But with the university facing a cash crisis, as well as criticism over its struggles with security breakdowns and lax finances at Los Alamos in recent years, some question a costly bidding war.
"For years I have been puzzled why UC attaches so much importance to keeping this contract," said Hugh Gusterson, a Massachusetts Institute of Technology professor of anthropology, science and technology studies who has written about the New Mexico lab.
The university has run the Los Alamos National Laboratory — the birthplace of the atom bomb and considered the country's premier nuclear weapons lab — for all 60 years it has been in existence.
That may end after the Energy Department announced that the next Los Alamos management contract, which begins in 2005, will be put up for open bidding. Possible competitors include the University of Texas and major defense contractors.
Reaction on the university's campus was mixed at the news.
Chris McKee, chair of Berkeley's physics department, wants to keep the lab: "It's extremely important that we have the outstanding scientists who are working on trying to preserve the security of our country."
But others are ready to see the lab go.
"Who needs that kind of prestige?" said Robert Bellah, a Berkeley professor emeritus of sociology who was active in faculty referendums a decade ago opposing UC's involvement with weapons work.
Putting together a competitive proposal could range from $5 million to $25 million in consulting and legal bills, said UC spokesman Michael Reese.
"That's a lot of student fees. That's a lot of programs. It's a lot of positions," Reese said. "It would be a question I think the taxpayers of California could rightfully call us on."
The university runs both the New Mexico lab and a sister facility, the Lawrence Livermore National Laboratory, where work helped create the hydrogen bomb.
Although the weapons labs are physically separate from the university's nine campuses, bid proponents say the university can draw on the labs' supercomputers and scientists.
"There is definitely a feeling among a lot of the scientists down there that a huge amount of opportunity to work together would be severed," said University Regent Dick Blum.
The bidding decision applies only to Los Alamos. But that facility and Livermore are intertwined and Blum is among those who think that if the university loses one, it likely would lose the other.
Workers at the labs, including some of the university's most vocal critics, don't want to see that happen.
Sue Byars, a site planner at Lawrence Livermore who also serves as a union representative, thinks university management needs much improvement. But she doesn't want to see workers lose generous benefits or the status of being affiliated with a major public university.
The university, which also manages the Lawrence Berkeley National Laboratory, doesn't make money off the labs. The government reimburses its administrative costs — about $17 million for all three labs last year.
The university can earn up to $17 million more for good performance and typically gets about 90 percent of that, but the money is put back into the labs, said school spokesman Jeff Garberson.
The review of the university's contract for Los Alamos was prompted after reports of financial abuse by several employees, equipment that was missing or unaccounted for, and the firing of two lab investigators who raised concerns about porous management.
Whether or not the university will submit a bid to manage the Los Alamos lab is unclear. University President Richard C. Atkinson seemed to back off a full-out bid effort in testimony Thursday before a congressional subcommittee.
"If we enter into a competition, I will not view it as a competitor. We will simply provide our proposal," Atkinson said. "We will not spend $25 million preparing the proposal and we will wait for the department to make its decision based on our record."