Editor's Note: This article is reprinted in today's Daily Newsbulletin with permission of the Associated Press.

Los Alamos' director extols its changes

The man who directs one of the nation's top nuclear weapons labs is on the offensive and "unapologetically upbeat" about a place that he says has transformed the way it does business.

Last May, Pete Nanos was on the defensive, reassuring worried Los Alamos National Laboratory workers after Energy Secretary Spencer Abraham announced that the University of California would have to fight to manage the lab for the first time in six decades.

The UC contract expires in September 2005.

A year after Abraham's April 30, 2003, announcement, Nanos says the lab is "poised to turn the corner in a big way" on bad press.

Trouble began in fall 2002 when allegations surfaced about Swiss cheese-style business controls, missing equipment, financial malfeasance and efforts by some lab managers to cover it all up..

Since then, top managers have been expunged and a number of internal and external reviews of business practices completed.

A wall-to-wall lab inventory accounted for more than 99 percent of controlled property, and the lab has instituted hundreds of policy changes.

Nanos also is pushing a more subtle but fundamental change in lab culture.

It's emblazoned across a glossy pamphlet Nanos pulled from his briefcase, the lab's new corporate statement extolling "The World's Greatest Science Protecting America."

"That's what I'm making sure that nobody misses at the laboratory. ... That's the essence of Los Alamos. It's the science and national security mission," Nanos said Friday during an interview with the Associated Press.

Nanos is infusing a corporate-style marketing and management approach to a place long known as a bastion of academia where scientists say the pursuit of critical science sets the tone.

Nanos understands that. That's why he says one manager should continue to oversee both Los Alamos and California's Lawrence Livermore national laboratories, another UC-managed lab whose contract will be put up for competitive bid.

Management of the labs must ensure "that you get a good aggressive peer review but that that peer review isn't being driven by market share," he says.

However, the retired Navy vice admiral has injected some corporate philosophy into a lab system criticized by auditors and members of Congress for its lax business practices.

For starters, Nanos said the lab must hold the line on costs but still meet ever-increasing expectations.

"I see budgets in the weapons program to be level or maybe even slightly declining," he says. "I don't see any large growth in weapons budgets, so being able to operate within those budgets and meet the critical goals of the nation is going to be extremely important."

A restructuring of the lab's weapons program is the first step toward saving money, he says. Nanos recently created a separate "directorate" for weapons programs.

That directorate is responsible for planning, budgeting and overseeing the lab's entire nuclear weapons portfolio. That leaves other areas of the lab time to focus solely on science.

Meanwhile, the lab also has lowered overhead costs by $40 million this year by scrutinizing how everyone spends their budgets.

"This is really important to the laboratory because what it does is it lowers the cost of science," he says. "It makes our science more competitive in the market."

And, as UC's man on the ground, Nanos has a healthy incentive to improve the laboratory's competitiveness under his employer's watch.

"I don't worry a lot about the (contract) competition in the day to day, but we do put our best foot forward," Nanos says.

In the meantime, the lab is starting to get a different kind of attention for its business practices -- praise.

The Energy Department inspector general last month gave the lab a positive review for efforts to revamp its purchase card program, a focus of the probe into faulty business practices that uncovered about $3,000 in improper purchases by lab employees.

"A year ago, there were some days when I felt like I was the lone cheerleader," Nanos says. Now, "everywhere, we're on the up slope."

--Leslie Hoffman

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