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‘Missing’ secret disks at lab never existed

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WALNUT CREEK, Calif. — Two top-secret computer disks reported missing from Los Alamos National Laboratory in July, resulting in a complete shutdown of lab operations, never actually existed.

Separate investigations by the Department of Energy and the FBI found that the disks never were created, according to a DOE memorandum dated Jan. 21 and acquired by the Contra Costa Times on Friday.

"We conclude that the allegedly missing disks never existed and no compromise of classified material has occurred. Bar codes were entered . . . in anticipation of the creation of disks that were, in fact, not created," deputy energy secretary Kyle McSlarrow wrote in the memo to Secretary of Energy Spencer Abraham.

"The difficulty in accounting for classified material is a symptom of a much broader disease of failure to follow procedures," McSlarrow wrote.

The University of California is being punished for "unacceptable" performance in managing the lab, largely due to problems with the way classified media such as computer disks and drives were handled, according to a report released Friday.

UC's 2004 management fees were slashed by the National Nuclear Safety Administration, the DOE's nuclear oversight arm. UC will get only a third of the money it was eligible to collect for managing the lab during the last fiscal year — $2.9 million of a possible $8.7 million. Last year UC earned $6.8 million of a possible $8.7 million. The disk incident, along with a safety blunder involving a student intern who was inadvertently hit in the eye with a laser, resulted in an "unsatisfactory" rating for operations at the lab.

"The major weaknesses in controlling classified material revealed by this incident are absolutely unacceptable, and the University of California must be held accountable for them," NNSA Administrator Linton Brooks said in a statement Friday.

Normally, UC receives a $3.5 million flat fee and up to $5.2 million more based on performance.

"We got walloped," said UC spokesman Chris Harrington. "Unfortunately we deserved this, but what we have done is corrected the problems so that we don't have to take this kind of hit in the future."

The fee reduction won't affect regular university operations, but will affect money that UC normally puts back into research at the lab, Harrington said.

UC has run the New Mexico lab since its inception in 1943. In 2002 after a string of security lapses and accounting errors, congress forced the Department of Energy to put the management contract for Los Alamos up for bid along with several other labs including Lawrence Livermore and Lawrence Berkeley Labs, both run by UC.

The current Los Alamos contract is set to expire on Sept. 30, and the DOE hopes to award the new contract this summer.

Though UC hasn't decided whether or not to bid for Los Alamos, the fallout from this summer's security and safety incidents may have hurt its chances of keeping the contract. But things could be turning back in UC's favor after several potential rivals recently dropped out of the competition.

The University of Texas, considered by many to be UC's biggest competition for management of Los Alamos, will likely bail out on the recommendation of chancellor Mark G. Yudof. Texas A&M and Lockheed Martin had already announced they are no longer interested in bidding.