LOS ALAMOS, N.M. - The University of California has retained the contract to manage the troubled Los Alamos National Laboratory in New Mexico, the Energy Department announced Wednesday.

The contract to run the nation's pre-eminent nuclear lab had gone out to bid earlier this year for the first time in the lab's 63-year history.

Energy Secretary Samuel Bodman said UC, which will team with Bechtel Corp., prevailed over a rival team comprising Lockheed Martin and the University of Texas.

The winning team also includes Washington Group International and BWX Technologies. CH2M Hill and Fluor Corp. were on the University of Texas team.

The initial term of the Los Alamos contract is for seven years with a provision to extend it to 20 years.

"This is a new contract with a new team, marking a new approach to the management of Los Alamos. It is not a continuation of the previous contract," Bodman said at a news conference in Washington, D.C.

The university has run the lab since it was created in the New Mexico desert in 1943 as part of the top-secret Manhattan Project to build the A-bomb. But because of bitter complaints in Congress about security lapses and poor management, the contract was put up for competitive bidding.

This time, the university teamed up with Bechtel to give itself more managerial expertise.

The Los Alamos National Laboratory, with about 8,000 University of California employees and 3,000 contract workers, is one of the nation's three chief installations responsible for maintaining the U.S. nuclear arsenal and manufacturing weapons components.

The lab also conducts research on a host of topics of national interest, including miniaturized technology, genetics, computing, the environment and health.

In 1999, in a case that proved a major embarrassment for the government and the lab, Los Alamos scientist Wen Ho Lee was jailed amid an investigation into possible Chinese espionage. The case proved to be weak, and Lee pleaded guilty to mishandling classified information and was released with an apology from a federal judge.

The lab was rocked by other security lapses, as well as credit card abuses, theft of equipment and other instances of mismanagement.

Former lab investigator Glenn Walp, who was fired in 2002 after alleging mismanagement, fraud and cover-up at the lab, said he was disappointed that UC-Bechtel won.

"It's a blue Christmas for America," he said. Walp said UC deserves praise for the work it has done in the past, "but in the last 10 years, they're just incapable of running the lab that's so important to American security."