Los Alamos Lab Sets Aside Purchases For Local Firms The Energy Department’s Los Alamos National Laboratory has set aside about $60 million in contracts for New Mexico businesses. A spokesman for the lab’s operating contractor, the University of California, said the set-asides are justified because the University’s contract with the Energy Department provides for a subcontracting preference for local businesses “in order to promote and enhance regional economic development.” A Los Alamos memo obtained by Set-Aside Alert lists 30 commodities that are set aside either for small businesses, 8(a) firms or all companies in New Mexico or in seven Northern New Mexico counties. The set-asides, announced May 9, cover items ranging from personal computers to lumber. In an e-mailed response to questions, the lab spokesman, James Rickman, did not explain why 8(a) firms qualify for set-asides while HUBZone and service-disabled veteran-owned businesses do not. In deciding what categories to set aside, the spokesman said, “market surveys are performed on a commodity-by-commodity basis to determine if adequate competition and fair and reasonable competition are achievable.” Some advocates outside New Mexico question the legality of the set-asides. “The policy to support New Mexico businesses is innocuous,” said Hank Wilfong, president of the National Association of Small Disadvantaged Businesses and a former SBA official. “But to limit competition to just New Mexico, they’re restricting it beyond the boundary of the law.” In an April 22 memo, G. Peter Nanos, director of Los Alamos at the time, wrote, “A strong, vibrant local economy ensures a vibrant laboratory – they go hand in hand. Accordingly, the laboratory has a stake in supporting our surrounding communities, including the small businesses whose owners are working long and hard to develop a strong and diverse business infrastructure in Northern New Mexico.” In his written response, the lab spokesman said the set-asides are also justified by “the need for urgent and time-critical delivery of commodities” as well as the need to have vendors and suppliers nearby so they can meet with lab officials. Los Alamos said it awards more than 40% of its subcontracts to small companies. Wilfong suggested the set-aside policy could be an attempt to block contracts for Alaska Native Corporations, which are counted as 8(a) businesses even if they are large. In its report on the 2006 Energy Appropriations bill, the Senate Appropriations Committee said, “Since October 2003, the Department has signed contracts with Alaska Native Corporations totaling more that $500,000,000 as 8(a) firms, despite the size and income of some ANCs. In New Mexico, for example, the National Nuclear Security Administration has used ANC contractors at the expense of New Mexico small businesses.” New Mexico’s senators, Republican Pete Domenici and Democrat Jeff Bingaman, have backed several legislative initiatives aimed at protecting local businesses around the two national labs in the state, Los Alamos and Sandia. The Appropriations Committee report also questions Energy’s plan to break up some of its large management and operations contracts to provide prime contracting opportunities for small businesses. More than 80% of the department’s budget goes to the large primes that operate its facilities, so Energy’s proportion of prime contracts awarded to small businesses is the lowest of any cabinet-level department. The University of California has operated Los Alamos since the lab was established in 1943 to conduct research that led to the development of the atomic bomb. Energy plans to open the contract for competition for the first time.