear non-defense facilities at LANL are not under 
the Board's jurisdiction. There may be, however, causal elements 
associated with these issues that are of interest to the Board. 
Moreover, there are often important relationships between nuclear 
safety and security, and between nuclear and industrial safety. For 
instance, the consolidation of nuclear materials can have both safety 
and security components; however, the Board's jurisdiction is limited 
to safety issues related to consolidation.

                 PAST BOARD ACTIVITIES RELEVANT TO LANL

    The Board has routinely conducted nuclear safety oversight at the 
Los Alamos National Laboratory, or LANL, since the Board's inception in 
1989. The Board's focus at LANL is directed by the hazards at that 
site.
    Based on the hazards, the Board's primary interests at LANL include 
plutonium operations, processing and stabilization of nuclear 
materials, the potential for nuclear criticality, nuclear waste 
processing and storage, and tritium operations. Nuclear safety programs 
at LANL are also of interest to the Board, including integrated safety 
management, authorization bases, work control, and quality assurance.
    The greatest hazard at LANL, hence the area of greatest interest to 
the Board, is plutonium in all forms, including metals, powders, 
solutions, and wastes. Consequently, the Board has placed emphasis on 
its oversight of the Technical Area-55 plutonium facility and the 
Chemistry and Metallurgy Research (CMR) facility. A few examples of the 
results of the Board's efforts at the plutonium facility include 
improvements in the plutonium-238 scrap recovery line, the 
stabilization and safe packaging of excess material, and successful 
design and installation of the fire water system.
    Other examples of areas in which the Board has been involved at 
LANL include facility upgrade and risk reduction initiatives to safely 
extend the life of the CMR facility, improvements in operations and 
oversight at Technical Area-18, and improvements in lightning 
protection at nuclear facilities.
    During 2004, prior to the laboratory shutdown, the Board provided 
advice to NNSA identifying the need to address a number of safety 
issues at LANL:In January 2004, the Board identified deficiencies in 
the implementation of DOE's order on facility safety at LANL, including 
the structured application of engineering standards and practices and 
use of formal design reviews. This concern is generally referred to as 
``conduct of engineering.'' Appropriate corrective actions to address 
this issue have now been developed by LANL, at DOE direction, and are 
included as part of the Operational Efficiency Project discussed later.
          In February 2004, the Board identified the need for a revised 
        plan to accelerate risk reduction efforts at LANL through the 
        stabilization, repackaging, and disposition of excess nuclear 
        materials. This activity is being conducted in response to two 
        previous Board Recommendations concerning stabilization of 
        excess nuclear materials, Recommendation 94-1 and 
        Recommendation 2000-1. A revised schedule was developed by LANL 
        to address this concern. These stabilization efforts have been 
        impacted by the LANL shutdown. This is a long term activity and 
        LANL's ability to meet the revised schedule is not certain.
          In May 2004, the Board identified deficiencies in the 
        application of Integrated Safety Management for work planning 
        and control at several NNSA sites, including LANL. For LANL, 
        this was a follow-up to a previous observation, and encouraged 
        further improvements beyond those actions already taken. LANL 
        has developed actions to improve its work planning and control 
        processes, and these actions have been included as part of the 
        LANL Operation Efficiency Project.
          In May 2004, the Board pointed out a number of safety issues 
        related to nuclear operations at Technical Area-18 at LANL, 
        including an over-reliance on administrative controls in lieu 
        of engineered controls, and the lack of effective operational 
        oversight by both NNSA and the laboratory. High hazard 
        criticality operations have not been restarted at Technical 
        Area-18. Both LANL and NNSA have made substantial changes in 
        the management and oversight of Technical Area-18. LANL is now 
        preparing to demonstrate readiness to conduct a limited number 
        of criticality experiments.
          Also in May 2004, the Board identified a number of 
        deficiencies with the development and maintenance of safety 
        bases at LANL. There have been some improvements in this area. 
        LANL has established a safety basis academy and taken other 
        steps to improve the quality of its safety basis submittals. 
        Likewise, the Los Alamos Site Office has taken action to reduce 
        its safety basis approval backlog.
          Again in May 2004, the Board identified deficiencies 
        associated with DOE Facility Representative training and 
        staffing at NNSA sites, specifically including LANL. In order 
        to provide the monitoring and oversight of contractor 
        activities necessary to ensure the adequate protection of 
        public health and safety, the Board has long communicated to 
        DOE the necessity to maintain ``eyes and ears'' in its 
        facilities. DOE's Facility Representative Program addresses 
        this need. As a result of the Board's communication, NNSA is 
        increasing the number of Facility Representatives at its Los 
        Alamos Site Office.
          In June 2004, in order to enhance its oversight at LANL, the 
        Board announced its decision to assign a second Board site 
        representative to LANL. This second site representative began 
        on-site duties in August 2004.

                SUSPENSION OF NUCLEAR OPERATIONS AT LANL

    In response to the shutdown of LANL last July, the Board went to 
LANL to assess the condition of the nuclear facilities to, among other 
things, ensure that the affected defense nuclear facilities were shut 
down in a safe configuration. We also wanted firsthand knowledge of the 
planned resumption activities. The Board provided several observations 
to NNSA including the need to adjust plant conditions to maintain safe 
and stable conditions during the shutdown, the need to aggressively 
pursue the implementation of improvements in the laboratory's work 
control process, and the need to continue to address several long-term 
safety initiatives that would be delayed by the shutdown.
    The Board invested considerable staff resources in monitoring both 
NNSA and laboratory efforts during the resumption process at LANL. In 
general, the Board has concluded that near-term actions and 
compensatory measures appear to be appropriate to support the 
operations that have been restarted.

                   THE BOARD'S CURRENT FOCUS AT LANL

    The hazards associated with nuclear operations at LANL are both 
significant and complex. The recent shutdown resulted in the 
identification of numerous corrective actions. The successful 
implementation of these corrective actions and the execution of the 
Operational Efficiency Project are vital to achieving long-term 
improvements in safety at LANL. The Operational Efficiency Project 
consists of several sub-projects focused on improving the safety of 
laboratory activities, all of which are of interest to the Board. These 
sub-projects include:

 Safety (through adequate work planning and control),
 Quality Assurance (including welding deficiencies),
 Software Quality Assurance,
 Conduct of Engineering,
 Safety Bases,
 Operations,
 Environmental Risk Management, and
 Training.
    If appropriately implemented, the corrective actions identified for 
these Operational Efficiency Project initiatives should address several 
of the Board's concerns. The laboratory has established mechanisms to 
analyze, prioritize, and manage these actions. The Board plans to 
closely monitor this effort.
    In addition to the Operational Efficiency Project, there are other 
identified corrective actions that must be completed. Fire protection 
upgrades must be completed, and nuclear material stabilization and 
packaging activities must be continued. The resumption of certain 
criticality operations at Technical Area-18 must be conducted safely 
with deliberate operations. To reduce the risk from accidental 
dispersion, potentially vulnerable transuranic waste material must be 
removed from the site through execution of the ``quick to WIPP'' 
effort.
    There are also other opportunities to improve the safety of nuclear 
operations at LANL. Concerns with NNSA oversight at LANL were part of a 
larger, complex-wide problem recognized by the Board and communicated 
to the Secretary of Energy in May 2004 by Recommendation 2004-1. In 
this Recommendation, the Board identified potential safety 
vulnerabilities at DOE associated with an increased emphasis on 
productivity at the possible expense of safety, the loss of technical 
competency and nuclear safety research capabilities, a lack of 
operational awareness at high organizational levels, and a de-emphasis 
of central safety oversight. The Secretary of Energy has accepted this 
Recommendation and an implementation plan is being developed that 
should result in improvements in DOE's oversight of its high hazard 
nuclear activities.
    Concerns with the manner in which nuclear material confinement was 
being implemented at several defense nuclear facilities across the 
complex led the Board to issue Recommendation 2004-2. This 
recommendation calls for active confinement ventilation for nuclear 
facilities with the potential for a radiological release. At LANL, an 
effective confinement strategy must be established for the Technical 
Area-55 plutonium facility in response to this Recommendation, and to 
ensure that accidents do not result in radioactive material being 
released from the facility. An effective confinement strategy must also 
be established for the proposed Chemistry and Metallurgy Research 
Replacement facility in response to this Recommendation.
    The Board recently issued Recommendation 2005-1 to the Secretary of 
Energy, which concerns nuclear material packaging. This Recommendation 
resulted in part from plutonium-238 uptakes by employees at LANL that 
were caused by a packaging failure. The Recommendation calls for the 
development of DOE-wide criteria for packaging systems for nuclear 
materials. Implementation of this Recommendation will reduce the 
likelihood of a nuclear material release and subsequent worker exposure 
at all DOE sites, including LANL.
    Late last year DOE issued a draft Request for Proposal for the LANL 
contract. The Board reviewed this draft Request for Proposal with 
respect to provisions that affect safety. We concluded that it 
contained unnecessary and ill-advised limitations on DOE's oversight of 
the contractor and undermined DOE's system for identifying and 
implementing safety requirements. The Board has worked with DOE to 
correct this condition. The latest version of the Request for Proposal 
addresses the Board's concern by preserving DOE's system for 
identifying and implementing safety requirements, and by not limiting 
the ability of DOE to direct or oversee contractor activities in the 
safety area.
    In conclusion, the Board believes that the physical and 
programmatic safety improvements being pursued at LANL are needed, and 
that close oversight by both NNSA and the Board is required to ensure 
that needed improvements are realized.
    Thank you for the opportunity to report on the Board's efforts and 
perspective relative to ensuring the adequate protection of public and 
worker health and safety at the Los Alamos National Laboratory. This 
concludes my prepared remarks.

    Mr. Whitfield. Thank you very much, Doctor.
    Mr. Kilpatrick, you are recognized for 5 minutes.

                 STATEMENT OF MICHAEL KILPATRICK

    Mr. Kilpatrick. Thank you.
    Mr. Chairman and members of the subcommittee, thank you for 
inviting me to testify today regarding safety and security at 
the Los Alamos National Laboratory. As mentioned, I am the 
Director of the Office of Independent Oversight and Performance 
Assurance, which is responsible for evaluating environment 
safety and health, emergency management, safeguards and 
security and cybersecurity functions for the Department of 
Energy complexwide.
    My testimony today will focus on our independent 
perspectives on the safety and security aspects of the LANL 
stand-down. Our perspectives are based on our recent 
assessments and, in particular, reviews that were conducted in 
calendar year 2004 following the stand-down as well as early in 
calendar year 2005.
    First, our safety perspectives on LANL. Our most recent 
comprehensive inspection of LANL's integrated safety management 
program was completed in April 2002. At that time, we had 
concluded that LANL had made improvements in a number of areas, 
such as development of their integrated safety management 
program framework and documentation. However, more importantly, 
we had identified weaknesses in LANL's implementation of their 
processes in a number of important areas, including procedure 
compliance and feedback and improvement systems for both DOE's 
Los Alamos site office and the contractor organization.
    In accordance with our regular schedule, we had planned to 
perform an inspection of LANL in the August and September 
timeframe of 2004 to evaluate selected aspects of integrated 
safety management, including progress and correcting the 
deficiencies identified in the 2002 inspection. However, 
because of both security and safety concerns, as you are aware, 
site management had declared the stand-down of most activities 
on July 16, 2004. Because virtually no work would be ongoing 
during the timeframe of the planned inspection, we would not 
have been able to observe implementation of safety requirements 
and thus our ability to do a performance-based evaluation of 
safety would be limited.
    At about the same time, the former Deputy Secretary of 
Energy Kyle McSlarrow asked us to temporarily step out of our 
normal role at Los Alamos. In doing so, he recognized the 
importance of resuming operations at Los Alamos as well as the 
importance of helping the site to more comprehensively identify 
and correct their problems. Based on the former Deputy 
Secretary's direction, it was decided to defer the planned 
inspection and instead perform an ``Assistance Review,'' which 
was intended to help the site office--and by extension the 
laboratory contractor--to assess safety at Los Alamos.
    Our approach to the Assistance Review was to use our 
expertise to mentor and coach the Los Alamos site office and 
the laboratory and their staff and to provide additional 
perspective and advice based on our broad expertise and 
technical depth in conducting critical assessments across the 
DOE complex.
    We found that the resumption process was having a positive 
impact on improving safety performance by identifying a number 
of areas requiring LANL management attention and action and by 
more generally raising safety awareness across the laboratory. 
However, we also concluded that significant efforts remained to 
be completed and that sustained and continued management 
attention would be needed to improve site office and laboratory 
oversight and assessment processes, to improve compliance with 
requirements and procedures, to ensure that expectations are 
understood and implemented, to improve implementation of the 
integrated work management process, and to prevent recurrences 
of past problems.
    At the conclusion of the Assistance Review, most LANL 
activities were still undergoing validation and few had 
actually been approved for resumption. Since that time, 
Independent Oversight personnel have continued to monitor the 
progress of Los Alamos, and we understand that most activities 
have now in fact been resumed. The upcoming safety inspection 
now scheduled for September to November 2005 will evaluate the 
adequacy of actions taken by LANL to address safety 
deficiencies identified through the resumption process and the 
efforts by the National Nuclear Security Administration and the 
LANL site office in ensuring the effectiveness of the 
laboratory's efforts.
    Turning now to our perspective on security at Los Alamos, 
our most recent comprehensive inspection was conducted in 
December 2002. At that time, we had noted improvements in a 
number of aspects of LANL's security, but we also identified 
weaknesses in implementation of requirements in such areas as 
unclassified cybersecurity as well as weaknesses in line 
management oversight by the Los Alamos site office.
    The problems with Classified Removable Electronic Media, 
which includes disks and other removable storage media--and I 
will refer to them as CREM for short--surfaced--or, actually, 
resurfaced in December 2003 when a LANL annual inventory 
revealed missing items. Personnel from the Office of Security 
and Safety Performance Assurance and NNSA personnel performed a 
review within a few weeks of that time and concluded that the 
most direct cause for the missing CREM was the failure of LANL 
staff to adhere to established procedures and the failure of 
CREM users, which mostly means scientists, to work with 
designated classified matter custodians. Subsequently, a number 
of other incidents involving CREM occurred at LANL, including 
the inability to account for a classified ZIP drive. DOE and 
FBI investigations of some of these incidents determined that 
classified information was not actually compromised, but, 
nonetheless, the incidents highlighted performance problems in 
accountability systems and compliance with requirements.
    Because of the number of these CREM incidents at LANL and 
other DOE sites, Former Secretary Abraham took aggressive 
action in July 2004, including a memorandum directing stand-
down of all departmental classified operations involving 
accountable CREM and establishing a set of much more stringent 
requirements. Senior management also imposed criteria for 
resuming CREM-related activities, which included training, 
performance testing, validation by a local validation team, and 
approval by the former Deputy Secretary prior to resumption.
    Further, at the direction of the Deputy Secretary, 
Independent Oversight was asked to and completed independent 
validations of the implementation at critical facilities 
subsequent to their restart, primarily in the late 2004 
timeframe.
    Independent Oversight's initial post-start review of Los 
Alamos was performed in November 2004. At that time, LANL had 
resumed some but not all of their CREM operations. We 
identified significant improvements in the protection of CREM, 
but we also identified a number of weaknesses in implementation 
of the requirements by LANL.
    Because of these concerns, we conducted a follow-up 
validation review in March of this year, at which time the 
remaining CREM libraries were operating. We found that further 
improvements had been made, and most of the concerns from the 
November 2004, review had been adequately addressed. However, 
we continued to find weaknesses in some LANL facilities with 
regard to the adequacy of documented procedures, and we are 
currently in discussions with NNSA regarding the rigor and 
formality of the NNSA approval of some specific exceptions to 
departmental CREM policy.
    An Independent Oversight comprehensive inspection of LANL's 
security is scheduled for the November-December 2005, 
timeframe. During this inspection we plan to take a hard look 
at CREM implementation as well as other important aspects of 
their protection strategy.
    In closing, Independent Oversight believes that the 
attention focused on LANL has resulted in significant 
improvements both in the safety and security arenas. However, 
the concerns are long-standing and the efforts to change a site 
culture are difficult, as evidenced by the initial deficiencies 
and implementation of these new DOE CREM requirements. While we 
believe that the recent DOE and NNSA actions have been 
aggressive and appropriate, continued management attention is 
warranted. Further improvements in LANL's self-assessments and 
line management oversight by the NNSA and its Los Alamos site 
office are essential to sustaining the momentum and preventing 
future events.
    This concludes my prepared testimony, and I request that my 
written statement be accepted for the record. Thank you.
    [The prepared statement of Michael Kilpatrick follows:]

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    Mr. Whitfield. Thank you.
    We appreciate the testimony of all of you.
    Administrator Paul, I find it ironic that, because of 
mismanagement at Los Alamos, there was incurred additional cost 
or costs of $120 to $363 million, roughly. A significant part 
of that money would have been spent on research, but because of 
the stand-down that was not done. So the government taxpayers 
are picking up this cost because of mismanagement.
    Now I was pleased to hear or to learn that the National 
Nuclear Security Administration on April 8 did send a notice to 
the University of California that they were going to disallow 
$14 million. Now that is a relatively small number when you 
consider the magnitude of the cost, and I would like to ask 
you, how did you determine it was only $14 million?
    Mr. Paul. Let me first address your initial comment that it 
is shocking to you that all of the costs could not be 
recovered. The ultimate decision, the way these contracts are 
written, is made by a contracting officer, and there is the 
standard as to what is an allowable and is not an allowable 
cost. Unfortunately, at least the legal opinions that we have 
received so far have tended to indicate that these costs 
actually cannot be charged against the University but for a 
couple of exceptions relating to some small contractor claims, 
for example, and also for the first 2 days of the shutdown 
where apparently there was no work done whatsoever.
    Mr. Wilmot was involved at that exact time and actually 
issued the notice of intent time based upon some of the small 
contractor claims; and if the Chair would indulge me, I would 
like to have him provide a little bit more detail on the 
analysis that resulted in the exact figure of the $14 million, 
if that would be appropriate.
    Mr. Whitfield. That is fine.
    Mr. Wilmot. Mr. Chairman, I am the contracting officer for 
the Los Alamos contract. I also have two other contracting 
officers that support me in that.
    In making the determination, I consulted the Chief 
Financial Officer of the NNSA as well as my legal staff and the 
service center legal staff. The decision I had to make was, 
there was some question as to the reasonableness of the 
duration of the stand-down and had I made a determination that 
it was an unreasonable duration, then I could possibly have 
found additional unallowable costs. But my rationale that I 
used in making the determination was, since I participated on a 
daily basis and in effect made decisions every day about the 
duration of the activities, I participated throughout the 
period, and so my determination was--is that the length of the 
stand-down was reasonable. So that was the key decision I had 
to make. It this is based on interpretation of the contract 
language.
    Mr. Whitfield. Okay.
    Do you have a further comment, Mr. Paul?
    Mr. Paul. Well, just that the actual standard itself, 
because you are asking the very questions that obviously I have 
asked myself when I first started looking at this, the standard 
apparently in the contracts, in all research and development 
contracts that we have in the government pursuant to an FAR 
clause, apparently there is a fair amount of specificity, 
guidance, requirements, given to you about what you can put in 
these contracts. The concept of a stand-down like this is not 
directly referred to in the FAR, as I understand it, as the 
lawyers tell me, and it basically falls within the category of 
allowable costs.
    I understand your frustration with it.
    Mr. Whitfield. Thank you. I am also going to ask unanimous 
consent that we enter into the record this notice of intent to 
disallow these costs. If you will enter that in the record.
    Mr. Paul. If I could supplement, Mr. Wilmot, could you 
point out where we are with that NOI. It is a 60-day 
determination.
    Mr. Wilmot. Yes. There is about 30 days remaining until the 
laboratory responds back.
    Mr. Whitfield. Mr. Paul, another question for you.
    In your testimony, you state that you believe that a 
culture of noncompliance existed within the laboratory, and you 
also stated this is a culture that we and laboratory senior 
managers are trying to reverse.
    Could you describe quickly, succinctly, what you think are 
the root causes for this culture of noncompliance that has come 
into existence at Los Alamos?
    Mr. Paul. Well, I mentioned earlier I tended to concur with 
the comment that one of the members said earlier, that the 
blame cannot be laid to a single person, so I want to be 
careful to not fall into that trap, as the Congresswoman 
pointed out accurately. But it does come down to leadership, 
leadership of an organization that is the contracting 
organization, but also leadership of the government that is the 
overseer, over a long, long period of time.
    A culture is something, in my view, that is built up 
through past practices and patterns, conduct that is allowed, 
that is condoned, that is acquiesced to, over a long period of 
time. Leaders send signals that their subordinates receive very 
clearly, and they adjust their actions accordingly, and if 
leaders send messages that certain conduct is acceptable, then 
they are facilitating it. They are fostering it. They are 
breeding it.
    Mr. Whitfield. I guess it is easy to be complacent when you 
have been managing something since 1943, and you have never had 
to compete for it.
    Mr. Paul. Exactly, so that is not to blame a particular 
person or a particular group of people, but a trend that has 
occurred over a long period of time. It is trend now to try to 
taking a particular person or particular group, but, quite 
frankly, the events that occurred I think are the byproduct of 
many years of atrophy, if you will, atrophy in seeking 
excellence, in expectations on the business side, the six 
factors that Mr. Friedman laid out.
    Here is the thing. We have got the best science in the 
world there. There is a standard of excellence when it comes to 
science. The toughest problems resolved by man on the face of 
the Earth happen on that plot of land by these great Americans, 
and they have done so for over 6 decades. But in terms of the 
management and the culture of compliance, we haven't quite 
gotten to that standard of excellence.
    I think we, me, the guy you are looking at right now, 
shares some of that responsibility. I haven't been here long, 
but every day that I am here, I am more responsible if it is 
not fixed.
    Mr. Whitfield. Mr. Friedman, in a recent report that you 
had, you had identified approximately $30 million of improper 
payments to the University of California and some contractors 
have reimbursed DOE for these inappropriate payments.
    Has the University of California reimbursed NNSA for any 
improper payments identified in this report?
    Mr. Friedman. First, Mr. Chairman, let me say that the $30 
million I think you alluded to includes the three laboratories 
under the University of California. However, 50 percent of the 
money is applicable to Los Alamos, 40 percent to Livermore and 
10 percent to Lawrence Berkeley national lab are tear. We mated 
a recommendation that those expenses be reviewed for cost allow 
built. We think they are highly questionable and should be 
recovered. But at this point, the decision, we have not gotten 
the decision from the Department, so therefore, to the best of 
my knowledge they have not been recovered from the university.
    Mr. Whitfield. So there has been no payment whatsoever?
    Mr. Friedman. To the best of my knowledge, that is correct.
    Mr. Whitfield. That is something still under review at this 
time?
    Mr. Friedman. Well, our responsibility is to make 
recommendations to the NNSA, which we have done. The ball is in 
the NNSA's court on this issue at this point.
    Mr. Whitfield. Mr. Paul, do you want to respond to that, or 
Mr. Wilmot?
    Mr. Paul. I am going to have to get back with you on that. 
I have seen some of the written explanations of those costs. I 
have to be candid with you and tell you I am not exactly sure 
what procedures we are taking to address that. I know that it 
is happening through the service center, and I just, if I could 
take it for the record and get back to you.
    Mr. Whitfield. I would appreciate you getting back to us on 
the exact status of that.
    Mr. Kilpatrick, you point out in your testimony that CREM 
management at Los Alamos resulted in a decision to order a shut 
down of all CREM operations at all DOE sites in order to 
conduct a full evaluation.
    Most weapons facilities like Sandia and Lawrence Livermore 
were able to restart their operations within a couple of 
Mondays. Why did the restart of the CREM operations take so 
much longer at Los Alamos?
    Mr. Kilpatrick. There are several reasons that contributed 
to it, not the least of which that it was an especially large 
undertaking at Los Alamos in that they both had a very large 
inventory of CREM items, numbering upwards of 80,000 items at 
one point. But also because of the decentralized and 
geographically disbursed nature of how it is that they manage 
their CREM. That latter factor is a lot of what contributed to 
the many problems that they experienced over the last few 
years, but notably in the early part of 2004.
    As a result of that, unlike some other sites, they 
basically were in a position where they had to step back and 
completely redesign a system and process for managing CREM, and 
hence the development of this concept of 20 centralized 
libraries, each of which required the development of not only 
institutional procedures, but library-specific local 
procedures, training custodians and training users on those and 
putting in place all of the physical controls that were 
associated with that.
    The other thing that is worth noting is that, for good 
reasons, the deputy secretary actually imposed more stringent 
requirements on Los Alamos than what was imposed for the rest 
of the departmental sites and, in particular, the requirement 
to do daily inventories of CREM, which substantially 
complicated their resumption effort.
    Mr. Whitfield. Okay. Thank you. At this time, I will 
recognize Mr. Stupak for his question period.
    Mr. Stupak. Mr. Chairman, I am going to defer to Ms. 
DeGette. She is catching a plan. I will defer to her.
    Ms. DeGette. Thank you so much for your comity, Mr. Stupak.
    I just have a couple of questions. Mr. Paul, the Chairman 
talked about your written testimony where you talked about the 
culture of noncompliance within the laboratory. Frankly, that 
is what I was talking about in my opening statement.
    You said in your oral testimony there is a group that 
finally gets it, and I guess you are referring to the 
management, because there is obviously to me a big group that 
doesn't get it. I have the blog right here, and it is page 
after page after page after page of anonymous postings of 
people griping. Frankly, I have a daughter who is in high 
school. I am appalled, the level of these complaints are like 
high school student complaints. They are not like, the 
management is doing this particular thing that respects one of 
our high-level nuclear facilities wrong. It is about, ``Gee, I 
don't like Nanos and I wish he would go to hell.'' That is the 
level of complaining in this blog. Would you agree with that?
    Mr. Paul. It is hard to disagree.
    Ms. DeGette. So here is my question: For the rest of you, 
have you all come across this same kind of culture of 
noncompliance? Mr. Wilmot, I know you are probably the closest 
to this on the ground.
    Mr. Wilmot. I have been through culture transitions both at 
Idaho and Savannah River, and I have seen instances where the 
culture has deteriorated and then had to regain momentum and 
improve.
    Ms. DeGette. Do you see that happening at Los Alamos right 
now?
    Mr. Wilmot. I see a small light at the end of the tunnel. 
The people I deal with in operations and facility management I 
think truly are what I think the group of people that Jerry is 
talking to when he sees they get it. So there is a group that 
operates the facilities and particularly the high hazard 
nuclear operations that really do get it. But there was brought 
up a mention of this recent accident in March, or incident in 
March, that is something I would be willing to talk more about.
    It seems to be something that is telling us that we still 
have got that serious problem. We still have it. But I would 
like to talk about that incident if indeed it were possible.
    Ms. DeGette. That is what we need to go into a closed 
session for?
    Mr. Wilmot. You don't need to.
    Ms. DeGette. Maybe there might be some time in a few 
minutes. But my question to you really is, do you think that 
this culture that you have seen at other places and now you are 
seeing can be fixed at Los Alamos?
    Mr. Wilmot. Yes, ma'am, but it will take a considerable 
amount of time. I can say that my experience in Idaho was many 
years, and Savannah River was 5 to 7 years.
    Ms. DeGette. You will be pleased to know that we have been 
dealing with this for a great amount of time here, too, so how 
much more time is it going to take? Mr. Paul, do you have some 
sense?
    Mr. Paul. Well, Congresswoman, let me be clear. My comments 
earlier were with respect to the ranking member's comments that 
I had read or listened to some time back where he said he heard 
over and over and over that they finally get it, and I was 
simply pointing out that the people at this table testifying 
before you who have tried to tackle this situation, they get 
it.
    Ms. DeGette. You know what, I think you are right. When I 
visited with Admiral Nanos, I was very impressed. But you are 
not going to fix the situation until you change the culture, 
and I think all of you would agree, is there anybody here that 
doesn't agree with that statement? All of you would agree with 
that.
    So here is my question, and that is what I was trying to 
get at with Mr. Wilmot, how do you change that culture with all 
of these anonymous people who are the ones supposedly doing 
this work?
    Mr. Paul. I think some of the--it is going to be a spectrum 
of tools, some of which we have tried to exert already, the 
message that we sent through the adjustment of the fee, the 
pushing back on the allowability of the costs, the competition 
itself I think sends a message. But those things in themselves 
won't do it. It is also going to require leadership, leadership 
on behalf of the government overseers, ourselves, IG, Defense 
Board plays an extraordinarily important role, SSA--that is 
independent oversight--and NNSA, but also the lab leadership.
    Ms. DeGette. Let me stop you there. Have we seen this kind 
of culture of contempt for safety and security at the other 
labs, like Sandia, Lawrence Livermore and Pacific Northwest? 
Have we seen those problems there?
    Mr. Paul. I cannot tell you that there is evidence that it 
is exactly the same. Look, every facility has a different 
personality, a different culture. The culture of noncompliance 
that has resulted in the data that you have been monitoring for 
years now is somewhat unique at Los Alamos. I think everybody 
understands that.
    Ms. DeGette. So your answer would be no?
    Mr. Paul. That is correct.
    Ms. DeGette. Okay. Part of the problem is, I think, we have 
to face that at Los Alamos, and we have to say, why is that? If 
we are not seeing that kind of culture at these other labs and 
we continue to see it at Los Alamos, no matter who the leader 
is of Los Alamos----
    Mr. Paul. That is right.
    Ms. DeGette. Every time, folks like you come to testify 
before us, you recognize the problem. So it is not just that, 
and you know this, it is not just at your level.
    Mr. Paul. Just to put a finer point on it, you know, I run 
what we call the Leadership Coalition, a collection of our 
Federal site managers from every one of our facilities within 
NNSA, and we meet once every 2 months. For the last several 
meetings, we spent a pretty fair amount of the time in that 
leadership coalition where I sit in the middle of all of them 
and get each one of them to dedicate some of their FTEs, some 
of their resources to go to this one facility, to help it get 
better.
    So that, in a sense, answers your question. Yes, this one 
is different. I am pulling from all of them----
    Ms. DeGette. Well, you know what, I don't think you should 
take this personally, which you seem to be doing, because it is 
not--frankly, you understand that there is a problem.
    What I am getting at with you and Mr. Wilmot and others is, 
what do we do--when I was in Los Alamos talking to the 
relatively new management right after the shutdown last summer. 
They got it. They were working on it. Well, that has now been 
almost a year and not only have things gotten worse, not gotten 
better, they have gotten worst in some ways, because, as of 
June, July--I guess it was July when I was there last year--
people didn't yet hate Mr. Nanos like they apparently do now. 
So I don't see the solution on the horizon.
    Maybe Mr. Wilmot has something. He did say he saw a little 
light. I am just hoping it is not a train coming toward you.
    Mr. Wilmot. I hope so, too. Let me just comment that I 
think that the solution is to carry the message and win the 
hearts of all of the members of the laboratory staff and 
convince them that this is truly an effort that if you improve 
your safety statistics and your operational capabilities, you 
don't run plants to failure, you have efficient business 
systems, that this is going to benefit and it is going to free 
up more funding to allow them to do more science.
    Ms. DeGette. How do we convince them of that?
    Mr. Wilmot. Well, my sense is, during the restart, they 
felt like this was imposed on them rather than participating in 
it. So somehow we have got to reverse that feeling and create 
the ownership.
    Ms. DeGette. How do we do that?
    Mr. Wilmot. Clearly, it has to be a very strong message 
from management that they are listening. The scientists have a 
unique issue here, because they have very small laboratories. 
And it is very onerous for them to try to look at the 
regulations themselves individually for each small task they 
have. We have got to try to tailor our approach to this, which 
is something we haven't done yet.
    Ms. DeGette. Can I stop you? Is that different than these 
other facilities?
    Mr. Wilmot. Actually, it is a little bit. At Savannah 
River, for example, we were a production plant. We had a small 
R&D facility there called Savannah River Technology Center. We 
had a unique issue to deal with that technology center, and it 
took a little longer there, because we weren't sure how to get 
science more engaged in the conduct of operations and doing 
things in a manner that is more acceptable by our standards.
    Ms. DeGette. But what about the other comparable labs, 
Sandia, the ones I have mentioned? Is it so different at Los 
Alamos than at those labs?
    Mr. Wilmot. My truth is that the institution has failed its 
staff. They have failed to convey the message of the importance 
of these particular disciplines, like project management, 
conduct of operations and all of those necessary things that 
you have to have in today's environment to run nuclear 
facilities. I believe the institution has failed its staff in 
getting the message to them and holding them accountable for 
those things.
    Ms. DeGette. The institution? Who?
    Mr. Wilmot. Me, too. I have been here a year now, and I am 
devastated by the accident--the incident that occurred in 
March. That is me. I own it. And what we have got to do----
    Ms. DeGette. You know, the devastation continues year after 
year. I am empathetic with you. I think it is very frustrating. 
But I think it goes deep into the institutional ethos at Los 
Alamos. I don't know what we do about it. I am not sure any of 
you do either.
    Mr. Chairman, thank you.
    Mr. Whitfield. The gentleman from Texas is recognized for 
his question period.
    Mr. Burgess. Thank you, Mr. Chairman.
    Maybe, if we could just continue on that line for just a 
moment and forgive me, because I am new, so these questions may 
sound naive. Mr. Wilmot, the institution has failed its staff. 
From what I am hearing here today, it sounds like you need new 
staff to me. That am I just being woefully naive in that 
assumption?
    Mr. Wilmot. Not at all naive, but I can assure you that 
every individual I have worked with, I have been very impressed 
with the people at the laboratory, and I have met a lot of good 
people. But my sense is, it is not an institution. They have 
not worked as an institution. There have been small groups. It 
was almost more like a university where you have small 
organizations.
    Mr. Burgess. I agree with that statement. But it is a very 
serious business of our Nation's nuclear program that they are 
running, not getting their own education.
    Mr. Wilmot. Let me just comment that the light I was 
referring to, what I have seen since about February, is what I 
consider to be an institution struggling to come together. I 
have seen it at the very top, at the director and deputy 
director level and the senior management team. I think my sense 
is that they are getting the message, but this does not happen 
overnight, because there are management systems that are not in 
place to help them to be an institution.
    Mr. Burgess. Well, I know we are not supposed to go into 
sports metaphors, but they always say, you fire the coach 
because you can't fire the team. I remember once down in Dallas 
when Don Nelson fired the team, and it actually worked out. I 
can't help but think that might be part of your solution.
    I want to come back to you in a minute because you asked 
for some time to talk about the incident that happened on your 
watch.
    But, Mr. Friedman, if we could just talk for a second 
about--you talked about, I guess it sounded like some credit 
cards that were used inappropriately and some people actually 
are incarcerated because of that?
    Mr. Friedman. Yes, sir.
    Mr. Burgess. And then the next paragraph you talked about 
some budgetary errors that looked a lot more significant, like 
the difference between the credit cards was $40,000 and the 
budgetary effort was $23 million.
    Mr. Friedman. $30 million actually.
    Mr. Burgess. Did someone go to jail for the larger error, 
or have they, or will they?
    Mr. Friedman. Let me clarify one thing, Mr. Burgess, if I 
can. The purchase card, the total amount of purchases made by 
purchase card at Los Alamos is a very, very significant number. 
I don't have it at instant recall, but it was in excess of $100 
million a year. So it is not an insignificant amount of money. 
So violations, misuse of the purchase card, is a serious, 
serious matter, and I want to keep it in perspective.
    With regard to the other issue, there were miscalculations 
made at the time the contract was signed, and the taxpayers are 
going to foot the bill of about $30 million at this point, 
unless there is some further action taken. So I think it is a 
significant issue.
    Mr. Burgess. Who is responsible for that further action? Is 
that our action here at this committee level?
    Mr. Friedman. The way we work under our charter, Mr. 
Burgess, is that I report to NNSA, and the contracting officer 
decides, to quote a phrase. And we have issued our report. We 
have taken a position on $30 million. It is over a 5-year 
period. It applies to all three laboratories, as I defined 
earlier, and the ball right now is in the court of NNSA to make 
a decision.
    Mr. Burgess. Will you be so kind as to follow up with this 
committee in writing as to the disposition of that? Are you 
allowed to do that?
    Mr. Friedman. We, as a matter of course, without a request 
from you or the committee, we keep a constant watch on those 
recommendations and determinations as to how they have been 
resolved.
    Let me be very candid with you. We suspect, and this is not 
my decision, we suspect that $29 million of the $30 million, it 
probably is unlikely that the Department will decide to try to 
recoup that from the university. That is my guess, because 
there was agreement at the time of contract initiation. I don't 
agree with that interpretation necessarily, but I think that is 
where the Department probably will come out.
    There is an additional $880,000, which is the third 
component, the third leg of this thing, we think clearly should 
be recouped from the university.
    Mr. Burgess. Thank you.
    Mr. Friedman. It is unequivocal.
    Mr. Burgess. Mr. Wilmot, use my remaining time----
    Mr. Whitfield. I think Mr. Paul wanted to comment.
    Mr. Paul. I beg your pardon. Just briefly, if I may, to 
respond to your earlier question about, whose responsibility is 
it? It is the NNSA, and we manage that contract through our 
service center. The colloquy I was having with the Chairman a 
little bit ago about the $30 million and our discrepancy, our 
chief financial officer at the service center is currently 
reviewing the Inspector General's report and trying to 
determine what portion of that could be claimed, you know, as a 
charge. I don't know the result of that. What will happen is, 
he will issue his recommendation. We will make a management 
decision. A management decision will be made through the 
contracting officer, who is the manager of the Los Alamos site 
for the Federal Government. That is Mr. Wilmot. So we will 
follow up and tell you where we are at with that process.
    I think the Inspector General is correct, that some of 
those decisions are, to some extent, burdened by the decisions 
that were made let's say in early 2000. So we are working 
through that.
    Mr. Burgess. Very well.
    Mr. Wilmot, if you would, let's use what time I have left 
to allow you to discuss what you were trying to get to earlier. 
It sounds like the safety incident--my goodness, painters sent 
into the vault that had no special training--it almost sounds 
like premeditated assault to me. But, by all means, let's hear 
what you have to say about that.
    Mr. Wilmot. Thank you. I do appreciate the opportunity.
    As I said, I was quite devastated by that. What I wanted to 
convey was that, as Mr. Paul had stated earlier, when we 
resumed activities at the end of January-early part of February 
and declared resumption started, we essentially had roughly 400 
findings that we had to make sure and have corrective actions 
for or some sort of compensatory measure in place.
    Now, I didn't have the staff to go out and validate all of 
that in the field, so we relied on the signature of an 
associate director in each of the organizations to sign off 
that, yes, barely, we had said what we were going to do. That 
is in February. This event occurred in March, early March.
    We asked the laboratory to do an investigation, to 
understand all of the things that went wrong in that particular 
event. In the meantime, I had an investigation team that went 
out and validated all of the corrective actions, these 400 or 
so findings--excuse me, the 400 findings that we validated. We 
found that only eight of those had not been validated or done 
as people signed off and said they had.
    Guess what? This organization that had this accident occur 
under its auspices was the one that I think actually even five 
of the findings were not--actually they did not correct them.
    Not that I feel good about it, but I just don't want you to 
get the wrong impression about the overall resumption because 
of this. Because they said they had fixed them. When I came 
back and validated after the fact of the accident, of course, 
they had not done what they said they did, with the signature 
of an associate director.
    So that is why I am devastated. That is the concern to me. 
So everything that has gone wrong in the laboratory could be 
found in that report. It is that serious. Those management 
errors that are there are egregious, no question, sir.
    So, but the point to you is, and to the panel, is that I 
don't want you to take away the message that we failed in 
resumption. I am not happy about what happened, believe me, but 
I do believe if that organization had implemented what it said 
it was going to do for resumption, we might not have had that 
incident. That was my point, and I thought it was very 
important for the subcommittee to hear that.
    Mr. Burgess. Okay. What sort of accountability have you 
extracted from the individuals responsible?
    Mr. Wilmot. We have a conditional approval clause, just as 
I did for the laser accident or for the CREM incident. I am not 
saying, right now, I am going to do it, but I certainly have 
that available to me, and this is of that importance. What that 
allows me to do is, of the earned fee, I can take up to 100 
percent of that earned fee away from them.
    Mr. Burgess. I encourage you to do so.
    Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. Mr. Stupak is recognized for 10 minutes.
    Mr. Stupak. When you say you can take up to 100 percent of 
their earned fee, that just means the lab loses some money, 
right?
    Mr. Wilmot. Yes, sir.
    Mr. Stupak. What about the individual who failed to sign 
off?
    Mr. Wilmot. Honestly, one of the actions that the 
laboratory has committed to is to look into the personal 
practices of the individuals.
    Mr. Stupak. So if you want accountability and you put the 
lab back on line and the associate director is supposed to sign 
off and you are led to believe they did, you go back and check, 
they didn't, where is the accountability of this associate 
director who is supposed to sign off rather than punishing the 
lab? But not punishing the associate director?
    Mr. Wilmot. I will not second guess what the laboratory 
should be doing here, but I am certainly going to be watching 
their actions on this. I was on the airplane----
    Mr. Stupak. Wait a minute, let's not be watching. We have 
been through this so many times. We get this all the time: I 
will be watching. Then you come and tell us another story, and 
this terrible accident happened in March, and it is a serious 
accident when you have radioactivity being leaked out and 
people being exposed to it. And we are just going to watch it? 
Where is the accountability?
    Mr. Paul. May I?
    Mr. Stupak. Sure.
    Mr. Paul. If I may, Congressman, I think what Mr. Wilmot is 
saying is he doesn't have the direct authority to take a 
direct----
    Mr. Stupak. Who does?
    Mr. Paul. The laboratory is their employer.
    Mr. Stupak. Who is the employer? UC?
    Mr. Paul. That is correct.
    Mr. Stupak. But isn't your job to oversee it? Aren't you 
supposed to be the management and director? Wouldn't you be 
managing UC?
    Mr. Paul. Exactly. And I think that is what Mr. Wilmot is 
trying to convey.
    Mr. Stupak. So if UC is not doing it, then it falls on your 
hands then, correct?
    Mr. Paul. Correct.
    Mr. Stupak. So what are you going to do about this 
associate director?
    Mr. Paul. I believe what Mr. Wilmot is saying is that the 
mechanism through which we can manage is through that employer 
down--when he says he is going to be watching it, I don't think 
he means passively. He means that that is a criteria he is 
going to use when he makes his decisions about whether to meet 
out some other--about whether to invoke other options.
    I believe that is--I don't want to lead the witness, but I 
believe, Congressman, that is what he is pointing out, not that 
we are going to passively watch this, but we have to stay 
within the bounds of law.
    Mr. Stupak. Let me ask you this then: What is so special at 
Los Alamos that we go through this year after year, that what 
is being done in Los Alamos, why can't it be transferred to 
other labs? In other words, why do we need Los Alamos? What is 
in the science that can't be transferred somewhere else?
    We are moving some stuff up to Colorado. We moved some 
stuff to Lawrence Livermore. We have this--what--46-acre 
facility, and we get back here all the time with complaint 
after complaint after complaint. We are trying to change a 
culture? I guess we are not social scientists.
    How are we going to do this? Why do we have to have this 
lab, seriously?
    Mr. Paul. A perfectly legitimate question. We ask that 
question. As good managers we have to ask that question about 
every single facility on a regular basis and justify everything 
we are doing with taxpayer dollars.
    We currently have a complex-wide study being conducted with 
an outside group to look at that very issue, what facilities 
are necessary for the defense nuclear complex of the future? We 
should receive by the end of June, I believe. I think we will 
have a written report by the end of June on that, and I am sure 
one of the issues--I haven't read the report, obviously, but I 
believe one of the issues is an analysis of every single 
facility and what activities could be moved.
    You specifically asked Los Alamos. There is some unique 
infrastructure there that would be very expensive to move and 
very difficult to move. Just the environmental impact statement 
alone on moving the Legacy Research Facility that has existed 
for the United States of America for over 60 years, the IS 
alone on that would be the biggest one ever in this country. It 
would be significant, facilities like DARHT and TA-55 and CMR.
    Mr. Stupak. Hopefully, we will get to the point in this 
country where we don't need all of these nuclear labs. So if we 
have so many problems with this one lab and if the work can be 
transferred to the other labs, why not do it?
    Mr. Paul. I think when we get the complex study, there will 
be an opportunity--we all look forward to that complex study, 
and I know from your interest in these issues, you will, too.
    Mr. Stupak. But I don't want to know about consolidating 
government services. I am saying we have a lab here that is a 
constant problem, that is costing us $30 million here. Let's 
see, shutdown was $119 to $300-some million it was estimated. 
We are not quite sure yet. You have objected to the $14 
million. $119 was the low end. $367 I think was the high end. 
So take away $14 million, so it is $357-some million it cost 
us. We talk about $30 million here on charge cards that people 
can't sort of account for.
    Why do we need this one then? Why can't we transfer those 
things out of here? The science? Is there any really unique 
science that can only be done at Los Alamos and nowhere else?
    Mr. Paul. I think you have to have a national laboratory. 
If you are asking me----
    Mr. Stupak. We have a couple more, we have Lawrence 
Livermore, right? Sandia.
    Mr. Paul. There has historically been a thought that peer 
review, that having more than one adds a lot of value to big 
science. You have to have that intellectual tension, if you 
will, that peer review. One lab doesn't do it for you.
    Mr. Stupak. We have four of them besides Los Alamos, don't 
we? Sandia, Lawrence Livermore, Brookhaven, GNNC.
    Mr. Paul. Certainly, the concept of moving a laboratory to 
another facility is not beyond the ability of man to analyze, 
and we will look into this.
    Mr. Stupak. How do you change this? This is all these 
blogs. I just looked at one of them. Look at that: ``Roger that 
to the petition.'' in other words, this person wants Mr. Nanos 
gone. ``you can understand that phrase, can't you, Mr. Nanos? I 
can't call you director or doctor because I can only do this if 
I respect the person and the position for which they hold and 
perform.'' this person obviously doesn't.
    So you can't change that. You are not going to change this 
person. His mind is made up. And you can go through 46 pages 
here of them, and they are all sort of like this.
    Mr. Burgess is right. You can't fire the team, and we 
can't. But maybe we can transfer the science, and they can 
transfer if they are interested in working for the government 
and doing the job. And if they are honorable people, as they 
claim they are in these blogs, they will continue their 
research somewhere else.
    What is wrong with that? Maybe we won't be back here next 
year, and again and again and again. I haven't been here that 
long. I have been here 13 years. I have been 12 years on this 
committee, and every year, I am here getting the same thing. I 
always get all these nice answers that it is leadership. It is 
management. It is this. It is that.
    I am just saying, why do we have to have this place any 
longer? Can anyone really tell me what is so unique that we 
can't do anywhere else what we are doing at Los Alamos?
    By your silence, I take it there is nothing that we 
couldn't transfer somewhere else and still keep our national 
security and our research and that all done, right?
    Mr. Paul. Look, anything that man does, he can undo. I 
don't want to reduce this to philosophy, but anything man does, 
he can undo. I mean, the rhetorical question, could you move 
something from one place to another, I guess theoretically you 
can.
    This particular facility, this particular lab and the 
facilities that are there, could you move everything there into 
the desert somewhere----
    Mr. Stupak. I am not talking about desserts. Why can't we 
move it to other labs?
    Mr. Paul. You could certainly do a cost-benefit analysis of 
doing that, and I think that is exactly what we are studying. 
That is the message I am trying to convey to you. I am trying 
to violently agree with you, that we need to be looking at all 
of these issues, and that is indeed exactly what is being done 
as to every single facility, trying to look into the future at 
what are the critical missions for this complex, how do they 
need to be done and what are the locations where we would need 
to do them.
    Mr. Stupak. And have you identified any critical mission 
that is being performed at Los Alamos that can't be done 
somewhere else in the United States by one of our labs or the 
military?
    Mr. Paul. Well, when we see the complex study, we will have 
a better handle on that.
    Mr. Stupak. Okay. If we can, the decision was made last 
year to shut down all the operations at the lab, and this 
decision was ordered by Mr. Nanos and, ultimately, may have 
cost taxpayers millions of dollars. In retrospect, was this a 
good decision, why or why not, and would Los Alamos have been 
shut down, for example, by NNSA had this not been ordered by 
the director? Can you give me your opinions on that?
    Mr. Paul. I can tell you that even prior to the shutdown, 
NNSA was having discussions with the director about doing it 
itself based probably more on safety grounds than on security. 
But, certainly, they both played into it.
    The decision to stand down itself we stand by. I think this 
committee and the committee chairman has stated that he stands 
by that decision as well. The question of duration, it indeed 
took longer to resume, to stand back up, about twice as long 
than what was expected.
    This organization believed that it was better to do it 
right than to hold to a particular time line. A very serious 
undertaking here to go through that level of reform, what we 
are trying to do here, 3,000 findings, it was very difficult, 
and it did take a heck of a lot longer.
    The management system is a business. They atrophied so bad, 
Congressman, you just didn't have an infrastructure in place, 
and you had to create it out of whole cloth in a lot of ways. 
And it just took longer.
    Mr. Stupak. You agree with this decision to shut her down?
    Mr. Paul. Yes, at that stage, I think it had to be done.
    Mr. Stupak. Mr. Wilmot, you agree it had to be shut down?
    Mr. Wilmot. I had discussions with the director and the 
deputy director about a rolling shut down at one time, and I 
actually gave him a draft paper of my concerns. Yes, sir, I do.
    Mr. Stupak. Mr. Friedman, do you want to add anything? Dr. 
Eggenberger?
    Mr. Eggenberger. Yes, I will add a little bit. The Board 
does nuclear safety at defense nuclear facilities only, so some 
of these issues that we are talking about we don't----
    Mr. Stupak. Would not be in your area, right. How about 
from your area?
    Mr. Eggenberger. From our area, if the Board would have 
thought that there was an eminent threat to health and safety, 
we would have recommended to the Secretary of Energy to shut it 
down. We did not do that.
    Mr. Stupak. Okay. Do you think Mr. Nanos was correct in 
shutting her down or doing a rolling shutdown as it was thought 
of, or do you think--what do you think on that?
    Mr. Eggenberger. You talked about the program of resumption 
and listed the items. That program had started before the 
shutdown. It was in its infancy. And as far as our individual 
concerns that I had mentioned in my summary, most of those, 
with a few exceptions, were rolled up into that program. So we 
believed that our interests were being taken care of if that 
program were implemented in a proper sense.
    To back up a little bit, the laboratory generally is very 
good at responding to our concerns and understanding our 
concerns and putting together a plan to address them. They are 
generally very good at that. The issue that generally comes up 
is the implementation, and implementation, in our view, is the 
responsibility of management at the laboratory and it is also 
the responsibility of the oversight by the Department of 
Energy. If that was done properly, we saw no reason why the 
laboratory could not continue on.
    Now, one other thing that I would like to mention is, in 
2004, we wrote to the Secretary a recommendation, and it is 
called Recommendation 2004-1. 2004-1. The Secretary has 
accepted that. And what that recommendation says or the 
requirements in it are that the Department of Energy take a 
more proactive role at headquarters in their interactions with 
their site offices such that they can understand and implement 
the safety programs that they have.
    Now, I am talking from a safety point of view.
    Mr. Stupak. Let me ask you this then on the safety program, 
DOE's Office of Environment, Safety and Health issued proposed 
industrial and construction worker safety regulations in 
January 2005 in response to the Defense Authorization Act of 
2003. They were intended to parallel the Price-Anderson nuclear 
safety regulations.
    But tucked into this, put out by DOE safety regulations 
here, were 10 separate exemptions to these rules, none of which 
were authorized by Congress and not part of the OSHA regime.
    Some of us feel that many of these exemptions are going to 
usurp the rules put in place. Are you saying that the Board 
agrees with this approach? Could these exemptions actually lead 
to a reduction in current levels of worker safety there?
    Mr. Eggenberger. My understanding is this is outside the 
nuclear safety regime and is in the safety regime that more 
addresses the OSHA-type items.
    Mr. Stupak. But it also deals with the nuclear, like that 
vat they were cleaning out there with the release of the 
radiation and the paint chips and all that that I spoke about 
in my opening. That may be OSHA, but you have to have a 
technician trained in handling radioactive material in order to 
do it. And when you put 10 separate exemptions on nuclear 
safety regulations, it may be OSHA, but it came from the Board. 
So is the Board more concerned about complying with OSHA than 
safety regulations?
    Mr. Eggenberger. That didn't come from us.
    Mr. Stupak. DOE's Office of Environment, Safety and Health. 
I know it is not you, but you were just talking about it. You 
were just talking about DOE's Office of Environment, Safety and 
Health. So I thought maybe you knew something about this.
    Mr. Eggenberger. No, I am talking about nuclear safety and 
implementation of nuclear safety, which is a line operation 
that runs from the Secretary to the NNSA chief down through the 
line down into the sites and results in the overseeing of the 
laboratories.
    Mr. Stupak. Mr. Chairman, you have been more than kind. 
Thank you very much.
    It seems like we just keep going around and around here. 
But this is a lab involved with nuclear research. We are not 
making Rice Krispies here. I really wish we would either fix 
this lab or end it. I just don't see much future, other than 
more hearings for us.
    Mr. Whitfield. Just to follow up for one moment here, you 
referred to a complex study in which are looking at 
alternatives and options available. When do you expect this 
study will be completed?
    Mr. Paul. Chairman Hobson had actually put language in the 
last Defense Authorization Act requiring this complex study. 
NNSA was on its way to creating it at the time. The original 
deadline I believe was the end of April.
    It was difficult to assemble the exact collection of people 
with the right qualifications to perform that study, so it 
didn't get started until a little bit later than what was 
anticipated.
    To answer your question, I believe that Chairman Hobson has 
said he was going to relax the due date on that for an oral 
presentation. I am not totally sure, but I think an oral 
presentation at the end of May and a written at the end of 
June. I don't think a final decision has been made on that.
    Within the next couple of months, I believe we are going to 
see the complex study which truly takes a holistic analytical 
approach to looking at every single facility within the NNSA 
complex and trying to match that up with a NNSA of the future 
and come up with some different options for condensing, 
consolidating and really analyzing what the footprint should be 
and where.
    Mr. Whitfield. So one possible option would be what Mr. 
Stupak suggested, that some research could be transferred 
elsewhere?
    Mr. Paul. I want to be very careful here, because I have 
not had that specific discussion with any member on the complex 
study, but my understanding is they are looking at all options.
    Mr. Whitfield. Okay. We will certainly be interested in 
looking at the results of that study.
    One other thing I would like to do, this is the corrective 
action performance report dated April 27, 2005, which basically 
shows that the University of California is already behind on 92 
post-start corrective actions contained in the corrective 
action plan. This document breaks down Los Alamos by division, 
and you will find on page three here that the manufacturing 
systems and methods division accounts for a total of 43 of the 
92 corrective actions thus far.
    I would just ask you directly, Mr. Wilmot, can you explain 
what the manufacturing systems and methods division does? And 
why is it so far behind on its corrective actions? And I am 
asking unanimous consent to enter this performance report into 
the record.
    Mr. Wilmot. I would ask that I be able to provide that in 
detail in a written comment to you. I think that would be 
better serving your time.
    Mr. Whitfield. Okay. That will be fine. Anyone else have 
any questions?
    Mr. Burgess?
    Mr. Burgess. Dr. Eggenberger, just a brief follow up on 
your testimony. You talked about fire protection upgrades must 
be completed. I guess these were not completed by the 
University of California. They excluded the fire protection 
management from their post-restart corrective action plan. Is 
that right, and should that have been in there?
    Mr. Eggenberger. I will comment on that a little bit, if 
you will permit me.
    Mr. Burgess. I wish you would.
    Mr. Eggenberger. As I mentioned to the ranking member, the 
OE project was in development prior to shut down, and it 
addressed most of our things. Now, at one time, my 
understanding is the fire protection program was in the 
operational efficiency project, and as they redid that and 
finalized it, they decided to take the fire protection out of 
that because it was basically to be done by one separate 
department and that they would handle it that way.
    Now, it isn't that fire protection is out. It is still in, 
but it is not being handled as part of the operational 
efficiency program. So our understanding is those items are 
still being done at the laboratory. So it isn't lost.
    Mr. Burgess. Very well.
    On the issue of the slow pace of efforts to stabilize 
nuclear materials at Los Alamos, specifically the University of 
California--I am still with you, Mr. Eggenberger--I believe the 
University of California has extended the original plutonium 
stabilization date from 2002 to 2010 at an additional cost of 
$78 million.
    Why is it important that the University of California 
accelerate plans to stabilize nuclear materials, and are there 
risks to workers if these stabilization plans are not 
accelerated?
    Mr. Eggenberger. This stabilization of excess materials 
began in 1994, at the laboratory under our Recommendation 94-1, 
and at that point in time, we asked around the complex that 
actions be taken to stabilize those materials which caused the 
most risk to the people and to the workers.
    At Los Alamos, they did that, up to a point. They did the 
high-risk items, and then there was what was left. What was 
left was then prioritized again, and in our view, the highest 
risk of what was left was at the end of the line rather than 
bringing it up to the first.
    They have redone that and brought the high-risk items up. 
And given the budgets and given the risk, since it is going 
down as we proceed out, we believe that the schedule is 
reasonable to go until 2010.
    One other, as far as other risks, are that buried in the 
transuranics, I guess it is TA-54, I mentioned the Quick to 
WIPP Program, which removes those and gets them down to the 
Carlsbad facility. That is going again, and it is not quite as 
fast, I believe, as DOE would like it to be, but it is on the 
way. And there is a lot of effort being put in by NNSA to 
continue on that. So, we are reasonably happy with that.
    Mr. Burgess. Very well. In the brief time I have left, Mr. 
Friedman, do you have any thoughts that you would like to share 
with us?
    Mr. Friedman. Well, I have been looking at Los Alamos for a 
long time, Mr. Burgess, and I share the frustration with the 
members of the subcommittee as to making progress.
    I suspect--I do want to comment, probably the smartest 
thing for me to do would be to stay out of the line of fire, 
but let me indulge my passion for danger.
    Mr. Stupak, to go back to a point you made earlier, I have 
audit inspection investigation responsibility for the entire 
departmental laboratory system, including the other weapons 
laboratories and the science laboratories and others. And no 
one should--there are 14,000 people working at Los Alamos, and 
you may have a few bloggers, a number of bloggers, who may be 
expressing personal angst. And that is legitimate. They have a 
right to do so. But the vast majority of people there are 
extraordinarily dedicated, Nobel Prize winners, Enrico Fermi 
Prize winners. They are an extraordinary group of people.
    I am not suggesting they can't be moved, the function 
couldn't be moved. It probably could be physically, but they 
are an extraordinary group of people. And my job is actually 
going out and being a critic, and here I am saying something in 
support of them and in support of the mission.
    To compare Los Alamos and say it is imperfect with the 
other labs being perfect would not be a correct 
characterization. There is no doubt that we have a more 
disproportionate number of problems from an IG perspective at 
Los Alamos than any other laboratories.
    However, there are problems that exist across the complex, 
throughout the laboratory system, and it may be in part 
inherent in dealing with large numbers of scientists, who are 
very dedicated people but may not have a commitment to business 
systems that we would like to see in the normal course of 
action.
    But it would be unfair, I think, to simply say these people 
or this operation is impure and the others are pure. There are 
problems throughout the complex, many of which mirror perhaps 
at a lesser intensity the problems that you find at Los Alamos.
    I appreciate your giving me the opportunity, Mr. Burgess. I 
wanted to clarify that point.
    Mr. Burgess. Thank you.
    Mr. Whitfield. Mr. Stupak.
    Mr. Stupak. Now I do have a question. Then how do you fix 
it? Really? Seriously. I don't want leadership. I don't want 
management. How are you going to fix it? Either fix it or close 
it. This is just crazy.
    Mr. Friedman. Mr. Stupak, I have appeared before you on 
several occasions, and we have had animated discussions.
    Mr. Stupak. I get animated about this stuff. I mean, there 
is so much duplication in our labs. If you take a look the 
budgets and that, there is a lot of duplication. I don't think 
we need all of this. And every time we come here, it is a 
couple of hundred million, a couple hundred million there, a 
couple hundred million there, and no one is accountable.
    You know, 12 years ago, I was the one talking about, there 
seems to be this culture out there--I had been out there a 
couple of times--about noncompliance; we will do it how we 
think it should be done, The heck with rules, regulations, 
Congress and everything else.
    Now, today, the witnesses were using the word ``culture.'' 
and unless you are going to get some social people, social 
engineers, whatever you want to call them, out there to fix 
this place, let's close it.
    Really, seriously, I really believe if you move one or two 
tasks out of Los Alamos, they will get the message. Either 
clean her up or we will shut her down. I don't know what else 
to do. At least that is an idea. You guys got any idea on how 
you are going to fix this, other than new management?
    Mr. Friedman. Well, let me say this: I respect your point 
of view on this. There has been no issue, no action that has 
been taken as momentous and as earthshaking in the 20-plus 
years that I have been looking at Los Alamos and indeed the 
laboratory system than recompeting this contract. And that may 
well be the defining moment as to whether Los Alamos can be 
salvaged in a way that would satisfy you and the other members 
of this subcommittee and others throughout society.
    Mr. Stupak. So, I mean, what would a new manager do 
different? Let's say, give it to the University of Texas. Since 
the Chairman is from Texas, we will give it to that university. 
Well, Mr. Burgess, you are from Texas. I would rather see it go 
to the University of Michigan.
    But let's say, give it to Michigan, give it to the 
University of Texas; what really is going to change?
    Mr. Friedman. Well, Mr. Stupak, if I knew the answer to 
that, I would be bidding on the contract, proposing on the 
contract myself. It is going to be the responsibility of all 
the proposers. And if the University of California proposes as 
well to come up with a proposal that is comprehensive, 
complete, represents a change from the status quo, in my 
business--I am in the business of advocating change, not 
accepting the status quo. That is the business I am in. And the 
status quo at Los Alamos is unacceptable. I don't think there 
is any question about that.
    So if I were on the panel that evaluates the proposals that 
the NNSA will be receiving, I would be looking for innovation, 
substantive, significant, deep-seated innovation in the way 
that Los Alamos goes about its business, as a primary criteria 
for making the decision as to who will manage Los Alamos for 
the next 7 years or decade or whatever the case might be.
    Mr. Stupak. I just think, if you have a model--You know, I 
am from Michigan, so we know about cars. If you buy a model, 
year after year, you buy an Oldsmobile, and it keeps breaking 
down, keeps breaking down, keeps breaking down, you don't go 
back and keep buying an Oldsmobile. Sooner or later, you go buy 
maybe a Buick or maybe go buy a Datsun. I don't know what the 
heck you buy.
    But it just seems to me that we are just repeating the same 
old things. And I don't see anything so unique and exclusive to 
Los Alamos that it can't be done somewhere else. If we've got 
this problem for I don't know how many years it has been now--I 
have only been here 12 years. I hate to see, like Mr. Dingell 
has been here forever, and he has got much more frustration 
than I have.
    Mr. Whitfield. I do think it is significant that we do have 
an RFP out there, and we cannot afford the status quo anymore.
    I would ask also unanimous consent that we keep the record 
open for 7 days for any members who have opening statements. I 
would also ask unanimous consent, our staff submit to the NNSA 
three questions relating to removal of material at TA-18, 
material at TA-55, and another question relating to Los Alamos 
TA-18, additional questions. You all submitted answers. So I am 
asking unanimous consent that we enter this into the record as 
well.
    With that, this meeting, this hearing----
    Mr. Stupak. Could I ask one more question? Do we have any 
blogs in support of Mr. Nanos? We don't, do we?
    Mr. Friedman. No, no.
    Mr. Stupak. We do?
    Mr. Freidman. I am not in the blog business. I have been 
accused of a lot of things, but not that. There are people who 
have entered the blog system in support of Dr. Nanos, yes.
    Mr. Stupak. I didn't want just the negative blogs in there. 
Thanks.
    Mr. Whitfield. This concludes today's hearing. Thank you 
very much for your time and testimony. Of course, we will be 
having another hearing with the University of California and a 
whistleblower panel.
    [Whereupon, at 4:09 p.m., the subcommittee was adjourned.]

                                 
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