Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED Classified Information Security Event EFCOG Fall Workshop October 21, 2015

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED Agenda Slide 2  Event Overview  Timeline  Investigation Results & Potential Violations  Enforcement Outcome (Mitigation of Penalties)  Lessons Learned

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED The event involved potential unauthorized disclosure, consisting of “loss of control of classified matter” Slide 3  December 2012 – LANS discovered that it could not document the disposition of two classified legacy parts –Parts manufactured in the 1960’s for the underground test program –Parts not required to be accounted for pursuant to then existing security requirements (parts contained accountable amount of depleted uranium)  April 2013 – LANS internal investigation concluded –Likelihood of compromise of classified information was low –Destruction documentation was not required in , when the parts in question likely were appropriately destroyed

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED The timeline related to this event stretched over multiple years 4 Week of 12/9/13 OE onsite investigation 5/27/15 LANS received PNOV 7/28/15 LANS received FNOV April 2013 Internal LANS investigation completed 8/12/14 OE enforcement conference; LANS factual accuracy provided 6/29/15 LANS submitted response to PNOV 4/24/13 Report closed in SSIMS Dec 2012 LANS discovered MC&A inconsistencies /14/13 LANS received OE Notice of Intent to Investigate /20/14 OE investigation report issued Jan 2013 LANS identified non-compliances and reported in SSIMS 2012

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED # Description of Potential Violation LANS Position at Enforcement Conference – clarifying information was provided as support 1Failure to provide timely notification of an incident of security concern Notification was timely and conservative Note: not cited in FNOV 2Failure to adequately define potential risk (disposition pathways, physical security) LANS incident evaluation was thorough, conservative and compliant 3Failure to control classified information No evidence that LANS failed to control classified matter 4Failure to implement a comprehensive self-assessment program NNSA approved self-assessment program The investigation report cited four potential violations of classified information security requirements Slide 5

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED  PNOV assessed a $247,500 financial civil penalty – Cited three violations – one Severity Level I and two Severity Level II violations; continuing violation – Penalty was initially calculated by OE to be $385,000; mitigated for corrective actions associated – After enforcement conference, LANS provided factual accuracy document and affidavits – LANS submitted letter to OE requesting reconsideration challenging severity of violations and argued that civil penalties proposed were excessive Civil penalties were mitigated based on corrective actions and clarifying information provided Slide 6 LANS’ continued focus during the investigation was factual accuracy and providing clarifying information, resulting in a positive outcome.

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED  FNOV assessed a $192,500 financial civil penalty – Penalty reduced based on LANS letter and additional supporting information provided Eliminated per day penalty that PNOV had identified as continuing violation Further consideration of LANS corrective actions – No change to severity of violations Civil penalties were further reduced based on additional clarifying information provided Slide 7 LANS’ continued focus during the investigation was factual accuracy and providing clarifying information, resulting in a positive outcome.

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED  Factual accuracy – continued follow up  Corrective actions – proactive discussions  Mitigation of penalties  Understanding of rules associated with investigation – 30 day response deadline – Citations associated with violations Lessons Learned – this investigation Slide 8

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy's NNSA UNCLASSIFIED  PAAA role  Teaming with legal counsel  PAAA engagement in investigation – Interviews – Planning  Strategy  Document request  Formality – OE interaction Lessons Learned – general Slide 9