LANL Cost Management and Workforce Planning Memo

Charlie McMillan

LANL Director Charlie McMillan sent out the following memo to all employees this afternoon:

Subject: Cost Management and Workforce Planning

On Thursday, the Laboratory submitted a plan to NNSA calling for a voluntary separation program (VSP) with a severance package based on years of service.

There are three main reasons why we are taking this action now:

* Our current budget and future financial outlook require significant cost-cutting to position the Lab for FY13 and beyond. In FY12 alone, we face a budget reduction of around $300 million across multiple programs.

* By implementing a voluntary separation plan, we mitigate the possibility of an involuntary separation program later; and

* We are positioning the Laboratory to meet future mission needs with a smaller workforce. For a variety of reasons, attrition has been low for the last three years, so we cannot rely on attrition alone to achieve workforce reductions.

When I established the Laboratory Integrated Stewardship Council (LISC) in November, I knew it was necessary to take immediate measures in anticipation of significant budget uncertainties.

The LISC has managed decisions on hiring actions and large procurements to ensure that we proceed only with actions that are reasonable and necessary. Additionally, the principal associate directors have championed initiatives to reduce costs related to travel, materials, and services. We also have invited employees to submit their own ideas for cost-cutting, and have established a committee to review every idea and to present recommendations to the LISC.

While I am pleased with the progress and the savings from these actions, the Lab needs to take additional steps for FY13 and beyond. With labor comprising 63 percent of the budget, a smaller workforce is part of the solution.

I have asked the LISC to monitor and recommend appropriate action with respect to reducing costs associated with our flexible workforce. In that vein, the LISC has already capped student hiring at 2011 levels. Craft employment has always fluctuated based on available work and will continue to do so. Analysis continues of the term and staff augmentation workforce.

With respect to the regular workforce, the VSP we submitted proposes a regular workforce reduction of 400 to 800 employees to align our funding with our missions.

One of our top priorities as we go through this process will be to ensure we meet mission deliverables this year and going forward. Similar to the voluntary program in 2008, critical skilled positions will be excluded from eligibility. In addition, we will decide whether to decline individual applications based on the need to retain a sufficient number of employees with certain essential skills. Though we also retained that discretion in 2008, we did not exercise it. Unlike the program in that year, we expect to deny some applications in this VSP.

We anticipate the VSP will be completed in a matter of weeks rather than months. Knowing that many of you face a difficult personal decision, I encourage you to begin thinking about the program now. We will provide details of the plan to you immediately after NNSA approval. Human Resources will be prepared to respond to your benefits questions and will schedule information programs.

We are committed to treating all employees fairly and respectfully in this process. We did so during the voluntary program in 2008 and we will do so again.

I will maintain open and effective communication with you and other stakeholders of the Laboratory. This includes all-employee meetings such as the one scheduled today.

Please remember that we are still in a planning phase, and there are many questions to which we do not yet have answers.

We will have more details as soon as NNSA approves the plan

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