Tuesday, November 2, 2010

Nukes Very Lucrative

A recent article in the Los Alamos Monitor underlined the fact that New Mexico is currently number five among the 50 states in terms of per capita annual income recieved from the federal government. For every $1 in federal taxes paid by New Mexicans, Washington returns $2 to New Mexico.

Federal dollars come from the sources of Social Security, Medicare and Medicaid, as well as from the DOE's nuclear weapons activities in NM: viz., the approximately $4 billion spent in fiscal 2010, for work at LANL, SNL, and the WIPP site.

In and around Los Alamos County, local economies are particularly dependent on federal largess. However, in recent years, this largess has been skewing toward the most highly paid Lab managers.

In this context, consider this brief history:

In 2005, after the DOE had decided to end its sixty year-long UC/LANL connection, it issued a Request for Proposal to an eager group of would-be new contractors. Among these, M. Anastasio led a team of entrepreneurs backed by the well-heeled Bechtel in creating a successful bid for the new LANL contract. No neophyte he, for several years prior to that time Anastasio had been the Director of Lawrence Livermore National Laboratory (LLNL).

Although partly selected by DOE for its promise to bring a new efficient management style to LANL, LANS-LLC is still a for-profit management group. It is not surprising then, that in the first year of the new contract at LANL (2006-2007), the new LANL Director took home a salary plus bonus of $1.25 million. This was approximately four times what the previous LANL Director had earned in his last year under the old UC contract.

In fiscal year 2009, LANS-LLC declared a profit from its management of LANL operations of $72 million. Legally, the Limited Liability Copmpany (LLC) is obliged to distribute, each year, all of its profits to its owner-managers.

(As an aside, in a somewhat memorable early 2006 presentation to staff of LANL's X-Division, the then X-Div Head, Paul Hommert, proclaimed that the new contract was being written in such a way as to ensure an increase in the number of managers and, therefore, an increase in the amount of money that many LANL employees could expect to be taking home, in the very near future. Immediately after the start of the new contract, Hommert, who was not a member of the new management team, was moved to a temporary post at UC Headquarters in San Francisco. Today, four years later, the perspicacious Hommert is the new President of Lockheed-Martin's Sandia Corporation, manager of Sandia National Laboratory (SNL), and the new Director of SNL. The previous President of the Sandia Corp. and SNL Director T. Hunter took home ~$1.75 million annually.)

In 2007, a similar process ensued at LLNL. The then LLNL Director, George Miller, led a team of manager entrepreneurs, again backed by Bechtel, calling themselves Lawrence Livermore National Security-LLC, who successfully bid for the new LLNL contract. On October 1, 2007, Miller became the new LLNL Director, under the new LLNS-LLC contract. Presumably, he too enjoyed a greatly increased pay package.

At about the same time, a team of nuclear weapons enthusiasts led by Stephen Younger, backed by Northrop-Grumman, and calling themselves National Security Technologies LLC, succeeded in winning a new contract from DOE for management of the Nevada Test Site (NTS). Younger had earlier been an Associate Laboratory Director at LANL, and was a past Director of the DOD's Defense Threat Reduction Agency.

Thus, the nuclear weapons industry became much more remunerative for its managers, especially its senior managers. However, even some non-management personnel obtained substantial benefits. For example, when the contract changed at LANL from UC to LANS-LLC, in June 0f 2006, DOE gave all LANL employees the opportunity to retire as UC/LANL staff while continuing as new full-time LANS-LLC/LANL employees. Senior staff could draw full UC/LANL pensions, in some cases amounting to nearly 100% of their previous LANL salary, while continuing to collect their regular full-time LANS-LLC/LANL salaries. This was double-dipping with a vengeance.

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