July 2, 2017

Light penalties and lax oversight encourage weak safety culture at nuclear weapons labs

Sandia National Laboratories

Sandia National Labs in Albuquerque, New Mexico. Flickr

The plan on a hot summer day was to liquefy highly flammable lithium at a temperature of more than 750 degrees and then pump it into a special chamber for cooling, as part of a research project at Sandia National Laboratories in New Mexico.  But what happened instead in August 2011 was a near-catastrophe that could easily have killed two workers.

The experiment was designed to help learn more about lithium’s potential use in an advanced nuclear reactor. But it went awry when someone turned the wrong valve and the heater holding the lithium cracked, causing the molten liquid to leak and spray abruptly onto a pipe holding the coolant.

The result was a steam explosion, a hydrogen explosion — or likely both — in the lab’s Plasma Materials Test Facility. The pressure blew open a port on the vacuum chamber, lifted the roof of the building and separated a wall in two places. It bent an exterior door 30 feet away. One worker was knocked to the floor, another narrowly missed getting hit by flying debris, and a fire erupted.

Sandia National Laboratories

The damage at Sandia National Laboratories after a hydrogen or steam explosion during a lithium experiment. The maroon electron beam gun on the right was blown away from the vacuum chamber on the left.

The workers were under pressure themselves, a Department of Energy (DOE) investigative report later said, because the experimental project was scheduled to be finished in three days. The work was “sufficiently behind schedule so as to encourage short cuts,” the report said.

DOE called the incident a “near miss to serious injury or fatality,” and its Sept. 25, 2014, notice of violation to Sandia Corp., a Lockheed Martin subsidiary, cited four Severity Level I violations, which can result in injury or death, and three lesser Severity Level II violations. It proposed a civil penalty of $412,500.

But at the same time, Energy Department officials said in the notice that the proposed fine would be entirely waived, due to what it called “significant and positive steps…to improve Sandia’s safety culture” since the 2011 explosion. In issuing the waiver, the Energy agency didn’t mention two other serious accidents at Sandia in 2012 and 2013 — the misfiring of a detonator and a battery fire that spread toxic fumes throughout a key building, even though both incidents were well-known to safety enforcers in Washington.

The strange tale of what happened at Sandia and how the Energy Department reacted to it is not an aberration, though — instead it’s part of what’s become a pattern that some experts consider alarming.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]Key findings

  • Workers at the nation’s premier nuclear weapons facilities suffer serious injuries. They get electric shocks, are blown off their feet when experiments go awry, are burned by acid or in fires, and can even inhale radioactive particles that cause lifetime cancer risks.
  • The Department of Energy imposes only minimal penalties for safety incidents on the contractors who run the labs — often 1 to 3 percent of contractor profits or less — and these have little impact on their behavior, according to the contractors themselves and many independent analysts.
  • By one measure, the number of safety incidents and accidents has tripled since 2013. Even after being hit with penalties, the same contractors often commit new safety infractions.
  • In one incident, at Sandia National Laboratory in 2011, a liquefied lithium experiment exploded, blowing one worker off his feet while a second narrowly was missed by flying debris. The lab could have been fined $412,000 but the Energy Department waived the fine. Almost half of all proposed safety fines have been waived over the past decade.
  • The National Nuclear Security Administration, which runs much of the nuclear complex, is severely understaffed and relies heavily on contractor self-assessments of their performance, which determine profits. Each of the agency’s procurement employees is responsible for $287 million in contractor spending, or 31 times the average for federal procurement workers.
  • Over the past decade the contractors at eight nuclear weapons sites have earned more than $2 billion in pure profit, amounting to a steady 86 percent of the maximum amounts their contracts allow. Earnings of 95 percent or even 100 percent of available profit were not unusual.[/perfectpullquote]

Much of what the nation’s nuclear weapons contractors do, how they do it, and whether their achievements are clouded by mishaps is shrouded in secrecy. But internal Energy Department documents obtained by the Center for Public Integrity make clear that the nation’s eight nuclear weapons labs and plants and the sites that support them remain dangerous places to work, even after more than a half-century of concerted efforts to make them safer. The documents also make clear that the private firms who run these eight labs rarely suffer serious financial penalties for their mistakes.

The litany of mishaps discovered by the Center is more than a little unsettling. Workers involved in complex experiments have inhaled radioactive particles that pose lifetime cancer threats. Those involved in everyday tasks get electrical shocks, fall off ladders, and are hurt moving heavy objects. They get knocked over when tests go awry. And they are burned by acid or in fires, splashed with toxic chemicals, and cut by debris from exploding metal drums.

The costs to the government of these mishaps can be high — laboratory work is sometimes halted while workers are retrained and sites get cleaned or repaired, occasionally for years. But what’s particularly striking about the accident records is how these contractors enjoy relative impunity for these problems.

The Center for Public Integrity’s investigation found:

  • The private firms running these laboratories and factories are each paid between $40,000 and $160,000 per day in profit (above the absolute costs of running the labs), amounting to a collective total of more than $2 billion in pure profit over the past 10 years. But during that period, according to data collected by the Center, the Energy Department’s enforcement arm completely waived or significantly reduced 19 of the 21 major fines they said were allowed under the law for safety lapses and other workplace misconduct. In doing so, they eliminated about 46 percent of the total dollar figure of those proposed fines, eliminating $3.3 million out of the $7.3 million they said could have been imposed.
  • Even when the Energy Department imposed a significant financial penalty against one contractor in 2014, it amounted to a tiny share of the government’s costs to repair the contractor’s disastrous mishap. That case involved the Los Alamos National Laboratory, which lost 90 percent of its potential good performance profit in 2014 after its errors caused nuclear waste to be improperly packed in an underground New Mexico storage cavern, where it exploded. That amounted to a penalty of $57 million. But this was less than four percent of the estimated $1.5 billion cost to the federal government, so far, of cleaning up and dealing with the resulting mess — which exposed 21 people to radiation and potential health risks.
  • Meanwhile, the frequency of serious accidents and incidents at these facilities has not diminished — as it has at most other workplaces in America — and may have risen significantly. One indicator of serious safety incidents, the number of violation notices, letters, and consent orders sent to contractors after accidents and mishaps, has more than doubled since 2013.  Fiscal year 2015 was a particularly problematic year, with seven DOE nuclear weapons facilities getting 16 such notices, three times the five issued in 2013. There were 12 such notices, which typically cite safety violations and potential fines, in 2016.
  • The other mechanism for enforcing safety is the withholding of some of the contractor’s profits for running the labs and plants. But a review of the payments to contractors at ten nuclear sites over a decade — even with penalties like the one cited above — shows the contractors, on average, earning 86 percent of the maximum profit available to them. “What’s the incentive to do the job right when no matter what, you get the money?” asks Ralph Stanton, a worker exposed to plutonium radiation in an accident at the Idaho National Laboratory.
  • Federal records show numerous instances in which the contractors, even after being hit with a financial penalty for malfeasance, later committed new safety infractions. The situation has led some workplace safety experts to suggest that the contractors are just building the fines and penalties into their economic models. “It is a cost of doing business, and the amount [of the penalties] is just not high enough to change their behavior,” said Celeste Monforton, a former Occupational Safety and Health Administration analyst who lectures at George Washington University’s School of Public Health.

Asked for comment, James McConnell, the top safety official at the National Nuclear Security Administration — which oversees the production of nuclear weapons — said in an interview that “safety is an inherent part of everything we do….Every one of our employees has the right to go home as healthy as they were when they showed up at work.”

He did not dispute that the data collected by the Center showed a notable rise in serious accidents since 2013, but suggested the spike might have occurred a year or two earlier because enforcement actions tend to run several years late. He also gave the Center a chart showing that the number of individual workdays lost to accidents at NNSA sites held fairly steady over the past six years, and was lower than that of industry sub-groups that do analogous work.

But the agency, in preparing its chart, listed the industry accident rate for 2015 as the number for each of the five years displayed. It did so “to enable readability” of the chart, according to NNSA spokesman Greg Wolf. As a result, the chart did not show the steady decline in industry workday losses over these years – compared to what the NNSA depicts as its steady  rate.

An investigation by the Center for Public Integrity found dangerous safety issues at several nuclear weapons labs. USA TODAY

Profits immune to bad behavior

Senior contractor officials have admitted the federal safety enforcement system is not working. In a report about “burdensome” oversight of their labs written in 2011 for the Secretary of Energy, the directors of the DOE labs, who are all contractor employees, argued that they should be freed from DOE’s safety oversight: “It has not been demonstrated that [DOE enforcement] has improved worker safety at the DOE facilities,” they wrote, according to a congressional report.

Paltry financial penalties that are more than offset by high profits may be the key reason why safety problems persist at these sites. But they are not the only reason.

Here’s how the system works now: Each of the eight major nuclear weapons contractors has all their actual costs covered by the government, including recurring costs commonly known as overhead. At the labs, these amount to roughly 85 percent of direct, project-related costs, according to a congressionally commissioned study in 2015  on the effectiveness of the DOE labs —  more than three times what such overhead expenses routinely cost.

The nuclear weapons work is, as a top NNSA official said in an Oct. 2009 email to executives at Sandia, commonly viewed as “extremely low risk,” financially-speaking. The official noted that the contractors commit “virtually no financial investment,” contribute only a limited number of top executives, enjoy legal indemnification protections, and have “relatively few” costs that are not completely reimbursed. It takes, the official said, “a complete screw-up/bad faith” to get into trouble.

In addition, they can make between $15 million and $60 million a year in pure profit. It comes from two bins: a fixed or guaranteed minimum profit and a so-called performance-related profit, which is supposed to be based on how well the contractors meet their agreed requirements. These payments, along with the threat of fines for safety and security violations and the risk of having a contract canceled or shortened instead of extended or renewed, form the “carrot and stick” of the DOE’s management effort.

Each of the contractors separately negotiates its profit packages, which can run from 1 percent to as much as 7 percent of the total amount of the government-paid budget for the lab or plant. Those budgets include salaries between $1.2 million and $1.7 million for the heads of the three principal weapons laboratories, or more than four times what the Supreme Court’s chief justice makes. The lab directors are responsible for carrying out their sites’ national security missions, but also act as presidents of the companies contracted to run the labs, so profit-making and business development rank high among their priorities.

The contracting companies get other financial benefits as well, such as gaining access to advanced technologies the labs are pursuing and the prestige of being able to market themselves as the makers of American nuclear warheads. “They are building this great big dangerous stuff,” said Neile Miller, principal deputy administrator from 2010 to 2013 of the NNSA. How can that not look good to other clients?

But no matter how well or how poorly the contractors perform they have reliably collected most of the funds set aside as an incentive for doing their work correctly. A few awards in the past decade have been as high as 95 to 100 percent of those incentive pools.

Moreover, workplace safety is only one small portion of the overall criteria that are used to determine annual profit. So even when enforcement fines run into the hundreds of thousands of dollars, they remain only a tiny fraction of the total profits routinely awarded to contractors.

Outside auditors and even the contractors themselves say these performance-related profits are ineffectual tools in promoting safer conduct. The National Academy of Public Administration, a congressionally-chartered group that works with federal agencies to improve their operations, complained in a 2013 report for example that award payments at DOE labs are “not seen as a major motivator” of high-level performance, simply because “all labs get most” of the payments for which they are eligible.

The executives who run Sandia Corp., which last year was awarded $27.5 million in federally-paid profit, made the same point in internal emails discussing their contract with the government. “In spite [sic] of the hype over monetary incentive contracting and the belief that contractors work harder and smarter when fee is at risk, we just don’t operate that way,” an unnamed Sandia official wrote in a 2010 internal “point paper” for management colleagues, obtained by the Center through the Freedom of Information Act. It was one of many documents in which Sandia officials strategized on how to negotiate higher fixed profits in lieu of performance-related rewards. (Sandia’s public affairs office declined comment on the email.)

Besides the lucrative, guaranteed profits, there is one other contract provision dear to the contractors:  If the firm does a good job, according to DOE rules, its contract can be extended for one or more years — saving it millions of dollars in expenses to prepare a new competitive bid. But terminating a contractor for poor performance is a trigger that DOE rarely pulls, with the result that most such firms have been able to count on a decade or more of steady income once they get their foot in the door. Indeed, the Government Accountability Office has estimated that the average DOE contract with extensions runs 17 lucrative years.

“Ultimately, decisions to re-compete contracts are the way to hold contractors accountable for the quality of their work,” says Gregory Friedman, whose 17 years as Energy Department inspector general spanned three presidential administrations before he retired in Oct. 2015. “Award fees are part of the factor; interim evaluations, annual evaluations are a part of the factor. But there’s nothing more potent than re-competing a contract to get a contractor’s attention. It is the ultimate carrot and the ultimate stick.”

But the contract experience of Lawrence Livermore National Laboratory, 30 miles east of San Francisco, and of Los Alamos National Laboratory in New Mexico, illustrates how this particular leverage is sometimes ignored.


$169.7M 10-year profit
93% of possible profit

Kansas City

10-year profit
96% of possible profit

Lawrence Livermore

$299.8M 10-year profit
85% of possible profit

Los Alamos

$558.8M 10-year profit
78% of possible profit


$241.4M 10-year profit
91% of possible profit


$257.3M 10-year profit
96% of possible profit

Savannah River

$116.9M 10-year profit
80% of possible profit


$692.2M 10-year profit
84% of possible profit

Livermore, where warheads are designed and related work is performed, was having a bad year in 2012. A signature effort to create fusion by bombarding hydrogen with high-powered lasers failed to deliver. The lab mismanaged funds on another project and experienced several electrical safety incidents. So it got only 78 percent of the profit available to it for good performance, two points below the minimum needed to get an additional year automatically tacked onto their contract; it also got $20.8 million in additional, fixed profit.

But NNSA’s then-deputy administrator Miller gave the lab an extra $541,527, pushing the performance profit over the 80 percent threshold to get the extra year. The total profit wound up being 88 percent of the maximum possible.

She also gave Los Alamos, which similarly fell short of the 80 percent mark, a waiver allowing them to have a year tacked onto their contract. At a congressional hearing in April 2013, Miller told lawmakers critical of the decision that she did so to support efforts by the labs’ new directors to improve their performance, as a “one-time pass.” Sen. Diane Feinstein, D-Cal., responded that “I am really concerned because…we come across all these problems — just problem, after problem, after problem. And seemingly there is no resolution.”

But the safety records of the two labs didn’t noticeably improve that year. At Livermore, three workers were accidentally sprayed with sulfuric acid while making high explosives. Two workers were severely burned and a third was exposed to sulfuric acid mist. This event was cited by DOE as being of “high safety significance,” amounting to four Severity Level I violations and two Severity Level IIs. For this, the local field office imposed a performance fee cut of $365,000, but no fines or civil penalties.

The NNSA performance award letter to the lab that year also mentioned the blowout of a glass window in an explosives experiment, the exposure of a water treatment plant worker to leaking chlorine gas, a potential exposure of workers to asbestos in a large tank they were cleaning, and an engineering plating shop fire that caused $100,000 in damage.

The NNSA nonetheless rated Lawrence Livermore’s operations and management as “very good” overall and said it “exceeded expectations” in many areas of the operations category that also included health and safety protections. In 2013, the managing consortium was awarded 78 percent of its available performance-related profit, or $21.5 million. Coupled with its $19.8 million fixed profit, it received a total of 87 percent of all the maximum profit, or $41.3 million out of $47.4 million. But this time it didn’t get an extra year added to its contract.

The same firms still run the lab, however, because the original contract is not yet up. Asked about its safety record, Lynda Seaver, media communications manager for the contractor consortium, said a response would come from NNSA, its regulator. Livermore “takes its safety and security very seriously,” NNSA spokesman Wolf said. “Employees go through extensive training and work undergoes rigorous analysis to ensure protective measures are in place.” He said further that the lab’s safety record has been improving.

Los Alamos’ performance, meanwhile, suffered after it got an extra year added to its contract. In 2013, with the NNSA’s encouragement, the lab director shut down the lab’s plutonium facility. In 2014, its improperly-packed waste exploded and closed the nation’s underground nuclear waste facility for years. In 2015 an electrical explosion burned a worker over 30 percent of his body. Its management contract was extended by a year in 2016, but the firms in control wound up losing the right to a longer extension without competition.

Los Alamos spokesman Kevin Roark declined to respond to detailed questions about the lab’s safety record and incidents at the lab — including those caused at two other sites by Los Alamos’ mistakes, and detailed elsewhere in this series. He said NNSA would respond on the lab’s behalf “so there is no further need to contact Los Alamos,” Roark wrote in a May 16 email.

NNSA chief of staff William White said in an interview that the decision by Los Alamos’ director to shut down its plutonium facility in 2013 — “when push came to shove” — “speaks to the lab director’s prioritization” of safety in that case. But spokesman Wolf declined to respond to many other detailed questions about Los Alamos’ safety lapses and their consequences.

On Friday, however, the NNSA slammed Los Alamos for improperly shipping small quantities of special nuclear material to both Lawrence Livermore and the Savannah River National Laboratory the previous week. The shipments should have been sent by ground cargo, but instead were sent by air, which is not permitted under federal rules for safety and security reasons.

“This failure to follow established procedures is absolutely unacceptable,” said NNSA Administrator Lt. Gen. Frank Klotz, USAF (Ret). The NNSA said there had been no loss of radioactive material or contamination, but an investigation is underway.

Not enough people to oversee the work

The dysfunctionality of the nuclear weapons contractor payment system has in some ways been predictable.

The Energy Department, the federal government’s largest civilian contracting agency, has long been tagged by federal spending experts as an exceptionally poor steward of those funds. According to a 2015 GAO report, the agency devotes only 5 percent of its employee and contractor workforce to overseeing 90 percent of its budget.

At the NNSA — a semi-autonomous unit of the department — the problem is even worse: As a 2013 DOE-sponsored study revealed, the agency’s procurement employees are each responsible for overseeing roughly $287 million in contract spending, or 31 times the average for procurement officials across the federal government.[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]Nuclear Negligence examines safety weaknesses at U.S. nuclear weapon sites operated by corporate contractors. The Center’s probe, based on contractor and government reports and officials involved in bomb-related work, revealed unpublicized accidents at nuclear weapons facilities, including some that caused avoidable radiation exposures. It also discovered that the penalties imposed by the government for these errors were typically small, relative to the tens of millions of dollars the NNSA gives to each of the contractors annually in pure profit. How we got this story »[/perfectpullquote]Here the culprit is Congress. With industry support, every year it restricts the number of DOE employees to a tiny fraction of the overall contractor work force. For instance, in 2015 Congress — acting in response to what two sources say was pressure from the laboratories —  limited the total number of NNSA workers (the people who oversee their work), to 1,690. By contrast, that year the contactor employees at the sites numbered 42,404, according to federal data. Roughly three-quarters of NNSA’s personnel are in Washington, moreover, rather than the sites they are supposed to police.

This makes the government naturally dependent on contractors to report their failings and police themselves. “NNSA just needs more people,” former deputy NNSA administrator Madelyn Creedon said at a nuclear weapons conference in Washington, D.C., on March 1.

Partly due to these personnel shortages, the GAO has continuously tagged the Energy Department’s major contract management programs as being at high risk of mismanagement, waste, fraud, and abuse since it started making those assessments in 1990 — one of only three federal agencies or departments to be achieve that distinction. Over this time, says Miller, “everything has changed except the potential for dysfunction. You see it, over and over, in cost overruns.”

The Energy Department’s nuclear weapons cleanup work and its large weapons-related construction projects have “struggled to ensure they have the capacity (both people and resources) to mitigate risks,” the latest GAO assessment said in February. “They have also demonstrated limited progress in contract management…and have struggled to stay within cost and schedule estimates for some major projects.”

Some of the troubles can be explained by the arc of the nuclear complex’s history: Born in a world war and impelled by an urgent patriotic fervor, the weapons laboratories and production sites were by all accounts self-run, interested primarily in production, and often heedless of workplace risks or environmental harm.

“You get caught up in the tyranny of the moment,” said Don Nichols, NNSA’s associate administrator for safety and health from 2013 until last year, in an interview reflecting on the safety lapses he has seen. Lab managers act as if “what’s paramount here is getting this thing out the door….[They] don’t mean to send the message that safety’s not important. But [they believe] we do really need to get this thing done. We’re in the game of national security, and it’s not just a widget that’s going to go on a shelf. It’s a nuclear weapon that’s going to keep people safe.”

That urgency to fulfill the mission above all else, Nichols said, “can be overwhelming.”

The result has been a nuclear arsenal unrivaled in quality, but also the birth of the nation’s costliest waste and contamination sites, and a persistent record of cost overruns.

This is all not surprising, said Miller, who oversaw nuclear weapons-related spending at the Office of Management and Budget before becoming the NNSA deputy and then, for six months in 2013, its acting administrator. The oversight staff for the laboratories had a high turnover rate, she said, so “who is setting the culture?” Those in Washington long saw their responsibility as just writing checks, and reports from DOE officers in the field were typically glowing — “it all read like the town where all the children were a little above average,” Miller said. “They were graded on a curve, with everybody getting an ‘A.’”

Washington has worked harder in the past quarter century to impose accountability, but the labs have resented it and complained of ignorant micromanagement. The friction has occasionally been intense, and in 2007, Energy Secretary Samuel W. Bodman — a chemical engineer and successful business investor — notoriously decried the “arrogance of the chemists and physicists and engineers who … think they’re above it all,” during testimony before Congress.

“For 50 years, nobody gave a damn about how much it cost,” said Miller, because the labs delivered the nuclear warheads they were asked to provide. Putting two fingers together, she said “we and the contractors were like this. The culture [at the labs] was one of anger and resentment from the first moment someone started looking over their shoulder.”

The Energy Department did not start formally regulating security and safety work by its contractors until 1988, but in 2008, at the end of the Bush administration, the GAO reported that the department’s oversight work fell short in meeting five key criteria for effectiveness. Included were a failure to inspect more than a third of DOE high-hazard sites, and an inability to keep many violations from recurring. Although the GAO had repeatedly urged stronger oversight, the Obama administration took the opposite tack.

Easing regulatory oversight

Responding to criticism from the labs that DOE’s oversight had become onerous, the department eliminated 38 of its 80 safety directives affecting its labs and plants. But the GAO concluded in 2012 — the same year that security lapses allowed an 82-year-old nun to break into a site in Tennessee holding enough highly-enriched uranium for at least 10,000 nuclear bombs — that the DOE could not demonstrate that its actions had produced any safety or productivity improvements; it warned instead that “in revising these directives, DOE could be undermining hard-won progress.”

The Energy Department’s safety and security enforcement system is unusual in another way: When the Occupational Safety and Health Act of 1970 was passed to protect workers, it effectively exempted two federal entities from its jurisdiction — the DOE and the Nuclear Regulatory Commission.

So the DOE took on the assignment on its own. “We’re self-regulatory…a little bit unique,” safety chief McConnell said. But its enforcers wound up being handcuffed by a unique rule: It states that the agency cannot levy a fine for a specific violation if those who award its performance-related profit have withheld some funds for the same reason.

It’s akin to avoiding prosecution twice for the same crime — like the “double jeopardy” rule in criminal justice. But to workplace safety enforcers, it’s an unreasonable limitation on the magnitude of the punishments that might be imposed, like prohibiting the police from fining teenagers for speeding if their parents had already withheld some of their allowance for poor driving.

When told of the DOE “double jeopardy” arrangement, David Michaels, who helped police federal workplace safety as director of the federal Occupational Safety and Health Administration from 2009 to 2016, said “I have never seen anything like that before.”

Rena Steinzor, a professor at the University of Maryland School of Law who specializes in workplace regulation and enforcement, said the arrangement “has a fox-in-the-henhouse undercurrent to it.” DOE is regulating safety performance by its own contractors, with whom it has close ties, she said. “If they lose [some of] their bonuses they don’t have to pay any [safety] penalties? I rest my case.”

Monforton, the former OSHA analyst, argued that the safety enforcement arm of DOE should be able to operate independently from the officials who decide on performance-based profits based on many factors, including how well the labs fulfill their nuclear weapons-related production requirements. That way, each could maintain its integrity. “What makes sense to me is to have these things separate,” she said.

Sandia National Laboratories

Sandia National Labs in Albuquerque, New Mexico. Flickr

Fires and detonations don’t dent profit

Although the Obama administration altered the Washington-based management structure for the weapons complex somewhat — by ordering more attention to cost overruns and new protections for contract workers that blow the whistle on safety infractions — it didn’t complete many other needed organizational reforms, congressional auditors said in a report this February.

Early that same month, the Trump administration, in one of its first decisions about the weapons complex, suspended implementation of the department’s new whistleblower protections pending additional study. That’s caused some critics to worry the oversight process will continue to be organized — or rigged, as President Trump might say — to favor the contractors’ interests.

Here’s an illustration of how the profit payment system has played out: On November 17, 2015, Sandia Corp. received another DOE censure for safety violations. This one was for two incidents — a badly-handled 2012 lithium-ion battery fire in its Building 905, the 98,000-square-foot facility where explosives, neutron generators and batteries are tested, and the unexpected ignition of a detonator in 2013 at one of its explosives sites. Together these incidents encompassed four Severity Level 1 violations (threat of death or injury) and two Severity Level II violations, the DOE’s violation notice said.[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]If you are a current or former employee of the National Nuclear Security Administration, the Energy Department, or one of its contractors, and you know of events, incidents, actions, decisions, conditions or documents worthy of our attention, please contact Patrick Malone (PGP fingerprint: 3AD5 A969 C8CD 14B2 D917 4BEF EB43 ED01 ACFB 7FEE) or R. Jeffrey Smith (D27F C3FA 32EE 2938 6080 47C5 C50E 1E64 CF5D 64F1) by email, postal mail or SecureDrop.[/perfectpullquote]

n the case of the 2012 battery fire, DOE documents depict a comedy of errors in emergency response and firefighting. No one turned off the battery’s power, and no one in the test area called 911 or the Sandia emergency number. When Kirtland Air Force Base firefighters finally arrived, they used the wrong type of fire extinguisher. The building hadn’t been shown to meet the fire code. The ventilation system for the equipment involved in the accident failed.

In the second incident, on Sandia’s explosives testing range at the foot of the Sandia Mountains in 2013, a detonator blew up in the hand of a worker. He was lucky, the violation notice said, because he had removed the detonator from a one-pound block of C-4 explosive minutes before the detonator went off.  “It could have killed him,” said Nichols.

Again, there were numerous mistakes and lapses, including a failure to recognize that static electricity could ignite the detonator, as well as first aid inadequacies and false reporting about the accident’s severity, according to the documents.  A Sandia incident report said he did not go to the local hospital emergency room when, in fact, he did.

In the censure letter, Frank Klotz, the head of the NNSA, noted that these safety deficiencies followed previous incidents of a similar nature — the premature ignition of a rocket motor at Sandia’s sled track in 2008 that broke a worker’s leg, and the molten lithium experiment explosion and fire in 2011, cited at the top of this story, for which Sandia was not fined. He further noted that “Sandia’s previous corrective actions had not been effective in preventing recurrence.”

But, even though federal regulations say aggravating circumstances allow for enhanced penalties, the NNSA again imposed no direct fines because, Klotz’s letter said, the agency had earlier withheld $686,000 of Sandia’s profit in 2014 for the detonator accident and other unspecified problems. This may seem like a hefty penalty, but because of higher grades on other aspects of its nuclear weapons-related work, Sandia Corp. still received 93 percent of the maximum profit available to it that year, or $26.3 million.

And it received 96% of its available profit, or $25.8 million, in FY 2013, the period of the lithium-ion battery fire. Both payments were just over Sandia Corp.’s average annual profits of $25.7 million over the past 10 years.

Current and former NNSA officials have said that Sandia’s persistent management problems played a role in their decision to give the operating contract to a new company, beginning on May 1 this year — National Technology and Engineering Solutions of Sandia LLC, a wholly owned subsidiary of Honeywell International. But when Honeywell took over the $2.6 billion annual contract, only a handful of new faces showed up.

“Key personnel from the Honeywell team are running the lab,” said Jim Danneskiold, Sandia’s media relations manager. “A dozen new people came in, that’s all.”  The Sandia website features 10 new senior managers, including the new lab director, Stephen Younger, who had been the lab director at the Nevada National Security Site from 2006 to 2012.

“Sandia considers the safety of all workers as paramount and is committed to continual safety improvement,” Danneskiold said in an email. Past problems occurred because changes in the way they did their work from time to time had unforeseen consequences, he said. He added that feedback from Washington “has been positive overall” and that the new management team will “continue to improve the labs’ safety culture.”