Lockheed loses Los Alamos outsourcing to U. of Calif.

The Energy Department awarded a highly contested, 20-year contract to a team led by the University of California to continue managing the beleaguered Los Alamos National Laboratory in New Mexico.

The University of California, the incumbent contractor, and teammates Bechtel National Inc., BWX Technologies Inc. and Washington Group International Inc. form the limited liability corporation called Los Alamos National Security LLC, which officially won the work.

The contract is for seven years base with 13 one-year options, and is estimated at up to $80 million per year. It was the first time the contract was competed after being run exclusively by the University of California for more than six decades.

The University of California-Bechtel National team beat out a partnership between Lockheed Martin Corp. and the University of Texas System for the deal to continue operating the nuclear weapons research facility. Other members of the Lockheed Martin-University of Texas team included CH2M Hill Companies Ltd. and Fluor Corp.

Wendy Owen, vice president of communications at Lockheed Martin Information and Technology Services in Cherry Hill, N.J., said the company was disappointed by the loss and was waiting to get more information about the evaluation criteria. The company has not yet decided whether to protest the award, she said.

Los Alamos National Laboratory, about 35 miles northwest of Sante Fe, N.M., was established in 1943 as a secret facility to coordinate scientific research of the Manhattan Project, under which the first nuclear bombs were created. Today, it develops technology for the safety and reliability of the U.S. nuclear deterrent, reduces the threat of weapons of mass destructions and terrorism, and generates scientific and engineering solutions for the country's defense, energy environment and infrastructure. The lab employs more than 13,300 people and had a fiscal 2004 budget of $2.2 billion

In recent years, the lab was dogged by a series of security related and operational scandals. Former Energy Secretary Spencer Abraham blamed some of the breeches and management problems on the University of California and in April 2003 decided to reopen its contract for bidding.

That the university won the contract work again is testimony that it cleaned up its act to correct the management and business problems at the lab, government sector analysts said.

The addition of Bechtel National to the team showed that the University of California had supplemented its security and project management services while it continued to focus on scientific areas, said Warren Suss, president of Suss Consulting Inc. of Jenkintown, Pa.

Ray Bjorklund, senior vice president and chief knowledge officer of Federal Sources Inc., McLean, Va., said it was not unusual for the federal government to choose universities to operate its scientific labs. The award "still demonstrates that an institution of higher learning is a viable source of contractor," especially for more sophisticated levels of engineering, he said.

Lockheed Martin Corp. ranks No. 1 on Washington Technology's 2005 Top 100 list, while Bechtel Group Inc. ranks No. 67 on the list of federal prime contractors.