ALBUQUERQUE — The managers of Los Alamos National Laboratory are pleased with their report card for the year, a federal assessment that led to a one-year extension of their contract to run the lab for the Department of Energy.

The assessment, by the National Nuclear Security Administration's Los Alamos site office, awarded Los Alamos National Security LLC 87.9 percent of the possible fees available, up from 81.3 percent the previous year. The assessment was for Oct. 1, 2007, through Sept. 30, the second full year LANS has operated Los Alamos.

It was the first year the government could extend the expiration date — considered another incentive for performance. Ultimately, the contract could be extended up to 20 years.

The extension from seven years to eight "is a big deal for us, a vote of confidence" that assures another year of stability for the lab, Deputy Director Jan Van Prooyen said Wednesday shortly after the report was released.

"We have a good management team. They're experienced, they're dedicated, and we're going to get better grades in the years ahead," he said.

The extension "was our biggest and most important goal," and gaining it shows Los Alamos is doing quality science and is contributing significantly to national security, he said.

The ratings process used by the DOE and NNSA is demanding and comprehensive, with some 200 measures that are difficult to achieve, Van Prooyen said.

"It's the way our employees judge how their lab is doing," he said. "At the lab, we're really pleased about it."

LANS earned its fixed fee of $21.9 million as well as $41.5 million of a potential $51.2 million incentive fee, called an at-risk fee. In addition, it earned $7.3 million for so-called "work for others" projects at the lab, which are funded by non-DOE agencies.

LANS, which took over managing Los Alamos from the University of California in June 2006 after a series of security breaches, consists of the university, Bechtel Corp., BWX Technologies Inc. and Washington Group International.

The lab employs 8,500 full-time workers, down about 2,200 people since 2005. That includes the voluntary separations of about 500 workers last year. With contractors and others, the lab has more than 11,000 jobs.

NNSA specifies what it wants, but leaves it up to the contractor to decide how to get that done.

The report card was based on LANS' own assessments, monthly performance reviews with the contractor, field assessments and audits, inspections, reviews of documents, tours of facilities and comments from the Department of Energy, NNSA and lab customers. Van Prooyen said the contractor has 1,000 separate measures it keeps on itself, which are available to NNSA daily and are validated by the agency. There also is oversight by LANS' parent companies.

LANS successfully completed more than 96 percent of certain weapons complex milestones, including producing seven pits, the triggers of nuclear weapons, the report said.

It said LANS made progress in reducing the number of classified parts kept at the lab, consolidating classified information and improving oversight of cybersecurity, but said it did not always meet NNSA's expectations in implementing nuclear safety programs at the lab.

NNSA said the contractor improved its relationship with the state Environmental Department. It "did not argue or debate every issue, but instead improved documentation and treated the regulator with care and respect," the report said.

The report praised the contractor for shipping the last of certain high-activity waste from Los Alamos to the Waste Isolation Pilot Plant in Carlsbad and for completing the second axis at the Dual-Axis Radiographic Hydrodynamic Test facility, designed to check the reliability of the nation's nuclear stockpile.

Van Prooyen noted Los Alamos shipped 20 percent of its transuranic waste to WIPP, more than in the previous two years. "It was a big accomplishment because it was technically very difficult," he said.

NNSA also had criticisms of LANS. The contractor did not finish construction and readiness testing on a small chemical lab, it was unsuccessful in the last two years in resuming low-level waste treatment operations, and it paid little attention to improving low-level treatment systems. The contractor also has struggled with the preparation, review and startup of new operations and lab-wide planning for acquisitions did not meet expectations, so several key procurements languished.

Van Prooyen acknowledged some projects were taking more time than expected. He said LANS was working with the federal agencies to improve the process. But, he said, "building and repairing nuclear facilities is a very challenging business. You have to do it right. There's a lot of planning that has to be done."