SPENCER MICHELS: Los Alamos National Laboratory, which develops nuclear weapons, has long attracted the ire of anti-nuclear activists.
PROTESTER: You created a committee which never made anything...
SPENCER MICHELS: This group was protesting a proposal to build a facility to manufacture plutonium bombs, or PITS, which set off thermonuclear explosions. With the Bush administration including in its 2004 budget plans to rebuild the nation's nuclear weapons manufacturing industry, the controversy has heated up.
In recent years, the lab has drawn even more fire from the government, the media and watchdog groups for alleged management and security lapses.
During World War II, when President Franklin Roosevelt ordered scientists to begin work on an atomic bomb, the University of California -- known as U.C. -- was put in charge of the project. Physicist J. Robert Oppenheimer led the scientific team at Los Alamos, a then-secret and secure location in the high New Mexico desert.
Today, the 12,000 employees at Los Alamos continue to work under U.C. management -- designing and studying nuclear weapons.
This year Los Alamos -- oldest of the three national nuclear weapons labs -- celebrated its 60th birthday.
SEN. PETE DOMENICI: I have been proud of the University of California…
SPENCER MICHELS: New Mexico Senator Pete Domenici praised U.C., but warned that all was not well.
SEN. PETE DOMENICI: The evidence is clear that the lab has not been managed well in a number of key areas, particularly in the management of its business systems.
SPENCER MICHELS: While the lab has been lauded for its science, it has been publicly accused of keeping sloppy records, condoning and covering up theft, and failing to secure and protect its nuclear materials.
Linton Brooks heads the agency in the Department of Energy which oversees the contract with U.C. to operate Los Alamos. He says scientists at the lab had little appreciation of business practices.
LINTON BROOKS: There were problems with inventory control in a variety of areas, such as laptop computers, firearms…
SPENCER MICHELS: Others go even further. Former Arizona police chief Glenn Walp was hired by Los Alamos to investigate stealing at the lab.
GLENN WALP: I came back with a report in March of 2002 and found out there was a multiplicity of theft occurring, in fact I found a culture of theft occurring throughout the lab.
SPENCER MICHELS: Walp says he found that some employees falsified documents to cover theft.
GLENN WALP: When a scientist retired the computers and items went with him. There were about well, approximately 300 computers, a lot of lab equipment as far as research, in fact in one case a five ton magnet, a large water tower, in one case a forklift which I do think they found later, but these were the types of items they had no idea where they were at.
SPENCER MICHELS: Danielle Brian, executive director of a watchdog group called the Project on Government Oversight or POGO, was highly critical when Walp and another whistleblower were fired by the lab.
DANIELLE BRIAN: There's absolutely a culture at Los Alamos of let's protect the institution, protect the reputation of the institution at all costs -- and what that means is when someone raises their head and says there's a problem, they are demoted or fired.
SPENCER MICHELS: After extensive publicity, Walp and his colleague were re-hired by the university as consultants.
While the Department of Energy's Linton Brooks doesn't believe there was a culture of theft or of cover up, he did decide this spring not to automatically renew the University of California's contract to manage the Los Alamos lab when it expires in 2005. Instead, there will be competitive bidding for the first time.
LINTON BROOKS: We saw this fairly widespread series of problems, individually not all of them huge, and concluded that we could no longer say it's self evident that nobody can do it better. And so the way you find out if people can do it better is called competition.
SPENCER MICHELS: Officials at the University of California were stunned and disappointed. U.C. manages the lab -- and its $2.1 billion a year budget -- as a public service, according Senior Vice President Bruce Darling.
BRUCE DARLING: So the university took it on as a national service to the American public. It continues to do so today for one reason and one reason only, that is to provide the best possible security to the American public.
SPENCER MICHELS: What about money, is that one of the reasons?
BRUCE DARLIN: Money really has nothing to do with it. The university has operated from, for the past 60 years, on a no financial gain, no financial loss principle.
SPENCER MICHELS: The nitrogen goes down the middle?
SCIENTIST: Well normally it would go down the middle of the cable...
SPENCER MICHELS: Throughout Los Alamos -- including at this lab where they are developing super conducting cables to carry electricity without resistance --scientists like Dean Peterson say the prestige that U.C. lends to the lab is invaluable. He resents the allegations of theft.
DEAN PETERSON: Most of us have security clearances and that would indicate that we're reliable people that don't steal things or that, that are dishonest and are a bunch of thieves. Overall, I've never seen anyone take anything here….
SPENCER MICHELS: Still, university officials have not been able dismiss criticism easily. Last year they fired the lab director and recently appointed retired Navy Vice Admiral George "Pete" Nanos who holds a Ph.D. in physics -- as the new boss, with a mandate to clean up the lab.
G. PETER NANOS: I'm not going to sit here and apologize or mount an apologia for the reasons why we had lax business processes, because I think we do. We've proven that we're not a bunch of crooks here at this laboratory, but it took us five months to find it out and that was because our business processes and systems were not up to snuff.
SPENCER MICHELS: Nanos makes a point of responding directly to a series of specific well-publicized allegations, including that an employee tried to buy a Mustang automobile with a Los Alamos credit card.
G. PETER NANOS: There's absolutely no evidence that any employee at Los Alamos National Laboratory tried to order a Mustang. The forklift that was missing was being repaired in Albuquerque. The two ton magnet was in a facility and found in inventory. The total amount of purchase card fraud over, out of $120 million that was audited was about $3,000 -- out of all our purchasing, $2.2 billion worth of purchasing that we audited, we found $14,500 worth of irregularity.
SPENCER MICHELS: Nanos initiated a "wall-to-wall" inventory using grocery store style bar codes of all property at the lab, that is nearly complete. Those in charge say very little is missing, far less than would be found in private industry.
Another major issue the lab faces is the security of its nuclear materials and information.
Nanos takes over just four years after Los Alamos scientist Wen Ho Lee was imprisoned for nine months on suspicion of passing nuclear secrets to China. He was later released, after pleading guilty to mishandling classified materials.
While that incident appears closed, security remains a hot-button issue -- although a disputed one -- at Los Alamos. POGO's Danielle Brian recently testified before Congress that her group has documented a number of security failures.
DANIELLE BRIAN: These scandals, I'd like to point out, have never been discovered by DOE. They've only been brought forward by outsiders.
SPENCER MICHELS: Brian said in an interview that informants have told her that radioactive materials at the lab are not safe.
DANIELLE BRIAN: Are they adequately securing the plutonium and highly enriched uranium that -- tons of it -- that are there at the facility? And we believe the answer is no.
SPENCER MICHELS: This spring Brian's group alleged the lab lost some weapons-grade plutonium, a charge the director downplayed.
G. PETER NANOS: We're talking about two vials of this size.
SPENCER MICHELS: This is plutonium.
G. PETER NANOS: This is the plutonium oxide, very low-grade. The amount was enough to just barely cover the bottom of the vile. And what we found is, we made, we made an administrative error in our counting system. This is the absolute lowest hazard category, of no use to an adversary, and it's an administrative error.
SPENCER MICHELS: The lab believes the vials were discarded as residue. Nevertheless, since 9/11, Los Alamos officials have focused increasingly on security, beefing up security forces and training schedules.
At a specially built firing range designed like a warehouse with offices, a special guard force uses live fire to combat a simulated terrorist attack on nuclear materials. Mike Wismer is one of those in charge.
MIKE WISMER: Our mission is to provide security for the special nuclear material by having a very highly trained and capable guard force that's able to rapidly respond to any potential threat and neutralize it quickly.
SPENCER MICHELS: But critic Brian says exercises, where there is a mock opposing force, have always failed.
DANIELLE BRIAN: When the government has mock terrorist attacks to see if the guards who are working at the facility can adequately protect these materials from a terrorist attack, the terrorists-- the mock terrorists-- are able to get in, get to those materials, and either take it back out or get in for long enough to be able to actually create a nuclear detonation.
SPENCER MICHELS: The energy department's Linton Brooks denies such allegations and says that security problems did not enter into his decision to put the lab contract up for bid.
SPENCER MICHELS: Security is adequate?
LINTON BROOKS: Security at Los Alamos has been good recently. It's been audited by outside groups, and I'm not particularly concerned there. I would not advise terrorists to go to one of my facilities. That's not going to be a high-payoff option for them.
SPENCER MICHELS: Despite his own confidence in lab security, Brooks recently announced new measures to strengthen security operations and appointed two new review groups, headed by former admirals, to assess security concerns.
Scientists like plutonium chemist Joe Martz say charges of both theft and security problems, and the resulting publicity, interfere with their work by inspiring bureaucrats to write new, unnecessary rules.
JOE MARTZ: I've recently run a project here at the laboratory which is a complicated nuclear experiment. I spent 80 percent of my time fulfilling the requirements of formal rules and regulations and about 20 percent of my time doing the science on this job.
SPENCER MICHELS: Speculation has been swirling over who will run this giant nuclear lab, where scientists also work on such non-nuclear technologies as fuel cells to power vehicles. Some fear that if a private company were to get the management contract, the quality of work and the confidence in it could be compromised. One reason is that the University of California certifies all nuclear weapons, according to Richard Mah, associate director for weapons engineering manufacturing.
RICHARD MAH: Five years ago, you know, if the president or CEO of Enron signed the certification of a nuclear weapon, people would said, "hey, this is a credible deterrent." Would they... would you feel that way now? No. And that's why I feel it's so important than an institution like the University of California be there to certify those nuclear weapons. That's my concern.
SPENCER MICHELS: Mah also worries that private companies would try to maximize its profit rather than work out of patriotism. Lab director Nanos agrees that a big university like U.C., which hired him, is the ideal manager for the lab.
G. PETER NANOS: The University of California is the largest university system. The nearest system in size and breadth and depth to this one is less than a third of its size. So it's the one place in the country where the full weight of academic science comes together with the very highly classified national security work.
SPENCER MICHELS: There has been published speculation that the Bush administration would like the contract go either to private industry or the University of Texas.
LINTON BROOKS: Yeah, it's absolute nonsense. There was absolutely no white house involvement in the decision. That's been absolutely no White House pressure to go a certain way. That's just ... that's a silly charge.
SPENCER MICHELS: Sixty years ago, the University of California began its stewardship of Los Alamos. But it has not yet committed to compete for the contract, fearing that now science could take a back seat to business. In response, Energy Department officials say they've just started working on the criteria they will use to determine who runs this historic national nuclear weapons laboratory.
GWEN IFILL: And an update: Last week, the University of California agreed to pay investigator Glenn Walp nearly $1 million to drop his threat of a lawsuit. Walp claimed he was wrongfully fired after he exposed theft and fraud at the weapons lab.