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Livermore Lab Violates Law: Major Financial Scandal at the NIF

Most of our loyal readers know that the National Ignition Facility (NIF) mega-laser at the Lawrence Livermore National Laboratory (LLNL) is billions of dollars over its original budget and years behind schedule. You may have also noticed that the Lab's NIF manager, Ed Moses, and others recently launched a media blitz claiming that NIF's legendary problems are all a thing of the past. They asserted, among other claims, that NIF is presently coming in on budget.

A number of media outlets were taken in by the hype. As you likely suspected, many of the claims being made for NIF are not true. Now, regarding NIF's finances, we have the proof.

And, the truth is far more explosive than NIF's fusion targets will ever be.

An internal Dept. of Energy (DOE) review details how LLNL management shifted costs to understate total spending on the controversial mega-laser. The previously secret report, released by 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," explained Marylia Kelley, Tri-Valley CAREs' executive director. "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 review 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.

The mega-laser has long been plagued by controversy. Ten years ago, Tri-Valley CAREs broke the story that LLNL 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 review, 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 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 financial 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 LLNL's deceptive practices were continuing into November 2009.

We invite you to also submit comments. Additional information can be found on our website at www.trivalleycares.org. 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.

Bio-lab Litigation Enters New Phase

This past month, your Tri-Valley CAREs legal team has been busy filing an important round of briefings before the U.S. District Court for the Northern District of California.

The briefs explain why the environmental review of the Lawrence Livermore National Laboratory (LLNL) Bio-Safety Level 3 (BSL-3) lab, which began conducting experiments on biological weapons agents in January of this year, is legally insufficient and must be supplemented or redone.

The goal of our lawsuit is two-fold.

First, to persuade Judge Saundra Brown Armstrong to order the government to complete a more thorough analysis of the environmental effects of the BSL-3. This new, revised document (and we hope the Judge will compel a full Environmental Impact Statement) should pay specific attention to the threat of terrorist activity, particularly in light of LLNL's highly criticized security lapses.

Second, before LLNL issues this revised document, pursuant to the National Environmental Policy Act (NEPA), the Lab must be required to conduct another round of public comment, and preferably a full public hearing. This would enable public officials, community members and other interested people to voice their concerns about potential impacts to the environment stemming from a terrorist attack or accident at the BSL-3.

Since the last public comment period on the BSL-3, significant information regarding two incidents at LLNL's lower-level biological research facilities has come to light. The first involves a major Anthrax release in 2005, which exposed at least five people. The second involves a violation of the country's Select Agent Regulations, which occurred when LLNL researchers conducted prohibited experiments with antibiotic resistant Plague.

In both cases, LLNL kept the information secret, which prevented the public from commenting on the relevance of these violations to the BSL-3 facility. It is worth noting that Livermore Lab researchers would be allowed to spray small animals with live Anthrax and Plague in the BSL-3, potentially leading to accidents, spills and releases even more serious than have occurred in the past.

Tri-Valley CAREs challenged the first version of the environmental review of the BSL-3 and received a favorable decision from the Ninth Circuit Court of Appeals on one of our legal contentions, specifically that the government should be required to consider the potential health and environmental impacts of a terrorist attack.

This is why the specific environmental disaster that is being considered by the court now is the threat of terrorism, although other accident scenarios could also prove deadly. Not surprisingly, perhaps, LLNL failed to adequately comply with the Ninth Circuit Court of Appeals ruling, which is why Tri-Valley CAREs is back in court now seeking summary judgment on the issue.

Our lawsuit has already been "precedent setting" because it is one of two in the nation that has won a decision ordering an analysis of the potential environmental impacts of terrorism. (The other suit was brought by Mothers for Peace of San Luis Obispo challenging expansions to the Diablo Canyon Nuclear Power Plant.)

Under this precedent, federal agencies must consider the potential impacts of terrorism when they conduct a NEPA review of major projects.

However, the DOE responded to this precedent creating decision by issuing a cursory, shoddy ever-so-very-slightly revised version of the same analysis that the Ninth Circuit Court had declared inadequate.

Thus, Tri-Valley CAREs is trying to uphold the integrity of the Ninth Circuit's decision and ensure that the DOE takes the requisite "hard look" at the environmental impacts that may result from terrorist activity at the BSL-3.

More broadly, this case seeks to ensure that all government agencies take this new responsibility under NEPA, to analyze terrorist threats, seriously.

Our case is set for a hearing soon. To find out more, check out the 'Litigation' tab on our website where you can find links to all of our briefs.

URGENT: Stop Funding for a New Bomb

Your Letter Today Can Prevent DOE from Adding Money for a New Nuclear Bomb! Here's what you need in order to act...

Background: Tri-Valley CAREs has gotten word that the Dept. of Energy (DOE) National Nuclear Security Administration (NNSA) is trying to add money, above what Congress allotted, for the further development of a new nuclear bomb, the B61-12.

As you may recall from our Fall newsletter, Congress cut the funds for the "Phase 2/2A study" for the B61-12 in half, from $65 million to $32.5 million. In addition, Congress specified that none of that money could be used to alter the nuclear explosive components of the old B61 bomb to create the new B61-12.

Now, the DOE NNSA is attempting to "reprogram" additional money into the B61-12 by taking money out of another program and putting it into the "Phase 2/2A study" for the new nuke. Here's how we can stop it.

The DOE cannot "reprogram" funds after Congress votes unless they get specific permission from (1) the White House Office of Management and Budget, and (2) the Congressional committees that handle DOE's budget. So, please write two quick letters TODAY asking them to JUST SAY NO to the DOE NNSA "reprogramming request."

Suggested Text: I am writing to ask you to OPPOSE any increase in funding for the "Phase 2/2A study" for the development of a B61-12 nuclear bomb. I understand that the DOE NNSA is preparing a "reprogramming" request to add money for this new bomb study. The request must be rejected.

Here are a few of the many reasons why - (1) The U.S. should remove all tactical nuclear weapons from Europe, not design new ones, (2) The entire German Parliament recently voted to support the withdrawal of nuclear weapons from Europe, including the B61 bomb, (3) Funding more weapons R & D before the Obama Nuclear Posture Review is released could prejudice that review process, (4) Development of new, "modernized" nuclear bombs is contrary to U.S. and global disarmament goals, and (5) The Congress was wise to cut the "Phase 2/2A study" in half and to specify that no money could be used to change the bomb's nuclear explosive components and no additional money should be given now.

Send to: Send one letter to Peter Orszag, Director, Office of Management and Budget, 725 17th St., NW, Washington, DC 20503. Send a second letter to our CA Senator who sits on the committee in charge of "appropriations" for nuclear weapons. Address this letter to: Senator Dianne Feinstein, 331 Hart Senate Office Building, Washington, DC 20510.

More info: Call us at (925) 443-7148 and keep checking our website for updates at www.trivalleycares.org

Final note: If you think that this latest attempt to create a new nuclear bomb means the weapons designers are going forward with the so-called "Reliable Replacement Warhead" program without calling it by that name, you are correct. President Obama announced that he would not support the RRW. Now, the DOE NNSA is trying to slip though another version of an RRW -- without calling it by the RRW name. It is up to us to stop them. Please send your letters today.

Lab Superfund Cleanup News

Your Tri-Valley CAREs team has been working hard to ensure the cleanup of toxic pollution emanating from Livermore Lab. We are making progress.

At the Lab main site a toxic groundwater plume has migrated into the community - and the plume's outer edges are beyond the reach of the Lab's existing equipment, including the off-site extraction wells and pipeline. This means that the contamination is still in the aquifer and is not being cleaned up. After alot of pressure, there is a new plan emerging. Under the plan, Livermore Lab would extend its off-site pipeline, bringing it further west into the City, across Charlotte Way, and to the edge of the contaminated area, which is under Big Trees Park and the adjacent community swimming pool. The Lab would then pump out the polluted water and use the pipeline to carry it back to a special treatment facility on the Lab property. The toxic material will be separated from the water.

We have been advocating, also, that the Lab hold a public meeting to hear from community members whose homes sit on top of contaminated groundwater. The Lab has said it will hold a meeting in January. However the date and location have yet to be announced. Stay tuned!

And, we have been meeting with DOE Headquarters over its allocation of stimulus funds. The DOE Office of Environmental Management has $6 billion to distribute, and we are advocating that the Superfund cleanup at Livermore Lab receive some of the stimulus money. This funding could greatly accelerate the cleanup of the off-site plume - and more!

Thursday, December 10

Holiday Party and Member Appreciation
5 PM - 8 PM (drop-in)
2582 Old First St., Livermore
(925) 443-7148 for details

You are cordially invited. All of us at Tri-Valley CAREs offer our thanks to our members, volunteers and supporters. Join us for this festive occasion. We will have food, ciders, mulled wine, merriment, friends and fun. Stop on by!

Monday, January 18

br> 9:30 AM, UCC
1886 College Ave., Livermore
RSVP required (925) 443-7148

Each year, the Tri-Valley Peace Coalition sponsors a commemoration of Dr. King on the occasion of his birthday and national holiday. This year, the event will feature an opportunity for kids (and adults) to create "peace art" that they can then carry on the short peace march to the fountains in downtown Livermore. If you would like to join the planning committee for this event, call Marylia at 443-7148. Check our website at www.trivalleycares.org for details as they are finalized.

Thursday, January 21

Tri-Valley CAREs meets
7:30 PM - 9 PM
Livermore main library
1188 So. Livermore Ave.
(925) 443-7148 for details

Resolve to become more active with Tri-Valley CAREs in the New Year. We welcome new and long-time members. Our monthly meetings are a place to get acquainted, get informed, and get motivated. Your actions for a more just and peaceful planet make a difference. Together, we will accomplish great things. Be part of the solution with Tri-Valley CAREs.

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