ACCELERATING the Pace of Progress Los Alamos National Security, LLC Board of Governors Operated by Los Alamos National Security, LLC for DOE’s National Nuclear Security Administration 2007 ANNUAL REPORT A Message From Our Governors Los Alamos National Security, LLC (LANS) was formed in 2005, when four organizations came together to pursue the NNSA management and operations contract for Los Alamos National Laboratory. Each of them brought complementary capabilities: ■ ■ ■ Bechtel National, Inc. contributes expertise in solving the business and operational problems that were distracting Los Alamos scientists from their core mission. University of California contributes leadership and expertise in its role as the academic force behind the science that enables stockpile stewardship. The Babcock & Wilcox Company and Washington Group International contribute site and nuclear operations expertise. As part of the LANS parent organizations’ commitment to support Michael Anastasio and his leadership team in the revitalization of the Laboratory, they created a Board of Governors, which operates with discipline and with autonomy from the four parent organizations. The LANS Board of Governors has made three fundamental commitments to NNSA: ■ ■ ■ February 12, 2008 Dear Administrator D’Agostino: Contents Board of Governors 2 Systems, Tools & Resources 4 Board Oversight 6 Reachback to LANS Partner Expertise 8 Accelerating & Sustaining Change 10 Transformation, Integration & the Future 12 To apply the best systems, tools, and practices to Los Alamos. To oversee Laboratory operations to ensure excellence and efficiency. Los Alamos National Security, LLC is committed to achieving needed changes and outstanding results at LANL. We are proud of our performance to date, and our regular discussions with you and other DOE leaders have helped us identify continuing opportunities for improvement. Per our proposal, we have drawn on the resources of all four LANS parent organizations to achieve NNSA’s mission for the Laboratory and to create and sustain safe, reliable, and consistent processes and behaviors. Apart from establishing a new leadership team, we have imported numerous advanced systems and processes to improve security, safety, and business practices, and more than 200 parent organization experts have contributed their talents to the Laboratory. Already we see significant results. A prime example: we demonstrated the Laboratory’s ability to deliver high-quality products at a scalable production rate, justifying NNSA’s decision to save billions of dollars by deferring the Modern Pit Facility. One of our key objectives is to help NNSA transform and integrate the weapons complex, and NNSA’s preference for Los Alamos national security science in weapons design, plutonium research, and research supercomputing supports that objective. Large-scale modeling and simulations, coupled with broad capabilities in experimental science, allow LANL to tackle for NNSA and other national security customers such challenges as biothreats, nuclear forensics, counterterrorism, and energy security. As we integrate the resources of LANS and Lawrence Livermore National Security, LLC, we are finding new opportunities to meet technical challenges and to share business and operations improvements. We have, for example, achieved substantial cost reductions at both laboratories by integrating our approaches to managing retirement benefits. To facilitate reachback to tap parent organization talent and resources. This report summarizes our progress toward meeting these commitments, actions we are taking to accelerate progress, and our vision for the future of the Laboratory. Our rate of progress at LANL is accelerating, but we are not yet satisfied. We share your sense of urgency, and we are confident that our management team has the right skills, our workforce has the demonstrated competence, and our unique facilities provide the requisite tools for Los Alamos to deliver results that are unsurpassed. Sincerely, COVER: A Los Alamos scientist works in an immersive visualization facility, an example of the Laboratory’s integration of experiments with exceptional theory, modeling, and highperformance computing. Gerald Parsky Chair, LANS, LLC, Board of Governors Thomas Hash Vice Chair, LANS, LLC, Board of Governors LANS, LLC 2006–2007 Board of Governors The Board of Governors is the conduit through which the LANS parent organizations provide oversight of the Laboratory and promote consolidation, cooperation, and communication across the national laboratory system. President, LANS, LLC Michael Anastasio Director, Los Alamos National Laboratory Independent Governors Executive Committee Gerald Parsky, Chair Thomas Hash, Vice Chair Sidney Drell Regent, University of California President, Bechtel Systems and Infrastructure, Inc. Senior Fellow, Hoover Institution, Stanford University Chairman, Aurora Capital Group Board of Governors Laboratory Director Michael Anastasio Vice Chair of the Mission Committee Richard Mies Bruce Darling Craig Weaver Executive Vice President - University Affairs, University of California Executive Vice President, Strategy Bechtel Systems and Infrastructure, Inc. Chair of the Nominations and Compensation Committee Chair of the Business and Operations Committee Admiral, U.S. Navy (Retired) Former Commander in Chief, U.S. Strategic Command Chair of the Nuclear Weapons Complex Integration Committee Nicholas Moore William Frazer S. Robert Cochran Senior Vice President Emeritus, University of California President, Babcock & Wilcox Technical Services Group Chair of the Science and Technology Committee Chair of the Safeguards and Security Committee Threat Weapons Environmental Reduction Programs Management Science & Technology Missions & Programs David Walker Nick Salazar Regent, University of California President, Bechtel National, Inc. Founder & Chairman, Westwood One, Inc. Vice Chair of Business and Operations Committee Representative, House of Representatives State of New Mexico – 475 DOE budget categories – 1,226 work-for-others projects 14% 2% 4% Norman Pattiz Laboratory & Business Operations LANL Budget by Program Area – $2.2 billion total Chair of the Ethics and Audit Committee William Perry Laboratory & Business Operations LEGEND: 54% 3% 8% 6% Chair of the Mission Committee Advisory Members Missions & Programs Science & Technology Director, Gilead Sciences, Inc. Senior Fellow, Stanford Institute for International Studies 2 LANS Organization 9% LEGEND: Defense Programs Nonproliferation & National Security Safeguards & Security Environmental Management DOE Office of Science Other DOE Programs Reimbursable Work from Other DOE Sites Work for Others (Non-DOE) NNSA programs represent 69 percent of the operating program portfolio. 3 Systems, Tools & Resources Business Services Meeting Our Commitment: The LANS Board of Governors contributes industry best practices, systems, tools, and resources from the four parent organizations to improve Laboratory performance and help NNSA transform the nation’s nuclear weapons complex. Accomplishment: Implemented industry best practices and applied expertise from LANS parent organizations to improve the Laboratory’s business processes and systems. Results: ■ Realized 10 percent cost savings in the Laboratory’s first 18 eAuctions using NNSA’s multisite online tool. Led the NNSA complex in eAuctions in fiscal year 2007, solidifying LANL’s role as the complex’s eAuction expert. Safety ■ Accomplishment: Implemented best safety practices drawn from industry leaders Bechtel, The Babcock & Wilcox Company, and Washington Group International. ■ ■ Created a Voluntary Protection Program (VPP) to promote excellence in occupational safety and health through worker involvement. LANL is working closely with VPP mentors from Pacific Northwest National Laboratory, Idaho National Laboratory, and Honeywell to ensure maximum effectiveness. ■ 3 Rate per 200,000 hours Results: ■ Reduced the Laboratory’s accident rate by 35 percent and its days-awayfrom-work rate by 41 percent between June 2006 and December 2007. Total Reportable Cases Days Away/Restricted/Transferred Cases 3.2 ■ 35% Reduction 2 2.09 1.4 1 0.83 2007 Instilling Desired Behaviors & Values Accomplishment: Provided Senior Leadership Alignment Core Training to help drive higher performance. Results: ■ Began applying behavioral science throughout the Laboratory to align workforce behavior with NNSA’s strategic vision, providing employees with clear responsibilities and accountabilities and ensuring that Laboratory management leads by example. ■ By the end of December 2007, completed training of a large percentage of managers in the six key areas that comprise the Laboratory’s Senior Leadership Alignment Core Training curriculum: Core Training Elements —Mike Anastasio, Laboratory Director and President of LANS, LLC. Launched a human resources performance management system to increase rigor and improve consistency. 41% Reduction 0 “Our greatest challenge has been improving several critical Laboratory systems so that our workforce can meet mission deliverables effectively, efficiently, safely, and securely.” Increased the number of competitive awards to maximize small business participation. EAuctions are also known as reverse auctions because competing online bidders bid prices down rather than up. Ben Aguirre (pictured) monitors bids during a recent LANL eAuction. Improved performance by 31.5 percent according to NNSA’s Los Alamos Site Office Conduct of Operations Performance Index. 2006 Implemented a new purchasing system that received NNSA approval. Performance-Based Leadership Lean Six Sigma Human Performance Improvement Project Management Environment, Safety, Health & Quality Safeguards & Security Leaders Trained to Date 89 percent 88 percent 98 percent 100 percent 99 percent 100 percent Director Mike Anastasio discusses leadership training with Associate Director Sue Seestrom. 4 5 Board Oversight Science Capability Meeting Our Commitment: Increased contributions by Board of Governors and parent organizations, coupled with greater transparency, have improved the Laboratory’s operational safety and security, science capability, and community involvement. Security Accomplishment: Closely monitored security performance, reduced vulnerabilities, and improved sustainability of operations through creation of a new Safeguards and Security Board Committee. Results: ■ Cut holdings of accountable classified removable electronic media (ACREM) during fiscal year 2007 by 60 percent, classified parts by 31 percent, vaults and vault-type rooms (VTRs) by 23 percent, and classified repositories by 15 percent. ■ ■ Consolidated 65 percent of the Laboratory’s total ACREM in one location. Reduced the rate of serious security incidents by 39 percent between June 2006 and December 2007. 12,000 ACREM 10,000 8,000 6,000 4,000 2,000 0 Jun 06 Oct 06 Jan 07 LANL’s prototype Super VTR was hailed by a GAO auditor as the best-in-government approach to security integration. Apr 07 Jun 07 Jun 07 Oct 07 Dec 07 The Board: ■ Established seven advisory committees: – Mission – Science & Technology – Safeguards & Security – Nuclear Weapons Complex Integration – Business & Operations – Ethics & Audit – Nominations & Compensation ■ Oversaw five Science & Technology capability reviews. ■ Integrated its assessments with those of LANL’s new Contractor Assurance System. ■ Integrated its corrective action findings with LANL’s Issues Management Tracking System. Accomplishment: Drawing on the University of California’s scientific strength, participated in the review and assessment of the Laboratory’s science and technology capabilities to ensure their continued unique contribution to solving the nation’s most difficult problems. Results: ■ Installed the first phase (70 teraflops) of the Roadrunner supercomputer for computations in support of national security science. Roadrunner is in a race to become the world’s first system to achieve a sustained petaflop—a million billion calculations per second. ■ ■ Evaluated scientific concepts and merits for MaRIE (MatterRadiation Interactions in Extremes), the Laboratory’s proposed signature experimental facility. Generated more than 1,700 peer-reviewed papers and 400 classified reports, won 127 awards from external organizations, and received 34 patents in fiscal year 2007, up from 25 the previous year. The Roadrunner supercomputer is slated to become the computational cornerstone of the Laboratory’s mission-related work. Key contributors to the effort include (left to right) Manuel Vigil, John Turner, and Josip Loncaric. Community Involvement Accomplishment: Supported aggressive efforts in economic development, community giving, and educational outreach. Results: ■ Awarded $550,000 from the LANS Venture Acceleration Fund to five northern New Mexico businesses for technology maturation. ■ ■ Achieved a record-breaking United Way campaign total of $1.7 million, through LANS matches of employee contributions. Signed agreements with the LANL Foundation totaling $3.9 million to fund science, technology, engineering, and mathematics initiatives and scholarships for northern New Mexico schools and regional nonprofits. Alayna Rodriguez, 2006 LANL Foundation Platinum Scholarship award winner, who is now studying at Harvard. 6 7 Reachback to LANS Partner Expertise Enhancing Project & Facility Management Accomplishment: Tapped parent expertise and best practices to improve project and facility management. Results: ■ Completed greater than 90 percent of all scheduled construction milestones. ■ ■ ■ Provided seasoned project directors to take the lead on the Laboratory’s two largest line-item projects: the CMRR and the Nuclear Materials Safeguards & Security Upgrades. Maintaining the Nation’s Deterrent Meeting Our Commitment: We transferred 120 key leaders and managers from our parent organizations, along with their best business practices, processes, and tools, to lead the transformation effort and expedite improvements. Accomplishment: Conducted functional management assessments, deployed AIM (assess, improve, and modernize) teams, and contributed project management expertise to restore and enhance sustainable, safe manufacturing methods for our nuclear deterrent. We also deployed 200 experts from parent and affiliated organizations to assess and improve critical functions, processes, and systems Labwide—from missions and science & technology to nuclear operations and security: ■ 59 functional management assessments ■ 12 assess-improve-modernize teams Results: ■ Restored our nation’s nuclear deterrent manufacturing capability and manufactured the country’s first certified pit in 20 years. ■ Produced 11 W88 pits and delivered 6 to the Pantex Plant, exceeding NNSA requirements by 10 percent while demonstrating improved quality assurance. Induction vacuum furnace used for casting operations. Reduced maintenance billing rates by 11% through efficiencies and aggressive management of overhead costs. Identified 1 million square feet of facilities that can be reduced from the inventory, and succeeded in removing staff from half of those facilities. Environmental Stewardship Accomplishment: Implemented industry best practices in environmental management. Sound project management systems integrate elements to support project planning, development, and execution. Results: ■ Shipped offsite 10 percent more curies of transuranic waste than in all prior years combined. ■ ■ Completed upgrades to the Laboratory’s transuranic waste repackaging and shipping facilities, enabling the processing and shipping to WIPP of the highest risk transuranic waste stored at LANL. Earned seven NNSA pollution prevention awards. LANL increased shipments of transuranic waste to the Waste Isolation Pilot Plant from 823 drums in fiscal year 2005 to 2,499 and 3,073 drums, respectively, in 2006 and 2007. 8 9 Accelerating & Sustaining Change Lasting transformation at Los Alamos requires engaging employees and thoroughly integrating the essential elements of change management: strategy, process, and behavior. We have an integrated approach to accomplish exactly that. We have realized gains in many areas, such as improving pit and component manufacturing, developing a prototype of the Super Vault-Type Room, and increasing the Laboratory’s Threat Reduction portfolio by 10 percent. In other areas, however, we have seen the need to redouble efforts, sharpen our focus, or make course corrections. Based on our experience at other sites and in other large organizations, the leadership team knows that significant and lasting behavioral changes at LANL will require time. LANL’s latest RAPTOR (Rapid Telescopes for Optical Response) telescope. This telescope will capture the first color cinematography of gamma ray bursts – nature’s largest explosions. Examples of recent progress addressing shortcomings or reversing negative trends: ■ ■ Project management. In November 2007, DOE’s Office of Engineering and Construction Management used a team of outside experts to conduct a review of the Laboratory’s $280 million Nuclear Material Safeguards and Security Project. The team was impressed by how well the Laboratory had integrated functions, roles, and responsibilities. We are working aggressively to replicate such effective integration across the Laboratory. Business initiatives. Having trained 525 LANL personnel in Lean Six Sigma, a data-driven approach to identifying and implementing the changes necessary to meet performance expectations, we can now better gauge and improve our own performance. The Lean Six Sigma team has begun to improve eight Labwide processes, starting with nuclear safety component life-cycle management. Nevertheless, we have more work to do. The CMRR engineering and construction project is benefitting from new management and new systems. NEW PHOTO COMING FROM BOB BREWER Creating Our Futu Laboratory Goals – Creating Our Future The work of the Laboratory continues advancing us toward the 12 overarching multiyear goals below. Established in May 2007, these ambitious goals and their associated commitments drive a combination of strategies, processes, and behaviors that will, over the long haul, best serve the complex and the nation. ■ Make safety and security integral to every activity we do. ■ Be the premier national security science laboratory and realize our vision for a capabilities-based organization. ■ Implement a cyber security system that reduces risk while providing exemplary service and productivity. ■ ■ Implement a performance-based management system that drives mission and operational excellence. Provide efficient, responsive, and secure infrastructure and disciplined operations that effectively support the Laboratory mission and its workforce. ■ Establish excellence in environmental stewardship. ■ Deliver improved business processes, systems, and tools that meet the needs of our employees, reduce the cost of doing business, and improve the Laboratory’s mission performance. ■ Develop employees and create a work environment to achieve employee and Laboratory success. ■ Leverage our science and technology advantage to anticipate, counter, and defeat global threats and meet national priorities, including energy security. ■ Assess the safety, reliability, and performance of LANL weapons systems. ■ Transform the Laboratory and the nation’s nuclear weapons stockpile to achieve NNSA’s vision for Complex transformation. ■ 10 Deliver improved business processes, systems, and tools that meet the needs of our employees, reduce the cost of doing business, and improve the Laboratory’s mission performance. 11 Transformation, Integration & the Future Transformation & Integration LANS recognizes its continuing responsibility to support NNSA’s transformation of the weapons complex through integration on three levels: ■ The NWC as a whole. ■ The relationship between Los Alamos and Livermore. ■ Within Los Alamos to provide innovative and responsive solutions to broad national security challenge. LANS parent organizations’ management of five of the eight sites that comprise the nuclear weapons complex gives the LANS Board unprecedented experience with the challenges and successes at other sites. Such knowledge and perspective facilitate communication and the exchange of ideas, needs, and technologies in support of NNSA’s efforts to transform the complex. Per the LANS proposal, the Laboratory established and chaired the Nuclear Weapons Complex Integration Committee for NNSA. The committee: ■ ■ Achieved more than 90 percent of its multisite goals. Established an unprecedented level of cooperation, including the “Code Blue” approach in which sites help other sites to solve such problems as Y-12’s throughput issue, for example. To facilitate integration between LANL and LLNL, the LANS Board and its Livermore counterpart have identical structures, including committees. Overlapping memberships help NNSA facilitate and monitor intersite efficiencies and ensure that the talents and resources of LLNL and LANL address performance problems at both laboratories. The Future at Los Alamos Our vision for LANL’s future includes: ■ ■ ■ ■ ■ 12 Continuing as NNSA’s center of excellence for nuclear weapons design and engineering, plutonium research and manufacturing, and supercomputing. Responding quickly to emerging threats and supporting mission objectives in counterterrorism and in nuclear energy research, forensics, and safeguards. Addressing broader scientific questions related to complex systems like Earth’s weather, disease pandemics, and the security of the nation’s electricity grid. Increasing our role as science provider of choice for the nation’s intelligence community and growing our nonproliferation programs. Addressing the need for energy security through energy storage solutions and new materials, and assessing the impacts of decisions about energy choices. Ensuring leading-edge capabilities by attracting and retaining top scientific talent and providing them the tools to succeed. will anticipate, “ We innovate, and deliver science that matters. “ ■ MICHAEL ANASTASIO DIRECTOR Operated by Los Alamos National Security, LLC for DOE’s National Nuclear Security Administration Los Alamos National Security, LLC Board of Governors LAUR-08-0592