LANL: The Real Story

Date: Mon, 26 Jun 2006 09:37:09 -0600
To: newsbulletin@lanl.gov
From: "David W. Thomson" <dwthomson@lanl.gov>
Subject: Service-based match to 401(k)

Ian Philp and Ralph Stevens (newsbulletin letters) may have discovered something that has been troubling many of us about the LANS management contract. One of the premises of the contract award was that LANS would bring "modern management" to LANL business processes. Could this be the first indication of how they intend to do that?

Back of the envelope calculations show that LANS will have to reduce LANL headcount by perhaps 400 people ($100M/$250K per head) to balance the budget. One would suppose that LANS was counting on a wave of retirements to eliminate the oldest and most highly-paid employees, freeing up funds for GRT, increased management fee, and the vastly expanded LANS management/overhead structure.

When the expected hundreds of retirees didn't do so, LANS is now caught in the proverbial "cash flow bind" and must take steps to defer expenses into next year. Two logical steps are not making bi-weekly contributions to the employee's 401(k) contributions until next fiscal year, and stretching out accounts payable. Indeed, if they can delay payables until after 1 October, they will hit next year's budget, protecting this year's fee. Next year they can go to Congress for an emergency appropriation to avoid layoffs at the lab and fund the promised 401(k) contributions.

It's a clever move.