Compiled by leaders of groups from communities located in the shadows of U.S. nuclear weapons sites. The report card grades looks to the future and lays out an agenda for the next administration.
2008 Radioactive Report Card Grade Book
Press Release
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| | | published Thursday, December 10, 2009 | 1239 Views | |  |
December 10, 2009
Originally appeared here
LIVERMORE – An internal U.S. Dept. of Energy (DOE) study details how managers at the Lawrence Livermore National Laboratory (LLNL) shifted costs to understate total spending on the controversial National Ignition Facility (NIF) mega-laser. The previously secret document, released today by the nuclear watchdog group Tri-Valley CAREs, pegs the current hidden costs of NIF at $80 million annually.
"Livermore Lab is systematically disguising the true costs of the NIF," charged Tri-Valley CAREs' executive director, Marylia Kelley. "When calculated over the life of the project, these hidden costs total more than $2 billion." Kelley continued, "This illegal scheme circumvents the United States Congress, which sets NIF's budget each year, and violates our nation's most basic federal contracting laws."
According to the report by the DOE National Nuclear Security Administration Office of Field Financial Management (OFFM), Livermore Lab’s practice of assigning NIF overhead expenses to other Lab programs violates Public Law 100-679 Cost Accounting Standards (CAS). This law is an integral part of the structure set up to regulate government contracts.
Some of the NIF fee reductions date back to 2001. The OFFM investigators noted that the misleading cost accounting, "materially misstates the actual costs by LLNL for the NIF/National Ignition Campaign... and may result in an undercapitalization of the NIF/NIC's total project costs."
The NIF is being shielded by Lab management from paying its share of three distinct overhead costs, the General & Administrative (G&A) cost, the Site Support Rate, and the Management Fee rate, according to the review.
The $80 million that is being sloughed off onto other Livermore Lab projects represents nearly 20% of NIF’s annual budget. And, NIF represents around 25% of the entire LLNL budget. “Any way you slice it, this is a major financial scandal.” Kelley commented.
The mega-laser has long been plagued by controversy. Ten years ago, Tri-Valley CAREs broke the story that Livermore Lab was covering up the fact NIF construction was behind schedule and over budget. The NIF had been slated for completion by 2002 at an estimated cost of $1 billion. More than $5 billion has been spent to date. And, NIF's ignition experiments have been pushed back nearly a decade, to the fiscal year 2011-2012 timeframe.
According to the OFFM, Livermore Lab management set up a special pool for NIF and NIF-related activities called the “Self-Constructed Asset Pool,” or SCAP. The investigators charge that the SCAP is out of compliance with the law. The review further states: “Use of the noncompliant SCAP results in inequitable distribution of costs and, in many cases, completely exempts the NIF/NIC from its fair share of G&A and Site Support Overhead costs. LLNL’s other programs continue to subsidize… through higher indirect cost allocations.”
The internal review shows that the SCAP for NIF has a special G&A overhead rate of 3.9%. Other projects pay a G&A rate of 29.3% in order to compensate for NIF’s discount. The investigators calculated that the G&A rate overall for NNSA and Work for Others projects at the Lab would fall by 6.4% (to 22.9%) if NIF were simply paying its legally required share.
Lab management set up a second noncompliant rate reduction for NIF for its site support costs. As with the G&A, NIF does not pay the standard rate. It has a specially reduced SCAP site support rate. The investigators write that: “From OFFM’s perspective, LLNL’s labor, fringe, and other direct costs making up the SCAP’s Overhead base are no different or diverse in relation to any other Laboratory program. Therefore, there is no apparent justification for applying a reduced site support overhead rate…”
The third category in which NIF enjoys a reduction in costs is through a special SCAP Management Fee. According to the OFFM, this offers NIF “extraordinary special treatment” leading to “higher fee rates” for other programs. Investigators placed a $60 million estimate on the sloughed off Management Fees alone -- $20 million for fees shunted to other projects in past years and an additional $40 million that will be dodged by NIF in the coming years.
The report reveals that the OFFM and the NNSA Livermore Site Office Contracting Officer had previously told Livermore Lab management to stop this practice. According to the internal review: “LLNL has had ample time to incorporate the Lab’s full fee rate into the National Ignition Campaign as recommended by OFFM and ordered by the LSO CO, but so far has refused to do so.”
The investigators conclude the review with cease and desist language for all three of the categories in which the NIF is gleaning illegal benefits that serve to mask its real costs.
The OFFM investigators were on-site in at LLNL in September 2009. The internal review is dated October 2009. Its cover letter demonstrates that the Lab’s deceptive practices were continuing into November 2009.
Kelley concluded, “Tri-Valley CAREs calls on the White House Office of Management and Budget, the Government Accountability Office and our members of Congress to investigate this financial scandal and to hold Livermore Lab management fully accountable for the laws that have been violated.”
A copy of the internal review is available from Tri-Valley CAREs on request. Phone us at (925) 443-7148 or email marylia@trivalleycares.org.
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