Acknowledgments
The Commission appreciates the contributions of the IDA Science and Technology Policy Instituteteam led by Susannah V. Howieson and Mark S. Taylor, including Susan L. Clark-Sestak, Christopher
T. Clavin, Laurie A. Dacus, Katherine E. Gliwa, Martha V. Merrill, Vanessa Peña, Kathleen A. Peroff,
Elizabeth A. Turpen, Ryan M. Whelan, Julian L. Zhu, and Brian L. Zuckerman. The Commission would
also like to thank all the individuals from the laboratory community, the Department of Energy, andbeyond for their cooperation and valuable input.
Cover design by Keith B. Meador, Institute for Defense Analyses, Alexandria, VA.

Cover Photo Descriptions
Front cover:Multi-programmatic Capability Resource (MCR)
The MCR, developed as part of NNSA’s Advanced Simulation and Computing (ASC) programat Lawrence Livermore National Laboratory, was among the world’s first systems using Beowulf
PC-cluster architecture to deliver multi-teraFLOP per second power.
Linac Coherent Light Source (LCLS)
The LCLS, at SLAC National Accelerator Laboratory, is a powerful x-ray laser that generates highenergy, ultrashort x-ray pulses with very high brilliance. It gives scientists an important tool forunderstanding materials, with wide-ranging impact.
Wind Turbines
Large wind turbines are capable of producing several megawatts of power and when grouped
together into wind farms, can provide bulk power to the electrical grid.
Back cover:
Advanced Light Source (ALS)The ALS, a 3rd generation synchrotron light source at Lawrence Berkeley National Laboratory,
provides extremely bright X-ray and ultraviolet light for research in fields such as materials
science, biology, chemistry, physics, and the environmental sciences.
Salt Waste Processing Facility (SWPF)
The SWPF, at Savannah River National Laboratory, handles spent nuclear fuel and is the key
liquid waste facility for processing approximately 90 percent of the 36 million gallons of tankwaste stored at the Savannah River Site.
Drilling Gas Well
Natural gas production from shale formations is one of the most rapidly-growing trends in U.S.
domestic energy exploration and production.
Volume 1, Chapter 2 photos as above
For additional information about the Commission and links to download this report the reader isreferred to http://energy.gov/labcommission.

Volume 2: Technical Chapters and Apprendices
TJ Glauthier, co-chair
Jared L. Cohon, co-chair
Norman R. Augustine
Wanda M. Austin
Charles Elachi
Paul A. Fleury
Susan J. Hockfield
Richard A. Meserve
Cherry A. Murray

October 28, 2015

Contents
1.

2.

3.

Value of the Department of Energy (DOE) National Laboratories ....................................1
A. DOE Laboratory System ..............................................................................................1
B. DOE’s Mission and Strategic Goals ............................................................................4
C. Purpose and Importance of the National Laboratories ...............................................4
1. Nuclear Security Mission .......................................................................................6
2. Science Mission ......................................................................................................8
3. Energy Mission .......................................................................................................9
4. Environmental Management Mission ................................................................ 10
D. The Laboratories’ Funding in Perspective ............................................................... 10
E. Recommendation ....................................................................................................... 14
Partnership between DOE and the Laboratories ............................................................... 15
A. Restoring the FFRDC Model .................................................................................... 15
1. Annual Operating Plan ........................................................................................ 21
2. DOE Federal Workforce Development ............................................................. 23
3. National Energy Technology Laboratory (NETL)............................................ 24
B. M&O Contractor Motivations and Performance Incentives ................................... 26
C. Recommendations ...................................................................................................... 27
Contract Requirements ....................................................................................................... 29
A. Background ................................................................................................................ 29
B. Description and Drivers of Requirements ................................................................ 30
1. Description ........................................................................................................... 30
2. Inclusion of Requirements into M&O Contracts .............................................. 35
3. Drivers .................................................................................................................. 36
C. Processes for Developing and Implementing Requirements .................................. 39
1. Development ........................................................................................................ 39
2. Implementation .................................................................................................... 47
D. Characteristics of Burdensome Requirements ......................................................... 50
1. Prescriptive and Transactional ............................................................................ 50
2. Redundant and Outdated ..................................................................................... 51
3. Spillover of Nuclear Requirements to Non-Nuclear Operations...................... 53
4. Bureaucratic and Unnecessary............................................................................ 54
E. Past Reform Efforts.................................................................................................... 61
1. Successes .............................................................................................................. 62
2. Lack of Improvement .......................................................................................... 64
3. Lessons Learned .................................................................................................. 65
F. Ongoing and Future Efforts to Reform Requirements ............................................ 66

iii

4.

5.

6.

7.

G. Findings and Recommendations ............................................................................... 68
Local Oversight: Contractor Assurance, Site Offices, and Support Centers .................. 75
A. Introduction ................................................................................................................ 75
B. Contractor Assurance System (CAS) ....................................................................... 77
1. Purpose of CAS ................................................................................................... 77
2. Implementation of CAS ...................................................................................... 79
C. DOE Field Operations ............................................................................................... 85
1. Site Offices........................................................................................................... 86
2. Support Centers ................................................................................................... 91
3. Evolving Oversight Functions Under CAS ....................................................... 94
D. Findings and Recommendations ............................................................................... 94
Assessments and Data Requests ........................................................................................ 97
A. Introduction ................................................................................................................ 97
1. Defining Assessments ......................................................................................... 97
2. Planning Processes for Assessors ..................................................................... 100
3. Purpose of Assessments .................................................................................... 115
4. Issues with Assessments ................................................................................... 115
5. Number of Assessments across the Laboratory System ................................. 118
6. Number of Assessments at other Federal Laboratories .................................. 124
7. Level of Effort Associated with Assessments ................................................. 125
B. Data Requests ........................................................................................................... 126
C. Findings and Recommendations ............................................................................. 127
Flexible Budgeting............................................................................................................ 129
A. Prior Studies ............................................................................................................. 129
B. Budget Process and Causes of Atomization........................................................... 131
1. Headquarters— Program Offices ..................................................................... 133
2. Site-Level Complexity ...................................................................................... 134
3. Comparisons with Other FFRDCs ................................................................... 136
C. Summary Remarks................................................................................................... 141
D. Findings and Recommendations ............................................................................. 142
Alignment and Quality of the Laboratories .................................................................... 145
A. DOE and Laboratory Strategic Planning ................................................................ 145
B. Processes to Ensure Alignment of Research and Research Programs ................. 146
C. Processes to Ensure High-Quality Research and Research Programs.................. 148
1. Office of Science Annual Review Process: Performance Evaluation andMeasurement Plan (PEMP) .............................................................................. 148
2. Office of Science External Review Processes ................................................. 151
3. Competitive Funding of Office of Science Programs ..................................... 152
4. Assessment Processes at Other DOE Program Offices .................................. 154
5. Conference Attendance ..................................................................................... 154
D. Alignment with DOE’s Objectives and Level of Duplication of Research ......... 156
1. Alignment with DOE’s Strategic Priorities ..................................................... 156
2. Alignment with the Broader Science and Technology Enterprise ................. 157
iv

3. Appropriate Levels of Duplication ................................................................... 158
E. Findings and Recommendations ............................................................................. 169
8. Laboratory-Directed Research and Development (LDRD) ........................................... 173
A. Background .............................................................................................................. 173
1. LDRD Is Implemented by Laboratories and Overseen by DOE.................... 174
2. LDRD Funding Levels Vary Across the Complex, Based on Size andMission Needs ................................................................................................... 175
B. LDRD Programs Support Vitality of National Laboratories in Multiple Ways .. 179
1. LDRD Builds Capabilities to Develop New Programmatic Areas andMeet Shifting Mission Needs ........................................................................... 179
2. LDRD Is Vital to Recruitment, Development, and Retention of theLaboratory Workforce, Especially at NNSA and Non-SC Laboratories....... 180
3. LDRD Fosters an Innovative Environment and Generates Cutting-Edge
Research Ideas ................................................................................................... 182
C. Congressional Changes to LDRD Accounting Policies ........................................ 183
D. Findings and Recommendations ............................................................................. 184
9. Diverse Support of Other Agencies ................................................................................. 187
A. Varied Scope of SPP ................................................................................................ 188
B. SPP Support of DOE Missions and Other Agencies’ Needs ................................ 190
C. Federal Agency Satisfaction with Laboratories’ Performance ............................. 191
D. Mission Executive Council ..................................................................................... 193
E. Findings and Recommendations ............................................................................. 195
10. Collaboration with the Academic Community ............................................................... 197
A. Laboratory/University Researcher Collaborations ................................................ 197
B. Multi-institution Funding Contracts ....................................................................... 201
C. Findings and Recommendations ............................................................................. 202
11. Partnering with Industry and Transitioning Technology ............................................... 203
A. DOE and Technology Transfer ............................................................................... 204
B. Barriers to Industry Partnerships ............................................................................. 206
1. Required Terms ................................................................................................. 206
2. Negotiation Complexity and Length ................................................................ 207
3. Too Early Stage ................................................................................................. 207
C. Innovative Practices ................................................................................................. 208
1. Centers and Institutions ..................................................................................... 208
2. External Outreach .............................................................................................. 208
3. Maturation Funding ........................................................................................... 209
4. Legal Mechanisms............................................................................................. 209
5. Lowering Barriers for Small Business ............................................................. 210
6. Facilitating Researcher Engagement ................................................................ 211
D. State/University Partnerships for Economic Development................................... 211
E. Findings and Recommendations ............................................................................. 212
12. Operating User Facilities .................................................................................................. 215v

A. Value to the S&T Community and the National Economy .................................. 215
B. Operation of User Facilities..................................................................................... 217
C. Findings and Recommendations ............................................................................. 218
13. Overhead ........................................................................................................................... 221
A. Background .............................................................................................................. 221
1. Overhead Rates Are a Representation of Institutional Efficiency.................. 221
2. Overhead Rate as a Comparison Metric—Useful, but
Not Comprehensive ........................................................................................... 223
B. Overhead Rates at Laboratories Are Comparable to Official Rates at
Research Universities .............................................................................................. 224
1. Laboratories and Universities Account for Capital Expenditures andMajor Facility Construction Differently .......................................................... 225
2. Overhead Rates Are Comparable after Adjustments Are Made forDifferent Accounting Practices and Business Models .................................... 226
C. Laboratory Cost Accounting and DOE Management—Balancing
Flexibility and Transparency................................................................................... 229
1. Institutional Cost Report (ICR) Provides a Mechanism to Assess Costs
that Should Continue to Be Improved.............................................................. 229
2. For the Purpose of Public Disclosure and Greater Accountability, DOE
Should Publish Laboratory Overhead Rates in an Annual Public Report ..... 231
D. Summary Remarks................................................................................................... 231
E. Findings and Recommendations ............................................................................. 232
14. Facilities and Infrastructure .............................................................................................. 235
A. Background .............................................................................................................. 235
1. Current State of DOE Laboratory F&I ............................................................ 235
2. Impact of F&I on Laboratories ......................................................................... 237
3. Funding Structure .............................................................................................. 237
4. Planning Processes ............................................................................................ 238
B. Issues ......................................................................................................................... 242
1. Condition of Facilities and Infrastructure ........................................................ 242
2. Resources for Facilities and Infrastructure ...................................................... 246
C. Current Efforts to Improve ...................................................................................... 250
1. Department Efforts ............................................................................................ 250
2. Office of Science Efforts................................................................................... 252
3. NNSA Efforts .................................................................................................... 253
4. Laboratory Efforts ............................................................................................. 254
D. Findings and Recommendations ............................................................................. 256
15. Project and Program Management .................................................................................. 259
A. Introduction .............................................................................................................. 259
B. History of DOE’s Project and Program Performance ........................................... 260
1. Outside Reviews and DOE’s Response ........................................................... 260
2. DOE’s Historical Data on Project Performance .............................................. 262
3. Three Large DOE Projects................................................................................ 266
vi

Review of Ongoing DOE Projects .......................................................................... 271
1. Overview of DOE’s Capital Asset Process ..................................................... 271
2. Analysis of DOE’s Current Project Data ......................................................... 272
3. Case Studies of Earlier-Stage (pre-CD-2) Large Projects .............................. 276
D. Why Office of Science Has Better Performance ................................................... 278
E. Recent Efforts by DOE Senior Management to Improve
Project Management ................................................................................................ 280
F. DOE Program Management .................................................................................... 282
1. Environmental Management............................................................................. 282
2. Life Extension Programs (LEPs)...................................................................... 284
G. Findings and Recommendations ............................................................................. 285
16. Lack of Meaningful Change after Previous Reports ...................................................... 289
A. Introduction .............................................................................................................. 289
B. Major Recurring Themes Produce Little Change .................................................. 292
1. Broken Trust Undermines Fulfillment of the FFRDC Promise ..................... 292
2. Broken Trust Fuels Operational Impediments ................................................ 293
C. Why Past Reports Have Failed to Bring About Change ....................................... 294
D. How This Commission Can Be Impactful ............................................................. 295
E. Findings and Recommendations ............................................................................. 296
Appendix A. Commissioner Biographies ................................................................................ A-1
Appendix B. Congressional Charge ......................................................................................... B-1
Appendix C. Letter from Secretary of Energy Moniz to Senator Feinstein........................... C-1
Appendix D. Organizations Represented in Interviews and Public Meetings ....................... D-1
Appendix E. Descriptions of Department of Energy National Laboratories ..........................E-1
Appendix F. Contract Award Fees of Department of Energy National Laboratories ............ F-1
Appendix G. Summary of Findings and Recommendations on Contract Requirementsfrom Past Studies .............................................................................................................. G-1
Appendix H. Examples of Burdensome Policies and Practices Identified from
Past Reform Efforts .......................................................................................................... H-1
Appendix I. Apportionment Categories ..................................................................................... I-1
Appendix J. User Facilities by Laboratory.................................................................................J-1
References .................................................................................................................................. K-1
Abbreviations ..............................................................................................................................L-1
C.

vii

1.

Value of the Department of Energy (DOE)
National Laboratories

As the Nation has changed, so too have the National Laboratories. Conceived to design
and produce the world’s first nuclear weapons, the laboratories of today face a vastly broader
set of challenges, and a more diverse array of missions. Throughout their history, however, it
has been the culture of scientific excellence, technical rigor, and mission-focused vision thathas defined the DOE Laboratories and served the United States time and again. The role of thelaboratories may indeed change with time, but the ability of laboratories to rise to meet theircharge remains strong since their founding. From weapons science to clean energy, legacy
cleanup to basic research, the National Laboratories serve the Nation in diverse ways, andrecognizing the fullness of the role they play is critical to an understanding their value.

A. DOE Laboratory System
Figure 1 shows the locations across the country of the 17 laboratories in DOE’slaboratory system. When categorized by their research focus and DOE stewarding office,there are 10 science laboratories stewarded by the DOE Office of Science (SC), 3 national
security laboratories overseen by the National Nuclear Security Administration (NNSA), and4 laboratories stewarded by the applicable DOE program office (one each by the Office ofEnergy Efficiency and Renewable Energy [EERE], the Office of Environmental Management[EM], the Office of Fossil Energy [FE], and the Office of Nuclear Energy [NE]). Table 1
provides information on each laboratory, including the managing contractor, the DOE
stewarding office, and fiscal year (FY) 2014 cost and size data. As a whole, the laboratories
received $11.7 billion in funding from DOE and employed over 55,000 staff. When otherfunding sources are included, their total budget in FY 2014 was $14.3 billion.
Sixteen of the 17 laboratories are federally funded research and development centers(FFRDCs), managed through a management and operating (M&O) contract.1 M&O
contractors for the National Laboratories include individual universities, university consortia,
nonprofit corporations, industrial firms, and partnerships involving the aforementioned typesof organizations. The National Energy Technology Laboratory (NETL) is the only
government-owned, government-operated (GOGO) laboratory.

1

The Atomic Energy Act of 1946 (P.L. 79-585) formalized the M&O contract and established the Atomic
Energy Commission, a precursor to DOE.

1

2
Source: Map provided by DOE.

Figure 1. Locations of the Department of Energy National Laboratories

Table 1. Characteristics of Department of Energy National Laboratories
Stewarding
Office
EERE
EM
FE
NE
NNSA

SC

Laboratory
National Renewable
Energy Laboratory
Savannah River
National Laboratory
National Energy
Technology
Laboratory
Idaho National
Laboratory
Lawrence Livermore
National Laboratory
Los Alamos National
Laboratory
Sandia National
Laboratories
Ames National
Laboratory
Argonne National
Laboratory
Brookhaven National
Laboratory
Fermi National
Accelerator
Laboratory
Lawrence Berkeley
National Laboratory
Oak Ridge National
Laboratory
Pacific Northwest
National Laboratory
Princeton Plasma
Physics Laboratory
SLAC National
Accelerator
Laboratory
Thomas Jefferson
National
Accelerator Facility

Budgetfrom DOE(FY 2014)*
$290M

Total
Budget(FY 2014)†
$340M

Size
(FTE)‡
1,700

Year
Est.
1977

$204M

$231M

800

1951

$690M

$692M

1,380

1910

Battelle Energy
Alliance, LLC
Lawrence Livermore
National Security, LLC
Los Alamos National
Security, LLC
Sandia Corporation

$670M

$800M

3700

1949

$1.2B

$1.45B

5,700

1952

$2B

$2.2B

9,500

1943

$1.8B

$2.75B

11,0001949

Iowa State University

$50M

$53M

280

1947

UChicago Argonne,
LLC
Brookhaven Science
Associates, LLC
Fermi Research
Alliance, LLC

$600M

$720M

3,400

1946

$530M

$580M

2,800

1947

$430M

$430M

1,800

1967

University of California

$640M

$760M

3,500

1931

UT-Battelle, LLC

$1.1B

$1.3B

4,300

1943

Battelle Memorial
InstitutePrinceton University

$580M

$910M

4,300

1965

$90M

$92M

460

1951

Stanford University

$410M

$420M

1,400

1962

Jefferson Science
Associates, LLC

$170M

$172M

710

1984

Managing Contractor
Alliance for Sustainable
Energy, LLC
Savannah River
Nuclear Solutions,
LLC
N/A

Note: Total budget differs from these values as the laboratories receive funds from external sources throughpartnerships and work for other agencies.
* DOE figures are from the DOE FY 2016 Budget Justification.
† Total budget figures provided by DOE Chief Financial Officer.
‡ Contractor-submitted calendar year 2014 data to the Office of Management and NNSA. Full time employee(FTE) Definition: the sum of FTEs as of the last calendar day of each month during the calendar year, divided
by 12. FTE = straight hours divided by 2080. FTEs may be lower than employee count as a result of part-time
employees. This figure does not include temporary employees and contractors.

3

B. DOE’s Mission and Strategic Goals
DOE is a conglomerate Department (as were its precursor agencies) that includes
responsibility for energy, science, nuclear weapons, and environmental cleanup. 2 Over
time its strategic priorities have shifted in response to specific needs but the three goals
outlined in DOE’s 2014–2018 Strategic Plan—science and energy, nuclear security, andmanagement and performance—are consistent with these historic mission areas. 3
In many cases, the mission of the Department and the corresponding roles of the
National Laboratories serve the Nation more broadly than one might expect if one thinks
DOE’s only purpose is “energy.” Of course, advancing the state of energy technology is
critically important to the Department’s core mission, but the Department is also the primaryFederal funding agency for physical science research and large-scale scientific capabilities.4
In addition, DOE is responsible for the U.S. nuclear stockpile, nuclear non-proliferation andcounter proliferation, and the environmental cleanup required as a consequence of nuclear
manufacturing and storage. This aspect of DOE’s mission has far reaching implications fornational security and environmental science, among other issues.
DOE is distinctive among Federal agencies in how it funds research. Rather thanfocusing primarily on proposals driven by a single principal investigator, the Department
also funds both large-scale multidisciplinary research and large expensive facilities that
universities and industry are unable or unwilling to invest in. These facilities are essential
to the advancement of science in areas beyond DOE’s core mission, such as the life
sciences. Through its laboratories, DOE supports the technical staff to maintain thefacilities and enable access to the facility for the broader S&T community.

C. Purpose and Importance of the National Laboratories
Most members of the public do not understand what the DOE National Laboratories
do, or what a critical role they play in the nation’s security and economic vitality. Those
people who do know about the National Laboratories often are familiar with only afraction of what they do, perhaps linked to one of the laboratories in their region.

2

Certain of the laboratories serve not only to pursue the DOE nuclear weapons mission, but also toadvance the national-security interests of the U.S. by serving other agencies in addition to DOE,
principally Department of Defense, Department of Homeland Security, and the Intelligence Community.

3

DOE, Strategic Plan, 2014–2018.

4

In FY 2011, DOE was responsible for $2.61 billion of the total $5.53 billion of Federal funding forphysical sciences research. National Science Foundation (NSF), National Center for Science andEngineering Statistics, Federal Funds for Research and Development (FY 2010– FY 2012) (Arlington,
VA: NSF, 2014), Appendix Table 4-37.

4The DOE National Laboratories occupy a key role in the nation’s S&T communitythat cannot be carried out solely by academic institutions or the business sector. The
laboratories are a place where sustained, long-term complex research and development(R&D) programs can be managed and executed across a range of basic and appliedresearch. They are also able to perform sensitive, classified research regarding nuclear
weapons and non-proliferation. In addition, they are a place where the Federal
government has been able to build and operate large-scale user facilities, such as linear
accelerators, synchrotron light sources, and high performance computer systems andnetworks for use by thousands of researchers in academia, the business community, andthe National Laboratories.
As illustrated in Figure 2, the National Laboratories exist in cooperation with theuniversity community and with industry, and fill a vital role in the process of scientificexploration and technology innovation. During the early stages of research, university
scientists have a greater role than most scientists at the National Laboratories. As theresearch advances from individual projects to larger scale programs involving large
numbers of researchers in highly complex, multi-disciplinary, long-term projects, theDOE laboratories take on a much bigger role and are an ideal location to host researchand researchers from other institutions. As the research advances further towards
commercialization, industry takes on the lead role, and the involvement of the National
Laboratories declines.
Broadly stated, the purposes of the DOE National Laboratories are to “solve
important problems in fundamental science, energy, and national security…steward vital
scientific and engineering capabilities including technology transfer…design, build, andoperate unique scientific instrumentation and facilities… [and] promote innovation that
advances U.S. economic competitiveness and contributes to our future prosperity.” 5 The
National Laboratories carry this out across the four mission areas of the Department ofEnergy, as described briefly in the subsections that follow.

5

DOE, Strategic Plan 2014–2016 (Washington, DC: DOE, 2014).

5

Source: DOE National Laboratory Directors Council, “The DOE National Labs: Vital Networkin the U.S. Science and Technology Ecosystem,” November 12, 2014.

Figure 2. Role of the National Laboratories in the S&T Enterprise

1.

Nuclear Security Mission

The National Laboratory system began with the
Manhattan Project in World War II when the Federal
government assembled the Nation’s top scientists todesign and build the first nuclear weapons. That mission
has evolved over the years and for at least the past two
decades has focused on stewardship of our nation’s
nuclear weapons, nuclear nonproliferation, homeland
security, support to the intelligence community, andcountering weapons of mass destruction. The three
NNSA laboratories are primarily devoted to this mission,
but several of the other laboratories participate as well.

After the April 2010 Deepwater
Horizon oil spill, more than 200
researchers from multiple DOE
laboratories provided support
through real time analysis,
technical input, and oversight. The
laboratory personnel sharedexpertise in stress analysis, fluid
flow, advanced diagnostics, andgeologic modeling, and assisted indetermining the best method forcontaining the spill.
___________________________

Source: J. Hruby et al., “The Evolution
of Federally Funded Research &Development Centers,” Public Interest(Washington, DC: Federation ofAmerican Scientists, 2011).

To assure the reliability, safety and security of ournation’s nuclear deterrent without testing, the laboratories
are carrying out science-based stockpile stewardship,including highly complex Life Extension Programs (LEPs) for each of the major nuclear
weapons that remain in our arsenal. The primary goals of the W76-1 LEP, for example, areto extend the original warhead service life from 20 to 60 years, address identified aging
6

issues, incorporate nuclear surety enhancements and minimize system certification risk in
the absence of underground nuclear testing and refurbish the system in a managed
affordable manner. As of last year, the program was over halfway complete. In addition, in
support of the nonproliferation programs, the laboratories have converted over 90 researchand test nuclear reactors worldwide from highly enriched uranium to low-grade uranium andhave removed nuclear material from over 230 sites worldwide. DOE laboratory technologythat quickly identifies the chemical makeup of weapons is being used to verify treaties
around the world.
To carry out the nuclear weapons work without nuclear testing, the laboratories haveworked with the leading computer manufacturers to advance the state of the art in highperformance computing and computer codes. Today the DOE laboratories have four of theten fastest supercomputers in the world at NNSA and SC laboratories. At the SC-managed
laboratories, the computers are now also being used by other laboratories and by university
and industrial researchers on a wide range of complex computational problems, including
human genomic analyses, analyses of chemical structures, climate change modeling, andmapping of energy resources.
The laboratories also serve other Federal agencies in support of their national security
missions, by providing capabilities such as nuclear and WMD forensics, special nuclear
material detection, and knowledge about foreign S&T capabilities. For example, theNational Atmospheric Release Advisory Center at Lawrence Livermore 6 tracked releases
from the Fukushima Daiichi Reactors after the nuclear disaster in 2011. The laboratories
also provided critical assistance after the April 2010 Deepwater Horizon oil spill,7 andduring the 2014–2015 negotiations with Iran on its nuclear program. 86“National Atmospheric Release Advisory Center (NARAC),” Lawrence Livermore National Laboratory,
last modified September 14, 2012. https://narac.llnl.gov/.

7

J. Hruby et al., “The Evolution of Federally Funded Research & Development Centers,” Public Interest
Report (Washington, DC: Federation of American Scientists, 2011).

8

D. E. Sanger and W. J. Broad, “Atomic Labs across the U.S. Race to Stop Iran,” The New York Times,
April 21, 2015, http://www.nytimes.com/2015/04/22/us/in-atomic-labs-across-us-a-race-to-stopiran.html?_r=0.

7

2.

Science Mission

In 2014 researchers led by Ilme
Schlichting of the Max Planck Institutefor Medical Research in Heidelberg,
Germany, used the Linac Coherent
Light Source X-ray free-electron laser
at SLAC to generate a complete
three-dimensional model of theprotein lysozyme without any priorknowledge of its structure. This was a
successful demonstration of a newtechnique for determining, fromscratch, biological structures form
crystals much too small for analysis
with conventional X-ray sources. Thisadvance has far-reaching implications
by potentially providing new targets
for drug development.

The challenges of new energy sources,
energy efficiency, economic competitiveness, andglobal security ultimately rest on understanding,advancing, and applying fundamental science inareas such as materials, physics, chemistry,
biology and nanoscience. The national laboratories
support this science mission through its staff ofoutstanding scientists and by collaborating withover 30,000 academic and industrial scientists whoannually utilize the DOE’s large-scale particle
accelerators, supercomputers, x-ray light sources,
neutron sources and other large user facilities.

DOE’s scientists are among the best in theworld in these areas of basic and applied R&D.
Source: DOE, OC website, “Solving
Over 60 researchers affiliated with DOE
Protein Structures for Scratch,”laboratories have been awarded Nobel Prizes,9 andhttp://science.energy.gov/bes/highlights/2
014/bes-2014-10-k/.
DOE laboratories have received over 800 R&D
100 Awards since 1962, when the annual
10competition began. They have discovered 17 new elements that have been added to theperiodic table.
___________________________

A number of important developments have arisen from the laboratories’ cuttingedge scientific work. For example, research in condensed matter physics and materials
science led to important discoveries in superconductivity, which is becoming increasingly
important in energy storage and transmission, and high performance machines. The
emerging field of additive manufacturing, or 3D printing, is another area in which the
National Laboratories are playing a crucial role in developing the basic and appliedscientific knowledge needed to produce, in collaboration with industry, complex parts
made of high strength materials for aircraft engines and other high performance
applications that are important to U.S. industrial competitiveness.

9

See http://www.osti.gov/accomplishments/nobel.html.

10“The R&D 100 Awards recognize the most promising new products, processes, materials, or softwaredeveloped throughout the world and introduced to the market the previous year. Awards are based oneach achievement's technical significance, uniqueness, and usefulness compared to competing projects
and technologies.” For a full list of awards from 1993 to 2014, see
http://science.energy.gov/about/honors-and-awards/rd-100-awards/.

8

NREL is developing a transportablesystem prototype for theConsolidated Utility Base Energy(CUBE) project for the U.S. Army.
The power interface unit offers acontainerized and highly mobile
energy system that integrates
standard generators, photovoltaics,
and battery and grid power, which
can be deployed at forward
operating bases. CUBE is in the
prototype phase and being fully
tested to validate its performance,
reliability, and projected fuel savings.
___________________________

Source: NREL website, “Energy Systems
Integration: Wyle,”
http://www.nrel.gov/esi/research_integrat
ion_wyle.html.

The Human Genome Project, which was
begun by the National Laboratories, hastransformed biomedical research, diagnosis andtreatment. In addition, protein crystallography
being carried out at the DOE synchrotron lightsources has been used to test nearly all new
pharmaceutical drugs introduced over the past 20
years. DOE science has also contributed to thedevelopment of MRI machines, now in virtually
every hospital in the country, and Los Alamos isdeveloping a portable “battlefield MRI” that canbe used in war zones and in underdeveloped
countries.
3.

Energy Mission

The National Laboratories play a very important role in DOE’s development ofadvanced technologies for the generation, distribution, storage, and use of energy in both
stationary and mobile applications. Much ofthis work is centered at the four applied Lawrence Berkeley developed solid
National Laboratories, but almost all of the nanostructured polymer electrolyte forrechargeable lithium batteries andother laboratories participate in these licensed the technology to start-up
company Seeo, Inc. The technology is
programs as well.
The laboratories have worked closelywith industry in many of the technology andsystem developments in this area. For
example, they have helped to develop thecurrent breed of high efficiency wind
generators and new, high efficiency solar
cells. They have also been instrumental inadvances in traditional energy sources, suchas high efficiency combined cycle natural gas
turbines, super critical coal boilers, andnuclear generating plants.
They had a major role in the developmentof hydro-fracking technology, which has led to
the nation’s “shale gas revolution” yielding
huge increases in oil and gas production. The
laboratory scientists helped develop 3D seismic
imaging, directional drilling techniques,9enabling development of a solid-state
rechargeable lithium battery with thepotential to improve the storage
capability, safety and lifetime ofrechargeable batteries for use in electricand hybrid vehicles, cell phones, laptops,and medical devices. These batteries aremuch safer because they lack thereactive and flammable materials of
conventional lithium ion batteries, andthey resist dendrite growth, a factor thathas stalled commercialization ofrechargeable batteries. Seeo wasfounded in 2007 and now has funding
from several top Silicon Valley venturefirms, including $17 million from
Samsung Ventures.
___________________________

Source: A. Tilley, “Samsung Leads $17M
Investment in Battery Startup for More
Efficient, Less Flammable Electric Cars,”
Forbes, December 9, 2014.

diamond drill bits, computer simulation of fracking, pore level analysis, and modeling,
monitoring and evaluation.
On the end uses of energy, the laboratories have made major contributions to energy
efficiency and conservation. For example, the laboratories developed the solid-stateballast for fluorescent lighting, which has been one of the greatest gains in energy
efficiency ever. They continue to work on both construction and design of buildings, aswell as on the efficiency of the equipment inside them.
4.

Environmental Management Mission

DOE’s environmental management mission is a consequence of its responsibility forcleaning-up the legacy environmental wastes generated by the weapons programs fromthe cold war. In support of that mission, the laboratories provide expertise in areas suchas radiology and chemistry, subsurface monitoring, groundwater modeling, andtechnology development.
The laboratories have developed innovative groundwater remediation methods andlong-term monitoring that are saving millions of dollars and providing better information
to local communities. In 2014, with the aid of these techniques, DOE completed thecleanup of 90 percent of Hanford’s River Corridor, representing 479 square miles.
The technology development process for treating the legacy wastes in tanks at
various facilities has been extremely challenging. Nevertheless, the laboratories lead theworld in developing cleanup processes and technologies for these highly radioactive
wastes. With that support, in 2014 DOE converted 15 million pounds of liquid waste at
Savannah River into glass, enabling the closure of 6 high-level waste storage tanks.

D. The Laboratories’ Funding in Perspective
Despite these critical and continuing contributions, DOE’s budget for its
laboratories has remained relatively flat in constant dollars over the past decade atapproximately $12 billion per year (Figure 3).

10Billions of FY 2014 Constant Dollars

$14
$12
$10
$8
$6
$4
$2
$0
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: DOE Budget.

Figure 3.Total DOE Laboratory Budget from DOE in Constant Dollars ($B 2014)

In addition, the constant dollar level of Federal R&D support to DOE as a whole has
stayed relatively level since 1976 (Figure 4). 11 However, the percentage of Federal R&D
spending bound for DOE has dropped considerably in the same timeframe; the high of 18
percent was in 1979, and it has remained between 6 percent and 9 percent for the past 20
years. At 8.1 percent of Federal R&D spending and Federal R&D spending at 0.81
percent of the Nation’s GDP, 12 DOE’s R&D budget is 0.066 percent, or less than one
thousandth, of the Nation’s GDP. 13

11

Although the overall budget of the Department has remained relatively stable, specific DOE program
funding has varied over the years due to changing strategic priorities within the Department’s four
missions: energy, science, environmental cleanup, and national security.

12

U.S. Federal R&D spending accounts for the lowest percentage of GDP among major industrialized
nations.

13

DOE percentage of Federal R&D spending from American Association for the Advancement of Science(AAAS), AAAS Historical Trends in Federal R&D, Total by Agency 1976-2015 (Washington, DC:
AAAS, 2014). Percentage of Federal R&D of U.S. GDP from AAAS, Intersociety Working Group,
AAAS Report XXXIX: Research and Development FY 2015 (Washington, DC: AAAS, 2014). These
values are from FY 2013. More recent values (FY 2014 and FY 2015) are estimates. The most recent
values for percentage of total national R&D are for 2011. In 2011, DOE R&D funding was 7.39% ofFederal R&D funding, and Federal R&D funding was 29.5% of total U.S. R&D funding. Thus, DOE
R&D funding was 2.18% of total national R&D expenditures.

11Billions of FY 2014 Constant Dollars

170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0

DOE
$14.30DOE

DOE$11.37
DOD

DOE
$9.21
NASA

DOE
$11.58
HHS (with NIH)

DOE
$11.69Source: AAAS website, AAAS Historical Trends in Federal R&D, Total R&D by Agency 1976–2015,
http://www.aaas.org/page/historical-trends-federal-rd.
Note: Values for 2015 are latest estimates from the President’s budget request.

Figure 4. Trends in R&D by Agency ($B 2014), 1976–2015

The Commission sees continued Federal support of R&D as critical to the future of
the national S&T enterprise and the nation’s economy and security. The most recent
report of the American Association for the Advancement of Science (AAAS) on U.S.
R&D funding notes that S&T are “key drivers of economic growth, improved humanhealth, and increasing quality of life,” and that “economists estimate half or more of
economic growth over the past several decades is due to technical progress.” 14
Because of its importance, several reports have called for maintained, if notincreased, funding to all types of Federal R&D. One such report released in September
2014 details how R&D, especially basic research, funding is an investment in future
success and that sustained funding is necessary for maximum benefit from thisresearch. 15 While total funding to R&D as a percentage of gross domestic product (GDP)14

AAAS, Intersociety Working Group, AAAS Report XXXIX: Research and Development FY 2015, 20.

15Committee on New Models for U.S. Science & Technology Policy, Restoring the Foundation: The Vital
Role of Research in Preserving the American Dream (Cambridge, MA: American Academy of Arts &Sciences, 2014).

12

has increased slightly over the past 30 years, Federal R&D funding as a percentage ofGDP has decreased at roughly the same rate that non-Federal funding has increased(Figure 5). Simultaneously, the United States has fallen from first to tenth in the world
for R&D investment as a percentage of GDP. 16 Restoring the Foundation recommended
the President and Congress increase R&D and provide a long-term investment strategy inorder to reestablish dominance internationally. 17 Such calls for sustained R&D funding
are not new, 18 but with current budget realities, the Commission is concerned that theUnited States is at risk of losing critical capabilities and its competitive advantage. Thisrisk is especially worrisome as it also pertains to national security. 19
Considering the positive impact laboratories have had and the small size of DOE’s
funding relative to other Federal R&D expenditures, the Commission concludes that theoverall funding level for the DOE laboratories is not too large. In fact, a strong case canbe made for budgetary increases in specific areas. The Commission sees sustainedFederal Government support of R&D at the National Laboratories as critical to the futureof the national S&T enterprise, as well as the Nation’s economy and security. The
principal challenges are to make the DOE laboratory system as efficient as possible toenable it to perform the maximum amount of R&D for the available level of Federal
funding, and to ensure that it focuses on important endeavors not otherwise being
addressed, especially high-payoff (often high-risk) longer-term research.
Prominent among areas for which a real increase in funding should be considered is
support for facilities and infrastructure at the laboratory sites. The issue of aging facilities
and infrastructure is discussed in detail in Chapter 6 and addressed by Recommendations
31, 32 and 33.

16

According to Organisation for Economic Cooperation and Development (OECD), Main Science andTechnology Indicators.

17

Recommendations in Restoring the Foundation include strong reauthorization bills like the America
COMPETES Acts of 2007 and 2010, and for the President and Congress to “adopt multiyear
appropriations for agencies.” Without these changes, the authors calculate a $639 billion shortfall in
funding of basic research by 2032 when compared to sustained funding from 1975–1992.

18

Two National Academies reports Rising above the Gathering Storm: Energizing and Employing America
for a Brighter Economic Future (2007) and its update Rising above the Gathering Storm, Revisited:
Rapidly Approaching Category 5 (2010), thoroughly detail how a decrease in support to R&D would
negatively impact the Nation. Additionally, in remarks at a National Academy of Sciences Annual
Meeting in 2009, the President called for the United States to spend 3% of GDP on science andtechnology, a goal the United States has not attained(http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-at-the-National-Academy-ofSciences-Annual-Meeting/).

19

N. R. Augustine, “The Eroding Foundation of National Security,” Strategic Studies Quarterly, 8 (4,Winter 2014).

13

3.0

U.S. R&D/GDP (%)

2.5
2.0
1.5
1.0
0.5
0.0
1953

1960

1967

Total R&D/GDP

1974

1981
Federal…

1988

1995

2002

2009

Nonfederal R&D/GDP

Source: Science and Engineering Indicators 2014 (1953–2011), AAAS Report XXXIX: Research andDevelopment FY 2015 (2012–2014 Federal R&D), OMB GDP and Deflators (2012–2014 GDP values).
Notes: Values for Federal R&D/GDP in 2012–2014 were calculated with Federal R&D values from AAAS
Report XXXIX: Research and Development FY 2015 and with GDP values from OMB Gross Domestic
Product and Deflators Used in the Historical Tables: 1940–2019. Values for 2014 Budget and 2013 and2014 GDP are estimates. Absent from this figure are values for total and non-Federal R&D 2012–2014.

Figure 5. Ratio of U.S. Research and Development to Gross Domestic Product (Percent),
1953–2014

The Commission also notes that Congress and others have repeatedly directed
external reviews of the laboratories. In the past two decades alone, over 50 commissions,panels, reviews and studies of the National Laboratories have been conducted by amultitude of groups. For many of these studies, the undertone of the charge has been toquestion whether the DOE laboratories should exist at all. The Commission concludes
that the unique role and value to the Nation of the National Laboratories clearly justify
their continued support.

E. Recommendation
The Commission has the following recommendation for Congress related torecognizing the value of the DOE laboratories:
Recommendation 1: The National Energy Laboratories provide great value to the
Nation in their service to DOE’s mission, the needs of the broader national S&T
community, and the security needs of the Nation as a whole. The Administration
and Congress should provide the necessary resources to maintain these criticalcapabilities and facilities. It would also benefit all stakeholders if the key
committees in Congress would develop a more orderly process of reviewing the
National Laboratories, to replace the unrelenting pace of studies evaluating theperformance of the DOE laboratories. For example, Congress could initiate acomprehensive review of the entire laboratory system in predetermined intervals.

14

2.

Partnership between DOE andthe Laboratories

While the relationship between DOE and its laboratories varies depending on the
different program office stewards, processes, and mission objectives, the FFRDC/M&O
model is the central element for 16 of the 17 laboratories. Under the FFRDC/M&O
model, government and the industrial or university contractor work together as partners
in a relationship with clearly understood roles and responsibilities. The government
should set the “what” of strategic direction and provide necessary funding, while thecontracted university and industry partners along with the laboratories they manage
should have the flexibility to determine precisely “how” to meet the technical andscientific challenges confronting the Nation. Unfortunately, this relationship has eroded
significantly for many in the laboratory network, leading to ever increasing levels of
micromanagement and transactional oversight, which, in turn, have significantly reduced
the efficiency of laboratory operations and so hindered the ability of the National
Laboratories to support DOE missions.
Perhaps the greatest strength of the FFRDC/M&O model is the freedom it provides
contractors to innovate and apply their best practices to meet national need. This
freedom, however, must be continually earned, through proven ability to deliver andtime-fostered trust with the Federal government.

A. Restoring the FFRDC ModelAll of the National Laboratories, save one, are run by non-governmentalorganizations as FFRDCs under an M&O contract. That relationship is designed to allow
expert organizations to manage the laboratories and to be accountable for laboratory
performance under the overall direction of DOE. When the FFRDC/M&O model
functions properly, it provides significant technical and management benefits to both
DOE and the laboratories. The M&O contracting approach, as originally developed, isdesigned to enable the National Laboratories to retain an exceptionally skilled workforce;
to be agile in shifting resources to new areas as needs change over time; and to utilize thebest scientific and operational management practices from the contracting organizations.

15

The Federal Acquisition Regulation (FAR) and Department of Energy Acquisition
Regulation (DEAR) outline the requirements of an FFRDC, which sets the foundation for
the relationship between the FFRDC and its sponsor. 20 FFRDCs must:•meet a special long-term government R&D need that cannot be met as
effectively by the government or the private sector;•

work in the public interest with objectivity and independence, and with full
disclosure to the sponsoring agency;•

operate as an autonomous organization or identifiable operating unit of a parent
organization;•

preserve familiarity with the needs of its sponsor(s) and retain a long-term
relationship that attracts high-quality personnel; and•maintain currency in field(s) of expertise and provide a quick-response
capability.

The FFRDC construct is especially important to the laboratories’ operation andsuccess because its exemption from civil service regulations provides the flexibility
necessary to attract and retain leading technical and scientific talent; enables the ability towork closely with the government sponsor on future plans to create, align, and ensure thecurrent and long-term relevancy of the laboratory; and provides the ability to work withothers beyond DOE, on a non-interference basis, thereby leveraging knowledge andresources to advance missions and increase impact. FFRDCs are still subject to budgetarycontrols from both the sponsoring agency and Congress.
In general, FFRDCs must provide continuity, adaptability, and objectivity. Table 2
details how these benefits to the sponsoring agency translate to FFRDC capabilities.
The M&O contract enables a sponsoring agency to enter into agreements with nongovernment entities that use their own capabilities for day-to-day operations and support
functions, while drawing upon the parent organization’s expertise when appropriate. In
theory, the Federal sponsor uses oversight, annual evaluation, award fees, and potential
recompetition of the contract as mechanisms for ensuring that the performance by an
FFRDC meets the needs of the government sponsor and that the capabilities continue toalign with the sponsor’s mission. The model relationship is not intended to involve many
stages of approval or control of the laboratory by the sponsoring agency. Other variationsof the contract, such as a Cooperative Agreement or a hybrid approach, are under

20

Federal Acquisition Regulation, 48 C.F.R. § 35.017 (2014); Department of Energy Acquisition
Regulation, Subpart 970.35 (2013).

16

evaluation by DOE and the laboratories and may prove valuable in restoring the DOElaboratory relationship to its intended ideal. 21
Table 2. Value of the FFRDC RelationshipBenefit toSponsorContinuity

Definition

FFRDC Capability

Uninterrupted, consistent support
based on a continuing relationship

Comprehensive knowledge of sponsoringorganization’s needs
Institutional memory regarding mission,
culture, expertise, and issues of enduringconcern to the sponsor

Adaptability

Response to emerging needs ofsponsors and anticipation of future
critical issues

Quick response for short-term assistanceto sponsors for urgent and high-priority
requirements
Personnel flexibility for workforce scale-ups
or reductions on short time scale
Link between sponsor offices andprograms*

Objectivity

Thorough, independent analyses toaddress complex technical andanalytical problems

Freedom from conflicts of interest anddedication to the public interest
Independence from commercial,shareholder, political, or other associations
Broad access to sensitive government
information
Absence of institutional interests that could
lead to misuse of information*For example, Argonne’s battery program receives funding from both SC and EERE. Argonne has created acohesive research program linked funding from SC for basic science and from EERE for applied science.

In addition to the provisions that govern FFRDCs, there are other regulations thatspecifically govern DOE M&O contracts found in the FAR and the DEAR. The FAR, at
Subpart 17.6 covers M&O contracts for DOE and any other agency having the requisite
statutory authority. This subpart recognizes the unique characteristics of the M&O
contract, namely the requirement that “the Government must maintain a special, close
relationship with the contractor,” 22 and “[t]he work is closely related to the agency’s
mission and is of a long-term or continuing nature, and there is a need (1) to ensure its
continuity and (2) for special protection covering the orderly transition of personnel and21

DOE SC, Working Groups to Study Modifications to Laboratory M&O Contracts for Single-Program
Laboratories (Washington, DC: DOE, 2015).

22

Title 48 CFR § 17.604(b).

17work in the event of a change in contractors.” 23 The FAR also describes the special
extend/compete process and authorizes agency acquisition regulations that reflect thedistinctive nature of the M&O contracts. DEAR Part 970 supplements the FAR andgoverns solicitation, award, and administration of DOE’s M&O contracts. 24
Ideally, the laboratory as an FFRDC/M&O should function as an independent, longterm, trusted advisor and honest broker. This construct is important because it provides
for the long-term continuity of missions and core capabilities that enable DOE to address
major national challenges. Laboratories are able to serve as strategic advisors andpartners to government, with access beyond that of a typical contractor, to bring the best
ideas forward to inform program directions and therefore strengthen the plans for national
programs. The laboratory is answerable only to the government customer and has novested interest in particular technologies or solutions. To achieve this ideal, the
FFRDC/M&O must trust that the sponsoring organization values its role. In turn, thegovernment must trust that the FFRDC/M&O is acting as a disinterested, supportive
party. These behaviors make it possible to build a partnership based on mutual trust.
Many of the problems cited in earlier reports stem from a “broken trust” in therelationship between DOE and the National Laboratories. 25 In conflict with the ideal
relationship that is envisioned in the FFRDC/M&O model, the laboratories are not treatedas partners and so, for example, are not engaged by the Department in its top levelstrategic planning. In day-to-day operations this broken trust engenders an excessive levelof transactional oversight and control by DOE over the activities of the laboratories. The
SEAB Task Force on the DOE laboratories described the oversight environment of thelaboratories as involving six groups with managing roles: “the laboratory director and the
director’s leadership team, DOE headquarters sponsoring program offices, DOE Site
Offices (called Field Offices in NNSA), DOE Service Centers, DOE operationaloversight offices (e.g., the Office of Independent Enterprise Assessment), [and] the M&O
Contractor.” The multitude of oversight entities has led “to a highly burdensome
operating environment that severely diminishes the effectiveness of this arrangement.”26
The Commission recognizes that the issue of trust (or lack thereof) is not experienced
uniformly across the system. Some laboratories along with their M&O contractors,
23

Title 48 CFR § 17.604(d).

24

Title 48 CFR Part 970.

25

SEAB, Alternative Futures for the Department of Energy National Laboratories (Washington, DC:
DOE, 1995), 6; and the National Academy for Public Administration (NAPA), Positioning DOE’s
Laboratories for the Future: A Review of DOE’s Management and Oversight of the National
Laboratories (Washington, DC: NAPA, 2013), 13, 23 and 75.

26

SEAB, Report of the Secretary of Energy Task Force on DOE National Laboratories (Washington, DC:
SEAB, June 17, 2015).

18

especially in SC, have been able to develop much better trusting relationships with theirprogram offices and site offices than others. Two examples are Pacific Northwest and
Brookhaven, which today have much stronger and more effective relationships with theirsite offices and with DOE headquarters than they did a decade ago.
Trust between Congress, DOE, and the laboratories has also deteriorated due toseveral high profile failures in project management, security, safety, or operations bycertain laboratories. This has resulted in both tighter Congressional budgetary controls on
DOE, and therefore the laboratories, and also more frequent Congressionally-mandated
studies auditing the laboratories. Congressional confidence in DOE and the laboratories’
abilities is another key to restoring an efficient operational environment.
The role of the M&O contractors is important here as well. There is a subtle, but
important distinction between the M&O contractor and the laboratory, as an entity in andof itself. While the laboratory is answerable only to the government customer, the M&O
contractor, as a separately organized entity, is ideally answerable to its customers,
partners, shareholders and the public at large (through the local, state and Federal
governments). DOE has created an apparent dichotomy between the laboratory
management and their M&O corporate parent(s). The contracts have been structured toensure great laboratory management but do little to involve the parent organization(s).
Laboratory management, while extremely important to the day-to-day operation andstrategic direction of the laboratory, should not be solely accountable as the M&O
contractor. The parent organization can drive improvement and ensure high performanceacross the enterprise; but only if this involvement is valued. Both the laboratory
management and the respective M&O parent organization should aid in the improvementof the laboratory system.
One cannot mandate or legislate trust, it must be earned. Transparency andagreement on scope of scale of laboratory activities are prerequisites for trust andindependent authority. Along with this, however, must come accountability, withconsequences to the laboratory and its management if they do not uphold their end of theagreement. Essential to all of this is the clear definition of the roles and responsibilities ofeach partner.
Both the FFRDC/M&O and the oversight agency have certain responsibilities toensure a successful relationship. As the oversight agency of the National Laboratories,
DOE must define its own missions, provide work tasking and funding to laboratories,
determine desired outputs, oversee the laboratories, and communicate successes (orfailures) to external stakeholders, including Congress. The FFRDC/M&Os, in turn, havea responsibility to execute scientific and technical work and manage the day-to-day
business operations of the laboratories. Certain tasks fall under the purview of bothparties; strategic planning for the laboratories and DOE is best accomplished jointly.

19

One of the Department’s most critical roles as a steward is to develop strategic plans
in consultation with the laboratories. Strategic direction must be developed for DOE, thelaboratory system as a whole, and for individual laboratories. Strategic review, planningand implementation ensure alignment between laboratory and Department priorities,
appropriate assignment of responsibilities across research programs and National
Laboratories, and sufficient levels of collaboration with external parties, including
academia and industry. As a steward of the 17 National Laboratories, DOE is also
responsible for evaluating the quality of research programs and ensuring each laboratory
receives sufficient resources to maintain its capabilities. These issues will be discussed
further in Chapter 7 of this report.
Strategic planning for both the Department and the laboratories is best accomplishedjointly, with DOE and its laboratories working together. The current level of laboratory
involvement in DOE strategic planning varies by office. For example, SC’s laboratories
are involved in the office’s Laboratory Strategic Planning process, but they are often
absent from broader discussions involving SC’s overall direction, priorities, and funding
levels. In contrast, the Office of Nuclear Energy (NE) recently updated its R&D roadmap
through a process that involved the deputies and representatives from all the relevant
National Laboratories. Idaho National Laboratory was responsible for collecting this
input, which NE used to make its final decisions on the R&D strategic plan. In this casethe laboratories were still—appropriately—excluded from the budgeting process.
Along with trust comes accountability; there must be consequences to the laboratory
and its management if they do not uphold their ends of the agreement. Consequences
should be a rich and graduated set of potential responses when performance isinadequate. Incentive fees are, at best, a limited instrument, as discussed later. The mosteffective incentive can be a greater degree of freedom to operate independently. The
corresponding remedy for negligence may be giving a laboratory a shorter leash bywithholding or limiting some authorities. Alternatively, DOE could condition funding on
more numerous and frequent milestones, at least temporarily until performance improves.
It is also important that such consequences be graded, matched to the severity of thesituation, and only imposed on the transgressing laboratory rather than on the entire
laboratory system.
The Commission notes that there is significant improvement being made in this area
under the current Secretary and directors of the National Laboratories, and wishes tosupport these and other steps in this direction. In particular, reactivating the National
Laboratory Directors Council was a very positive step, which has resulted in much more
open and effective collaboration between DOE and its laboratories in areas such as
strategic planning and overall management. Likewise, reactivating the Laboratory
Operations Board and other forums for collaboration of various groups within DOE andthe laboratories is having very positive results. It is important that these continue.
20

Recent initiatives have led to an increase in laboratory involvement in DOE’s
strategic planning. The Big Ideas Summits, which involve the laboratories in discussionsof ways in which their capabilities can help solve grand challenges, is an example of thiscommitment. The summits resulted in Crosscuts, or system-wide strategic planning on aseries of important topics. One key to the success of the crosscut initiative has been thetreatment of laboratories as partners in the strategic planning exercise.
1.

Annual Operating Plan

An annual operating plan for each laboratory can serve as the foundation for aneffective working relationship with appropriate roles and responsibilities. The concept iscentered on the idea that the laboratories are FFRDCs and that the document would be
one between trusting partners, not simply an addendum to the M&O contract. Once anagreement is in place, DOE should give the laboratory the flexibility and authority tocarry it out, so long as its activities are consistent with the operating plan and the law.
Each laboratory, of course, must also maintain an appropriate degree of transparency with
DOE about its activities, and must discuss with the department any new opportunities thatare outside the scope of the operating plan. The laboratories will be held accountable not
only for performance of technical work, but also for compliance with all applicablerequirements, such as financial, environmental, safety and health, and other standards.
In practical terms, the annual operating plan should represent a high-level agreement
between DOE and a specific laboratory on the nature and scope of the laboratory’splanned major activities for the year ahead, including the major areas of significant
program funding, work for other agencies, collaborations with academia and the private
sector, hiring plans, facilities and infrastructure plans, and any other activities that the
Department and the lab deem significant. It is very important in the Commission’s viewthat this NOT become an extensive new planning process. The idea is to draw upon the
many detailed planning and budgeting systems that already exist within DOE and its
program offices to produce a brief, high-level summary of major activities for the year
ahead. Although the Commission does not want to dictate the detailed form and structureof the operating plan, it envisions such plans would be relatively short documents (lessthan ten pages) containing information such as:•

Major areas of activity in support of DOE programs for the coming year,
including general levels of funding, compared to the prior year•

Top priorities for the coming year, including key milestones and goals, andcollaborations with other laboratories•

General nature and scope of SPP for Federal agencies, including any majorchanges from the prior year

21•

General nature and scope of collaborations with business and others fortechnology commercialization and regional development, through CRADAs andother vehicles, including any major changes from the prior year•

Levels of activity regarding user facilities compared to the prior year•

Major infrastructure and facilities priorities for the coming year•

Any other major changes, including human resources, and new initiatives not
identified above

Looking across existing Department documents, the ten-year plans developed
annually by SC laboratories in collaboration with SC are the closest to what theCommission is envisioning. However, the SC’s 10-year plans are much more detailed andcontain a mix of strategic (e.g. core capabilities) and tactical (e.g. facilities andinfrastructure investments) elements. The new annual operating plans should only focus
on a single year’s activities and provide a high-level summary, much of which can be
drawn from the more detailed plans. Table 3 provides a potential template for the annual
operating plan which is partially based on the SC 10-year plans.
The narrative of the annual operating plan, while brief, can also provide an
opportunity for DOE and the laboratory to highlight key priorities, but should not becomea “laundry list” of all activities. Strong discipline will be needed to preserve the highlevel summary nature of the annual operating plan.
The annual operating plan is not intended to be a retrospective evaluation document,such as SC’s Performance and Evaluation and Measurement Plan (PEMP) or NNSA’s
Performance Evaluation Plan (PEP). Instead it can provide high-level perspective for such
evaluation plans. In other words, as envisioned by the Commission, the annual operatingplan fits between the laboratory’s long term strategic plan and its evaluation plan.

22

Table 3. Potential Template for Annual Operating Plan (Maximum 10 pages)
Annual Operating
Plan Section

Description

Summary of Strategic
Focus, Budget & Staffing

Briefly describe how the lab’s annual plan aligns with the DOE
strategic plan and priorities. Provide the overall lab budget andstaffing, by major category (pie charts), and note majorchanges from the prior year

Major DOE Programs &Initiatives

Briefly describe each major area of DOE-funded activity,
including its nature, scope and specific goals for the upcoming
year (limit to “major” ones). In addition, note the resources
required (staffing and budget resources). (A table or bulleted
list may be the most effective format for this and for thefollowing categories)

Strategic Partnership
Projects (SPP)

List the total level of on-going and new SPP activities with otherfederal agencies planned for the upcoming year, noting themost significant ones. This should identify SPP funding levelceiling requests that will be needed for the next fiscal year.
Identify the resources required (staffing and budget).

Collaborations with Industry,
Academia & Regional
Economic Development
Organizations

Summarize the major areas of collaboration with non-federal
organizations related to technology transition, joint research,and regional development, noting major changes from the prioryear. Identify the general scale of resources involved.

User Facilities

Briefly describe any major changes in the lab’s user facilities
and the expected levels of activity at them, noting significant
changes from the prior year

Facilities and Infrastructure

Briefly describe the facilities and infrastructure activities
planned for the upcoming year and how they relate to thelaboratory’s long-term site plan and the prior year’s activities.

Human Resources

Include information regarding the laboratories human resource
requirements for the upcoming year in the appropriate sections
above (DOE programs, SPP, other collaborations, and facilities
and infrastructure). If not already covered, summarize thestaffing implications of the annual operating plan and changes
from the prior year.

Cost of Doing BusinessInformation regarding the laboratories budget requirements forthe upcoming year should be included in the appropriate
sections above. List any major new budget or financing
initiatives, if any, not covered above.

2.

DOE Federal Workforce Development

As discussed in the Congressional Advisory Panel on the Governance of the Nuclear
Security Enterprise report, this Commission found that DOE does not have the careerdevelopment programs needed to build a Federal DOE workforce with the necessary

23technical and managerial skills.27 Too little emphasis is placed on technical training,
experience, and accomplishments. In addition, too few headquarters personnel have spenttime in the field and as a result lack an in depth understanding of the issues. To rectify
this, DOE has recently instituted an executive rotator program designed to encouragerotation of DOE staff into the field. After a series of negative IG reports, 28 particularly
related to the high cost, rotations in the other direction—laboratory personnel into the
Department—have been discouraged. The Commission feels, while waste and fraudshould certainly be avoided and punished, laboratory rotators are important to the
Department’s effective management of its laboratories and research programs, to provide
expertise and understanding of the issues between headquarters and the field and toengender communication and trust both ways. The exchange program must be
reinvigorated across the Department.
3.

National Energy Technology Laboratory (NETL)

The National Energy Technology Laboratory (NETL) is unique among the 17
National Laboratories in two respects. First, and most obvious, it is the only one that is
not contractor-operated; it is both government-owned (as are all of the laboratories) andgovernment-operated (unlike the others). Thus, NETL has not enjoyed the flexibility andother benefits that come with management by an M&O contractor.
In addition, NETL also differs from the other laboratories in terms of its structure
and missions. In addition to its on-site R&D related to fossil fuels, NETL manages alarge contracting operation for DOE’s Office of Fossil Energy (FE). In fact, only about
10 percent of NETL’s funding goes to support its own research at the laboratory; the vast
majority, about 90 percent, is sent elsewhere or is used for program management. In
effect, FE has co-located its program offices and contracting and other service support
functions with its laboratory. In other locations, this contracting and service support
activity might be categorized as a “support center”, which provides administrative
services for the host DOE program office and for other offices as well.
There is nothing inherently wrong with locating service and program office
functions in the field, which is done in other locations within DOE. However, placing the
program and service functions within the “laboratory” itself and having its director
27

See Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise(Augustine/Mies panel), A New Foundation for the Nuclear Security Enterprise, 12–14.

28

DOE Inspector General (IG), Audit Report: The Department of Energy’s Management of Contractor
Intergovernmental Personnel and Change of Station Assignments (Washington, DC: DOE/IG-0761,
March 2007). DOE IG, Management of Facility Contractors Assigned to the Washington, D.C. Area
(Washington, DC: DOE/IG-0710, November 2005). DOE IG, Summary Audit Report on Contractor
Employee Relocation and Temporary Living Costs (Washington, DC: DOE/IG-0400, January 1997).

24

oversee all of it diminishes the attention and emphasis that the director and the“laboratory” bring to the R&D function. Because of this structure, the R&D function at
NETL does not enjoy the singular focus seen at the other DOE laboratories. As a result of
all of the above, the laboratory has not consistently produced research results or had an
impact concomitant with the best of the laboratories in the National Laboratory network.
The Commission is aware of the important national and regional role of thelaboratory, and the concern of elected officials and union representatives that any
changes in the structure of NETL might jeopardize the continued employment andaccomplishments at the laboratory. The Commission takes those concerns very seriously
and is making a two-part recommendation that it believes will strengthen NETL and theregion in the long run.
The first part of the recommendation concerns the management structure of thelaboratory, but would not change the employment status of the personnel—they would
continue to be federal government employees, as they are now. This recommended
change is for DOE to organize the workforce at NETL into two organizational units: one
focused on the R&D work, and the other on the federal program management,
contracting and other support functions. The R&D unit, with approximately 10 percent of
the annual funding, would be the “national laboratory” and be called “NETL”. The otherunit, with about 90 percent of the funding, would consist of federal employees who
provide program management direction for the Office of Fossil Energy, and other federal
employees who provide contracting and other inherently governmental services insupport of FE and other DOE offices.
The Commission believes that this would yield significantly increased clarity andfocus on the R&D mission for the research staff at NETL and for others outside NETL
who work with them. The Commission believes those changes would enhance thestanding of the R&D programs at NETL and lead to a more consistent level of highquality research. That should also result in even better opportunities for collaboration
with researchers in academia and industry, and strengthen the lab’s ability to attract andretain top quality professional staff.
In the long run, the Commission believes that portion of NETL’s activity that is the
R&D work would benefit even more if it were converted to a government-owned,
contractor-operated FFRDC. The Commission recognizes the strongly held local views
against this idea. Yet in the Commission’s view, the other DOE National Laboratories
that are structured that way benefit from stronger affiliations with universities and otherorganizations, have greater success in recruiting and retaining top quality personnel, andhave a more consistent record of producing high quality R&D. It is the Commission’sview that a careful assessment of the pros and cons of such a possible change should bemade by DOE working with NETL and the local and regional governments, academic
institutions, and other stakeholders.
25In recent years, a collaboration with a group of universities in NETL’s region
produced significant gains in research quality and productivity—as measured by journal
publications—until it was discontinued last year. Apparently, there are plans to resume
university collaborations, but at a reduced level.

B. M&O Contractor Motivations and Performance Incentives
Contracting organizations may be motivated to run laboratories out of a sense ofservice to the Nation, for reputational enhancement, for access to quality technical staff,
and/or for other reasons, but management fee should not be the primary motivating
factor. Incentive fees may be appropriate for some types of production operations, but are
not the best mechanism for research programs. Fees must be adequate to coverunallowable costs, such as gaps in salary, community and educational contributions,employee scholarships, and potential risks, but it does not need to be as high as some of
the recent NNSA laboratory contracts. 29 The Commissioners find that a high fee
perpetuates the stereotype that laboratory managers and M&O contractors are focused
only on profit and are merely “contractors” rather than partners. In addition, the process
to evaluate performance and award fee has led to box checking and transactional
compliance for the laboratories. Both of these have resulted in a breakdown in trust
between some of the laboratories and DOE. The Commission agrees with theAugustine/Mies panel finding that the relationship between the NNSA laboratories andthe government has been eroded by a fee structure and contract approach that invites
detailed, tactical, and transactional oversight rather than a strategic, performance-based
management approach. 30
The Commission also notes that approximately six years ago, NASA changed its
contract for the Jet Propulsion Laboratory (JPL), also an FFRDC, from an incentive fee toa fixed fee. JPL personnel have found the change to be positive in that it has decreased
bureaucracy associated with the annual fee awarding process. The primary incentive forthe laboratory to perform well is that it will receive more research funding from NASA;the punishment is that it will receive less.

29

The average available award fee as a percentage of the laboratory budget from DOE is 1.76%. While
Sandia’s (1.56%) is lower than the average, both Lawrence Livermore’s (3.83%) and Los Alamos’(3.17%) are higher. This translates to an available award fee of $28.1M for Sandia, $45.9M for
Lawrence Livermore, and $63.4M for Los Alamos. See Appendix A for complete award fee information.

30

See Augustine/Mies panel, A New Foundation for the Nuclear Security Enterprise, 12–14.

26

C. Recommendations
The Commission has the following recommendation for the Department and thelaboratories to improve their partnership:
Recommendation 2: Return to the spirit of the FFRDC model (stewardship,
accountability, competition, and partnership). DOE and the National Laboratories
must work together as partners to restore the ideal nature of the FFRDC
relationship as a culture of trust and accountability. DOE should delegate moreauthority and flexibility to the laboratories on how to perform their R&D, and holdthem fully accountable for their actions and results. For their part, to be trusted
partners and advisors, the laboratories must be transparent with DOE about theirplanned activities ahead of time, as well as about their actions and results as they
are carried out.
Recommendation 3: DOE and each laboratory should cooperatively develop a highlevel annual operating plan, with specific agreements on the nature and scope ofactivities at the laboratory, and milestones and goals that are jointly established.
Within that framework, DOE should provide increased flexibility and authority to
the laboratory to implement that plan. This increased flexibility must go hand-inhand with greater transparency and accountability. The annual operating plan is
not intended to be a retrospective evaluation document, such as SC’s Performanceand Evaluation and Measurement Plan (PEMP) or NNSA’s Performance
Evaluation Plan (PEP). Instead it can provide high-level perspective for such
evaluation plans. In other words, as envisioned by the Commission, the annual
operating plan fits between the laboratory’s long term strategic plan and its
evaluation plan.
Recommendation 4: To improve DOE’s ability to manage the laboratories, DOE
should implement greater leadership and management development for its Federal
workforce, including multi-directional rotational assignments with the laboratories.
Recommendation 5: DOE should separate NETL’s R&D function from its program
responsibilities (and call the R&D portion—not the program activities—NETL).
Furthermore, consideration should be given to converting the new, research
NETL into a government-owned, contractor-operated FFRDC. Whether or not
the above steps are taken, NETL should increase its interactions andcollaboration with universities.

27

Recommendation 6: DOE should abandon incentive award fees in the M&O
contracts of the National Laboratories in favor of a fixed fee set at competitive
rates with risk and necessary investment in mind. In addition, DOE should adopt a
broader and richer set of incentives and consequences to motivate sound laboratory
management and enforce accountability.

28

3.

Contract Requirements

A. BackgroundPrevious Commissions and other independent studies have highlighted the need for
DOE to address duplicative and excessively burdensome requirements in M&O contracts.
The present Commission examined studies since 1995 and found the same issues are
echoed, including excessive oversight, prescriptive compliance, burdensome
bureaucracies, diffused and misaligned accountability and authority, and ineffective
consideration of risk in policy decisions. These studies include recommendations toreform contract requirements and their implementation to gain efficiencies in operations
and to reprioritize resources towards the performance of missions. Recommendations
range from providing laboratories with greater flexibility to restructuring and creating
new agencies and governance models for oversight. Refer to Appendix G for a summaryof previous studies’ findings and recommendations.
DOE has received much public attention and high levels of scrutiny due to incidents
in safety and nuclear operations across the complex. Local events often trigger enterprisewide attention and affect operations across all laboratories and sites. As a result of these
events, the public, Congress, groups within the Department, and other stakeholders havebeen highly critical of the laboratories’ management, particularly management related tosafety and security. Public perception remains an important aspect of oversight andenforcement and, over time, has led to a Departmental culture of risk aversion and overcompliance with requirements.
DOE’s roles as self-regulator and mission performer can either reinforce each otheror be at odds. The struggle to maintain balance between these two duties is at the heart of
DOE’s present oversight culture. Major safety or security incidents, politics, and mission
needs can also influence the degree of flexibility or stringency in oversight. In
circumstances when tides shift toward stringency, trust across the entire DOE complex
declines, increasing risk aversion and overly conservative interpretations of requirements.
This history has caused a great deal of confusion about the roles and responsibilitiesof staff across DOE headquarters, field elements, M&O contractors, and the laboratories.
The laboratories experience at minimum five layers of oversight from entities within the
Department: the field and site offices, service centers, programmatic offices, functional
offices, and auditing and enforcement groups.
Against this backdrop, the Commission explored how contractor requirements affectlaboratory operations and mission fulfillment. The Commission sought evidence to29validate or refute previous report findings. This information was then used to determine
ways to improve development and implementation of contractor requirements.

B. Description and Drivers of Requirements
We use the term “requirements” to represent a broad set of DOE internal documents
and Federal, State, and other regulations that appear in M&O contracts.
1.

Description

Requirements that apply to contractors are typically incorporated in DOE policies asa contractor requirements document (CRD). 31 DOE has two main programs to establish
enterprise-wide contractor requirements and CRDs:•

DOE Directives Program—policies, orders, guides, manuals, and notices—managed by the DOE Office of Management•

DOE Technical Standards Program—standards, handbooks, andspecifications—managed by the DOE Office of Environment, Health, Safety
and Security32

A primary means of establishing CRDs is through departmental orders. In 2015, 87
of 129 DOE orders (67 percent) had CRDs (Table 4). 33 Generally, directives have beensteadily increasing since the DOE Directives Program was created in 1995 andaccelerated starting in the 2000s when NNSA was established (Figure 6). The
Commission obtained data for directives since 1980, the earliest date for which DOE had
records. (DOE was established in 1977).

31

Some directives in M&O contracts predate the creation of CRDs in 1995, see DOE Manual 251.1-1,
Directives System Manual, October 16, 1995. In 2015, 86 directives included CRDs while 14 did not.
The analysis included requirements that contain CRDs and that do not have CRDs but are considered
contractor requirements.

32

The Office of Management and Office of Environment, Health, Safety and Security are under the Officeof the Under Secretary for Management & Performance, which was created in 2013 by the Secretary ofEnergy.

33

This does not include any exemptions or equivalencies to DOE orders and other clauses that individual
M&O contracts may incorporate.

30

Table 4. Numbers of DOE Directives with
Contractor Requirements by DOE Office in 2015
OfficeOrdersGuidesManuals Notices
5

Total

Office of Environment, Health, Safety and Security

26

Office of the Chief Financial Officer

44

Office of Congressional and Intergovernmental Affairs

1

1

Office of Economic Impact and Diversity

1

1

Office of Energy Efficiency and Renewable Energy

11

Office of Environmental Management

3

Office of General Counsel

11

Office of the Chief Human Capital Officer

33

Office of Inspector General22

Office of the Chief Information Officer

77

Office of Intelligence and Counterintelligence3

3

Office of Management

8

National Nuclear Security Administration

22

Office of Scientific and Technical Information

1

Office of Science

4

Total

87

1

3

2

31

1

7

1

13

3

25
1

1
4

12

5
1

104

Source: Data provided by the DOE Office of Management.
Notes: The analysis included directives that either contain CRDs or are themselves considered contractor
requirements. Directives include policies, orders, guides, manuals, and notices. No policies contained
CRDs. Guides do not contain CRDs, but they reference mandatory requirements in orders and otherdocuments and can be incorporated into M&O contracts. Some requirements in M&O contracts predate
the creation of CRDs in 1995. See DOE Manual 251.1-1, Directives System Manual, October 16, 1995.

Since 2010, the numbers of guides, manuals, and notices have decreased while thenumber of orders has remained fairly stagnant (Figure 6). In fact, the Department
initiated an enterprise-wide effort to phase out manuals altogether in favor of appending
them to directives that reference them. These trends suggest that requirement reforms
implemented over the past several years have been effective in controlling the number ofcontract requirements from directives. (For further discussion of requirement reforms,
refer to Section E of this chapter.) The most prolific DOE offices that have issued M&O
contractor requirements include the Office of Environment, Health, Safety and Security
and NNSA (Table 4 and Figure 7). The rise in safety and security requirements fromthese offices over the past several decades indicates DOE’s promulgation of enterprisewide contract requirements in response to public scrutiny of laboratory performance inthese areas.

31Source: Data provided by the DOE Office of Management.
Note: The analysis included directives that contain CRDs and that are themselves considered contractor
requirements. DOE did not have records of directives prior to 1980. Directives include policies, orders,guides, manuals, and notices. No policies contained CRDs. Guides do not contain CRDs, but theyreference mandatory requirements in orders and other documents and can be incorporated into M&O
contracts. Some requirements in M&O contracts predate the creation of CRDs in 1995. See DOE Manual251.1-1, Directives System Manual, October 16, 1995.

Figure 6. DOE Directives with Contractor Requirements Documents (CRDs), 1995 to 2015

Source: Data provided by the DOE Office of Management.
Note: Refer to the Abbreviations appendix for DOE Office abbreviations.

Figure 7. DOE Directives with Contractor Requirements Documents (CRDs) by
Authoring Office, 1980 to 2015

32

NNSA establishes additional contractor requirements specific to its sites as NNSA
policies (NAPs) and supplemental directives (SDs), of which currently 7 and 12 exist,
respectively. 34 Department of Energy Acquisition Regulation (DEAR), which is codified
in the Federal Acquisition Regulation System (Title 48 CFR), Acquisition Letters (ofwhich currently 49 exist), and General Counsel Letters are other means by which DOE
can issue requirements to contractors.
Not all of these policies are included in M&O contracts and some may be applicable
only to Federal employees. (Refer to Table 5 for further descriptions of these requirements.)
For instance, guides and technical standards are considered consensus standards andbest practices that are voluntarily applied to comply with requirements. Directives often
reference these documents, creating confusion in their application in oversight and laboratory
operations. For example, there are currently 173 active technical standards and 21 are
invoked by orders that apply to DOE M&O contractors. 35 Guides and other non-mandatory
documents invoked as references are viewed by DOE oversight staff and the M&O
contractors as DOE’s preferred way to comply with a requirement. Their insertion into the
M&O contracts may make it difficult for M&O contractors to use alternative methods.
In addition to Federal, State, and local regulations, M&O contractors must also comply
with regulations established by other government offices, such as the Office of Management
and Budget. For example, after Executive Order No. 13589, Promoting Efficient Spending,
was issued in November 2011, DOE instituted new requirements for conference data
management systems with a multi-layer management and approvals process. In this case, a
DOE order on conference management does not exist, but actions to be taken by thecomplex as a whole, including contractors, are outlined in a Secretarial Memo.36 These
additional requirements are difficult to capture since they manifested outside of DOE’s
internal directives system. Other requirements that are not fully documented in M&O
contracts include programmatic or functional direction from DOE offices in their oversightrole and M&O contractor practices (e.g., corporate or university rules).

34

Section 3212(d) of Public Law 106-65, the National Defense Authorization Act for Fiscal Year 2000, as
amended, provides the NNSA Administrator with authority to establish Administration-specific policies.

35

Invoked technical standards are available at DOE’s website, “Other Requirements,”
https://www.directives.doe.gov/other_requirements#b_start=0&c9=Invoked+Technical+Standards.

36

DOE, Updated Guidance on Conference Related Activities and Spending (Washington, DC: DOE,
2012).

33

Table 5. Examples of M&O Contract Requirements and Descriptions
DOE or NNSA

Requirement

DOE-Wide

Secretarial
Memorandum

Mandatory requirements written by the Secretary of Energy for the
Department

DOE
Acquisition
Regulation(DEAR)

Mandatory requirements that supplement regulatory requirements forthe acquisition process under the Federal Acquisition Regulation
System (Title 48 CFR Parts 901–970)

PolicyHigh-level expectations for the Department that may not directly
contain requirements, although mandatory contractor requirements
may flow down

Order

Mandatory requirements that establish management objectives andassign responsibilities throughout the DOE complex; orders must be
unique to DOE and must avoid duplicating information from otherdirectives or any existing legal source

NoticeMandatory requirements that have the same effect as orders but areissued in response to departmental matters requiring prompt action toestablish short-term management objectives; must be incorporated
into an order within 1 year of effective date; may reference otherrequirements from existing directives

ManualMandatory requirements that supplement other requirements,
including directives, laws, and regulations, by providing procedural
instructions to carry out requirements provisions

Guide

Non-mandatory guides that provide acceptable means for complying
with requirements; Guides do not impose but may reference
requirements from existing directives

Standard

Non-mandatory standards, but can be made mandatory wheninvoked by other requirements; provide specific standardized
approaches, methodologies, technical criteria, or other information

Handbook

Non-mandatory handbook that provide a compilation of goodpractices and lessons learned

Specification

Non-mandatory specifications that describe detailed technicalguidance

Directive

Technical
Standard

Description

Other

Non-mandatory guidance that can be sent to contracting officers toLetters (e.g.,modify M&O contracts and provide guidance on a number of areas,
Contract
Officer, General including DOE requirements
Counsel)

NNSA-Specific

Policy (NAP)

High-level expectations that are specific to NNSA and may notdirectly contain requirements, although mandatory requirements may
flow down and must be aligned with policy

Supplemental
Directive (SD)

Mandatory requirements that supplement DOE directives to indicate
how NNSA will implement mandatory requirements

Sources: NNSA website, “NNSA Policy System,”
http://nnsa.energy.gov/aboutus/ouroperations/managementandbudget/policysystem; DOE website,“Acquisition Letters,” http://energy.gov/management/acquisition-letters, “Directives,”
https://www.directives.doe.gov, and “DOE Technical Standards Program,”
http://energy.gov/ehss/services/nuclear-safety/department-energy-technical-standards-program; and Title
48 CFR, Chapter 9—Department of Energy Acquisition Regulation.
Notes: DEAR includes stipulations for contract management, additional clauses and forms (Subchapter H—
often referred to as H-clauses), and agency supplementary regulations (Subchapter I—often referred toas I-clauses). Directives include: policies, orders, guides, manuals, and notices. Technical standards
include: standards, handbooks, and specifications.

34

2.

Inclusion of Requirements into M&O Contracts

The inclusion of requirements into M&O contracts is not uniform across thelaboratories. In reviewing the prime M&O contracts for 16 of the 17 National
Laboratories, the Commission observed that DOE applied clauses for the FAR, DEAR,
and other departmental policies in varied ways across the M&O contracts (Table 6). 37
Table 6. Number of Contract Clauses for 16 Contractor-Operated National Laboratories
OfficeH-Clauses

I-Clauses

DEAR

Directives

Ames

40

95

61

50

Argonne

44

99

62

78

Brookhaven

42

99

62

85

Fermi

47

98

60

51

Lawrence Berkeley

50

92

71

50

Oak Ridge

45

101

63

70

Pacific Northwest

44

67

57

72

Princeton Plasma Physics

51

94

60

58

SLAC

37

84

61

41

Thomas Jefferson

47

73

61

52

EERE

NREL

42

104

55

41

EM

Savannah River

66

63

38

90+

NE

Idaho

52

14

48

88

NNSA

Los Alamos

47

91

60

97

Lawrence Livermore

44

79

58

84

Sandia

44

74

58

85

SC

Laboratory

Notes: FAR: Federal Acquisition Regulation, and DEAR: Department of Energy Acquisition Regulation. Of
the 17 National Laboratories, NETL is the only government-operated laboratory and does not have an
M&O contract. H-clauses are special contract requirements inserted by DOE; I-clauses stem from FAR
clauses; and DOE directives include policies, orders, guides, manuals, and notices. Source: The data isderived from Prime Contractor Contracts reviewed as of July 2015 and may not include pending
modifications to contracts based on more recent DOE revisions of requirements. Additionally, SavannahRiver and Thomas Jefferson have provided us their most recent numbers in September 2015.

The varied application of certain clauses is not out of the ordinary consideringclauses may be specific to the nature of the work performed at each laboratory. 38
However, there is a relatively large variation in the application of Department enterprisewide policies, such as DEAR clauses and directives. A comparison of the number of
37

NETL is a government-operated laboratory and does not have an M&O contract. Contracts reviewed asof July 2015.

38

These special contract requirements are referred to as H-clauses.

35

DOE requirements across the laboratories shows that higher risk laboratories, including
the NNSA laboratories as well as Idaho and certain SC laboratories, have relatively more
DOE requirements than lower-risk or single-program laboratories, such as Ames,
Princeton Plasma Physics, and SLAC.
3.

Drivers

Internal and external entities that can drive requirements include DOE headquarters,
Office of the General Counsel, and Inspector General (IG); independent oversight groups,
including the Defense Nuclear Facility Safety Board (DNFSB) and the Government
Accountability Office (GAO); advisory groups, such as the Secretary of Energy Advisory
Board (SEAB); and the Congress, media, and general populace (Figure 8). These drivers
may provoke DOE to take strong actions in response to violations or incidents at
individual sites. These actions can often impact expectations or requirements across theentire DOE enterprise.
Auditors may assess deficiencies in compliance with M&O contract requirements.
(Refer to Chapter 5 for further discussion on impacts of assessments and data requests.)
NNSA’s laboratories are under close examination by external auditing groups, including
the DNFSB and GAO, due to the relatively higher operating risks at defense nuclear
facilities. 39 The DNFSB oversees safety by evaluating DOE’s directives and processes
for safety and how well DOE’s facilities are complying with those requirements. In fact,of the 104 orders with contract requirements, 29 orders (about 28 percent) are subject toreview by DNFSB. 40 Although DNFSB’s scope is limited to defense nuclear facilities, itis perceived among defense and non-defense laboratories as a continuous driver of overly
strict and rigid requirements across the DOE complex. In fact, studies have recommended
that NNSA transition regulation to the Nuclear Regulatory Commission and cease
oversight by the DNFSB to address the seemingly burdensome impacts to NNSA’s
missions, among other reasons. 41 The issues seem to stem from DOE’s lack of clarity on
guidance versus mandatory requirements, the DNFSB’s conservative application of DOE
requirements in assessing compliance of DOE facilities, and the lack of risk-based
39

The DNFSB is a board of Senate-confirmed safety experts and was established in the 1990s to provide
oversight of safety in defense-related DOE facilities. The role of the DNFSB is to “provide independent
analysis, advice, and recommendations to the Secretary of Energy to inform the Secretary, in the role of theSecretary as operator and regulator of the defense nuclear facilities of the Department of Energy, inproviding adequate protection of public health and safety at such defense nuclear facilities.” See 42 U.S.C. §2286a(a), Defense Nuclear Facilities Safety Board, Functions of Board.

40

DOE website, “Directives,” https://www.directives.doe.gov.

41

L. F. Brooks, “Alternatives to the Current NNSA Model,” in T. Bolz (ed.), In the Eyes of the Experts:
Analysis and Comments on America’s Strategic Posture (Washington, DC: U.S. Institute of Peace, 2009),
114–125.

36

policy-making and practice from Federal oversight at headquarters and field elements.
These elements are further discussed in Section C of this chapter.

Figure 8. Complexity of Drivers Influencing Establishment and
Implementation of Contractor Requirements

37

At the root of the perception of the DNFSB and the drive to development of new
requirements may be the adjudication process and over-reaction to the safety issues
DNFSB identified. While the number of recommendations from the DNFSB was highduring the days of Rocky Flats, a heavily contaminated nuclear weapons production site
in operation from 1952 until 1992,42 since 1995, the DNFSB has issued fewer than 1.5
recommendations per year on average (Figure 9).

Source: DNFSB website. “Recommendations to DOE,” http://www.dnfsb.gov/boardactivities/recommendations.

Figure 9. Number of DNFSB Recommendations, 1990 to 2014

DNFSB recommendations are formal written recommendations to the Secretary ofEnergy, and they require an acceptance or rejection of the recommendation. In making its
recommendations, the DNFSB should assess the risk and consider the technical andeconomic feasibility of implementing the recommended measures.43 The Secretary ofEnergy has historically accepted every DNFSB recommendation made, although three were
accepted with conditions. In one of the conditional cases, NNSA effectively communicatedthe rationale for disagreeing with part of DNFSB’s recommendation (see box).

42

Rocky Flats was the target of major scrutiny from the public due to incidents related to plutonium fires,radioactive waste leaks, and risks for public contamination.

43

Title 42 U.S.C. § 2286a(b)(5), Defense Nuclear Facilities Safety Board, Functions of Board.

38

NNSA Rationale and Risk-Based Approach In Response to a DNFSB Recommendation
In October 2010, the DNFSB issued a recommendation, “Safety Analysis Requirements for
Defining Adequate Protection for the Public and the Workers.” The DNFSB asserted that NNSA
laboratories were at risk for not meeting radiation exposure level standards by departing fromaccepted evaluation methodologies in DOE’s technical standard DOE-STD-3009-94, “Preparation
Guide for U.S. Department of Energy Nonreactor Nuclear Facility Documented Safety Analyses.”
The technical standard is invoked in M&O contracts and is also referenced in Federal regulations(10 CFR Part 830, Nuclear Safety Management).
As a result, the DNFSB recommended that DOE develop a plan to reduce exposure at defense
nuclear facilities to meet the referenced technical standard. DOE’s response stated that thetechnical standard “was not written as a prescriptive item-by-item requirements document; rather
it provides an overall approach and guidance.” NNSA was able to provide evidence that its
interpretation of the standard had not changed and that NNSA was using it as a guideline. NNSA
rationalized their risk-based approach and argued that the few defense nuclear facilities that havethe potential to exceed the standard’s safety threshold provided adequate protection throughmulti-layered controls to mitigate potential risks and consequences.
___________

Source: Based on interviews and DNFSB, “Safety Analysis Requirements for Defining Adequate Protection
for the Public and the Workers,” Recommendation 2010-1 to the Secretary of Energy, 2010.

C. Processes for Developing and Implementing Requirements
1.

Development

The main processes for developing and implementing contract requirements are
outlined in DOE’s Departmental Directives Program, Technical Standards Program, and
NNSA’s policies to establish NAPs and SDs. (Refer to Table 7 for a summary of DOE
and NNSA processes to establish requirements.)

39

Table 7. Summary of DOE and NNSA Processes to Establish Requirements
Program

Chair

Timeline

Approvals

Departmental
Directives
ProgramDirector, Office ofManagement~150 days

Secretary (policy)
Deputy Secretary (orders& notices)

Comment
Process
Yes,
RevCom*Director, Office ofManagement (guides)

Review Board Members
Voting: Under Secretarial
offices, Office of the GeneralCounsel, and Office ofEnvironment, Health, Safety
and Security

Recertify
4 years

Non-voting: National Laboratory
Director’s Council and Field
Management Council

40

Technical
Standards
ProgramManager assigned by the
Office of Environment,
Health, Safety andSecurity~90-120 days

Senior program official in
the Office of Environment,
Health, Safety andSecurity

Yes,
RevCom*No

5 years

NNSA Policies

Associate Administrator forManagement and Budget~120 days

NNSA Administrator

Yes

Management Council
comprising of head of each
NNSA program office to resolve
impasses

2 years* RevCom is a web application that maintains comments on draft requirements.

The principles for developing directives in the Departmental Directive Program(Table 8) are ideals and do not always apply in practice. For instance, fire protection
requirements in DOE Order 420.1, Facility Safety, duplicate requirements in DOE’s
health and safety regulations under 10 CFR 851, Worker Safety and Health Program. In
addition, although DOE established requirements in areas in which other standards may
not apply or exist, such as protection from exposure to beryllium, additional DOE
requirements that exceed other standards may not be necessary. 44 In general, duplicationand excessive requirements above Federal regulatory or industry standards can create
confusion and inefficiencies in operations, particularly for low-risk activities such as
human resources.
Table 8. DOE Directives Program Principles
Principle

Description

What versus How

Directives should specify goals and refrain frommandating how to fulfill requirements, althoughestablishing the “how” may be necessary to cover highrisk functions.

Duplication of Laws, Regulations,or National Standards

Departmental directives shall not duplicate or beinconsistent with applicable laws or regulations. To theextent possible, directives also should be written so thatthey are consistent with or incorporate widely acceptednational standards.

Improved Planning

Office of primary interest (office authoring a directive) willassess risk, degree of prescription. If appropriate, anestimated financial impact will be determined and factored
into decision making When contractors are affected theirviews will be solicited early.

Applicability

Do not approach directives with a one-size-fits-all
perspective. Those covered by a directive should makefull use of exemptions and equivalencies to avoid
unnecessary burden.

Impasse Process

An impasse process will be used to resolve differences.

Unofficial Guidance

Existing requirements that cross organizational lines andapply to contractors but were not developed andpromulgated through the formal directives process are to
be considered invalid unless/until they have beenreviewed and adopted through that process. To the extent
possible, program offices, including field offices, should
limit supplementing directives with additional guidance.

Source: DOE Order 251.C, Departmental Directives Program.

44

Chronic Beryllium Disease Prevention Program under 10 CFR 850, Worker Safety and Health Program.

41

Directives are developed by a process governed by the Directives Review Board(DRB). (Refer to Figure 10 for a description of the process to review and approve an order.)Generally, the DRB reviews directives before their release for DOE-wide comment andapproves the final directive draft before submitting it to the Deputy Secretary for approval.
The DRB involves senior representatives from DOE’s Under Secretarial offices, the Officeof the General Counsel, and the Office of Environment, Health, Safety and Security.
Representatives from the National Laboratory Director’s Council (NLDC) and the Field
Management Council (FMC), which represent the laboratories and field elements,
respectively, also serve advisory roles and are non-voting members.
The DRB is ideally a platform where the effect of directives from various
perspectives can be considered before approval, but efforts to involve appropriate
stakeholders and experts in the process can break down. Members of the DRB
commented on the variability in the quality of the input provided by DRB representatives.
For instance, there is one non-voting representative each for the National Laboratories
and field management council. Additional participation across the stakeholders, such as
program offices and laboratory representatives, could better inform the process.
In addition, the DRB process includes many opportunities to solicit views fromindividuals at headquarters, field elements, and laboratories. Enterprise-wide input ismanaged through RevCom, a web application that maintains comments on draft DOE
requirements. Federal and laboratory employees can access RevCom by creating an
account online and directly input their comments on draft requirements. The information
submitted by representatives of the laboratories and the field elements can be filtered atvarious points in the process. Directives Points of Contacts (DPCs), which are designatedofficials across the laboratories, field elements, and headquarters, may modify thecomments from their respective offices and institutions to address conflicting input and arequirement author’s office (referred to as the office of primary interest) serves as the
final arbiter of which comments are eventually presented to a requirement’s author.
Although the RevCom process provides transparency into the office of primary interest’s
decisions to accept or reject a comment, the original author of the comment may or may
not access the RevCom system to review this feedback.

42

43
Source: Based on interviews and DOE Order 251.1C, Departmental Directives Program.

Figure 10. Process to Develop a DOE OrderDOE’s current enterprise-wide process for directives is commendable, but limited inthat it addresses only the set of requirements communicated via directives. In addition to
the Departmental Directives Program, the Technical Standards Program promotes the useof voluntary consensus standards (VCSs) where applicable. 45 Technical standards may be
developed only in the absence of appropriate VCSs. Technical standards are written as ameans of implementing DOE requirements when a technical methodology is needed.
Technical standards are developed in a process similar to directives but without a review
board. Comments from stakeholders are similarly managed through RevCom.
Although technical standards are suggested ways of accomplishing tasks, they canbe interpreted by risk averse or oversight staff as a separate set of requirements. DOE’s
Office of Management has explored ways to bring technical standards and otherrequirements into the DRB development process. A review platform for all contractor
requirements could improve the strategic basis from which new requirements are
introduced. Such attempts have been met with mixed reactions due to the complexities ofbringing the processes together.
A third set of requirements is created by NNSA’s policy system, which allows
NNSA to administer requirements specific to NNSA laboratories through NAPs andSDs. 46 NAPs and SDs go through a separate review and comment process directed by an
NNSA management council before they are approved by the NNSA administrator.
Because DOE requirements come in so many forms and are driven by both internaland external interests, DOE has a limited ability to control all the requirements thelaboratories may face. Rather than conducting a systematic and strategic review of how
new requirements affect laboratory operations and performance, DOE is reacting to thenumerous reviews and audits conducted by oversight groups, or to specific incidents thatbring the attention from media, Congress, and the public. New requirements that stemfrom these reactions and their associated pressures may be at the root of DOE’s culture ofconservatism in the implementation of requirements.
But strategic leadership decisions could be improved for the requirements overwhich DOE has greater control as a self-regulator, including DEAR clauses anddirectives. This suite of requirements is not addressed holistically to identify how new
requirements may impact operations and mission performance as a whole. The
cumulative impacts of numerous contract modifications amounts to significant work andis not considered in the overall funding for the M&O contract. DOE also does not

45

DOE Order 252.1A, Technical Standards Program (February 2011)46

Established under the authority of the National Defense Authorization Act for Fiscal Year 2000, Section
3212(d), as amended (Public Law 106-65).

44

comprehensively assess tradeoffs and costs during the development of new requirements.
New contractor requirements can add significant costs in review, adjudication, andimplementation. (Refer to the box below for examples.) The laboratory’s mission support
activities and overhead largely bear the brunt of this cost. Performance can suffer overtime as additional requirements are added to M&O contracts and programmatic resources
are used to support these activities.
Examples of Laboratory Costs to Review and Implement Contract Modifications
According to staff at Sandia National Laboratories, in the period January to June 2015, NNSA
sought the following changes to Sandia’s M&O contract:•••

Added two DEAR clauses in lieu of a DOE directive,
Added or modified 55 FAR or DEAR clauses, andAdded or modified 14 DOE directives.

Review of NNSA’s request to replace the primary DOE human resources directive (DOE
Order 350.1, Change 3, Contractor Human Resource Management Programs) with two DEAR
clauses, required approximately 20 hours of contract administration time and about 130 hours ofcombined labor from Sandia’s Labor Relations, Staffing, Compensation, Benefits, and Pension
departments. Ultimately, the proposed changes were not made to Sandia’s contract. Although
Sandia and NNSA reached a mutually agreeable solution, the cumulative time spent preparing
information, engaging with Federal and laboratory staff, and negotiating proposed changes to the
M&O contract was significant.
Laboratories may also experience costs in implementing contract changes that are notsupported by increased funding to the M&O contract. According to staff of Thomas Jefferson
National Accelerator Facility, it would cost $75 thousand for a consultant and 2 person-weeks ofeffort to document and implement the fire protection requirements (DOE-STD-1066-2012) for
facility safety (DOE Order 420.1, Facility Safety). In fact, a full-time equivalent was added to theThomas Jefferson’s staff to complete documentation and maintain the program. Lawrence
Livermore recently tracked the amount of time in full-time-equivalents (FTEs) to review draft
requirements, internally assess impacts, provide comments through RevCom, and jointly discussmodifications to the M&O contract with the field elements. The estimate for an average contract
modification is about 35 full-time equivalent employees.
Source: Based on interviews and data provided by the respective laboratories.

Requirement authors may not adequately assess the value, impacts, and risks ofrequirements before they are developed and approved. The laboratories typically perform
impact assessments after a requirement is approved and information from the assessments
may be used to negotiate implementation between DOE and the laboratory’s contracting
officers. The review of impact assessments after a directive is approved is inefficient at
best; it is difficult to modify or eliminate the requirement once it has been inserted into
M&O contracts.
The DRB and other DOE staff recertify requirements by reviewing their relevance,
but a requirement’s author must initiate a formal review and an author can delay theprocess indefinitely without enforcement. According to the Departmental Directives
45

Program policy, the director of DOE’s Office of Management has the authority to cancel
directives that have passed their 4-year recertification date. This process is rarely used.
Out of the 87 orders containing contractor requirements, 60 have not been recertified in
the last 4 years, some going back as far as 1992. 47 This backlog may make it difficult forleadership and laboratories to identify opportunities to improve operations andperformance. In the past, the Office of Management considered sun-setting directives, butthere were internal concerns about sun-setting long-lasting safety directives. 48 There areopportunities to apply sun-setting requirements in lower-risk functional areas, such as
human resources and business and financial services.
The 2014 pilot of the Enterprise Risk Management (ERM) Model for humanresources requirements suggests that DOE is making efforts to move towards a risk-based
framework. DOE staff stated that outcomes from the pilot indicated that the humanresource requirements associated with Federal regulations and the results from the pilot
did not support scaling up the model to all DOE requirements. In a more recent effort, on
August 17, 2015, the Secretary of Energy added the role of Chief Risk Officer to the
Associate Deputy Secretary. The Chief Risk Officer is responsible for “advancing ananalytical approach to systematically identifying, assessing and managing strategic,
project, financial and reputational risks across the Department.” 49 This initiative appears
to be a step in the right direction towards institutionalizing risk management approaches
throughout DOE.
DOE could also apply lessons learned in risk management and adapt frameworks
from other regulatory agencies, such as the Nuclear Regulatory Commission, to informthe development and institutionalization of an enterprise-wide risk management model(see the following box).

47

DOE website, “Directives for Review by EO FY 2015,” DOE Directives, Delegations, andRequirements.

48

Based on interviews with staff from the DOE Office of Management.

49

Secretary of Energy, letter announcing Associate Deputy Secretary, August 17, 2015.

46

Lessons Learned from Risk Management Frameworks at the
Nuclear Regulatory Commission
A review of the Nuclear Regulatory Commission risk management framework suggests several
lessons learned that could be applied to the management of DOE requirements:
•

•

•

•

•

Establish a dichotomy between (1) requirements that absolutely must be met to achievereasonable assurance that the site will provide adequate protection of public health andsafety and in which there is no cost relation (described under 10 CFR Part 50) and (2)requirements in which a risk justification is appropriate.
Develop a timely and transparent process to inform decisions on new requirements,
including a robust benefit and cost assessment framework, training, and guidance toconduct assessments in a participatory manner.
Promote an effective safety and security culture in which new requirements are made only
if a safety significance threshold is met to ensure that issues receive the attention
warranted by their significance.
Facilitate training and guidance for dealing with situations in which an accurate
probabilistic estimate is lacking and individual judgment may be necessary, particularly forhigh-probability/low-consequence events.
Employ and encourage effective communication strategies to inform others and assess
the pervasiveness of potential risks from new incidents or events across sites, including
the use of bulletins or notices, requests for formal and informal responses regarding
mitigation activities, and independent communications from industry groups.

Sources: Nuclear Regulatory Commission reports, Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory
Commission, NUREG/BR-0058; A Proposed Risk-Management Regulatory Framework, 2012; and Probabilistic Risk
Assessment (PRA). Also Nuclear Regulatory Commission website, “Probabilistic Risk Assessment (PRA),”
http://www.nrc.gov/about-nrc/regulatory/risk-informed/pra.html.

2.

Implementation

Requirements must be incorporated into M&O contracts, typically in the form of a
CRD, to enforce their implementation. When a requirement with a CRD is issued, it issent to the applicable field element’s contracting officers who will reach out to thelaboratory’s contracting officer to coordinate its review with subject matter experts.
These experts conduct an impact analysis of the CRD. After reviewing the impact
analysis, the contractor and site office contracting officers will discuss whether it isappropriate to implement the CRD as written or to modify it due to evidence ofburdensome impact and tailor it to the laboratory’s work environment. After the M&O
contract is modified, the contractor works to implement the CRD.
There is a formal process to claim exemption or equivalency to DOE requirements.
Examples vary across the enterprise (Table 9). Exemptions or equivalencies obtained at
one laboratory may not necessarily set precedence for another laboratory. Somelaboratories that have obtained third-party certifications, such as those from theInternational Standards Organization (ISO), have received equivalencies for DOE
requirements while others have not. For example, many laboratories maintain ISO
Standard 14001:2004, Environmental Management Systems, but most of theselaboratories have either not sought equivalency on the environmental management
systems clause in DOE Order 436.1, Departmental Sustainability, or were not approved47

for the equivalency (by local or headquarters oversight staff). DOE staff suggested thatthe equivalency process is not widely used and could be better leveraged by M&O
contractors, while laboratory staff indicated that DOE’s conservative views on what may
be considered equivalent or valid as an exemption makes the process laborious.
Equivalencies granted for all SC laboratories show how program offices can strategicallymanage the relevancy of requirements.
Table 9. Examples of Equivalencies and Exemptions to Contractor Requirements
Scope
All SC Laboratories

DOE Requirement

Exemption or Equivalency

DOE Order 413.3B, Program andProject Management for theAcquisition of Capital Assets

Order revised to delegate authority for
project approval and other activities to
SC rather than the Office ofManagement

DOE Order 226.1B, Implementationof Department of Energy Oversight
PolicyOrder can be replaced with an Hclause, Contractor Assurance System

SandiaDOE Order 414.1C, Quality
Assurance

Order replaced by ISO 9001-2008,
Quality Management Systems

Idaho, PacificNorthwest, Sandia

DOE Order 436.1, Departmental
Sustainability

Order replaced by ISO 14001:2004,
Environmental Management Systems

Fermi

DOE Order 350.3, Labor Standards
Compliance, Contractor Labor
Relations, and Contractor Workforce
Restructuring Programs

Order replaced by H-clause, Employee
Compensation: Pay and Benefits

Note: SC Laboratories are Ames, Argonne, Brookhaven, Fermi, Lawrence Berkeley, Oak Ridge, PacificNorthwest, Princeton Plasma Physics, SLAC, and Thomas Jefferson.

Requirements also allow for a graded approach, which provides flexibility to avoid
inefficiencies of a one-size-fits-all approach. The success of a graded approach depends on
the relationship between the laboratories and the field element, as well as on individual
willingness to accept risk and accountability for taking on those risks. Some field elements
and laboratories collaborate effectively to understand the relevance of new requirements inthe context of the laboratory’s operations. Working together, the field elements andlaboratories tailor implementation strategies for those requirements that are relevant.
At some sites, joint review teams involving field element and laboratory staff havebeen established to facilitate joint discussion on the local implementation of contractor
requirements and modifications. These joint review teams typically consist of two groups:(1) a working group made up of laboratory subject matter experts that meet with the field
element counterparts to discuss accepting a requirement as written or, if agreement cannot
be reached, to raise the decision to an executive board; and, (2) an executive board
consisting of field element and laboratory leadership that considers the laboratory’s impact
analysis and votes whether to accept or reject the requirement (Figure 11).
48

Source: Laboratory interviews.

Figure 11. Example of Joint Working Groups and Executive Boards to Review
Requirements Established by Field Elements and Laboratories

A well-implemented contractor assurance system (CAS) can facilitate effective
collaboration and discussion between the field elements and laboratories. A CAS is asystem to measure, improve, and demonstrate performance in meeting mission objectives
and contract requirements. 50 Elements of a CAS include mechanisms to increasetransparency across the laboratories and DOE including developing effective governancestructures of the laboratory and M&O contractor, risk management processes,
requirements flow-down, performance assessments, worker feedback, issues
management, analysis and reporting, lessons learned, metrics and indicators, training andqualifications, and continuous improvement programs. A CAS presents increased
responsibilities and accountability at the field elements and laboratories with increased
focus on performance and risk-informed oversight. (Refer to Chapter 4 for further
discussion of a CAS’s effect on oversight.)
Efforts are underway to leverage a strong CAS with the goals to improve
performance and accountability, reduce costs, and use industry standards for non-nuclear
activities. For example, NNSA established an SD to establish a Line Oversight andContractor Assurance System, which added line oversight by the field elements toinclude operational awareness, on-site reviews and assessments, and other activities
involving evaluations of the M&O contractor. 51 Line oversight activities are riskinformed and focus on the areas of weakness in the contractor’s program andperformance. The process includes reviews of line oversight by a headquarters review

50

DOE Policy 226.1B, Department of Energy Oversight Policy, DOE Order 226.1B, Implementation of
Department of Energy Oversight Policy.

51

NNSA, NA-1 SD 226.1A, NNSA Line Oversight and Contractor Assurance System Supplemental
Directive.

49

team. The effectiveness of a CAS varies across the laboratory system, so, there is an
opportunity to improve consistency by sharing best practices on the use of a CAS andsuccesses in applying oversight frameworks.
Accountability is essential to efficient and effective implementation ofrequirements. Responsibilities for managing risks are distributed and diluted across DOE
program offices, field elements, including oversight staff at field offices and service
centers, M&O contractors, and laboratories. Authority and responsibility are not alwaysaligned, which blurs the lines of accountability. Improper placement of accountability can
promulgate conservative interpretations, which is observed through the duplication of
responsibilities across the DOE enterprise. For example, reporting and approvals forvarious requirements could be streamlined if authority to engage in activities, such as
SPPs and CRADAs, could be controlled in the field, by field elements or the laboratory,
as appropriate. The Commission observes that the implementation of a CAS is a step
forward in restoring the “trust but verify” oversight role and eliminating unnecessary
bureaucracy that obstructs the focus on obtaining high levels of performance from thelaboratories.

D. Characteristics of Burdensome Requirements
Interviewees across the DOE system mentioned various burdensome requirements,
many repeating similar concerns documented in past reform efforts. (Refer to Appendix
H for summaries of burdensome requirements identified in past reforms.) The
Commission identified four characteristics of these requirements that impact the level ofburden experienced by the laboratories.
1.

Prescriptive and Transactional

Requirements can include language that is overly prescriptive, which leads totransactional oversight. Overly prescriptive language includes references to specificindustry standards and DOE guides, technical standards, handbooks, manuals, and thelike. DOE guides and handbooks, for instance, are intended to share best practices rather
than be used for enforcement. References to non-mandatory DOE documents have caused
confusion in interpretation of mandatory requirements and their implementation in thefield. An example of overly prescriptive language appears in the DEAR—a clause toacquire vending machines that are fully capable of accepting and dispensing $1 coins andto ensure that signs and notices are displayed denoting these capabilities.52 DOE
contracting officers have some latitude on which DEAR clauses and directives to include

52

FAR 52.237-11, Clause I.71, Accepting and Dispensing of $1 Coins.

50

in the M&O contracts. However, laboratories indicated that similarly prescriptive clauses
are increasingly being inserted into the M&O contracts.
2.

Redundant and Outdated

Requirements in areas in which applicable Federal, State, or local regulations andnational standards exist cause confusion in implementation. Of these, requirements thatreference outdated standards potentially open the laboratories to risk when subcontracting
or procuring necessary items. A notable example of references to outdated requirements
includes 10 CFR 851, DOE’s safety standard issued in 2006 (Table 10). Two of the DOE
standards have not been revised, while the standard industry codes have been updated
three times, and a third standard is based on designs that are no longer manufactured.
Table 10. Examples of Requirement References to Outdated Standards
OutdatedStandards

Description

National Electrical
Code/NFPA 70

10 CFR 851 invokes the 2005 edition of the code. The code has been
updated 3 times since 2006 (2008, 2011, and 2014). Electrical designs
are typically performed to the latest edition of the NEC to ensure lessons
learned and emerging technologies are incorporated; however, thispractice outpaces the regulation and designs are not in compliance.

Standard forElectrical Safety in
the Workplace(NFPA 70E)

10 CFR 851 invokes the 2004 edition of the NFPA 70E, which has been
updated 3 times (2009, 2012, and 2015). Lessons learned and improved
guidance and criteria have been incorporated into the newer editions of
the Standard. These provide for enhanced worker safety above what isrequired.

American Society of
MechanicalEngineers (ASME)
Boiler and Pressure
Vessel Code

10 CFR 851.27(b)(7) and Appendix A(4)(b)(1) invoke the 2004 edition of
the ASME Boiler and Pressure Vessel Code. ASME codes are periodicallyrevised and updated, making previous editions either obsolete or not
applicable. Pressure vessels are not manufactured or certified to thereferenced obsolete code editions. DOE contractors/subcontractors use
alternate editions of the code at the risk of enforcement of noncompliance.

DOE’s highly active role in enforcing health and safety violations drives M&O
contractors to become risk averse in implementing these and other requirements.
Implementing outdated safety standards can cause confusion, reduces protection, andincreases risk for the M&O contractors and its subcontractors whose crews are trained on
the current standards and who may be brought on-site at DOE facilities from offsite
projects where they follow current standards. If they follow the current standards at the
DOE facilities, the M&O contractors would technically not be in compliance with the
DOE standards. In fact, a comparison of the safety record for NNSA laboratories, theKansas City Plant (KCP), and the U.S. manufacturing and construction industries shows51

that DOE’s increasing promulgation of safety-related contract requirements starting in theearly 2000s did not lead to significant decreases in safety incidents (Figure 12).

Source: Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise(Augustine/Mies panel), A New Foundation for the Nuclear Enterprise: Report of the Congressional
Advisory Panel on the Governance of the Nuclear Security Enterprise. DOE Office of Environment, Healthand Safety (formerly the Office of Health, Safety and Security), presentation to the Congressional
Advisory Panel on the Governance of the Nuclear Security Enterprise, 22 January 2014, Figure 7. U.S.
manufacturing and construction data are from the Bureau of Labor Statistics.

Figure 12. Comparison of Safety Trends (Total Reportable Cases), 2002 to 2013, for
Kansas City Plant, NNSA Laboratories, and the U.S. Manufacturing andConstruction Industries

In addition, laboratories claim that burdensome requirements for project
management have resulted in relatively higher costs to develop a Government-owned
facility than in the private sector (See Chapter 15). 53 Comparison of construction costswith the private sector has been the topic of several DOE working groups and studies.54
These studies noted factors that could lead to higher costs to the government, including

53

DOE Order 430.1B Change 2, “Real Property and Asset Management,” and the 18 associated Guides, 9
Handbooks, and 12 Secretarial Memorandums, see DOE website, “DOE Project Management Policy andGuidance,” http://energy.gov/management/office-management/operational-management/projectmanagement/policy-and-guidance.

54

DOE, Operations Improvement Committee Workshop Committee Report on Construct Cost at National
Laboratories (Washington, DC: DOE, 2012). Government Accountability Office (GAO), Capital
Financing: Partnerships and Energy Savings Performance Contracts Raise Budgeting and Monitoring
Concerns (Washington, DC: GAO, 2004). Contractor Financial Management Alliance, Economics of an
Alternatively Financed Facility: Four Case Studies (Idaho National Laboratory, 2013).

52excessive oversight for worker safety and project management requirements. Other
factors that could contribute to higher costs extend beyond DOE requirements, such as
the Davis-Bacon Act to provide local prevailing wages to subcontractors. 55 Incremental
funding and uncertainties in the Federal budgeting process also affect long-term
investments necessary throughout a facility’s life-cycle. In addition, some laboratories are
required to use project labor agreements (PLAs), which are negotiated plans for the useof union employees on projects. The effects of these factors have not been rigorously
studied and the evidence base for their burden is anecdotal.
Interviewees mentioned that, despite their potential for additional costs, DOE
requirements in the area of worker and nuclear safety, however inconsistent with industry
standards they are, provide the reassurance of safety to contractor and subcontractor
employees. For instance, officials at Lawrence Berkeley stated that its M&O contractor,
the University of California at Berkeley, opted to implement some of DOE’s safety
requirements for construction of their own facilities, such as university campus buildings.
3.

Spillover of Nuclear Requirements to Non-Nuclear Operations

Nuclear facility operations and laboratories are subject to more rules andrequirements than non-nuclear laboratories. This is to be expected, given that managing
nuclear operations is more complex and higher risk than managing non-nuclear
operations, particularly when it comes to safety and security. The difficulty lies in theinterpretation of requirements at laboratories that may manage both nuclear and nonnuclear facilities. Only three laboratories—Ames, Fermi, and NREL—manage only nonhazardous facilities. For the other 14 laboratories, from 3–25 percent of the facilities areclassified as nuclear facility Hazard Category 1, 2, or 3 or radiological facility (Table
11). 56 Inefficiencies occur when field elements and laboratories do not apply a graded55

The Davis-Bacon Act of 1931 was established to pay local prevailing wages for public works projects,
see Department of Labor website, “Wage and Hour Division: Davis-Bacon and Related Acts,”
http://www.dol.gov/whd/govcontracts/dbra.htm.

56

DOE categorizes nuclear facilities by hazard category codes that represent the hazards associated with abuilding. Nuclear facility hazard category 1 represents a facility with a hazard analysis that shows thepotential for significant off-site consequences during an accident. An example is the Advanced Test
Reactor at Idaho. Nuclear facility hazard category 2 represents a facility with a hazard analysis thatshows the potential for significant on-site consequences during an accident. An example is the Defense
Waste Processing Plant at Savannah River. Nuclear facility hazard category 3 represents a facility with ahazard analysis that shows the potential for significant localized consequences during an accident. An
example is the Transuranium Research Lab at Oak Ridge. A Radiation facility handles or contains
nuclear materials, but at levels below the threshold for Nuclear Category 3 facilities. An example is the
National Tritium Labeling Facility at Lawrence Berkeley. Thresholds are defined in DOE Standard
DOE-STD-1027-92, Hazard Categorization and Accident Analysis Techniques for Compliance withDOE Order 5480.23, Nuclear Safety Analysis Reports.

53

approach, as intended by requirements, based upon the hazards present as well as the risk
associated with those hazards.
Table 11. Type and Number of Facilities for Laboratories Operating
Nuclear and Non-Nuclear Facilities at 17 National Laboratories in FY 2014
Assets without
Nuclear orRadiological

Assets with
Nuclear orRadiological#
Assets%Assets#Assets%Assets

Total
Assets

Ames

14

100%

0

0%

14

Argonne

159

76%

49

24%

208

Brookhaven

408

88%

55

12%

463

Fermi

466

100%

0

0%

466

Thomas Jefferson

103

85%

18

15%

121

Lawrence Berkeley

201

91%

21

9%

222

Oak Ridge

580

83%

116

17%

696

Pacific Northwest

97

90%

11

10%

108

Princeton Plasma Physics

56

97%

2

3%

58

SLAC

220

83%

45

17%

265

EERE

NREL

67

99%

1

1%

68

EM

Savannah River

100

87%

15

13%

115

FE

NETL

239

100%

0

0%

239

NE

Idaho

724

81%

172

19%

896

NNSA

Los Alamos

1,481

92%

136

8%

1,617

507

74%

175

26%

682

1,223

99%

16

1%

1,239

OfficeLaboratory

SC

Lawrence Livermore
SandiaSource: Data provided by the DOE Office of Management.
Notes: Assets include buildings, trailers, and other structures, such as radioactive waste storage tanks andpits. Classifications of hazard categories for assets are recorded in DOE’s Facility Information
Management System.

Non-nuclear laboratories that also operate nuclear and other hazardous facilities areconcerned that nuclear operating requirements will extend to their non-nuclear
operations. Some laboratories have begun efforts to consolidate their nuclear work to
gain efficiencies in operations.
4.

Bureaucratic and Unnecessary

Some laboratories experience approval overhead for activities such as StrategicPartnership Projects (SPPs), Cooperative Research and Development Agreements(CRADAs), conferences, and foreign travel and visitors. A laboratory that engages inthese activities must seek a range of approvals across field elements and many54

headquarter offices. (Refer to Figure 13 and Figure 14 for depictions of the approval
processes for SPPs and conferences, respectively.)55

56
Source: Based on interviews.

Figure 13. Strategic Partnership Projects Approval Process

57
Source: Based on interviews.

Figure 14. Approval Process for Conferences (continued on the next page)58
Source: Based on interviews.

Figure 14—Continued

While approval processes for these activities is generally managed well by mostlaboratories and timelines can be reasonable (e.g., a 2–4 week turnaround for SPPs),
some laboratories indicated instances in which lengthy approvals (taking several months
to a year) have driven some SPP customers and scientific collaborators away fromengaging with the laboratory. Lengthy approvals of SPP projects may be caused bydisagreements on intellectual property rights and requests to change standard contract
clauses.
In 2012, OMB released a memorandum to all Federal agencies to promote efficient
spending, which built upon Executive Order No. 13589 and a prior OMB memorandumon the topic, 57, 58 and outlined new policies and practices to reduce spending, largely for
travel and conferences. 59 At the time, the DOE Deputy Secretary released a series ofletters instructing the implementation of new OMB requirements. 60 Some of the newpolicies required that conferences for which total DOE travel costs were over $100,000
required the Deputy Secretary’s approval and conferences over $500,000required awaiver from the Secretary of Energy.
During every laboratory visit, laboratory staff told the Commission that the resulting
conference management rules and their implementation have discouraged scientists andengineers from attending technical conferences. Laboratories may not even develop
requests for conferences that meet thresholds and require additional senior DOE
leadership approvals. Conference policies could hinder the laboratory’s ability to retain
the best researchers and to maintain a leading edge. Lengthier approvals for conferences
have led laboratory employees to decline to submit papers or accept speaking invitations
due to uncertainty about gaining approval to attend. When approval is not granted until
close to the conference date, employees inevitably must spend more on conference
registrations, lodging, and travel arrangements.
GAO reported that DOE officials provided examples of changes in conference
participation at the NNSA laboratories during the period since the conference policy

57

Executive Order No. 13589, Promoting Efficient Spending (November 9, 2011).

58

J. J. Lew, Eliminating Excess Conference Spending and Promoting Efficiency in Government[Memorandum] (Washington, DC: OMB, 2011).

59

J. D. Zients, Promoting Efficient Spending to Support Agency Operations [Memorandum] (Washington,
DC: OMB, 2012).

60

D. B. Poneman, Promoting Efficient Spending to Support Agency Operations [Memorandum](Washington, DC: DOE, 2012).

59

change. 61 Data on conference attendance in 2009 and 2014 provided to the Commission
by a handful of SC laboratories and by NETL indicated a mixed result (Table 12).
Table 12. Total Employees from Selected Laboratories
Attending Conferences in 2009 and 2014
Number of Employees
Laboratory

2009

2014

Argonne

1,969

3,541

Fermi

387

917

Thomas Jefferson

506

706

Princeton Plasma Physics

290

264

Savannah River

900

567

NETL*

669

453

*NETL includes Federal and Contractor Employees.
Source: Data provided by selected DOE National Laboratories.

It is hard to draw definitive conclusions on the impact of the new conference
management rules since many other factors are also at play, including increases anddecreases in annual programmatic R&D funding. GAO noted that it was unable todetermine whether the changes in conference participation by NNSA laboratory
researchers could be directly attributable to the policy change because of incomplete dataand other confounding factors, such as the budget cuts associated with sequestration. The
increase at some of the SC laboratories may result from employees learning to more
efficiently navigate DOE’s conference policies. Laboratory staff have also noted that
implementation of the new conference management policies requires more staff time andresources to approve the same amount of conference attendance requests. In addition,comparison of trends in conference attendance does not fully capture the demand toattend conferences since this does not account for conferences researchers chose not topursue because of the added administrative burden.
DOE has made some changes to improve the process such as creating a list ofreoccurring, non-DOE-sponsored conferences that will be subject to an expedited process
and setting deadlines to attend conferences that allow time for the employees to receive
discounted registration fees. However, these changes may not effectively alleviate the61

GAO, Defense Science and Technology: Further DOD and DOE Actions Needed to Provide Timely
Conference Decisions and Analyze Risks from Changes in Participation (Washington, DC: GAO, 2015)60

constraints employees face when making decisions about submitting papers, accepting
speaking roles, and locking in cheaper travel arrangements. 62

E. Past Reform Efforts
The long history of efforts to reform requirements at DOE include proposals totransition to external regulation, reform contracting practices, and conduct internal
reviews (Table 13). Reforms have involved the National Laboratories and other sites inthe DOE complex, including plant and production sites. 63 A look at these efforts over the
past two decades reveals mixed perceptions of success on outcomes across the DOE
enterprise.
The past reform efforts suggest that DOE’s leadership agreed that requirements
needed to be improved. Among the successes was the introduction of flexible oversightframeworks that reduce or tailor DOE requirements at specific sites. Critics claim thatmost reform efforts produced little or no substantial or long-lasting changes in the way of
doing business at the laboratories. Reforms were often initiated with support from DOE’s
top leadership, who articulated goals of providing greater flexibility for laboratories andavoiding excessive oversight. Many of the reforms have been heavily collaborative.
Generally, when initiating a requirements reform, DOE leadership has sought input andinvolved representatives from across the complex, including field offices andlaboratories.
Table 13. Examples of Previous DOE Requirement Reforms
Reform Effort

Time Period

External Regulation (transition to Nuclear Regulatory Commission andOccupational Safety and Health Administration (OSHA) regulations)Mid-1990s to early 2000s

Kansas City Plant (KCP) Management Pilot

2006 to 2009

Hanford Site Mission Support Contract

2009 to present

NNSA Applications of the KPC Model to other sites

2009 to 2011; 2014 to 2015

DOE Safety and Security Reform

2010 to 2012

National Laboratory Director’s Council (NLDC) Prioritization of
Burdensome Policies and Practices

2011

Mission First Initiative and Contract Equivalencies Initiative

2012 to 2013

Y-12/Pantex contract consolidation

2014

62

GAO, Defense Science and Technology.

63

Although DOE plant and production sites were considered outside the scope of the Commission’s
charge, reform efforts at these sites provided lessons learned for the management of DOE requirements
relevant to the National Laboratories and were included in the Commission’s analysis.

61

1.

Successes

The specialized nature of improvements from successful reforms at NNSA plants
and production sites provide some lessons that could be applied to the broader
management of requirements at the National Laboratories.
a. Kansas City Plant
In 2006, NNSA initiated a pilot at the Kansas City Plant (KCP)—a site that
manufactures electronic and other non-nuclear components of nuclear weapons in
Missouri. The pilot was successful in streamlining and eliminating many requirements byrelying on industry standards and corporate best practices (Table 14). The number ofrequirements, including DOE orders, NNSA policies, and technical standards decreased
from about 160 to about 70 after the reform. 64
Many throughout NNSA, including KCP field managers and staff, view the pilot as
successful, partly because of the high-level support from, NNSA leadership and field
elements. 65 For instance, KCP established a joint-Federal field office and contractor
board to identify non-value-added DOE requirements and prevent “creep” of new orrevised requirements. In addition, the plant’s work was low-risk and non-nuclear,resembling private sector manufacturing. Nuclear safety and security requirements did
not apply to KCP’s work, which facilitated the elimination of DOE requirements. 66 Somesignificant outcomes from the pilot included more than $465,000 yearly cost savings
from recognizing that the municipality could provide on-site fire services. In addition,
KCP refocused Federal oversight to rely on contractor and third-party assessments anddata, primarily for lower risk activities. Oversight staff was reduced from 55 to 38 andresources re-prioritized towards high-risk activities. 67
Due to the high-risk activities at other NNSA sites, the transition of the KCP modelto those sites has been limited. (Refer to Section F.)

64

GAO, National Nuclear Security Administration: Agency Expanded Use of Some Federal Oversight
Reforms, but Is Still Determining Future Plans (Washington, DC: GAO, 2014).

65

Ibid.

66

Ibid.

67

Number of staff based on interviews and current as of time of writing.

62

Table 14. Examples of DOE and KCP Requirements Before and After Reform
Operating
Requirement

DOE

KCP

Quality
Management

DOE Order 414.1D, Quality
Assurance

International Standards Organization(ISO) 9001:2008*

Facility Safety

DOE Order 420.1C, Facility
SafetyRely on municipal firefighting
services and eliminate on-site fire
department

Environmental
Safety and Health(ES&H)

10 CFR 851, Worker Safety
and Health Program
DOE Policy 450.4, Safety
Management System Policy,
orders, guides, and manuals

DEAR 970.5204-1 Integration of
ES&H into work planning and control
Occupational Safety HealthAdministration (OSHA)
Requirements^
ISO 14001:2004

Emergency
Management

DOE Order 151.1C,
Comprehensive Emergency
Management System, andguidesNational Fire Protection Association(NFPA) 1600: Standard on
Disaster/Emergency Management
and Business Continuity Programs#

Security

DOE 470, Safeguards andSecurity Program series ofrequirements

Site-specific standard based on
National Industrial Security Program
manual**Source: GAO 2014, 2007 KPC Report, NNSA. 2014. “Extension of Program Principles from the Kansas City
Plant Oversight Pilot,” Report to Congress. NNSA: Washington, DC* ISO 9001:2008 is an international standard used in private industry to ensure that quality and continuous
improvement are built into all work processes.
^ KCP initially maintained OSHA’s VPP “Voluntary Protection Program,” which was replaced by OHSAS
18001 for occupational health and safety management systems.
# NFPA 1600 has been adopted by the U.S. Department of Homeland Security as a voluntary consensus
standard for emergency preparedness.
** NISP was established in 1993 by Executive Order No. 12829 and manages industrial security in private
industry.

b. Contract Reforms
Although tangential to the direct reform of requirements, the following contract
reforms at NNSA initiated new governance and oversight models that provide more
effective means of implementing DOE requirements:•

The Y-12 National Security Complex in Tennessee and the Pantex Plant in
Texas represent two core nuclear production sites in NNSA. In 2014, thesecontracts were consolidated into a single M&O contract. From contract planning63to award, the process took 6 years. 68 Award fees are allocated to the contractor
based on cost savings and continuous improvement at the sites, including
personnel and operational efficiencies. The contract is envisioned to generate
more than $3 billion in cost savings.
•

2.

The Hanford Site in Washington established a separate performance-based
contract for mission support services, such as facility maintenance andoperations, and some items in the contract have a fixed price. The mission
support contract has allowed oversight to identify what needs to be done by thecontractor but not how.

Lack of Improvement

The processes to undertake past reforms incurred significant costs and required
thousands of hours to respond to numerous requests to provide data, compile information,and provide input. 69 Critics from across the complex claim that results had little
substantial or long-lasting benefits to laboratory operations. (Certain exceptions werepreviously mentioned.)
In some cases, reform efforts have failed to be implemented altogether not long after
leadership has announced a commitment or intention to proceed with reform (Table 15).
For instance, in the 1990s, the DOE Secretary at the time announced an initiative to shift
the SC laboratories to external regulation based on the Nuclear Regulatory Commission
and the Occupational Safety and Health Administration (OSHA) regulations. After
multiple pilots of this initiative at several SC laboratories in the early 2000s, new DOE
leadership decided not to proceed with the transition to external regulation due to its highcost.
In addition, DOE’s safety and security reform, led by the new Office ofEnvironment, Health, Safety and Security, reduced the total number of requirement
documents by combining multiple relevant requirements into fewer documents. 70 It is
unclear whether this and other reforms have led to the elimination of transactional andlow-added-value requirements. Refer to Appendix H for further discussion of pastreforms.

68

GAO, National Nuclear Security Administration.

69

This information is based on interviews. DOE does not estimate the costs of reform processes and data
was not collected to validate interviewees’ opinions. The lack of assessments of costs to inform reforms
and establishment of policies is the topic of a GAO report, see GAO, DOE Needs to Determine the Costs
and Benefits of Its Safety Reform Effort (Washington, DC: GAO, 2012).

70

The Office of Environment, Health, Safety and Security (AU) and the Office of Enterprise Assessment(EA) replaced the former Office of Health, Safety and Security (HSS) in May 2014.

64

Table 15. Examples of Unsuccessful Requirement Reform Efforts
Reform Effort

Description

Reasons for Lack of Success

External
Regulation

Focused on reform of SC
laboratories
Nuclear Regulatory Commission
and OSHA piloted reforms atseveral laboratories and assessedcosts
DOE conducted cost assessments

Several DOE leaders transitioned
in and out of their positions
changing previous leadership’s
commitments
DOE claimed that transition would
be too costly up-front
Lacked relevance to the DOE
system as a whole since targeting
SC laboratories

NLDC Prioritizationof Burdensome
Policies andPractices

NLDC prioritized 18 policies andpractices from 80 proposed
policies and practices across thesystemSome actions taken, but
controversial policies and practices
remain in effectMission First
Reform Initiative

Stemmed from a response to an
NRC study
DOE created working teams ingovernance, finance, andcontracting
A 3-year implementation plan wasdeveloped but cancelled after 1
year

Security incident at the Y-12
complex stalled the reform
Reform was cancelled in March2013

Contract
Equivalencies
Initiative

Identified requirements above andbeyond Federal, State, and local
regulations
NNSA laboratories analyzed
requirements and proposed
revisions

No actions taken on recommended
revisions

Source: Based on interviews.
NLDC: National Laboratory Director Council, NNSA: National Nuclear Security Administration, NRC:
National Research Council, OSHA: Occupational Safety and Health Administration.

3.

Lessons Learned

The review of DOE’s reform history indicates that reforms have often been piecemeal, focused on single functional areas or sites, and not aimed to resolve systemic issues
within the DOE system. For instance, the Commission identified the following issues
with previous reform efforts:•

Excessive number of prescriptive contract requirements were expected to be
implemented without regard to cost and balance of risks•

Requirements that instructed “how” work is to be conducted rather thandescribing performance and mission expectations
65

•

Authorities for direction, oversight, and risk-acceptance were placed at various
levels rather than a single location, creating complexity and confusion of roles
and responsibilities•

Little or no risk tolerance and a lack of understanding of risks meantrequirements could not be tailored to unique laboratory environments

Some lessons gleaned from past reform efforts suggest that reforms can work
effectively in certain situations:
1. If reforms address simpler (i.e., single purpose), low-risk, non-nuclear
operations. The addition of nuclear or radioactive research and operations
adds complexity and greater scrutiny. Also nuclear requirements can spillover to low-risk non-nuclear operations.
2. If reforms are collaborative. Successful reforms are driven by strong
leadership support at all levels and rely on expertise from appropriate
stakeholders across the complex, particularly from those in the field.
3. If accountability and authority for oversight are aligned. Alignment leads toefficiencies by allowing greater tailoring of relevant requirements andreliance on third-party or laboratory assessments to maintain adequate safety
and mission performance.

F. Ongoing and Future Efforts to Reform Requirements
Several reform efforts are ongoing—two pilots initiated by SC, a review of outdated
DOE requirements, and an evaluation led by NNSA on the use of national consensus
standards. The SC pilots are at specific laboratories:•

One pilot is designed to eliminate relatively low-risk requirements from the
M&O contracts, including human resources, foreign travel approvals, and data
requests. 71•

Another pilot is being explored by a group at SLAC that considers changing
SLAC’s contract arrangement from an M&O to a cooperative agreement or aconsiderably streamlined M&O contract. The group is exploring which DOE
requirements would apply to either type of agreement (if any). 72 SLAC and71

At the time of writing, DOE had not selected the site for the pilot.

72

DOE has precedence for using cooperative agreements for research and facility operations. For instance,
DOE developed a cooperative agreement with Michigan State University for construction of the Facility
for Rare Isotope Beams (FRIB), a new national user facility for nuclear science. More broadly, DOE hassolicited 387 cooperative agreements since 2009 according to Grants.gov (www.grants.gov), of whichmost are for research rather than for facility construction and management.

66

DOE intend to eliminate redundant and little value-add contract requirementsthat are not relevant to SLAC’s work, similar to the process undertaken at KCP.
These pilots are being informed by parallel efforts to identify management concerns
and actionable recommendations for reform:•

A Secretary of Energy Advisory Board (SEAB) task force established to study
issues related to the health and management of the National Laboratories 73•

An SC working group created to review input and study modifications tolaboratory M&O contracts for single-program laboratories (DOE 2015) 74

Requirements are also being reformed through authorities provided to the director of
the Office of Management. According to DOE policy, the director of the Office ofManagement can cancel orders and guides that have not been recertified in the past 4
years. 75 The director of the Office of Management is responsible for presenting therequirement to the DRB for consultation. This process provides a means of attesting to
the requirement’s continuing relevance or assessing if revisions are necessary. The
director of the Office of Management recently identified the ten oldest DOE
requirements—dating back to the 1980s—that were not recertified in the past four years
and plans to review their relevance. Although this review will address only about 15
percent of the requirements in the recertification backlog, it provides an opportunity toeliminate unnecessary requirements.
Lastly, NNSA is leading an enterprise-wide effort to apply a process similar to thatat KCP to compare DOE requirements with national consensus standards. The process
will identify requirements that add little value to contractor performance and operations.
The effort is ongoing and initial analysis indicates that there could be benefits ineliminating DOE requirements and relying on national standards for lower risk
administrative functions, such as human resources and business and financial services.
Sweeping elimination of requirements through contract reforms may not necessarilychange the way contractors do business since requirements in these areas can also be
regulated by Federal law or governed by corporate best practices. Nonetheless,cancellation of administrative requirements has the potential to streamline oversight.

73

SEAB, Report of the Secretary of Energy Task Force on DOE National Laboratories.

74

DOE SC, Working Groups to Study Modifications to Laboratory M&O Contracts for Single-Program
Laboratories (Washington, DC: DOE, 2015).

75

DOE Order 251.1C, Departmental Directives Program.

67

G. Findings and Recommendations
The Commission has formulated the following findings related to the development
and implementation of contractor requirements:•

There are too many requirements that provide little added value and are
redundant with Federal, State, and national standards. DOE has been
increasingly establishing requirements across various functional areas. There has
been a significant increase in requirements related to safety, security, andenvironmental health, as well as lower-risk activities such as human resources,business services, and financial services. Generally, many of these requirements
add little or no value to laboratory operations and performance, with exceptionsin activities in nuclear, high-hazard, and/or classified areas where regulatory andindustry standards may not apply or exist. Some of the DOE requirements are
not even as up-to-date as Federal, State, and industry standards, which causes
confusion and potential risks for subcontractors that comply with updated
standards at their off-site locations.

•

Requirements are too prescriptive and dictate how activities should be
performed rather than what outcomes are to be achieved by the laboratories.
Instead of guiding the laboratory’s work, many DOE requirements dictate
prescriptive compliance. This practice undermines the benefits from allowing
M&O contractors to rely on regulatory standards and best practices frombusiness principles for the operation and administration of the laboratories.

•

Requirements dictate too many approvals, reflecting layers of bureaucracy andthe lack of integrated responsibilities for oversight across headquarters and field
elements. DOE’s requirements can involve excessively bureaucratic approvals
from many offices across the system rather than allowing decisions to be madeat the lowest possible levels. The rationale for requiring these approvals is not
explicit. It is also not clear whether laboratory or field element approvals could
suffice, particularly in areas related to SPPs, CRADAs, conference management,
and foreign travel. The current situation can cause delays and confusion
regarding accountability and hinder collaborations that are critical to a highperformance research and development organization.

•

DOE’s process to develop and review requirements could be more rigorous andinclude more feedback. DOE provides opportunities for involvement and input
from the field elements and laboratories at various stages in the process.
However, there is generally a lack of quality input, particularly on value andimpacts, stemming from ineffective engagement and communication.
Responsibility to provide feedback throughout the process to develop
requirements lies with DOE program and functional offices, field elements, and68

the laboratories. Engagement could be improved by increasing participationfrom subject matter experts, particularly from the field, in the decision-making
process and maximizing quality input.
•

DOE does not properly consider risk and impacts in developing andimplementing requirements. Although some new efforts exist to review the risks
associated with contractor requirements, these efforts are rudimentary and notconsistently applied across the system. In fact, DOE does not have acomprehensive framework to strategically assess the value of accepting or
ameliorating risks relevant to laboratories’ operations. DOE lacks a corecapability to independently assess risks and impacts to laboratory operations inorder to effectively inform decisions for new requirements.

The Commission has the following recommendations for the Department to improvethe development and implementation of requirements.
Recommendation 7: DOE should give the laboratories and M&O contractors theauthority to operate with more discretion whenever possible. For non-nuclear, nonhigh-hazard, unclassified activities, DOE should allow laboratories to use Federal,
State, and national standards in place of DOE requirements. DOE should review
and minimize approval processes.
Recommendation 8: DOE should modify its processes for developing directives,
orders and other requirements to more fully engage subject matter experts for input
on the benefits and impacts of the proposed requirements. When developing new
requirements, DOE should use a risk-based model, ensuring the level of control
over an activity is commensurate with the potential risk.
The Commission recommends the following specific and actionable strategies thatinvolve Congress and stakeholders throughout the DOE enterprise, including
headquarters, field elements, M&O contractors, and laboratories, to implement therecommendations above.
•

DOE headquarters and Laboratories should work together to establish morerobust DOE policies and processes to review and develop contractor
requirements.
–

DOE headquarters should revise Draft 251.1d ‘Departmental Directives
Program’ and the Technical Standards Program to:o Require authors, working with the DRB, to (1) present an analysis of thevalue and impacts of draft requirements to be reviewed by the DRB
69

before final approval of a draft or recertification and (2) include field
element and laboratory representatives on writing teams forrequirements for M&O contracts.
o Where appropriate, automatically sunset requirements after a certain
number of years, with exceptions for requirements in which national orindustry standards do not apply or exist.
o Expand participation of program offices, field elements, and laboratories
in the DRB process and seek involvement of these groups throughengagement with the Laboratory Operations Board (LOB) or thecreation of a focused group under the Under Secretary for Management
and Performance 76

•

76

–

DOE headquarters should encourage the Director of the Office ofManagement to recommend cancellation of requirements that are overdue
for recertification and initiate a DRB review for their continued relevancy.

–

Field elements and laboratories should provide rigorous feedback andevidence of impacts into RevCom and to the NLDC representative to inform
DRB deliberations.

–

DOE headquarters should centralize the development of contractor
requirements, including Technical Standards, Secretary Memos, Acquisition
Letters, etc., rather than having separate programs and processes to establish
contractor requirements (e.g., Departmental Directives Program, TechnicalStandards Program, etc.).

DOE headquarters, field elements, and laboratories should work together toaddress conservative interpretations of contractor requirements by establishingeffective mechanisms to discuss intent, implementation, and assess relevancy of
requirements to laboratory settings.
–

Laboratories should establish a joint-DOE field element-laboratory board toreview the requirements in the DRB pipeline and engage early in
discussions on interpretation and implementation.

–

DOE headquarters should identify ways to further communicate tolaboratories, field elements, and themselves, what are mandatory contractor
requirements versus non-mandatory guidance and best practices.

The LOB was established by the Secretary of Energy in 2013 to improve the effectiveness and efficiencyof the labs and of the relationships among labs, DOE, and contractors, see E. Moniz, Letter to the
Chairman Lummis and Ranking Member Swalwell, Subcommittee on Energy, Committee on Science,
Space and Technology, House of Representatives (July 10, 2013).

70

•

•

–

Consistent with the implementation and maturation of the Contractor
Assurance System (CAS, which is described in Chapter 4), encourage field
elements to tailor requirements to the nature of work at the laboratories andto remain transparent to all levels of the DOE enterprise during this process.

–

Congress and DOE headquarters should revise relevant DOE requirements(Secretarial Memoranda, DEAR, directives, etc.) and M&O contract
clauses, including FAR, as necessary to delegate approval authority locallyto field elements for engagement activities, such as SPPs, CRADAs,
conferences, and foreign visitors. Where appropriate, delegate approvals tolaboratory leadership and conduct oversight and reporting periodically (onan annual or bi-annual basis). 77

DOE headquarters, field elements, and laboratories should develop mechanisms
to exchange lessons learned and cultivate effective communication across the
DOE system.
–

DOE headquarters should encourage field elements and laboratories toexchange lessons learned and best practices in the implementation of CAS
and oversight frameworks across the DOE system. DOE could coordinate
this through existing cross-enterprise groups, such as the LOB, or establish a
focused group under the Under Secretary for Management and Performance.

–

DOE headquarters should continue efforts to create an open andcollaborative environment across the system, including engagement inboards, working groups, and other forums.

DOE headquarters and field elements should institutionalize risk management
practices and principles to address deficiencies in consideration of risk acrossthe DOE system and help balance DOE’s roles as mission performer and selfregulator.
–

77

DOE headquarters should develop risk analysis capabilities to make DOE
agile and responsive to the operational needs of the system. The
Commission supports the Secretary of Energy’s recent addition of Chief

A conceptual model proposed by NAS (2015) could be considered as a model to facilitate and streamline
approvals processes for SPPs, CRADAs, conferences, and foreign visitors. NAS describes a ‘work scopeagreement’ that identifies technical areas in which work can be executed. Similarly, technical areas andother criteria could be identified to characterize activities in which approvals are burdensome and notnecessary. This process could serve as an umbrella approval for various projects, conferences, andforeign visitors. Refer to Appendix H of National Research Council (NRC), Aligning the Governance
Structure of the NNSA Laboratories to Meet 21st Century National Security Challenges (Washington,
DC: National Academies Press, 2015).

71

Risk Officer to the Associate Deputy Secretary’s responsibilities. This
responsibility should be further supported by the establishment of a risk
office and staff with the responsibility of engaging in independent risk
analyses and risk management to inform requirements analysis anddecisions.
–•

Apply lessons learned and adopt and adapt risk management models fromother regulatory agencies, such as the Nuclear Regulatory Commission, to
DOE’s management, oversight, and development of an enterprise-wide risk
management model. See the box “Lessons Learned from Risk Management
Frameworks at the Nuclear Regulatory Commission” in Section C of thischapter.

DOE headquarters should eliminate any requirements that are duplicative ofFederal regulatory and industry standards.
–

To address the confusion when implementing requirements, DOE
headquarters should comprehensively review and eliminate any contractor
requirements that are duplicative of Federal and State regulatory andindustry standards or that provide little or no value to the operations or
performance of the laboratories’ missions.

–

To facilitate these efforts, DOE headquarters should task existing crossenterprise groups, such as the LOB, or create a focused group under theUnder Secretary for Management and Performance to:o Identify and compile a record of outcomes and burdensome practices
from recent reform efforts and assess their applicability.
o Assess and develop an ongoing capability to evaluate contractor
requirements for: (1) impacts and value to enable performance,
including execution of missions and ensuring adequate protection ofenvironment, health, safety and security and (2) relevancy acrossspecific sites in the DOE enterprise by cross-walking contractor
requirements to Federal, State, or local regulations and industry
standards and assessing DOE’s rationale for establishing requirements
above and beyond these. DOE could revisit the Contract Equivalency
Initiative process and expand this enterprise-wide.

•

There are several opportunities for DOE to pilot requirement reforms that would
expand reform efforts currently underway and leverage successful strategies
from past reforms.
–

DOE's SC pilots that are currently underway to streamline requirements atspecific single-program laboratories should be continued. DOE should72

explore the potential to expand pilots to multi-program laboratories andlaboratories in other programs, including the NNSA laboratories. Lessons
learned should be developed with input from across the DOE enterprise andsystematically applied across the system.

78–

Pilot the elimination of DOE requirements from M&O contracts that(1) present little added value and (2) are duplicative of Federal, State andlocal regulations and industry standards. The identification of requirements
for reform could be based on the LOB or a new risk analysis office's efforts
to assess the value and relevancy of requirements at specific sites across thesystem.

–Pilot innovative governance models and M&O contracting vehicles, such as
fixed-price mission support contracts and cooperative agreements, 78 which
could leverage staff and resources, streamline operations, and generate costsavings.

A description of cooperative agreements can be found in 31 U.S.C. §6305.

73

4.

Local Oversight: Contractor Assurance, Site
Offices, and Support Centers

A. Introduction
The laboratories execute their mission in the midst of a complicated oversightenvironment, including significant local or on-site oversight. Any recommendations
about efficiencies at the laboratories must also take into account the local oversightenvironment of the laboratories. As we noted earlier, the SEAB Task Force on the DOE
laboratories identified no less than six groups involved with laboratory management andoversight. 79 DOE field elements primarily consist of two of these entities: DOE Site
Offices (called Field Offices in NNSA) and DOE Support Centers. DOE operationaloversight offices (e.g., the Office of the Inspector General) may be co-located with thelaboratory, but this is discussed further in Chapter 5, Assessments and Data Requests.
The multitude of oversight entities has led “to a highly burdensome operating
environment that severely diminishes the effectiveness of this arrangement.” 80
DOE has attempted to shift from transactional compliance to a performance-based
oversight model by installing a contractor assurance system (CAS) at each of thelaboratories. Generally, CAS employs metrics produced by the laboratories to assure
DOE that they are meeting requirements, mitigating risk, and effectively managing thelaboratory. CAS has been used to reduce Federal oversight by focusing on laboratory
system approval, verification of system effectiveness, and the use of management
information systems. It also emphasizes periodic audits of high-risk operations, rather
than continuous Federal inspection of all operations. One critical aspect of this model istransparency and mutual access to data. CAS implementation increases the use oflaboratory-conducted oversight in operational domains such as finance and humanresources, thereby prioritizing work at the site office and decreasing the number ofexternal assessments. As a result, site office leadership has been able to reduce the staff
size of some site offices by a factor of two to reflect the reduced workload. The status and
79

The SEAB Task Force on the DOE laboratories described the oversight environment of the laboratories
as involving six groups with managing roles: “the laboratory director and the director’s leadership team,
DOE Headquarters (HQ) sponsoring program offices, DOE Site Offices (called Field Offices in NNSA),DOE Service Centers, DOE operational oversight offices (e.g., the Office of Independent Enterprise
Assessment), [and] The M&O Contractor.” SEAB, Report of the Secretary of Energy Task Force on
DOE National Laboratories.

80

Ibid.

75

maturity of CAS vary across laboratories; so too does the extent to which site offices rely
on CAS for oversight. Trust between the laboratory and site office staff is important tothe site office’s willingness to depend on CAS to manage operational risk effectively. 81
Particularly important to local oversight is the relationship between the laboratory
and its site office. 82 If the relationship is adversarial, then it can seriously impede mission
execution. These site offices serve as the local DOE oversight for the laboratory andmanage the contract, and a site office (or two) co-locates and oversees each of the 16
FFRDC laboratories. 83 In the recent Augustine/Mies panel report, the NNSA field offices
were criticized as being too large and adding to “wasteful and ineffective transactionaloversight.” 84
Another field element that has a role in managing the laboratories are support
centers (also called service centers, business centers, or operational offices). 85 The
support centers provide business, technical, and financial support to DOE headquarters
and to the site offices. Within the past 10 years, in an effort to improve and streamline
mission support, DOE and NNSA have reorganized the support centers, which has led toconfusion surrounding their roles and responsibilities. Although few outside of the
support center personnel can fully explain their role, they do serve important functions.
The support centers aid the site offices in their oversight of the laboratories. Depending

81

NAPA, Positioning DOE’s Labs for the Future.

82

The importance of the site office/laboratory relationship is discussed in previous reports on the National
Laboratories, such as NAPA, Positioning DOE Labs for the Future; SEAB, Report of the Secretary ofEnergy Task Force on DOE National Laboratories; the Galvin report, SEAB, Alternative Futures for the
Department of Energy National Laboratories (Washington, DC: DOE, 1995); and Augustine/Mies
panel, A New Foundation for the Nuclear Enterprise.

83

The term “site offices” is used to describe DOE Federal offices located at each laboratory site. These
offices are called “site offices” or “field offices” depending on the location, but the roles andresponsibilities are consistent even with the differing name. The Golden Field Office, however, serves
both as a site office and a support center to EERE and NREL and co-locates NREL in Golden, CO(http://energy.gov/eere/about-us/business-operations/golden-field-office). NETL, as a GOGO, does nothave a site office. The Savannah River Site which includes the Savannah River National Laboratory has
two site offices, one for its stewarding office, EM (http://sro.srs.gov/) and one for NNSA.
For more information about each site office at NNSA’s eight sites, see
http://nnsa.energy.gov/aboutus/ourlocations. For information on SC’s 10 site offices, see
http://science.energy.gov/about/field-offices/.

84

Augustine/Mies panel, A New Foundation for the Nuclear Enterprise.

85

More information on the support centers is available at NNSA’s webpage,
http://www.nnsa.energy.gov/aboutus/ourlocations/nnsa-complex; SC’s webpage,
http://science.energy.gov/isc/; EERE’s webpage, http://energy.gov/eere/about-us/businessoperations/golden-field-office, NE http://www.id.doe.gov/; and EM’s webpage
https://www.emcbc.doe.gov/.

76

on the support center, they can also perform significant Department-wide functions suchas managing grants or consolidated financial services (e.g., paying DOE’s bills).
The Commission visited all field elements (site offices and support centers) to
conduct interviews concerning the Commission’s charge.

B. Contractor Assurance System (CAS)The Contractor Assurance System (CAS) at the DOE laboratories is comparable toquality assurance or internal controls at a company, but in addition to providing assurance
to M&O contractors (akin to a Board of Directors or company management), a DOE
laboratory CAS also provides assurance to the laboratory’s Federal owners and overseers,
DOE.
DOE first introduced CAS to the laboratories in 2005 in order to address operational
inefficiencies, which had been cited by previous reports, panels, and auditors of thelaboratories. 86 DOE Order 226.1 established requirements for “all aspects of operations
essential to mission success.” 87 In 2007 and 2011, DOE issued revisions to clarify andenhance the order in response to “lessons learned” from incidents and suggestions byoutside organizations. 88 In the justification memo for the second revision, DOE described
CAS as “instrumental in putting into place a consistent comprehensive oversight modelacross the Department.” 89 Also in 2011, NNSA created a policy letter on“Transformational Governance and Oversight” (NAP-21) to establish additional policy
guidance for CAS specific to its sites.
The requirement for a CAS has been inserted into each laboratory M&O contract by
amending the H clause with similar language at each of the laboratories. 90
1.

Purpose of CAS

According to NAPA, the purpose of the Contractor Assurance System (CAS) is “toassure both DOE and contractors’ management that laboratory operational andprogrammatic risks are effectively and efficiently identified, controlled, and managed.” 91

86

DOE Order 226.1, Implementation of Department of Energy Oversight Policy (2005).

87

Ibid.

88

The new orders established in 2007 and in 2011 are DOE Order 226.1A and DOE Order 226.1B,
respectively.

89

DOE Justification Memorandum, “Notice of Intent to Revise Department of Energy Order 226.1A
Implementation of Department of Energy Oversight Policy, dated July 31, 2007” (2010).

90

An “H clause” in a DOE laboratory M&O contract is a site-specific clause.

91

NAPA, Positioning DOE’s Laboratories for the Future.

77

Similarly, the Contractor Assurance Working Group of the Energy Facility Contractors
Group (EFCOG) describes CAS as a cohesive system involving laboratory management(“contractor management”), the M&O contractor (“contractor governance”), and DOE
oversight:•

A CAS enables contractor management to provide reasonable assurance
that mission objectives will be met and contract requirements fulfilled;that site workers, the public, and the environment are protected; and that
operations, facilities, and business systems are effectively run andcontinuously improved.

•

A CAS enables an M&O contractor’s governance system to define
acceptable performance outcomes, to provide oversight of laboratory
performance, and to hold contractor management accountable for theseoutcomes so that the contractor may provide assurance to DOE.

•

Finally, a robust and effectively functioning CAS builds trust between
DOE and its contractor, helps to ensure alignment between DOE andcontractors in accomplishing and addressing mission needs, and allows
DOE to optimize its oversight function to leverage the processes andoutcomes of its contractor(s). 92

The CAS identifies, controls, and manages operational and programmatic risks (asdescribed by both NAPA and EFCOG), but it also builds trust. Trust between DOE andits contractor is key to CAS performance. By trusting an effective CAS, DOE can change
the level of its oversight in response to good performance. To develop this trust, in
addition to the systems and metrics that comprise the laboratory input to CAS (asdescribed in DOE Order 226.1B and the laboratories’ associated H clauses), DOE
oversight components must perform certain roles in ensuring the maturity and robustnessof the CAS process (Table 16). 93

92

Contractor Assurance Working Group of the Energy Facility Contractors Group, Elements of aContractor Assurance System. Prepared by the Contractor Assurance Working Group of the Energy
Facility Contractors Group (2010).

93

The SEAB Task Force on the DOE laboratories described six oversight components: laboratory
management, DOE headquarters and sponsoring program offices, DOE site offices, DOE support
centers, DOE operational oversight offices, and the M&O contractor.

78

Table 16. Contractor Assurance System (CAS) Roles andResponsibilities for DOE Oversight Organizations
Organization
Headquarters andsponsoring program
officesRoles and Responsibilities•••

Site Offices

•
•
•
•
•
•

Support Centers
Operational Oversight
Offices

Provide strategy for CAS implementation both by thelaboratories and by oversight organizations, including site
offices
Support further maturation of CAS throughout the laboratory
systemPromote capable leadership at site offices willing to further the
principles of CAS and to change oversight based on laboratory
performance
Work in full partnership with the laboratory
Leverage laboratory management systems and oversightmechanisms
Enable mission execution at the laboratory as main priority andgoal
Coordinate outside entities on behalf of the laboratory
Implement requirements through graded approach
Optimize workforce size based on improving laboratory
management and processes•

Provide support to site offices and other DOE entities••

Leverage site reviews of laboratory through site offices
Recognize the role of site offices as coordinators of thelaboratories

Note: This list of DOE organizations is taken from the list of six organizations that have a role in oversight of
the laboratories (as laid out by the SEAB Task Force on the DOE laboratories). The non-DOE
organizations are the M&O contractor and the laboratory management.

2.

Implementation of CAS

In 2013, NAPA looked at DOE’s 16 FFRDC laboratories, assessed their CAS, andrecommended that CAS be further implemented and matured due to the potential benefitsof the system. At the time that NAPA surveyed the laboratories, many still did not have amature system. That said, the authors of the NAPA report concluded that for thoselaboratories with robust CAS “the DOE oversight model [was] changing” for the better. 94
Today, we still see variation across the laboratories in terms of relationships with DOE
and its site offices and effective implementation of CAS.
The Augustine/Mies panel report on the NNSA laboratories highlighted the erosionof trust in the NNSA system, and although not referencing CAS by name, recommended

94

NAPA, Positioning DOE’s Laboratories for the Future.

79

that “leaders in both the government and M&Os should prescribe and enforce behaviors
that rebuild credibility and trust.” 95 GAO found that NNSA has not fully establishedpolicies or guidance for using information from CAS, which has led to inconsistency in
NNSA field office procedures. 96 NNSA itself has been concerned that the laboratory
CASs are not sufficiently mature to act as a reliable replacement for field office on-site
inspections and transactional reviews. 97 Since CAS is already at least nominally in placeat the NNSA laboratories and it has been shown to build trust and credibility at otherlaboratories, the NNSA laboratories could also benefit from a similar implementation of
the system.
As the Commission conducted its interviews around the laboratory system, it
became clear that though the term “CAS” is widely used, there is some variation inunderstanding of what it actually means. The potential benefits of CAS can only berealized if the site office is willing to rely on laboratory assessments. The levels of trust
differ between the NNSA version of CAS and the SC or applied program office versionof CAS. The building of trust between the site office and the laboratory and the
optimization or ‘changing/reduction’ of DOE oversight as a result of CAS is integral in
making the process work.
a. Office of Science Laboratories“Internal controls in thislaboratory—we don’t need toprescribe a [new] process.
Instead, [we] help bring in aprocess that depends on thecontractor.”— Site office personnel
at an SC laboratory

In response to its initial experience with
CAS, SC modified the H clause in all its M&O
contracts executed after January 2010. 98 SC
describes the purpose of CAS as providing“transparency between the contractor and DOE toensure alignment across the enterprise toaccomplish mission needs, and for DOE todetermine the necessary level of Federal
oversight.” 99 SC has also outlined the overarching
principles of CAS:

95

Augustine/Mies panel, A New Foundation for the Nuclear Enterprise.

96

GAO, NNSA: Actions Needed to Clarify Use of Contractor Assurance Systems for Oversight andPerformance Evaluation (Washington, DC: GAO-15-216, May 2015).

97

NAPA, Positioning DOE’s Laboratories for the Future.

98

DOE SC webpage, “Oversight: Contractor Assurance Systems,” http://science.energy.gov/sc3/oversight/contractor-assurance-systems/.

99

Ibid.

80

•

Line management is accountable for performance•

Assurance is an outcome•

Assurance is reasonable, not absolute•

Assurance covers the full scope of contractor operations•

Effective assurance is built on mutual trust between DOE and thecontractor 100

Effective implementation of CAS requires collaboration between DOE, especiallythe site offices, the laboratory, and the M&O contractor. The strength in this partnershipthen creates trust, even in cases of poor performance. As an example, since before 2005,
the Radiation Protection Program at Argonne had repeated issues of noncompliance with
10 CFR 830 and 10 CFR 835. 101 Prior to 2005, the traditional oversight model had not
improved Argonne’s performance, and Argonne and its M&O contractor, the Universityof Chicago, could not provide adequate assurance that its Radiation Protection Program
followed regulations or met DOE requirements. The Argonne site office and a more
involved M&O contractor (as required by CAS) helped work through these issues at thelaboratory. In some cases the site office defended the laboratory to outside entities,
including helping DOE enforcement fully understand that the laboratory was improving
its compliance with regulations. This took place concurrently with, and was in part due
to, the implementation of CAS across the SC laboratories. Instead of working against
each other, the site office and the laboratory were able to leverage CAS to help thelaboratory improve its operational performance. With improved communication,
collaboration, and persistence, the laboratory is now compliant. This development of trust
during a time of poor performance has allowed for continued and improved collaboration
between the two parties. The laboratory provides assurance and transparency while thesite office responds to the improved performance of the contractor by reducing its
oversight.
At the time of these issues at Argonne, some at DOE headquarters saw the poor
performance of the Radiation Protection Program as evidence that CAS was not working.
On the contrary, CAS allowed for greater visibility and finer granularity of laboratory
performance and increased transparency into the actions taken by management toimprove the situation. Those who were on-site during this time say that the previous
oversight model did not help the laboratory improve its performance, but that CAS was

100

Ibid.

101

Site visit with Argonne/presentation slides have more information (February 27, 2013).

81critical in the laboratory becoming compliant with DOE regulations. As one interviewee
remarked, “not performing well does not mean contractor assurance is broken.” 102Starting in 2010, SC has conducted peer reviews of CAS across its 10 laboratories
for assurance that all laboratories had rigorous systems in place and for dissemination ofbest practices. As an example, Brookhaven received the following peer review results:•

The CAS fulfills the H clause and is effective•

Strong partnership evident and integral to the CAS’ effectiveness•

The CAS enables mission execution—encompasses S&T and Operations•

Clear roles, responsibilities, accountabilities [between the site office, the
M&O contractor, and the laboratory]•

Agreement on continuous improvement 103

The reviewers suggested that Brookhaven Science Associates (BSA, Brookhaven’s
M&O contractor) improve its ability to describe how well CAS enables mission
accomplishment, how CAS effectiveness is evaluated by the Board of Directors, and how
independent reviews are determined and value disseminated. According to BSA andBrookhaven, the preparation for the peer review process added value to the laboratory,
M&O contractor, and the site office because these entities prepared by jointly updating
the CAS program documentation, which in turn facilitated a current knowledge of theCAS processes and their performance.
From the Argonne and Brookhaven examples on CAS implementation and peer
review, respectively, the potential benefits of CAS become more apparent. When CAS
works—when it mitigates risk and provides assurance to all stakeholders—the site officeand the laboratory operate as a team. The Federal employees at the site office and thecontractors at the laboratory perform separate and distinct roles, but each party works
toward the overall goal of efficient and effective mission execution by leveraging theknowledge and expertise of each other. The laboratory is given increased flexibility in
how it executes its programs and the site office holds the laboratory accountable for its
results.
b. Applied Laboratories
Since the applied laboratories are stewarded by offices with only one National
Laboratory each, the process by which peer review occurs is not as uniform as in SC.
NREL and Savannah River both have a CAS clause in their contract, though their102

Non-attributional interview, fall 2014.

103

J. Wilke, BSA Contractor Assurance System: The Peer Review Experience (2011).

82

processes are still evolving along with their relationship with EERE and EM,
respectively. The extent to which they leverage CAS is less clear.
The Idaho National Laboratory, which
was re-formed as a National Laboratory from
Argonne West and Idaho National
Engineering and Environmental Laboratory in
2005, together with DOE’s Office of Nuclear
Energy (NE) and the Idaho Operations Office(IOO), has been leveraging the knowledge
and experience of SC in tailoring CAS to its
site.

“How should we self-regulate as anagency and what should that look
like? An ‘event’ can happen, but theoverreaction response to the event is[also what determines] the disaster.”“Trust takes a long time to build anda moment to break.”–– Personnel from anapplied DOE laboratory

Through these efforts, Idaho should beconsidered a top performer with CAS,
demonstrating a good relationship between the site office and the laboratory. 104 The
creation of CAS was from SC defining principles and experience, and Idaho’s CAS was
customized to fit the new National Laboratory’s focused mission. 105 NE, IOO, and Idaho
have all been involved in the development of CAS with special emphasis oncommunication and trust between the laboratory and IOO. Now that the laboratory has
more experience with CAS itself, IOO and Idaho plan to examine collaboratively thelaboratory’s current M&O contract in order to find opportunities to reduce burdensome oroutdated requirements and assessments, thereby realizing the full benefits of CAS.
c. NNSA Laboratories
As described by GAO’s 2015 report on NNSA
CAS, NNSA still needs to determine how the system
NNSA “has not established
is best used, especially by Federal overseers. Basedpolicies or guidance specificon the Commission’s efforts, NNSA seems to depict
to using information from
CAS as “CASs.” In particular, NNSA’s perception of
CAS to evaluate M&O
the contractor assurance system is a system of metrics
contractor performance.”
managed by the laboratory without the added—GAO 2015
necessity for change on the Federal side. Noteworthy
is the fact that NNSA does not include in its CAS guidance the importance of the teamformed by the M&O contractor, field office, and laboratory.

104

Idaho Operations Office serves as both site office and support center for Idaho National Laboratory
and the Office of Nuclear Energy.

105Interviews with Idaho National Laboratory, Idaho Operations Office, and Office of Nuclear Energy
personnel, conducted 2014-2015.

83

In its current implementation, NNSA does not stress the importance of the field’s
involvement as much as the other stewarding offices. This interpretation of CAS runs
counter to NNSA’s original purpose that CAS be “coupled with focused Federal
oversight” and that “line oversight activities focus on areas of weakness in thecontractor’s program as evidenced by a tailored, risk-informed evaluation.” 106 As
described by the Augustine/Mies panel report, “NNSA’s transactional oversight has
proven to be expensive and counterproductive.” 107 While other laboratories havebenefited from a reduction in oversight with further implementation and maturation ofCAS, the NNSA laboratories have experienced CAS as just another layer of transactionaloversight, and so CAS has been a burden for both NNSA and its laboratories.
From the GAO’s research, NNSA officials say that
CAS is intended to allow the contractor to assess its performance; provide
data for its management decision-making process; and more effectively
manage processes, resources, and outcomes. When effectively
implemented, each M&O contractor’s CAS should support the contractor
in self-assessing performance, developing data for decision-making
purposes, and more effectively managing processes, resources, andoutcomes. 108
This speaks to what the contractor should do in managing CAS, but does not lay out
the responsibility of NNSA or its field elements. GAO recommended that NNSA
describe what the field elements should do in using and approving CAS. This
recommendation could go farther by establishing CAS as not just a system of metrics forthe laboratories to use, but also a system to improve the working relationship between thelaboratories and the site offices.
The issues with CAS in NNSA as described by GAO include the recent
discontinuation of a process at NNSA HQ for validating site office oversight approaches,lack of guidance on how to use CAS to evaluate contractors, and potentially not enoughqualified personnel within NNSA to implement CAS. 109 In response to the issues raisedby GAO, NNSA is undoing NAP-21, its CAS guidance, and in its place, creating new
policy for CAS. The projected date for this change is September 30, 2015, with an
implementation guidance document due by March 31, 2016. During this process, NNSA
has an opportunity to draw from the experience of the other stewarding offices. The new106

DOE Manual NA-1 SD 226.1A, NNSA Line Oversight and Contractor Assurance System Supplemental
Directive. (2008).

107

Augustine/Mies panel, A New Foundation for the Nuclear Enterprise.

108

GAO, NNSA: Actions Needed to Clarify Use of Contractor Assurance Systems for Oversight andPerformance Evaluation.

109

Ibid.

84

document and its associated requirements should take advantage of the best practices
others in the Department have learned over the last 10 years.
As CAS is currently implemented, there is room for improvement. In general the
Commission saw that the SC laboratories and their site offices seem to be performing thebest, with the applied energy laboratories and their site offices next, and the NNSA
laboratories and their field offices having the lowest performance. Not every SC
laboratory has a mature CAS and not every NNSA laboratory has a broken relationshipwith their local DOE representatives.
What differs by stewarding office is how the Federal oversight responds to thelaboratories’ performance as determined by CAS measures. The principal Federal
involvement in CAS, as described by SC, applied laboratories, the contractor assurance
working group, and even the original wording of the NNSA guidance, is to change its
oversight mechanisms and practices in response to laboratory performance by leveraging
the information and data provided by the CAS systems and metrics. In general, NNSA
seems to lag in implementation of CAS systems and has not stressed the importance of
CAS principles, including building trust between field elements.
The actual Federal involvement by NNSA is to check every single one of thesystems as set up by the laboratories and to determine if these systems are sufficiently
rigorous for adequate assurance. The next step in dynamic oversight, viz., responding to
the performance that these measures indicate, is conducted (and has been shown to be
successful) at both the SC and applied laboratories, but not at NNSA. As a result the
NNSA laboratories have not seen much change in their oversight and NNSA has not seenmuch benefit from CAS.
Since CAS is already present across the laboratory system and included in the M&O
contracts, the Commission believes it can be further matured and implemented to resolve
operational issues and to build trust at the NNSA laboratories. The Commission sees
potential for CAS improvement, not in creating a new CAS system or new metrics, butrather reframing and reinforcing the current CAS and its principles, and leveraging peer
review from the DOE laboratories with a robust CAS.

C. DOE Field Operations
CAS takes a system-based approach to oversight, coupling implementation of
optimized programs, software, and metrics, to a process of contractor assurance that can bechecked, measured, and affirmed. Rather than a static compliance framework, CAS
encourages a dynamic, ever-evolving process that can and should be continually reworked
based on how well contractors perform and how well their systems provide assurance.
CAS relies on mutual trust and collaboration between Federal and contractor staff,
manifested in good relations between site office and laboratory leadership. For the most85

successful on-site relationships across the laboratory system, the site office andlaboratory support the same mission, making for a more effective and efficient model oflaboratory operations. When relations are more strained or roles less clearly defined,laboratory operations have suffered. Because of the potential impact a site office can haveon the operations at a laboratory, it is important to understand its role, and how best toalign the site offices with the core missions of DOE.
1.

Site Offices

All 16 contractor-operated laboratories have a site office that reports directly to theirstewarding office. Savannah River has an NNSA and an EM Office, and as a GOGO,NETL has no site office. As the Federal representative at the contractor-operated
laboratories, site offices play an important role in ensuring that DOE’s missions aredelivered and the interests of the public protected.
a. Roles and Responsibilities of Site Offices
Site offices have many roles and responsibilities related to the Federal oversight andsupport of the laboratories. As the day-to-day representative of DOE headquarters in thefield, much of DOE’s policy and direction is implemented through site office staff. Siteoffices are also responsible for managing the laboratory prime contracts and making
amendments as appropriate—such as authorizing new SPP agreements or CRADAs—aswell as oversight of the operational and management performance of the contractor. For
laboratories located on Federal land, site offices act as landlords to ensure effective
management of Federal resources. In addition to these functions, site offices can andshould be partners with the laboratory, providing mission support where appropriate. A
good relationship between laboratory and site office is not only beneficial, but vital toeffective and efficient laboratory operations.
Since site offices interpret Federal policy, a site office’s culture can reverberate
through a laboratory. When site office staff approach their responsibilities with a cultureof general conservatism and risk-aversion, the relationship becomes transactional andarms-length, placing higher administrative burden on both staff at the site office and thelaboratory as more time is dedicated to compliance, at the cost of reduced focus on core
mission work. In contrast, site offices that work in partnership with their laboratory witha focus on mission achievement can protect public interests while empowering thelaboratories to execute their missions.
A site office manager can develop a site office culture of supporting the laboratory
mission and working collaboratively, but if any site office employees do not report to the
manager, issues of conservatism, risk aversion, and getting in the way of mission
execution can surface. While not a universal problem, this issue can cause serious issues
with respect to Contracting Officers (COs) that do not report to the Site Office Manager.
86

COs primarily sign-off on contract changes, and examples exist of COs unnecessarily
delaying the transfer of funds for projects.
At the Oak Ridge Site Office, until 2009, the contracting officer did not work for the
manager. The Oak Ridge Site Office Manager, like other DOE site office managers, lookat their office as a team that works together to support the mission of the laboratory. Prior
to the change in 2009, the CO worked outside of this team, and impacted laboratory
personnel’s view of the site office. At the Oak Ridge Site Office and other site officesthat have enacted this reporting structure, previous issues have been significantly reduced
or eliminated through having COs report to the site office manager.
The level of oversight and involvement of the site office in day-to-day affairs varies
across laboratories and stewarding offices. The SC Management System (SCMS)
provides guidance to its site offices, encouraging a risk-based approach to determining
oversight priorities. By assessing issues based on their risk level, site offices can focus on
the key, pressing issues. This is in contrast to using a less effective and potentially moreburdensome “checklist” approach that requires site office involvement in every activity,
no matter the risk involved. Other site offices take a more transactional approach, aproblem sometimes exacerbated by having too many requirements. NNSA field offices inparticular, have a larger volume of compliance requirements that must be checked,
demanding more site office staff and pressuring the site office to adopt a moretransactional model of oversight.
During its laboratory visits, the Commission noted that ongoing communication—
both formal and informal—between site office and laboratory personnel, clear
understanding of distinct roles and responsibilities, and an appreciation by the site officeof their support of mission benefited both the site office and laboratory through lessburdensome oversight and more streamlined resolution of any issues that arose. When therelationship was strong, site offices also acted as advocates for their laboratory, forexample by removing irrelevant clauses from the contract, such as nuclear-related audits
at non-nuclear laboratories.
Ultimately, the strength of the relationship between site office and laboratory mustbe nurtured by leadership and staff at both institutions. Laboratories must do their part,sharing their management systems and providing assurance through transparency. With
this in mind, the influence of site offices on laboratories—both positive and negative—
can be significant, and the Commission observed that where site offices saw their primaryrole as supporting the laboratories, rather than policing them, both site office andlaboratories benefited.

87

b. Size of Site Offices
Laboratory site offices are criticized for being too large, especially at NNSA
laboratories. As reported in the Augustine/Mies panel report, staff size at site offices canbe a telling measure of transactional oversight. While plans to reduce the size of NNSA
site offices are currently in place, a “considerable gap between NNSA averages and thoseof other DOE programs” still exists. Table 17 shows the number of staff at the laboratorysite office in terms of FTEs. 110 A considerable gap also exists between the site office sizeat the DOE laboratories and that at comparable FFRDCs managed by other agencies,
such as DOD and NASA.
Table 17. Site Office Size at DOE Laboratories and other Federal Laboratories
Site Office
Golden Field Office—site officecomponent*
Princeton Site OfficeThomas Jefferson Site Office
Ames Site Office
Brookhaven Site OfficeFermi Site Office
Pacific Northwest Site OfficeArgonne Site Office
SLAC Site Office
Oak Ridge National Laboratory Site
OfficeBerkeley Site Office
Livermore Field Office**
Los Alamos Field Office**
Sandia Field Office**

Primary Sponsor

Aerospace
APL (UARC)††
Draper (nonprofit)
JPL
Lincoln Lab

Stewarding Office

FTEs

DOE

EERE

13

DOE
DOE
DOE
DOE
DOE
DOE
DOE
DOE
DOE

SC
SC
SC
SC
SC
SC
SC
SC
SC

9
12
3
27
15
34
25
11.5
40

DOE
DOE
DOE
DOE

SC
NNSA
NNSA
NNSA
Total
Air Force
Navy--Air Force

19.5
83
86
81
459†
0
10.5
13
31
0-2

DOD
DOD
-NASA
DOD

Source: SC Site Office figures from presentation by Joe McBrearty, March 24, 2015; non-DOE FFRDCs
supplied staff size data to Commission, June 2015.
* Golden Field Office value from interview, December 2014** NNSA Site Office figures are from the Augustine/Mies panel report (Table 4).
† This total value does not include personnel who perform laboratory site office-like functions at the Idaho
Operations Office or the personnel at the two site offices for the Savannah River Site.
†† APL is a University Affiliated Research Center (UARC) at Johns Hopkins University.

110

Augustine/Mies panel, A New Foundation for the Nuclear Enterprise.

88

Site Office FTEs/$Mof Laboratory
Operating Budget

To account for differences in laboratory size, Figure 15 normalizes these figures byscaling full time employees to laboratory operating budget. The figure depicts almost afactor of two difference between many of the site offices and the Princeton Site Office,but the Princeton Site Office has a small staff of only 9 employees. This suggests thenormalization is less accurate for the laboratories with small operating budgets.
0.12
0.10

0.10
0.08
0.06
0.04

0.07
0.06

0.06
0.04

0.03

0.03

0.04

0.03

0.03

0.04

0.03

0.04

0.03

0.02
0.00

Source: Site Office FTE values from Table 17of this report and from Table 4 from the Augustine/Mies panel
report, December 2014, and operating budgets from Table 1of this report.

Figure 15. Site Office FTE/ Laboratory Operating budget ($M)

While the size of a site office approximates the level of transactional oversight, size
alone should not be used to assess whether the staffing level at any given site office iscorrect and appropriate. Rather, whether or not a site office adds to the transactional burden
at a laboratory or supports the laboratory’s mission execution can be better extrapolated
through how that site office interprets and implements DOE assessments and requirements,
and whether the site office interacts with contractors in an adversarial manner. The rightstaff and appropriate size for a site office must be determined on a case-by-case basis, andwithin the context of a given laboratory’s unique needs and challenges.
DOE also recognizes the size of site offices as a potential area of concern. Recently,
NNSA field offices underwent a capabilities assessment to determine the appropriate
number of employees needed to fulfill their Federal responsibilities. Although athoughtful exercise, their assessment left out the possibility of reducing workload througheffective implementation of CAS, meaning that the estimates for required staffing level
were likely overestimated. This stands in contrast to the strategic reductions in force at
the SLAC/Lawrence Berkeley site offices, which reduced the staff at both site offices byaddressing attrition not by backfilling vacant positions but instead by distributing those89

responsibilities to the remaining staff. Through strong leadership and effectively
implementing CAS, SLAC and Lawrence Berkeley site office leadership criticallyassessed their own responsibilities in the context of laboratory needs, allowing them toreduce their own size in an informed way. Despite their reduced size, both site offices
continue to fulfill all of their Federal responsibilities.
c. Leadership from Stewarding Office to Empower Site Office Leadership
Throughout DOE and the National Laboratories, strong leadership emerged as a key
element of effective site office operations. The strength of senior leadership in SC
empowers site offices in SC to effectively implement CAS, which in turn helps
headquarters prioritize its oversight efforts in an informed way. At any moment, there
might be potentially thousands of areas to focus on across the system. CAS provides site
offices the authority to assess and prioritize a given laboratory’s key issues in a dynamic
way. Rather than treat oversight as a static responsibility, under CAS site office personnel
should expect each day’s responsibilities to change as the environment and operations at
the laboratory shift. Today, the Office of Nuclear Energy (NE) has adapted its processes
to match those in SC. Specifically, leadership at NE has given blessing to its Idaho site
office to cut requirements, coordinate external assessments, and track level of effort ofassessments.
Changing needs at a laboratory can be addressed by strong leadership. For instance,
when Princeton Plasma Physics was given the go-ahead to restart operations at its
National Spherical Torus Experiment–Upgrade (NSTX-U) after a 2-year shutdown, SC
recognized the heightened level of risk involved in the laboratory beginning its firstmajor infrastructure project in decades. After determining that key project management
skills were not present at the Princeton Plasma Physics site office, SC prompted the
Brookhaven site office management to step in, providing additional expertise andguidance to ensure that the project would proceed safely and on schedule.
When leadership fails to grant clear guidance and authority to site offices, roles
become unclear and the site office does not have as much freedom to enact productive
change at the local level. Unguided change may even be inconsistent with headquarters
policy, as is sometimes the case for NNSA site offices. 111 Leadership should provide
clear direction of the mission with CAS principles in mind, entrusting authority to thefield office to make key decisions that best support the execution of mission.

111

GAO, NNSA: Actions Needed to Clarify Use of Contractor Assurance Systems for Oversight andPerformance Evaluation.

90

2.

Support Centers

In addition to site offices, DOE has support centers as another element of its field
operations. Generally, support centers assist both site offices and HQ in providing bothtechnical expertise and administrative manpower as needed. “Support Centers” is the allencompassing term used in this chapter to refer to the operations offices, the consolidated
business centers, and the service centers across the laboratory system. The Support
Center Taxonomy within the Department is shown in Figure 16.

Note: NETL has no site office. Additionally, the Albuquerque Complex is “an arm of NNSA headquarters,”
but provides many of the same services as other support centers around the laboratory system and so is
included among the “support centers.”

Figure 16. Support Center Taxonomy

Currently, the roles, responsibilities, and authority of the support centers are notclearly understood by many in the laboratory system. Ideally, support centers shouldhouse and provide expertise to multiple site offices on the basis of mission-relevance,
allowing individual site office size to be low, and to headquarters personnel in areas
where efficiencies can be obtained. In their role of supporting headquarters, support
centers conduct such responsibilities as payroll and contract processing. In many of the
support centers, most of the staff is engaged in these responsibilities. For the staff in the
support centers who support the site offices, site offices are their customers, drawing on
the support centers’ capabilities as needed. Table 18 describes the location, stewarding
office, functions, and size of the support centers that serve the site offices of the National
Laboratories.

91Support centers are substantially larger than most site offices with the total
workforce tripling the total workforce at laboratory site offices, a concern that DOE iscurrently investigating for both support center roles—supporting site offices andsupporting headquarters. Over the last 3 years, SC has reduced the staff at support centersby 10-15 percent, purely by attrition. A similar approach to reduction should be exploredat the other support centers. In general, while the Commission understands that the
support centers play an important role, the boundaries of that role must be more explicitly
delineated to both site offices and laboratories. Critically, support centers should not haveapproval authority, which belongs with site offices due to their ability to better assesslaboratory needs.
Table 18. Support Centers across the DOE Laboratory System
Stewarding
OfficeSupport Center

Location

Functions

Albuquerque Office

Albuquerque,
NM

NNSA

Environmental
Management
Consolidated
Business Center*

Cincinnati, OH

EM

Golden Field Office

Golden, CO

EERESite office for NREL andsupport center for EERE

Idaho Operations
OfficeIdaho Falls, ID

NE

Site office for Idaho andsupport center for NE

Integrated Support
CenterArgonne andOak Ridge

SC

Support center for SC

Support center for 3
NNSA laboratory site
offices- Headquarters
Field Location

Workforce
921

Support center for EM
123

Total

143
230

281
1,698*** Due to the structure of EM, the Environmental Management Consolidated Business Center (EMCBC)
mostly provides support to the site offices associated with cleanup sites. Savannah River is part of thecontract for the Savannah River Site and thus, the EMCBC provides support for the whole site’s site
offices, unlike other support centers that provide support for the site office for the national laboratory.
** This total value includes personnel that perform site office-like functions at the Idaho Operations Officeand the Golden Field Office.

Although both a support center and a site office in function, the Golden Field Officecan be used as an example of the myriad roles that a support center can provide. Most of
the office works on issues that do not directly deal with NREL, its laboratory. Thirteen

92employees conduct the functions of the site office with a total of 30 employees that
support the laboratory. 112 The rest of the support center conducts procurement services(including acquisitions and policy) and business services (including chief counsel andfinancial assistance) for EERE. The business services division obligates up to $800
million in financial assistance annually as opposed to the $400 million obligated for the
NREL contract. 113
In 2002, NNSA closed two operations offices and created a service center in
Albuquerque. The service center was further reorganized in 2011 during a system-wide
attempt to increase resources to mission execution by streamlining mission support
functions. In this second reorganization, the service center manager was removed, theservice center was re-named the Albuquerque Complex, and the staff began reporting
directly to headquarters. While the reorganization was intended to reduce the staff size at
the system, it failed to separate the support nature of the “support center” from approvalauthority, which remains an issue today. When support centers move beyond providing
business, technical, and financial support to HQ and the site offices, and instead begin to
exercise approval authority, support centers step beyond their appropriate role.
In contrast, the SC Integrated Support Center (ISC) Service Plan discusses how
roles can be delegated more reasonably among site offices and support centers (Figure17). Prior to 3 years ago, the ISC offices had line authority over the site offices. Now, theChicago Office and the Oak Ridge Office have the role of supporting the site offices andin this role, no longer have authority over approvals. Approval authority within SC had
previously been an issue, and SC has worked to make the ISC roles and responsibilities
more clear and appropriate.

112

Interview with Golden Field Office personnel, December 2014.

113

Ibid.

93

Figure 17. Depiction of the Service Plan of the SC Integrated Support Center3.

Evolving Oversight Functions Under CAS

As CAS matures, site offices and support centers should expect to see their own
oversight functions evolve. Since CAS is designed to make oversight adaptive tochanging levels of risk and need, the importance of a strong relationship between site
offices and laboratories is more important than ever. Only through strong site officeleadership and clear understanding of laboratory operations can CAS succeed instreamlining laboratory oversight and moving away from a system that favors “checklist”
compliance. Site offices and support centers may find their familiar roles, staffing, andeven structure reworked under CAS. With those changes, however, is the promise of
greater efficiency, stronger partnership, and ideally more effective performance of thelaboratory mission.

D. Findings and Recommendations
Based on its work, the Commission found the following:•

CAS principles have been leveraged at sites to reduce the amount of oversight,
including site office size.
–

A major role of the site office within CAS and the FFRDC relationship is toensure that the mission of the laboratory is accomplished.

–

Benefits of CAS implementation include increased approval andauthorizations at the laboratory/site level, reduced prescriptive andoverlapping requirements, and decreased audits and inspections.

94

•

–

Some site offices have been reduced by half when the relationship betweensite office and laboratory is restored with capable site office leadershipwilling to make changes that result in reduced workload.

–

Peer review of CAS implementation across the 10 SC laboratories allowed
for dissemination of best practices and assurance that all laboratories had
rigorous systems in place.

–

Because NNSA is eliminating their current CAS policy (NAP-21) andcreating a new one with guidance released by March 2016, NNSA has acurrent opportunity to improve oversight at the laboratories by including
CAS principles and ideals in its new CAS policy.

The roles, responsibilities, and authority of the support centers are unclear to
many in the laboratory network. The optimal role of support centers is toprovide business, operational, and technical support to site offices andheadquarters, without line approval authority. Line approval authority iscurrently in place in some support centers.

Based on these findings, the Commission makes the following recommendations
with respect to the laboratories’ oversight environment:
Recommendation 9: DOE should focus on making the use of CAS more uniform
across the laboratories. DOE local overseers should rely on information from the
CAS systems, with appropriate validation, as much as possible for their local
oversight. The quality of CAS can be increased through peer reviews for
implementation and effectiveness.
Recommendation 10: The role of the site office should be emphasized as one of“mission support” to the program offices at DOE and to the laboratories. The site
office manager should be clearly responsible for the performance of the site officein support of the mission, and all staff in the site office, including the Contracting
Officers, should report to the site office manager. Since site office effectiveness is
so dependent on site office leadership, DOE should devote more effort toleadership training and professional development of field staff.
Recommendation 11: DOE should clarify the role and authority of the support centers.
Wherever approval authority resides with a support center, DOE should remove it
and reinstate it at either the site office or DOE headquarters, as appropriate.

95

The Commission also makes the following additional recommendations:•

DOE should help build trust between site offices (through the FFRDC
relationship and the further implementation of CAS principles and ideals) andpromote capable leaders with flexibility to reduce workforce due to changing
oversight.

•

DOE and LOB should encourage recurrent peer review of CAS (both for
implementation and for effectiveness) across the laboratory system. The NLDC
and FMC could both perform key roles in organizing this peer review process.
–•All laboratories and site offices should be involved, including thosestewarded by NNSA. A graded approach will need to be used based on
maturity of CAS across the laboratory system.

NNSA should leverage best practices from SC and NE in creating their new
CAS policy and requirements, including the critical importance of therelationship between the site office and the laboratory.

96

5.

Assessments and Data Requests

A. Introduction
Previous reports on the National Laboratories have found that the laboratories are
subject to too many assessments and data requests, which collectively represent a burden
for the laboratories. 114 To develop a greater understanding of the underlying causes andcomplexities of the issue, the Commission collected data on assessments and data
requests from all 17 of the National Laboratories. Based on the data collected, the total
number of annual external assessments at a laboratory ranges from 4 to over 300. The
Commission found examples of burdensome and duplicative assessments at multiple
laboratories, but this issue is most prevalent at only a few of the laboratories. In addition,
the Commission found that onerous and lengthy data requests can often arrive at thelaboratories without being sufficiently vetted or filtered.
1.

Defining Assessments

Assessments are on- or off-site review, for which topic, scope, and frequency vary.
For the purpose of this chapter, the term “assessments” is used for audits and inspections
conducted by groups both internal and external to the laboratories. “Internal assessments”
are audits and inspections conducted by M&O contractors, laboratory management andother organizations within the laboratory. The laboratories typically have various officesthat conduct assessments, such as quality assurance, internal assessment, or internal audit
offices. Laboratories also hire other organizations to conduct independent assessments of
the laboratory directorates and its processes.
M&O contractor audits and inspections are separate and independent from those
conducted by directorates and offices within the laboratory. At many of the laboratories,
the board of directors or other governing bodies may decide to conduct assessments fortheir own governance and oversight of the laboratory.
“External assessments,” as defined in this report, are audits and inspections
conducted by organizations that are external to the laboratory. The organizations“external to the laboratories” are further split into three groups based on proximity to the114

National Laboratory Director’s Council, NLDC Prioritization of Burdensome Policies and Practices(2011); Augustine/Mies panel, A New Foundation for the Nuclear Enterprise (2014); NAPA,
Positioning the DOE Labs for the Future (2013); SEAB, Alternative Futures for the Department ofEnergy National Laboratories (Washington, DC: DOE, 1995).

97

laboratory site and whether they are part of the Department of Energy (DOE) or not: local
to the laboratory and internal to DOE (“DOE local”), off-site and internal to DOE (“DOEoff-site”), and separate from DOE (“separate”). Table 19 displays the grouping ofspecific organizations into the 4 categories of assessments.
Table 19. List of Performers of Assessments at the National Laboratories
Internal to the
Laboratories(Internal)

External to the Laboratories
Local, Internal to
DOE (DOE Local)

Off-Site, Internal to DOE(DOE Off-Site)

Separate from DOE(Separate)

Independent Third Party

Site Offices‡

DOE EADNFSBInternal Audit Office

Support Centers**

DOE IG

GAO

Laboratory Management

DOE Program Offices††

Local and State
Authorities

Quality Assurance Office

Other DOE headquarters
officesStandards groups(e.g., ISO)‡‡

M&O Contractors†

Other Federal
agencies

Note: Reviews conducted by shaded organizations are excluded from the assessments data. All underlinedorganizations’ assessment processes are discussed in more detail in the text. This list of conductors ofassessments is not exhaustive and instead is meant as a simple depiction of how the data are
categorized.
† “M&O Contractors” refers to the parent organizations that manage the 16 FFRDC DOE laboratories under
M&O contracts. These reviews are excluded from the data later in the chapter. These assessments are
not strictly “internal” to the laboratory, but since they handle governance, the M&O contractors areincluded in the “internal” column for the purposes of this table.
‡ Although both “site office” and “field office” are used across the laboratory system for the site
representation of DOE that conducts local oversight and contract management, this report uses “siteoffice” for all of these offices.
** Service centers, business centers, operations offices, and support centers are collectively termed“support centers” in this report. Although no longer a “service center” within NNSA, the AlbuquerqueComplex conducts work similar to the support centers in other stewarding DOE offices and is groupedamong the collection of laboratory system support centers in this report. Additionally, support centers are
not always local to the laboratories, but their main customers are the site offices, which make theirassessments most similar to those of site offices.
†† Technical reviews and assessments conducted by DOE Program Offices are not included in this chapter’s
definition of “assessments.” Although these assessments are important to programmatic direction andprogram quality assurance, they are not included in this chapter and instead are referenced in the
stewardship of the laboratory in Chapter 7, Alignment and Quality of the Laboratories.
‡‡ “ISO” stands for the International Organization for Standardization, which sets international standards andtheir accompanying certifications.

Within the “DOE local” category of external assessments, site offices at each of
the laboratories conduct the majority of assessments. NETL, as a GOGO, does nothave a site office, and Savannah River has two site offices (one for NNSA and one for
EM). All other laboratories have one co-located office that performs the operations oflocal oversight. Although both “site office” and “field office” are used across thelaboratory system for the on-site DOE representatives who perform local oversight,
98this report uses “site office” to denote all of these offices. Support centers, which
provide technical support to each of the site offices, mostly conduct assessments inconcert with the laboratory’s site office, but also have a few regular assessments ateach laboratory. The support centers at NREL and at Idaho, the Golden Field Officeand the Idaho Operations Office, respectively, perform the functions of both site
offices and support centers in one entity.
Within the “DOE off-site” category of external assessments are offices within the
Department that are not site offices or support centers. According to the data collected bythis Commission, the primary conductors of assessments at the laboratories within DOE
are the Office of Enterprise Assessments (EA) and the Office of Inspector General (IG).
EA is the independent assessor within the department that conducts assessments in“nuclear and industrial safety, cyber and physical security, and other critical functions as
directed by the Secretary and his Leadership team.” 115 IG is the auditing organization
charged with discovering “waste, fraud, and abuse” across the department. 116 DOE
Program Offices conduct mostly technical reviews of programs and projects. Since thesereview processes are discussed at length within Chapter 7, Alignment and Quality of theLaboratories, they have been excluded from this chapter. Other DOE headquarter (HQ)
offices conduct particular topical assessments at the laboratories such as the DOE Officeof Project Assessment and the DOE Office of Management.
The “separate” category includes many organizations outside of DOE including
the Defense Nuclear Facilities Safety Board (DNFSB); the Government
Accountability Office (GAO); standards groups, including the International
Organization for Standardization (ISO); local and state authorities; and other Federal
agencies. The assessments from all “separate” organizations are included in the datathat follows this discussion.
Using these categories, the Commission collected specific information about allassessments (title, assessor, and purpose) for each of the sites for one year (assessment
open during any or all of FY 2014). Collectively, the Commission utilized these data inorder to establish trends and to demonstrate how numbers of assessments can vary. Since
definitions for “audits,” “inspections,” and “assessments” can be and are slightly different
at each site, final conclusions cannot be drawn from these data alone. Thus, after
receiving the list of assessments from all 17 National Laboratories, the Commission
115“The Office of Health, Safety and Security (HSS) was divided into two separate organizations on May
4, 2014: The Office of Enterprise Assessment (EA) and the Office of Environment, Health, Safety andSecurity (AU).” For more information about the newly created DOE-EA, go to
http://energy.gov/ea/office-enterprise-assessments.

116

More information about IG can be found at the DOE IG webpage, “About Us,”
http://energy.gov/ig/about-us.

99

conducted interviews with representatives from the laboratories to elicit individuallaboratory context and experience. These interviews provided detail on the impacts of theassessments at each laboratory.
Similarly, the processes of auditing organizations can illuminate the purpose of
these assessments. The Commission interviewed the organizations that have beenreferenced the most in interviews. The exclusion of other groups and their processes does
not mean these groups are exempt from the issues discussed.
2.

Planning Processes for Assessors
a. Processes for Planning Internal Assessments

The laboratories conduct a fair amount of self-assessments. DOE requires some ofthese assessments, but most stem from the laboratory’s management practices for most of
the laboratories. For the NNSA laboratories, requirements dictate almost half of internal
assessments. These assessments are determined each year through internal assessment
plans. Most of the laboratories use risk-based approaches to determine their internal
assessment plans each year. As part of the Cooperative Audit Strategy to prevent
duplicative assessments, the laboratories create an annual laboratory audit plan. Theselaboratory plans go to the audits division of IG, which creates its own annual audit plan
for assessments at the laboratories. 117 The coupling of the two planning processes allows
for the laboratories, the site offices, and the IG to be involved in assessment planning at
the other organizations.
As an example of a laboratory’s internal assessment planning, Fermi has an
Assurance Council that meets monthly and conducts reviews of its management systems.
Fermi has 16 management systems with topics ranging from Governance to Science toLegal. Each of these management systems has an owner in charge of keeping the system
up to date with “changes in the laboratory’s operating environment, applicable laws andregulations, self-assessments and the various review processes of the laboratory.”118
Annually, the Assurance Council creates the laboratory’s assessment plan with Fermi site
office and local Chicago IG office personnel involvement.
Another example of internal planning is Brookhaven’s internal assessment plan.
Each of the 30 management system owners creates a list of the highest potential risks inthat area, and submits that list to their Assessment Support Center. 119 The Assessment
117

DOE, Acquisition Guide 70.4 (Washington, DC: DOE, March 2004),

118

More information about Contractor Assurance at Fermilab can be found athttps://web.fnal.gov/organization/cas/Pages/default.aspx.

119

From interview with the laboratory and site office personnel, April 2015.

100

Support Center takes the list of potential assessments by risk and by area, and incollaboration with the laboratory’s site office, combines assessments where appropriate.
Along with assessing institutional risk, this process determines the laboratory’s
assessments for the year based on available resources. With the risk determination, theprocess includes flexibility in case of incident or of necessary additions to take precedentover lower risk assessments.
In order to determine the effectiveness of this internal process in mitigating risk at
the laboratory, Brookhaven, its site office, and the Chicago Office of the Integrated
Support Center conducted a pilot risk gap analysis for one of Brookhaven’s management
systems: radiological control. The purpose of this risk gap analysis was to identify
strengths and weaknesses in Brookhaven’s risk assessment of radiological control.
Brookhaven has now completed the first risk gap analysis pilot. The laboratory and thesite office both expressed how this exercise has provided additional assurance in thelaboratory’s management systems. 120
Both of these examples include involvement by site offices in laboratory processes
in a way that adds value. An important aspect of internal assessments at the laboratories
is the ongoing relationship between the laboratory and its site office. In cases where thisrelationship is healthy, the interaction between the site office and laboratory often resultsin the site offices leveraging the assessments conducted and data collected by thelaboratory. Leveraging these systems requires the Federal employees to place increasing
trust in laboratory systems while ensuring the rigor of these systems. In turn, thelaboratory’s systems and processes must be transparent and accessible to their site
Federal authorities.
Effective implementation of a contractor assurance system (CAS) can impact the
number and frequency of assessments. In this context, the purpose of CAS is for thelaboratory to provide assurance to stakeholders through creation of systems and metrics
to monitor performance and for the Federal stakeholders—DOE—to leverage theinformation from the contractor in areas of lower risk and better performance. This, inturn, should reduce the number of duplicative external independent reviews, and increase
the number of shadowing and joint reviews conducted by the site office. This benefit of
CAS has been realized in many of the SC laboratories with effective implementation of
CAS principles. Argonne implemented CAS in 2010, and its site office, Argonne Site
Office (ASO), provided the number of reviews for each year since then (Figure 18). This
figure shows that ASO has increased observing and conducting joint reviews and has
decreased independent reviews (“functional area reviews”) since the implementation of

120

Ibid.

101

CAS. This example shows that implementing CAS appropriately and effectively has thepotential benefit of reducing assessments.

Source: Argonne Site Office presentation to the Commission to Review the Effectiveness of the National
Energy Laboratories, November 5, 2014

Figure 18. Trend in Argonne Site Office (ASO) Oversight under CAS

b. Processes for Planning DOE Local Assessments 121
As previously mentioned, the site offices are involved in the annual laboratory
planning strategy in an advisory capacity. In addition to involvement with laboratory
processes, some site offices track and trend the site office’s assessments of the laboratory
and use this information to determine future assessments. For example, Oak Ridge Site
Office organizes assessments in this way with a determination of level of risk and of
frequency of assessments in each laboratory area. This allows the site office to perform
assessments on the subjects and areas that are the riskiest or those that have not beenassessed in a while.
The Pacific Northwest Site Office (PNSO) also has risk-based processes todetermine when to conduct independent reviews, and these processes are based on its

121

Role, responsibility, and size of site offices and support centers are discussed in Chapter 4.

102

laboratory’s risk management approach, which produces risk profiles and heat maps.122
For a specific program or area, the laboratory determines all risk statements, which
describe potential risks, and then employs a Likelihood/Consequence Matrix to determine
the overall risk assessments of those statements. In placing a potential risk on the
Likelihood/Consequence Matrix, the laboratory decides the Likelihood of occurrence(ranging from Highly Unlikely to Almost Certain) and potential Consequence of the risk
(ranging from Minimal to Catastrophic). 123
For example, within the Property M&O Program, the sub-program of Fleet
Management has one property risk statement, which is a “fleet equipment accident withsignificant injury or loss of life due to improper maintenance management (maintenanceowned by Property Management).” 124 The actual level of risk is determined fromlikelihood of causing mission impact, project interruption, reputation & image, and asset
loss. At Pacific Northwest, Fleet Management has an overall actual risk of causing injury
as “highly unlikely” with a potential impact of “serious/dangerous,” and an overall risk ofmaintenance issue with vehicle as “unlikely” with a potential impact of “minimal.” Theserisk assessments result in a total overall risk of “unlikely” with “minimal” impact (Table
20, Column A).
Table 20. Pacific Northwest Overall and Estimated “Uncontrolled” Risk Assessment for“Fleet Management”

A. Overall Risk Assessment*

B. Estimated “Uncontrolled” Risk Assessment**

Likelihood: Unlikely
Impact: Minimal
Color: Blue (Very Low)
Driven by FM Risk 1

Likelihood: Possible
Impact: Serious
Color: Yellow (Medium)
Driven by FM Risk 1

Source: Pacific Northwest Finance Programs Risk Assessment provided to the Commission, July
2015.
* The overall risk assessment for the program is assigned based on the highest risk assigned to therisk statement. This is the value that is displayed on the risk heat map in Figure 19.
** This is a hypothetical assessment of risk if the program and all existing controls were removed.

122

C. Caldwell and R. Haffner, Prioritizing and Managing Risk across the Organization. (Richland, WA:
Pacific Northwest National Laboratory, 2012).

123

Ibid.

124

Pacific Northwest National Laboratory Finance Programs Risk assessment, July 2015. Note that this is
not a failing; this is a potential risk.

103

The laboratory then determines the estimated “uncontrolled” risk assessment, whichis the hypothetical assessment of risk if the program and all existing controls were
removed (Table 20, Column B). In other words, A is the level of risk of this sub-programat the laboratory and B is the hypothetical risk if the laboratory’s control systems were
not in place (a level of risk not present at the laboratory). The intent is to try to assess theinherent risk associated with the program and better understand what the worst-casewould be if all controls failed. It also provides a means for understanding the “riskreduction” value of the current controls.
After the overall and estimated uncontrolled risk assessments are conducted, theFleet Management sub-program is placed on the Likelihood/Consequence Matrix
according to its cumulative risk profile. This process is repeated for all sub-programs tocreate the entire heat map for the Property M&O Program (Figure 19). Each sub-programis shaded by its estimated “uncontrolled” risk assessment. This level of risk is not present
at the laboratories; this level of risk would occur only if all controls in place at thelaboratory were removed. The Fleet Management sub-program resides in the
Unlikely/Minimal box, corresponding with its overall risk assessment, and is shaded inyellow for its Possible/Serious uncontrolled risk assessment should the laboratory
controls be removed. Thus, for the Fleet Management sub-program, laboratory controls
reduce risk from Possible/Serious to Unlikely/Minimal.
The purpose of the heat map is to determine the risk profile at the laboratory,
produce action plans to reduce risk, and to allocate resources according to risk. This heat
map exercise is repeated for all programs and their sub-programs. Some have many more
sub-programs than this example.
PNSO leverages the laboratory’s risk-based process by utilizing Pacific Northwest’sheat maps (since the maps are readily available to the site office). PNSO has defined its
own five “Focus Level Criteria” to prioritize each area’s risk: Performance Trend,
Confidence Based on Oversight Activities, Impact of Recent Changes, Importance ofControls, and External Factors. 125 The “Focus Level Criteria” define for site officepersonnel how to determine risk of each area of the laboratory, and each criterion ranges
from Minimal (1) to Very High (5). For the Performance Trend criterion, “no identified
weaknesses” would correspond to Minimal risk, and the site office would assign VeryHigh to “significant weaknesses exist and warrant direct PNSO attention.” When the site
office applies this risk determination to each sub-program with all five Focus Level
Criteria, the resulting tool is a “Risk Thermometer,” which is used to determine the needfor independent reviews by the site office (Table 21).

125Site office interview, June 2015.

104

Catastrophic

ImpactDisastrous

Asset Life
Cycle
TravelSerious

Payroll
Minor
Fleet
MinimalHighlyUnlikely

Unlikely

Possible

LikelyAlmostCertainLikelihood

Source: Information provided by Pacific Northwest National Laboratory, July
2015.
Note: The color that highlights each sub-program corresponds with the estimated“uncontrolled” risk assessment, which is the risk if no controls at the laboratory
were in place (Table 20, Col. B), and the box that the sub-program is in within
the matrix corresponds with the overall risk assessment (Table 20, Col. A).

Figure 19. Pacific Northwest Risk Assessments for two M&O Programs (Timekeeping andTravel, and Property) Plotted on a Heat Map

105

Likelihood

ImpactPNNL Risk Product (Uncontrolled)

Likelihood

ImpactPNNL Risk Product (Controlled)

Performance Trend

Confidence Based on Oversight Activities

Impact of Recent Changes

Importance of Controls

External Factors

PNSO Focus Level Average

PNSO Risk Product (PNSO Focus x PNNL Risk Product Controlled)

Table 21. Pacific Northwest Site Office (PNSO)
Risk Thermometer Based on Pacific Northwest (PNNL) Heat Map

4

3

12

2

3

6

1

5

2

1

1

2.0

12

Likelihood(1–5);
Impact (1–5);
Uncontrolled

Program Title
Working Alone

Risk
Statement
Injury Working
Alone

Likelihood x
Impact =PNNL Risk’
Controlled

PNSO Focus Level Criteria(1 = Minimal; 2 = Minor;
3 = Moderate; 4 = High;
5 = Very High)

Source: Pacific Northwest Site Office, June 2015.

Table 21 depicts an example of the first step in the creation of the risk thermometerfor one laboratory program (Worker Safety) in one sub-area (Working Alone). The heat
map exercise that was explained for the Property M&O Program is repeated for all
programs including Worker Safety. Based on the risk statement of “injury working
alone” and according to the data displayed in Table 21, Pacific Northwest’s
determination of the controlled level of risk would be in the green region of the
Likelihood/Impact Matrix, and the uncontrolled level of risk (the risk if no controls werein place) would be in the yellow region of this matrix. PNSO then assesses the risk levelof injury working alone based on its five Focus Level Criteria, which results in a PNSO
determination of “Minor” risk. The risk level value as established by Pacific Northwest ismultiplied with the risk level established by the site office criteria to come up with a final
product value of 12. This process is repeated for all sub-areas of Worker Safety (of which
there are 44), and the sub-areas are ordered by the final Risk Product value. For Worker
Safety, the risk product value ranges from 0 to 41. This value of 12, considered106

“Minimal” level of risk, within the Worker Safety Program is comparably low to the risk
product values of other sub-areas such as Electrical Safety, Beryllium, or Fire Protection.
PNSO has access to the management systems (through CAS) at the laboratory andleverages these systems in a way that more accurately determines which areas at thelaboratory need independent reviews based on laboratory performance, time since last
review, changes in the area, criticality of controls, and external factors. PNSO has only
developed this process in the past couple of years, but sees the process as adding value
and credence to their choice of assessments.
The risk thermometer, a risk determination that leverages the laboratory’s heatmaps, is a good example of how risk-based processes can be developed to reduce
independent reviews. Instead of conducting an independent assessment for each area ofthe laboratory or attempting to determine risk of an area based on just one of the Focus
Level Criteria (for example, “confidence based on oversight activities”), the risk
thermometer method allows for a more detailed, and ideally more accurate, determinationof the areas that need an independent assessment the most.
As part of their methods for leveraging laboratory processes, site offices shadow
laboratory assessments, and conduct joint assessments with the laboratories. Shadowing
and joint assessments allow the site offices to be involved in an assessment without
duplicating the efforts of the laboratory. In shadowing, the site office participates in theassessment in an observational role while the laboratory takes the lead in determining thescope and focus of the assessment. For joint assessments, the site office and thelaboratory explore a certain area, program, or operation together, jointly taking a lead rolein determining scope prior to the assessment. All of the SC laboratories use joint
assessments, shadowing, or both as an assessment oversight tool. The appliedlaboratories’ site offices also utilize this strategy, and Sandia’s site office has done thisfor at least two years. 126
Lawrence Livermore and the Livermore Field Office (LFO) have newly piloted a
program to conduct joint assessments based on a model developed by the Nevada Test
Site. In order to conduct this pilot, LFO and Lawrence Livermore agreed on definitions
and threshold for risk. More transparency of systems, agreement on risk, and further
acceptance of CAS principles may allow for more joint assessments and may even reduce
the need for many independent reviews, as demonstrated by heat maps and risk

126

According to NAPA, Positioning DOE’s Laboratories for the Future, and assessments data received
from the laboratories for FY 2014.

107

thermometers at Pacific Northwest and PNSO and by the reduction in independent
reviews at ASO mentioned earlier in this chapter. 127
Risk-based processes will differ by site and each laboratory’s management
processes. Additional methods and processes could be disseminated among site offices
through the Field Management Council, a committee made up of the Federal leaders at all
DOE field facilities, or peer review of CAS. 128
c. Processes for Planning DOE Off-Site Assessments
Of the organizations within the DOE off-site category of assessments, twoorganizations are presented here with their processes for conducting assessments at thelaboratories, IG and EA.
1) DOE Inspector General (IG)The Inspector General Act of 1978 established Offices of the Inspector General inagencies within the executive branch to “increase [the Government’s] economy andefficiency.” Each Inspector General Office is an independent organization for its
associated Federal agency with the following objectives:
1. to conduct and supervise audits and investigations relating to programs andoperations…;
2. to provide leadership and coordination and recommend policies for activities
designed (A) to promote economy, efficiency, and effectiveness in theadministration of, and (B) to prevent and detect fraud and abuse in, suchprograms and operations; and3. to provide a means for keeping the head of the establishment andthe Congress fully and currently informed about problems anddeficiencies relating to the administration of such programs andoperations and the necessity for and progress of corrective action.129
As required under DOE Order 242.A, IG conducts audits of the activities of “DOE,
its contractors and financial assistance recipients” in the areas of “(1) financial andcompliance; (2) economy and efficiency; and (3) program results.” 130 This order also lays
out the responsibility of IG to create a “DOE-wide audit plan,” which should be

127

See Chapter 5, Section 2.a “Processes for Planning Internal Assessments.”

128

See also Recommendation 9 in Chapter 4.

129

5 U.S.C. App. 3

130

DOE Order 224.2A, Auditing of Programs and Operations (2007).

108

coordinated with other organizations, such as GAO and contractor internal audit
organizations, “to avoid unnecessary duplication.” 131 This order also requires the
management of all “field elements” to provide assurance of the “adequacy of coverage,
technical competence, objectivity, and independence of audits conducted by internal
auditors of DOE major facilities management contractors.” 132
Order 224.2A presents what is required and expected in IG’s auditing of programs
and operations. Order 221.2A describes the expectations of cooperation with the IG bypersonnel and organizations throughout the Department. 133 “[DOE] and [NNSA]
contractors must ensure that their employees cooperate fully and promptly with requests
from the [IG] for information and data relating to DOE programs and operations.” 134 The
intent of both of these orders and the public law is to establish an IG office within the
Department which has the duty to find waste, fraud, and abuse while having the authority
to investigate claims at all of the sites.
In determining which assessments to perform in a given year, IG, as mentioned
previously, interacts with the internal audit organizations of the laboratories and thelaboratories’ site offices through the Cooperative Audit Strategy and the DOE
Contractors Internal Audit Directors Steering Committee (CIAD). 135 The purpose of the
Cooperative Audit Strategy is to provide a systematic, risk-based approach to prioritizing
the IG’s audits. It also helps prevent duplicative assessments throughout the laboratory
system, and provides a formal way in which the IG interacts with contractor internal audit
organizations and their site offices. As described by Fermi National Accelerator
Laboratory’s website, the CIAD committee “provides an outlet to learn internal audit bestpractices, and network with [the internal audit directorate’s] peers at other DOE
contractor sites.” 136 The CIAD regularly holds meetings and conferences, and interacts
with IG to bring up issues concerning audits and inspections across all DOE contractors.
Generally, the Commission found that the Cooperative Audit Strategy seems towork. Most of the laboratories say that the Cooperative Audit Strategy works incoordinating audits by IG, and the CIAD helps air grievances, solve problems, anddisseminate best practices. The exception to this is a specific site (Oak Ridge) where thenumber of local IG personnel is large, which has led to the perception that the site is
131

Ibid.

132

Ibid.

133

DOE, Order 221.2A, Cooperation with the Office of Inspector General (2008).

134

Ibid.

135

DOE, Acquisition Guide 70.4 Cooperative Audit Strategy (2004).

136

Fermi National Accelerator Laboratory website, “About the Staff.”
http://www.fnal.gov/directorate/IA/IA_Staff.html.

109subject to more than its share of IG attention simply due to the close proximity. 137 Table
22 shows the locations and sizes of IG Field Offices.
Table 22. Locations of IG Field Offices by Type

Location
Albuquerque
ChicagoDenverGermantown
Idaho Falls
Las Vegas
Lawrence
Livermore
Los Alamos
Oak Ridge
Pittsburgh
Richland
SavannahRiver

Co-Located DOE
Offices
AlbuquerqueComplex
Chicago Office
Golden Field Office
Idaho Operations
OfficeNevadaOperations Office——
Oak Ridge Office——
Savannah River
Operations Office

Office of
Audit
Services

Office ofInspections

Office ofInvestigations

Numberof FTEs

x

x

x

34

x
x
x
x

x
x
x

8
16
13
10

x

7

x

x

x
x
x
x
x

x

21

x

x
x
x

3
39
22
14

x

x

13

Source: DOE IG webpage and FY 2014 DOE Budget Request.
Note:There is also a DC/Forrestal location, which is IG headquarters and has 314 Full Time Equivalents (FTEs).

IG has 10 field offices co-located at laboratories. These range in size from 3 to 39
full time equivalent (FTE) personnel that perform functions in audits, inspections, and137

Oak Ridge provided four examples from 2014:• DOE IG, Audit Report: Follow-up on the Department’s Management of Information Technology Hardware, DOE/IG-0926(Washington, DC: DOE, 2014): Out of $125M in IT hardware procurements, $2M were found to be more than necessary(1.6%). In the Department’s response “it was clear that the Department was already addressing issues before the audit was
conducted.”• DOE IG, Audit Report: Follow-up on the DOE’s Acquisition and Management of Software Licenses, DOE/IG-0920(Washington, DC: DOE, 2014): $1.4B is spent by DOE on IT, IG found DOE/contractors spent $600K more than necessary
over a 3 year period. The time it took the IG to conduct the audit resulted in greater cost than savings. Further, the cost of
implementing a tracking system and dictating how M&O contractors should perform software procurements is “not conduciveto the operating basis behind M&O contracts.”• DOE IG, Audit Report: Strategic Petroleum Reserve’s Drawdown Readiness, DOE/IG-0916 (Washington, DC: DOE, 2014):
Found that SPR was not able to achieve max 90-day drawdown rate –this was because the program designed to ensure oilcomplied with state and Fed regulations prior to delivery had been suspended. Although IG acknowledged the lack of funding
and that management was aware of the issue and had two working groups assigned to fix it, IG recommended DOE perform along-range strategic review of the reserves.
• DOE IG, Audit Report: Cost and Schedule of the Mixed Oxide Fuel Fabrication Facility at Savannah River Site, DOE/IG0911 (Washington, DC: DOE, 2014): GAO report was issued prior to this report which identified the same concerns noted by
IG. Despite this, IG issued 3 recommendations, all of which were already being implemented by DOE.

110

investigations. The audits and inspections division of IG conducts the reviews ofprograms and operations as outlined by the organization’s annual audit plan produced
from the Cooperative Audit Strategy. 138 The investigations division of IG “performs
investigations into allegations of fraud, waste, and abuse in programs and operations.” 139
Due to complaints from the laboratories about IG, the Commission aimed todetermine the level of performance of IG processes in preventing duplicative assessments
and the extent to which IG personnel coordinate with other organizations. From thisreview, IG headquarters does a good job at coordinating with the internal audit
organizations of the laboratories, and most of the field office locations also work tocoordinate with laboratory site offices prior to conducting assessments. The Commission
found that at a few sites the local IG offices invoke DOE Order 221.2A, which outlines
how contractors must cooperate with IG personnel, past the order’s intended use. Thiscan result in scope creep and lengthy assessments. Further, some IG personnel seemed tohave an adversarial relationship with some laboratories and their site offices. On thewhole, these issues are not pervasive in the laboratory system. When the Commission
discussed these issues with the IG, it appeared aware of these locality specific issues andit is working to resolve them.
2) Office of Enterprise Assessments (EA)The Office of Enterprise Assessments (EA) contains the Department’s independent
assessors. The office was previously part of the Office of Health, Safety and Security(HSS), and as of May 2014, DOE divided HSS into EA and the Office of Environment,
Health, Safety and Security (AU). 140 AU creates the policy, guidance, and reports
concerning environment, health, safety, and security, and EA conducts the assessments in
enforcement, cyber and security, environment, safety, and health, and outreach andanalysis. At the SC laboratories with no Category 1-3 nuclear facilities, EA safety has
conducted only two Independent Safety Oversight Assessments within the past 5 years,
which shows how the safety office sees its purview as mostly nuclear facilities safety. 141

138

More information can be found at IG’s website, “Audits & Inspection,”
http://energy.gov/ig/mission/audits-inspections.

139

More information can be found at IG’s website, “Investigations,”
http://energy.gov/ig/mission/investigations.

140

More information about EA can be found at its website, http://www.energy.gov/ea/office-enterpriseassessments.

141

According to information provided by EA; the SC laboratories without Category 1-3 nuclear facilities
are Ames, Brookhaven, Fermi, Lawrence Berkeley, Princeton Plasma Physics, SLAC, and Thomas
Jefferson.

111

Some laboratories prefer EA security assessments over other models. EA uses large
teams which are able to gather all of their necessary data while on-site at the laboratory.
This differs from other assessors who may send the laboratories lengthy data requests
even after the completion of the on-site assessment. However, other laboratories
described EA security assessments during which the team stayed on-site seemingly
longer than necessary, thereby increasing the laboratory’s assessment-related costs. For
example, an EA safeguards and security assessment at Idaho cost the laboratory $1.3
million. This assessment occurred after the Y-12 security incident, and was one of many
all-intensive security reviews at DOE locations. Congress and the Secretary are often theinitiators of the EA security assessments the laboratories deem burdensome.
According to EA, critical security assessments cannot be completed by site officepersonnel because site office personnel do not receive the same level of training. 142 Thus,
the security portion of EA finds that it cannot leverage site office reviews as much asother assessors. EA’s assessments are mostly conducted at NNSA locations and so its
perspective of the site office workforce capabilities is consistent with GAO’s recent
findings on NNSA workforce needs. 143
The Commission did learn of informal avenues for preventing duplicative
assessments within the Department. In one case, IG invited an EA assessor to a preassessment briefing. Subsequent conversations revealed that EA recently completed anassessment of the same topic area, and the potential IG assessment was ruled
unnecessary. Prevention of duplicative assessments through informal processes like thisexample is infrequent and further coordination among DOE assessor can be increased.
d. Processes for Planning Separate Assessments
Of the non-DOE assessors, two organizations are presented here with theirprocesses for conducting assessments at the DOE laboratories, DNFSB, and GAO.
1) DNFSBDNFSB is “an independent federal agency within the executive branch of
government, answerable to the President and subject to Congressional oversight anddirection … [and] the only independent oversight entity involved in nuclear safety for
DOE’s defense nuclear complex.” 144 The board of five presidentially-appointed members
142

According to EA interview, June 2015.

143

GAO, NNSA: Actions Needed to Clarify Use of Contractor Assurance Systems for Oversight andPerformance Evaluation.

144

DNFSB, Background on Defense Nuclear Facilities Safety Board Oversight Processes, and 42 U.S.C
Section 2286(a).

112

is independent from DOE and NNSA. The board conducts focused assessments of only
the DOE laboratories with defense nuclear facilities (See Chapter 3 for a more detailed
discussion of DNFSB).
The DNFSB has a very public process for how they conduct oversight including aprioritization determination that has a list of the main risk factors. 145 “Four types ofsafety oversight are underway at all times: evaluation of DOE’s organizational policies
and processes (i.e., DOE’s safety framework); evaluation of actual hazardous
operations/activities and facilities in the field; expert-level reviews of safety implicationsof DOE’s actions, decisions, and analyses; identification of new safety issues otherwise
unknown in the DOE complex.” 146 The board carries out oversight tasks based on DOE
Manual 140.1-1 Interface with the Defense Nuclear Facilities Safety Board. The DNFSB
does not develop any regulations of its own. As its primary role, the DNFSB reviews how
DOE implements DOE-developed regulations.
“In a typical year, the Board’s staff will average ten review team trips per month(total) split up among the numerous sites included in the defense nuclear complex.” The
Board’s staff also makes sure that its field representatives rotate from facility to facility,
and all of the staff in headquarters have some experience in the field. They see thisrotational program as critical to training all staff personnel. As described in therequirements chapter, the Board has decreased the number of recommendations to DOE
over the past 20 years. This is an indication that as performance has improved at thefacilities, the Board has suggested fewer changes.
There is confusion between DNFSB “recommendations” and suggestions orobservations. DNFSB facility representatives produce weekly public-facing facility
updates (1 page each), and these facility updates can be misconstrued as formal
recommendations from the Board. The laboratories do not want to be out of compliancewith DNFSB recommendations, and so these suggestions are followed, which contributes
to over-conservatism at DOE and the laboratories.
Both DNFSB and EA conduct more assessments at the NNSA laboratories than theother laboratories due to the laboratories’ higher risk profile and focus of theorganizations’ reviews. Because of this, both organizations see leveraging site officereviews as not possible due to the incomplete training of the NNSA site office workforce.

145

Ibid.

146

Ibid.

113

2) Government Accountability Office (GAO)GAO examines whether taxpayer dollars are being put to the best use across theFederal Government. GAO conducts assessments on behalf of Congress in order “to help
improve the performance and ensure accountability of the Federal Government for the
benefit of the American people,” and 95 percent of GAO’s work is the result of a requestor mandate from Congress. 147 According to GAO interviewees, the large number ofrequests from Congress enables and forces GAO to prioritize topics based on need andrisk. GAO organizes its auditing teams by topic; for example, the group that audits the
NNSA laboratories does all assessments in the natural resources and environment
domain. At times, GAO teams will draw from expertise outside of the organization andassign stakeholders to teams.
In addition to duplication of assessments by other assessors, interviewees cited thelong length of time to complete an assessment as the primary issue with GAO
assessments. On average, GAO assessments remain “open” for an average of 1 year,
which means GAO can request additional data from the laboratory, and the current stateat the laboratories may not be reflected in the final recommendations and findings. 148 An
independent international peer review of GAO from 2013 indicates that the organization
has piloted new systems to monitor scope creep and excessive time for assessments.149
GAO created these new tools in response to suggestions to “ensure oversight ofsignificant changes to audit scope” and “enhance monitoring of time variances on
audits.” 150 Still unknown is the success of these measures, but the institution of thesetools are an indication of GAO trying to fix these issues.
e. Leveraging External Assessments to Prevent Duplication
These external assessors (both within DOE and non-DOE) have risk-based
processes as described, but there still exists some confusion as to how much they
leverage each other’s work. The Commission found examples, especially in response to147

For more information, visit the GAO website at http://www.gao.gov/about/index.html.

148

Three laboratories provided data about the average length of GAO assessments, which was about 1
year (Idaho, Lawrence Livermore, and Oak Ridge). Other interviews provided similar anecdotes.

149

Every 3 years, an independent organization conducts a peer review of GAO. For the calendar year of
2013, the Office of the Auditor General of Norway conducted the peer review and found that thesystem of quality control was providing adequate assurance. The peer review team also monitoredsuggestions from the 2011 peer review, including for GAO to “ensure oversight of significant changes
to audit scope” and “enhance monitoring of time variances on audits.” Auditor General of Norway,
International Peer Review of the Performance and Financial Audit Practices of the United States
Government Accountability Office (2014).

150

Office of the Auditor General of Norway, Report of the International Peer Review Team on GAO’s
Performance and Financial Audit Practices (2011).

114

large incidents, where many assessors each conducted their own independent review.
These duplicative assessments seem to have decreased over time based on laboratory
anecdotes, but they still occur, resulting increased cost at the laboratories. Further
coordination would be beneficial, especially within the Department.
Each one of these external assessors, GAO, IG, DNFSB, and EA, mentioned thedifference in performance of oversight between NNSA and the rest of the program
offices. Their impressions from conducting assessments at the laboratories are SC is thehighest performer, then the applied programs, and then NNSA.
3.

Purpose of Assessments

Assessments are conducted for oversight, quality assurance, and to improve
management. They are a necessary part of responsible stewardship and management. The
reasons to conduct assessments include (performer in parenthesis):4.

•

Mitigate risk (all assessors)•

Effectively and efficiently manage (M&O contractor/
laboratory management)•

Provide assurance to M&O contractor and to DOE (laboratory)•

As regulator or overseer, ensure quality and verify compliance of requirements(External entities [DOE, GAO, IG, etc.])

Issues with Assessments

For all the potential benefit of assessments, every auditing group should not assess
all management systems and every aspect of the laboratory. In order to illustrate theissues that can occur from assessments, personnel from the laboratories and site offices
cited issues related to assessments and provided examples of onerous assessments.
Duplicative audits can occur due to overlapping requirements and insufficient
coordination of external assessors. Auditors’ legal authority may overlap resulting inconflicting interpretations or the creation of multiple reporting mechanisms. Table 23
shows an example prepared by Idaho concerning the drivers for the contractor assurance
system, quality assurance, integrated safety management system (ISMS), and entity
assessment. All four programs require assessments for similar areas.

115

Table 23. Examples of Overlapping Requirements Resulting in Duplicative Assessments
ProgramDriverAreas of Programmatic
Overlap

Assessment
Requirement
Requiresindependent
verification.
Implemented
through Peer
Review every 2
years, plus DOE
oversight

Contractor
Assurance
SystemDOE Order 226.1B
Implementation of DOE
Oversight Policy

Performance Improvement
Tools
Assessments
Issues Management
Event Investigation
Performance Monitoring
Lessons Learned

Quality
Assurance

DOE Order 414.1D Quality
Assurance

Integrated
SafetyManagement
System (ISMS)

Idaho Contract DE-AC0705ID14517, Clause I.22
Department of Energy
Acquisition Regulation(DEAR) 970.5223-1,
Integration of Environment,
Safety, and Health into
Work Planning andExecution
DOE P 450.4A
Federal Managers’
Financial Integrity Act(FMFIA) reporting
requirements—A-123
Circular Management’s
Responsibility for Internal
Control

Performance Improvement
Triannual
Tools
Assessments
Issues Management
Performance Monitoring
Roles and Responsibilities(R2A2s)Performance Improvement
AnnualTools
Assessments
Lessons Learned
Checking and Corrective Action
Effective implementation ofManagement Systems (e.g.,work control, ES&H, QA, CAS,LP, etc.)

EntityAssessment

Assessment of Effectiveness of Annual
Internal Controls• Safeguards and Security• Risk Monitoring• ES&H• Business Controls• Management
Effectiveness• R2A2s• Strategic Planning &Capability Development• Issues Management

Source: Analysis completed by personnel from Idaho National Laboratory, June 2015.

Some assessors take up to a year or more to complete an assessment. The value ofthe information collected during an on-site inspection decreases with the increase in time
before the report’s release to the laboratory. By the time the assessment report ispublished, the laboratory may have already addressed the problems raised.
Additionally, while assessments are “open” the laboratory must be available to theseassessors for any follow-up data requests. The longer the assessment is “open,” the more116

resources are devoted to data requests. The average length of both GAO and IG
assessments is one year. 151
Some assessors come to the laboratory with undefined scope and unspecified levelof effort prior to beginning the assessment. This makes it difficult for the laboratories todetermine the appropriate number of resources or personnel to allocate to a specificassessment. When the scope and level of burden on the laboratory are undefined orchanging, the laboratory may devote resources to preparing for an assessment only for
those efforts to be wasted when the scope changes. Similarly, without an estimate forlevel of effort, the laboratory cannot plan for allocation of resources. As mentioned
previously in this chapter, one Safeguards and Security inspection at Idaho in 2014 by
EA cost the laboratory $1.3 million. Additionally, the Idaho Safeguards and Security
program (developed through CAS) had previously identified all of the findings by theinspection team. 152
Some laboratories complained about some assessors lacking the appropriate
expertise, especially in technical domains. This requires laboratory staff to expend
resources and time to teach the assessors how to assess the laboratory processes. Some
contractors hired by Departmental auditors to assess the laboratories are not familiar with
DOE requirements or processes.
External assessors, as described earlier in this chapter, describe their own “riskbased” processes for assessments, but these risk-based processes do not seem to extend to
determining the value of independent assessments by that organization. Put in anotherway, the assessments conducted by other organizations are not formally introduced into
these processes, which should impact the risk of a certain area. Similarly, the mostburdensome assessments that duplicate the efforts of both the site office and thelaboratory are often created or determined as needed by external assessors without arigorous look at what has recently been assessed at the laboratory. One recent example is
Sandia’s Strategic Partnerships Projects program (SPP). In the course of one year at the151

Information supplied by three National Laboratories. The other National Laboratories did not provide
average length of GAO and IG assessments.

152

This inspection caused many issues. Idaho was told the assessment would only last 3 weeks and it
ended up being conducted from January 16–April 17, 2014. The data call prior to the assessment
included 15,000 pages of data that were required to be sent hard copy to EA (HSS at the time).
However, the EA team did not sufficiently digest the documents and asked for them to be reproduced
when they arrived on-site. After all of the inspection details (42 limited scope performance tests
engaging 4-100 staff, 2 full scale force on force exercises, 350 staff performance tests, 273 physicalsystem component tests, 150 briefings, meetings, and interviews, and 23 tours), the EA team gave thelaboratory 2 hours to review the 200 pages of findings. The laboratory had self-identified all of theresultant findings. In all, these efforts cost the laboratory $1.3M, which excludes the expenses of the
EA inspection team (estimated by the laboratory to be over 6000 hours).

117

laboratory, GAO conducted an assessment of SPP; IG had an SPP audit, a cooperative
research and development agreement audit (which includes SPP agreements), and theannual consolidated financial statement (which also includes SPP disclosure), and createda SPP task force; and NNSA’s Office of Field and Financial Management (OFFM)
conducted a biannual pricing review (which includes SPP). 153 None of the auditors
reported any serious deficiencies with SPP at Sandia.
The Commission found that, although many of the laboratories had specificexamples of onerous audits or inspections by outside institutions, only four of thelaboratories would cite, when pressed, assessments as being generally burdensome on thelaboratory. The three NNSA laboratories complained about a constant barrage of onerous
assessments, and Oak Ridge has specific issues with IG assessments. The otherlaboratories had varying levels of burden from assessments, but most, including Oak
Ridge, emphasized the importance of their relationship with their site office in helping tomaintain a healthy level of oversight at the laboratory. The negative impacts ofassessments incur cost at the laboratories, and the laboratories should quantify these costs
so that a determination of level of burden can be made.
5.

Number of Assessments across the Laboratory System

The Commission collected data from all 17 laboratories on assessments.154 Figure 20
shows the number of external (DOE local, DOE off-site, and separate) assessments
conducted at each laboratory for FY 2014; this includes the assessments from every
performer in Table 19 except for the laboratory, its M&O contractor, and DOE program
offices. The laboratories in Figure 20 are organized from left to right by increasing size ofoperating budget. The exception to this is the Savannah River Site, which includes SavannahRiver National Laboratory, and has an annual budget of about $2.5 billion. 155 Since
Savannah River National Laboratory is part of the whole site’s contract, many assessments
are conducted on-site that include the National Laboratory, but not exclusively so. 156 Thus
the column that is labeled “Savannah River-only” refers to the assessments conducted only at

153

Information provided by Sandia through list of assessments for FY 2014.

154

After review of the data supplied by all 17 laboratories, NETL stood out because its “external
assessments” only include non-DOE sources, and thus, make its number of assessments difficult tocompare to the annual burden at the other laboratories. The discussion in this chapter focuses on theexperiences of the 16 FFRDC laboratories.

155

Savannah River Nuclear Solutions (SRNS) Savannah River Site Facts. (Savannah River, SC: SRNS,
2012).

156

Other National Laboratories are not a subset of a larger site. Instead, they have their own M&O
contract. The exception to this is NETL, which is a GOGO.

118

the Savannah River National Laboratory, and the assessments conducted for the whole sitethat include the National Laboratory are labeled “Savannah River Site.”

Number of External Assessments

350
300
250
200
150
100
50
0

DOE-Local

DOE-Off-Site

Separate

Source: Data supplied by each laboratory through list of assessments for FY 2014.
Notes: Laboratories are organized by increasing size of operating budget from left to right.
“External assessments” include those that were open for at least part of the fiscal year. These values
include assessments that started or ended in other fiscal years as some assessments span fiscal years.
* Savannah River National Laboratory is part of the Savannah River Site contract. Thus, the values
presented for “Savannah River Site” include assessments of the laboratory. The values presented for“Savannah River-only” are a subset of the site assessments that included only the laboratory, not otherparts of the site. Lawrence Livermore’s site office also performs over a 1,000 walkthroughs per year at thelaboratory, which are not reflected in the DOE-local value, as they are meant to be reduced in scope andimpact as compared to full audits or inspections. The number of walkthroughs at other laboratories is
unknown, although this is an oversight tool that other site offices leverage.

Figure 20. Number of External Assessments at the DOE Laboratories (FY 2014),
Operations Only

Brookhaven and Lawrence Livermore are used as case studies to elucidate thedifferences in assessments across the laboratory system. In Figure 20 Brookhaven and
Lawrence Livermore have a larger number of external assessments when compared tolaboratories of a similar size. Although both values are relatively large, these assessments
result in different impact on the laboratory. Brookhaven has a significantly higher number of
local external assessments when compared to similarly sized SC laboratories. Brookhaven119also has a strong working relationship with its site office, and the laboratory personnel, when
asked, do not find these local external assessments burdensome.
Lawrence Livermore, on the other hand, has the largest number of external assessments
by its site office, and presented many examples where assessments incurred costs notcommensurate to value or risk. According to Lawrence Livermore personnel, the laboratory’s
large number of external assessments has resulted in a large burden on the laboratory. About
200 of these assessments are conducted by their site office. Although both Brookhaven and
Lawrence Livermore seem to have burdensome external assessments based on number,
actual and perceived burden are vastly different at the two laboratories and are at least
partially based on the quality of the relationship with each site office.
In Figure 21, the number of assessments by the IG, EA, GAO and DNFSB are
displayed. As size of the laboratory increases, so do the number of external assessments, with
the NNSA laboratories being the main subject of these assessments. All the laboratories
smaller than Brookhaven had a total of nine assessments, which is less than the number of IG
assessments conducted at Brookhaven (12) in FY 2014. Consistent with their focused scope,
DNFSB and EA conducted most of their assessments at NNSA laboratories. While there are
relatively few assessments by these organizations as compared to site offices, according tolaboratory staff, these assessments can be the most burdensome. Site offices can help
coordinate these; for example, Princeton Site Office conducts joint assessments with IG and
EA. In addition, DNFSB has conducted a joint assessment with both the Sandia site officeand EA.

120

35
30
25
20
15
10
5
0

DOE IGDOE EAGAO

DNFSBFigure 21. Number of Assessments by the DOE IG, DOE EA, GAO, and DNFSB (FY 2014)

A more complete picture can be seen when the internal data are paired with theexternal (Figure 22). The laboratories are once again organized from left to right byincreasing operating budget.

121

800
700
600
500
400
300
200
100
0

Internal

DOE-Local

DOE-Off-Site

Separate

Source: Data supplied by each laboratory, 2015.
Note: These are assessments that were considered open for at least part of the fiscal year. These values
include assessments that started or ended in other fiscal years as some assessments span fiscal years.
* The total number of assessments conducted by Pacific Northwest in FY 2014 is about 7400. This value
includes independent assessments, internal management assessments, management activity
observations, project reviews, and about 6000 space-based assessments (more rigorous than a cursory
walkthrough). These all are considered the same level as “assessments” as the other laboratories. The
692 internal assessments included in this figure exclude the space-based assessments and the projectreviews.
** Savannah River National Laboratory is part of the Savannah River Site contract. Thus, the values
presented for “Savannah River Site” include assessments of the laboratory. The values presented for“Savannah River-only” are a subset of the site assessments that included only the laboratory, not otherparts of the site.

Figure 22. Number of External and Internal Assessments at the DOE Laboratories(FY 2014)

Adding internal assessments to the earlier comparison between Brookhaven and
Lawrence Livermore, Brookhaven had 185 internal and 71 external assessments in FY
2014, and Lawrence Livermore had 172 internal and 324 external. Brookhaven has arelatively large number of external assessments, but the laboratory also has a large
number of internal assessments. Brookhaven’s culture of internal auditing differs from122

others in that they extensively track and trend their processes. This is one reason that theirinternal assessments value is larger than other laboratories. Conversely, the number ofexternal assessments at Lawrence Livermore is almost double the number of internal
assessments. This comparison (as well as looking at the same comparisons for otherlaboratories) suggests that healthier oversight environments may have greater internal
assessments when compared to the number of external assessments. When taken together,
the relative value of external to internal assessments provides some information about theadded burden of external assessments. A greater ratio of internal to external can indicate
a greater trust and reliance on laboratory data and systems.
The risk profiles of Lawrence Livermore and Brookhaven are very different; one
could expect the NNSA laboratory to naturally have a higher number of external
assessments. The oversight environment in NNSA is more prescriptive and the auditors
are less willing to rely on contractor assessments. 157 Sandia has 606 internal and 120
external assessments, and Los Alamos has 495 internal to 116 external assessments.
These ratios of internal to external are much greater than Lawrence Livermore and may
suggest that the large number of external assessments at Lawrence Livermore is not only
due to the generally higher risk profile of NNSA laboratories. Sandia’s and Los Alamos’s
self-assessments may be leveraged more than Lawrence Livermore’s self-assessments,
and interviews would also suggest that this is the case. All 3 NNSA laboratories havehigh internal and external assessments. This may be partially attributed to them being
bigger laboratories with higher risk profiles.
These high numbers are also likely due to the large number of requirements at
NNSA laboratories. Lawrence Livermore estimates that 40 percent of its internal
assessments are required, about 44 percent of Los Alamos’s internal assessments (204 of
460 noted as required or not required) are required, and about half of Sandia’s internal
assessments (287 of 564 noted internal assessments) are to “comply withrequirements.” 158 As mentioned in the chapter on contract requirements, NNSA has many
more numerous and prescriptive requirements than other program offices. This increases
the number of assessments as requirements can detail when assessments take place at thelaboratory. If requirements are reformed, unnecessary or duplicative assessments may
decrease at the NNSA laboratories.

157

Based on interviews, site visits, and discussion in Chapter 4 on CAS, site offices, and support centers.

158

Lawrence Livermore estimation from supplied data, Los Alamos value calculated from supplied data—
460 of the 495 assessments were marked as either required or not required, and Sandia calculated fromsupplied data. Those from Sandia noted as having a purpose of “comply with requirements” are counted inthis number. Other purposes for internal assessments in the data set include Assess Risk Control, Improve
Performance, Request by Customer, and Validate Contractor Assurance.

123

The data presented in this section along with the interviews conducted across thelaboratory system suggest that the issues of broken trust and burdensome oversightenvironment within the NNSA may manifest themselves in increased number ofassessments at the laboratories. The burden at other laboratories has been reduced by the
relationship between the laboratory and its site office and by involvement from thelaboratory and Federal personnel in implementation of CAS. Whereas prior reports havefound that most laboratories experience a great amount of burden due to assessments, thisCommission, which is conducting its research a few years after the institution of CAS
across the laboratory system, has found that the NNSA laboratories experience the largest
burden from assessments.
6.

Number of Assessments at other Federal Laboratories

To determine how the DOE National Laboratories compare to other laboratories, theCommission asked The Aerospace Corporation, Draper Laboratory, The Johns Hopkins
University Applied Physics Laboratory, NASA’s Jet Propulsion Laboratory, and MIT
Lincoln Laboratory for the number of external assessments (non-technical/operationsrelated) that the laboratory receives each year. The response to this data request is foundin Table 24. In general, the non-DOE laboratories seem to have fewer assessments thanthe DOE laboratories, particularly when compared by operating budget.
Table 24. How Assessments at Other Laboratories compare to DOE Laboratories
Laboratory
Non-DOE
Laboratories

DOE National
Laboratories

Draper Laboratory
The Aerospace Corporation
The Johns Hopkins University Applied
Physics Laboratory (APL)
NASA’s Jet Propulsion Laboratory(JPL)
MIT Lincoln Laboratory
Ames
Princeton Plasma Physics
Brookhaven
Idaho
SandiaBudget($M)

External Assessments(FY2014)

491
890
510

12
3
15

1,670

23

952*
36
81
770
1,300
2,500

72
12
27
69
37
120

Source: Values provided by each laboratory to the Commission, June 2015.
* From NAPA Positioning DOE’s Laboratories for the Future: A Review of DOE’s Management andOversight of the National Laboratories (Washington, DC: NAPA, January 2013).

NAPA found that the main difference between DOE laboratories and other nonDOE FFRDCs subject to “audits and operational reviews by external entities” are the“separate site office inspections, audits, or operational reviews [that] compound these124

operational reviews” at the DOE laboratories. 159 The reviews at non-DOE FFRDCs
appeared to the Academy researchers as “less extensive and intrusive relative to the audit
and oversight assessment environment facing many of the DOE laboratories, e.g., theLawrence Livermore environment described [in the paper].” 160
7.

Level of Effort Associated with Assessments

While the data and interviews suggest that the most burdensome assessments occur
at the NNSA laboratories, the magnitude of that burden is hard to evaluate from past
anecdotes without a figure for the level of effort involved for each assessment. The
Commission attempted to quantify how different the burden is between these laboratories.
However, it became clear that very few laboratories track assessments by number ofhours expended by personnel. Due to lack of data, the Commission was only able toreview examples from three laboratories—NETL, Lawrence Livermore, and Idaho.
NETL developed an Audit Coordination & Tracking System (ACTS) in 2011, which
includes the number of hours and associated level of effort of NETL assessments for the
past four years. This system has allowed the laboratory to track the most burdensome
assessments. For example, for its four IG audits in FY 2014 NETL expended about 1200
personnel hours. Lawrence Livermore provided the Commission with an estimatedamount of effort for their internal assessments, which was $32 million and about 345,000
hours in one year. The laboratory has started to track level of effort for its external
assessments. Idaho, as part of its development and implementation of CAS and as part ofthe ongoing healthy working relationship between the laboratory and the Idaho
Operations Office, expressed during the site visit that the two organizations plan to start
to track level of effort of assessments.
The Working Group to Study Modifications to Laboratory M&O Contract forSingle-Program Laboratories (“Evolutionary Working Group”) was created to findsolutions to issues at the laboratories that could be implemented through pilot contract
modifications of a single-program laboratory’s M&O contract. As part of its efforts, theEvolutionary Working Group collected external assessment data from the ten SC
laboratories and also attempted to determine the level of burden on the laboratories. 161
The Evolutionary Working Group was unable to obtain level of burden from the159

NAPA’s Positioning DOE’s Laboratories for the Future benchmarked the 16 DOE FFRDCs to MIT
Lincoln Labs, JPL, Frederick National Laboratory for Cancer Research (FNLCR), Center for
Advanced Aviation System Development, National Defense Research Institute, and National Radio
Astronomy Observatory.

160

Ibid.

161

DOE Office of Science, Working Group to Study Modifications to Laboratory M&O Contracts forSingle-Program Laboratories.

125

laboratories as “the data provided by the laboratories on DOE HQ Assessments areincomplete; they do not track these accurately.” 162 The Evolutionary Working Groupfocused on reducing the burden of external assessments and has recommended thatexternal organizations within the Department annually “provide an assessment
cost/benefit analysis report,” including site offices submitting an annual list ofassessments. 163
The recommendation from the working group applies to organizations within the
Department (since this was in the group’s purview), but this recommendation excludes
the laboratory’s resources expended on internal assessments, and all non-DOE external
assessments of which there are many. Conclusions about the amount of burden producedby assessments across the system will not be fully measured until all laboratories tracklevel of effort of both internal and external assessment. A complete estimate of burden
for all assessments at the laboratories would go far in determining whether examples of
egregious assessments significantly outweigh other appropriately managed assessments
and in differentiating nuanced definitions for assessments, audits, and inspections acrossthe laboratory system.

B. Data Requests
Data requests, or calls for information, arrive at the laboratories from many sources,and generally no central point of contact exists to field these calls. From interviews, data
requests can be redundant, repeated, and unnecessary, have short turn-around times, andgenerally take much of laboratory personnel’s time in order to respond appropriately. 164
Many of these requests do not include any indication of how the data will be used, whichcauses staff to follow-up with the original requestor many times.
Currently, extensive tracking of data requests does not occur at the laboratories.
Lawrence Livermore, which only recently has started formally tracking large data requests,
received over 155 data requests in one year. Informal calls and quick turnarounds during
the year were not formally tracked. Additionally, requestors may call up or email anyone
within the organization, and these calls for information are hard to track.
A few years ago SC began filtering data calls to the 10 SC laboratories through the
Deputy Director for Field Operations in order to establish a single point of contact for the
SC laboratories. Both SC and its laboratories see this process as being very valuable; the

162

Ibid.

163

Ibid.

164

One of the more egregious requestors asked laboratory staff to send the emails of all 17 DOE
laboratory directors.

126

Deputy Director screens the requests and will direct the requestor to the correct point ofcontact at each laboratory. Vague requests can lead to multiple clarifying conversations
or repeated data collections until the call has been appropriately answered. The Deputy
Director has been vigilant in making sure that data calls do not go to the laboratories
before being vetted through his office, but unfiltered data calls, especially from within the
Department, still manage to arrive at the laboratories.
In improving the oversight environment for the laboratories, authors of the NAPA
report Positioning DOE’s Laboratories for the Future recommended that all site offices
should act as coordinators or “gate-keepers” of the laboratories. 165 For the authors of the
NAPA study, this role “should also apply to data calls generated by headquarters programand staff offices.” 166 However, the problem with the site offices being the gate-keepers
for data calls generated from the department is that many of the data calls are sent to allof the laboratories and could be answered by one call, rather than 5 or 17.
The Commission has received agreement from interviewees from headquarters, site
offices, and laboratories that data requests have remained a serious problem. The current
administration has been looking at opportunities to improve this problem, and thisCommission believes that lessons can be learned from having a single point of contact for
all laboratory data requests.

C. Findings and Recommendations
Based on its work, the Commission found the following:•

Assessments are not a crippling issue at the majority of the laboratories. But the
NNSA laboratories report that they receive very burdensome assessments
potentially due to over-reliance on transactional-based oversight and a large
number of requirements.

•

The contractor assurance system (CAS), when implemented well, adds highvalue to the laboratories and effective implementation has been shown to reduceoversight, including assessments.

•

Most of the laboratories do not track the amount of effort associated withassessments. Conclusions about the amount of burden of assessments across thelaboratory system cannot be fully measured until laboratories track level of effort.

•

SC has successfully reduced the amount of unfiltered data requests at thelaboratories through a single data request point of contact. This filtering process

165

NAPA, Positioning DOE’s Laboratories for the Future.

166

Ibid.

127

does not occur at other laboratories, and burdensome data requests still arrive at
all laboratories.
Based on these findings, the Commission makes the following recommendations
with respect to assessments and data requests:•

DOE and its program offices should support continued implementation of CAS
principles across the laboratory system. This will involve the following
improvements for assessments:–

Laboratories: Make internal assessment processes and management systems
fully transparent to site office representatives–

Site offices: Coordinate off-site and external groups and advocate for thelaboratory in cases of duplicative audits–

Site offices: As part of CAS, create risk-based processes for determining
independent reviews. Where appropriate, leverage shadowing and joint
assessments of contractor-led assessments based on risk.

–

External assessors: Leverage information from site offices and laboratories
before conducting work on-site to reduce duplicative assessments andamount of burden on the laboratories.

•

DOE should move forward with the Evolutionary Working Group
recommendation for DOE organizations that conduct assessments at thelaboratories to provide an annual cost/benefit analysis of assessments for
all laboratories.

•

Laboratories should consider tracking the laboratory level of effort of allassessments to showcase their efforts as well as more effectively highlighting
burden of external assessments.

Recommendation 12: All stakeholders should make maximum use of local
assessments (performed by site offices and laboratories), with appropriate
verification, to reduce duplicative assessments and burden on the laboratories.
Recommendation 13: DOE should establish a single point of control—within the
Department or each stewarding program office—for all laboratory-directed
data requests.

128

6.

Flexible Budgeting

A. Prior Studies
An additional manifestation of an eroded FFRDC model is the decreasing size ofbudget categories and tighter controls placed on laboratory budgets. Numerous studies
spanning two decades, but particularly those in more recent years, have exposed the“budget atomization” problem confronting the laboratories. Budget atomization in thiscontext refers to (1) ever smaller “buckets” of funding and tighter controls on movementof funds between buckets; or (2) greater rigidity within each bucket to address higher
priorities or contingencies in laboratory operations.
While the Galvin report does not refer to budget atomization directly, its references
to DOE’s institutional fragmentation and treatment of laboratories as “a set of projects”
appear prescient with respect to partial causes of the budget atomization problem. DOE’s
internal structure, when combined with the micromanagement that has becomecharacteristic of an eroded FFRDC model, has resulted in further parsing of program
funds and tighter controls at the project or task level. Additionally, the Galvin reportrightly underscores the distinction between the short-term “job shop” approach relevant
to most commercial sector research endeavors as opposed to long-term, multidisciplinary scientific activities appropriate to a National Laboratory. 167
More recently, the 2013 National Academies report, Managing for High-Quality
Science and Engineering at the NNSA National Security Laboratories, and the 2014
Augustine/Mies panel report underscore the negative effect of budget atomization on
NNSA laboratory operations. The National Academies report highlighted that historicallythe overall weapons program at each laboratory in principle had sufficient flexibility touse some of its budget to fund a robust research program, in support of the weapons
mission. However, “the weapons program budget is subdivided into so many categories
with so many restrictions that this important flexibility is effectively lost.” 168 The loss offlexibility has reduced the amount of core program research and was deemed to havenegative implications for recruiting key talent to the laboratories. A corollary in the SC
domain has one laboratory director stating that he did not have sufficient flexibility in his

167

SEAB, Alternative Futures for the Department of Energy National Laboratories.

168

NRC, Managing for High Quality of Science and Engineering at the NNSA National Security
Laboratories (Washington, DC: National Academies Press, 2013).

129

budget to recruit a principal investigator that he deemed essential to achieving thescientific objectives of the laboratory. 169
The 2013 NAPA report also offered an extensive overview of budget atomization.
While recognizing that Congress and Federal contract administrators need visibility bothto effectively manage programs and ensure accountability, the “budgetary controls thathave led to the creation of thousands of ‘funding buckets’ significantly reduce thelaboratories’ flexibility, creates excessive administrative costs and burdensome reporting
requirements, and impedes mission accomplishment.” 170
While both the National Academies and the Augustine/Mies panel called on
Congress to “reduce the number of restrictive budget reporting categories,” theAugustine/Mies panel report also recommended that the Congress, Secretary, andDirector 171 “adopt a simplified budget and accounting structure (by reducing budget
control lines) that aligns resources to achieve efficient mission execution.” Additionally,
the Director should reduce the internal budget control lines to the “minimum number
needed to assign funding for major programs and mission-support activities across thesites.” 172 The NAPA study did not focus on congressional controls, but rather
recommended that DOE work on improving “its funds distribution system…not only thetechnical operation of the system, but how program offices’ fund allocation processes canbe modified to minimize the number of ‘funding buckets’.” 173
Although the Senate Energy and Water Appropriations Committee staff recently
spearheaded an attempt to reduce the number of control lines in the weapons program,
this initial effort did not yield results. Congressional movement on this issue has been
hindered by the question of the extent to which congressional control over taxpayer
money hinders the agency’s ability to actually meet the taxpayer’s expectations regarding
the return on investment. With respect to the NAPA report’s recommendation, theCommission found no evidence of a DOE-wide effort to address how program offices
might modify their fund allocation processes to address this problem. Furthermore, thebudget atomization problem is not uniform across program offices and any DOE-wide
effort will have to take into account the huge variance among program offices’ funding

169

Commission visit to Fermi, November 18, 2014.

170

NAPA, Positioning DOE’s Laboratories for the Future, 26–27.

171

The “Director” reference in this recommendation is the Director of the newly formed Office of Nuclear
Security; the Panel called for establishment of this Office and granting of new authorities for a Director
who would serve at least 6-year terms. See Augustine/Mies panel, A New Foundation for the Nuclear
Security Enterprise, xiii.

172

Ibid.

173

NAPA, Positioning DOE’s Laboratories for the Future, 28.

130allocation approaches. Lastly, previous DOE efforts to address this issue failed due to its
complexity and the sheer magnitude of operational and cultural changes required.
Whereas these previous studies identified the problem of micromanagement andemphasized its negative effect on operations at the laboratories, they did not reveal any
systemic causes or offer specific solutions.

B. Budget Process and Causes of Atomization
The Commission pursued a rigorous examination of this issue to identify causes anddetermine potential solutions. The Commission investigated the various roles played by
the Office of Management and Budget (OMB), Congress, and DOE headquarters in thebudgeting process and gathered extensive data from several program offices andlaboratories.
Each of the players in the budget process performs a role in allocation,
apportionment, and fielding of money through various program offices to thelaboratories, but the effects of atomization are not uniform across OMB examiners or
across the congressional committees that oversee DOE funding. For example, while thestockpile stewardship budget remains tightly controlled and heavily segmented by
Congress, the SC budget is comparatively unconstrained. Conversely, OMB applies aquarterly apportionment process to the SC funds, but not with respect to the weaponsbudget. Further, whereas what OMB submits to Congress in the President’s Budget
appears not to have significant implications for atomization, the combined impact ofcongressionally imposed “obligational control levels”—Congress’s
requirements
regarding controls under a Continuing Resolution (CR) —and OMB’s interpretation ofcongressional language regarding apportionment affect compliance-related activities atthe laboratory level and DOE management and laboratory flexibility. A separate, but
related, issue is that DOE’s program offices internally manage and allocate funds inwidely different ways, which creates additional complexity in determining causes anddelineating potential fixes to the atomization problem.
An overarching problem for laboratory effectiveness is the breakdown of the budget
process itself. The Budget Control Act combined with truncated timelines and uncertainty
over actual annual funding—all while operating under a CR—severely inhibits flexibility
at the laboratory level. The process is exacerbated by congressional language dictating
allocations at the program, project, or activity (PPA) level during a CR. In addition,
OMB’s quarterly apportionment for some of DOE’s major programs further constrains
the laboratories’ flexibility and creates additional transactional costs in mission
execution.
The appropriations committee establishes so-called Congressional Obligation
Control Levels (OCLs) as legal limits on appropriations funding for OMB and the131respective agencies. Within any given OCL, there is some flexibility at the level of a total
dollar amount or a percentage of the total funding line, whichever is lower. For example,
the ceiling for movement of funds for NNSA is $5 million or less than 10 percent of thefunding amount, whichever is lower, which allows for some movement of funding
between OCLs without congressional approval. However, NNSA reported that whenrequesting the movement of funds that exceeds the statutorily defined thresholds between
OCLs, the timeline for the necessary congressional approvals is between 3 and 6 months.
DOE’s general practice is to request such approvals “in bulk” so as to minimize thenumber of transactions required to move funds where needed to achieve mission
objectives. The Commission found no evidence that movement of funds between OCLs
creates an issue for non-weapons DOE program areas.
The recent reliance on continuing resolutions to fund the U.S. Government and achange in law has exacerbated the budget atomization issue. DOE used to be able tocontrol funds at the Obligational Control Level (OCL) when operating under a continuing
resolution. However, Section 301(c) in the FY 2012 appropriations bill, which wasreinstated as Section 301(d) in FY 2014 and FY 2015, changed the legal level of control
to the program, project, and activity (PPA) level. 174 In one example cited by DOE
personnel, this change expanded the number of control categories from 30 to over 300.
This, in combination with other Office of Management and Budget (OMB)
apportionment requirements—including quarterly apportionment for SC and otherprogram areas—creates constant turmoil and delay in getting money to the laboratories.
The sites, in turn, have increasingly limited flexibility to achieve a sometimes wide-ranging
and multi-year mandate in their research efforts on a small dollar increment within thelimited timeframes of any single CR. 175 Repealing Section 301(d) would allow thelaboratories to manage more effectively, while still complying with all new start andother legal restrictions when operating under a continuing resolution.
Table 25 shows the obligations for five appropriations as examples of how thesebuckets proliferate as funding moves out to the field—from congressional PPAs to
individual program offices to individual laboratories. The first four columns show the174

Section 301(d) reads “Except as provided in subsections (e), (f), and (g), the amounts made available
by this title shall be expended as authorized by law for the programs, projects, and activities specified
in the ‘Final Bill’ column in the ‘Department of Energy’ table included under the heading ‘Title III—Department of Energy’ in the explanatory statement described in section 4 (in the matter preceding
division A of this consolidated Act).”

175

OMB has three categories for its apportionment to agencies: Category A, split funding by time period(e.g., quarterly funding); Category B, split (or prohibit) funding by project (e.g., no funds for Small
Modular Reactors), and; Category C, make funding unavailable this year, pushing it to future years(e.g., NNSA Pension funds). Each of these categories is further explained in Appendix I.

132number of buckets for FY 2014 funding only. The last shows how many buckets each
office manages when all years of funding are considered.
Table 25. Number and Source of Control Points for Laboratory Budgets
Legal Control

Program Office

FY 2014 Appropriations Only

Weapons
DefensePrograms
All other
Defense, EM
SC
EERE
OE

All Years

Appropriation(year & periodof availability)

Program
Project Activity(PPA)

9 Digit Budget
and Reporting(B&R) Codes

Place

Place

1
1

70
44

321
161

1,278
566

2,369
979

1
2
3
3
2

26
33
26
18
7

160
119
253
84
14

712
609
1054
553
80

1390
1,292
2,120
1,253
211

Source: DOE Office of the Chief Financial Officer.
Note: The table does not include the Obligational Control Level (OCL).

1.

Headquarters—Program Offices

Under each PPA listed in Table 25, the program offices further subdivide funding
and then manage the work to be done, determine where it is to be done, and track themilestones that correspond to the funding being expended. The nine-digit Budget andReporting (B&R) codes represent each program office’s breakdown of funds for separate
projects at different sites. Although headquarters approval for movement between B&R
codes is not required, laboratory requests for such changes must be submitted toheadquarters for their verification that such actions do not violate any Congressional
controls. The actual implementation of any requested changes is performed at
headquarters within DOE’s accounting systems.
DOE’s institutional fragmentation, with its attendant lack of uniformity acrossmajor program offices, is one facet of the atomization problem. The controls andprocesses for the increasingly smaller funding buckets vary widely among program
offices. Similarly, each program office has different requirements regarding the platform
for the financial accounting and reporting from the laboratories. Lastly, how the Work
Breakdown Structure (WBS) associated with each B&R code is handled by different
program offices creates either greater flexibility or even more onerous controls,
depending on how each project is segmented into tasks and what reporting or other133requirements are associated with the achievement of milestones within each task. 176 For
example, several laboratories noted that SC does a fairly good job of embedding someflexibility within their WBS; conversely, DOE’s Office of Energy Efficiency and
Renewable Energy (EERE) was mentioned as having the tightest controls on its funding
and a more restrictive WBS, thereby requiring more compliance-related transactions
within each B&R code.
The controls imposed, or desired, by project managers in various programs is one
significant cause of the budget atomization problem, and a serious obstacle to resolving
it. Project managers too often wish to control their funding in small increments, withfrequent, tactical milestones embedded within the WBS, in order to exercise “strong
management.” As was expressed in the Galvin report and reiterated by recent reports,
most prominently the NAPA 2013 study, the laboratories are not treated as a coherent
whole, but rather as a conglomeration of projects. The budget atomization issue issymptomatic of stove-piped micromanagement at DOE headquarters. Not only is there alack of uniformity across program areas within DOE, but there appears to be anincreasing trend of “projectization” across the various program areas within each silo thatis expressed in B&R codes and potentially further exacerbated by the WBSs. The extent
of this problem also varies widely across the program offices. As a result, from a site
level perspective, strategic “thrusts” at the laboratories frequently require patching
together funding from different program offices, sometimes in combination with LDRD
seed investments, to build a robust, coherent research thrust within the laboratory.
2.

Site-Level Complexity

At the site level, congressional controls and institutional fragmentation combine tocreate a patchwork of legal controls, program office requirements, and non-uniform
compliance-related transactions to track and report the use of funds within each B&R
code. The difficulty presented by atomization differs widely by laboratory; indeed, staff
at some laboratories claimed that they did not see this as an issue. That said, the more
DOE Program Offices that provide the laboratory funding, the more complex theaccounting and reporting environment. The size and diversity of the laboratories’
Strategic Partnership Projects (SPP) portfolio further complicate this picture. For
example, one of the multi-program SC laboratories maintains six separate reporting
platforms to fulfill the requirements of its DOE headquarters program offices. Different
OCLs combine across program offices for any of the “multi-sponsor” laboratories; the176

The work breakdown structure further segments each B&R code into manageable sections, potentiallywith compliance-related milestones associated with each task, for the work to be executed by the
project team. It is at the discretion of each project manager within DOE to determine what level ofdetail or reporting requirement may pertain to any particular task and its associated funding bucket.

134same holds true for B&R codes and corresponding WBSs created by each program office
to manage and track funding. In addition, SPPs constitute an additional OCL and B&R
code for each individual project.
The full complexity of the atomization problem goes beyond the OCL and B&R
code level and is depicted by Figure 23and Figure 24. The top three parts of the pyramidin these figures (appropriations, congressional controls, and B&Rs) are all built into the
DOE accounting system and are part of DOE’s funds distribution process. The contractor
cannot get paid unless the government obligates and pays money into the B&R funding
buckets, thus the transactional requirement for the movement of funds between B&R
codes. The next layer of the pyramid is at the project office level and reflects thesegmentation set forth by the WBS for each project. This level of the pyramid is outsideof DOE’s accounting system and not directly part of DOE’s funds distribution process,but it illustrates how each B&R code (and funding bucket) is further segmented by the
WBS at the project level. Whereas the two bottom layers of the pyramid reside outside of
DOE’s accounting system, the laboratory’s corresponding IT system must align with andaccount for not only the B&R code fragmentation, but also the tasks and milestone“controls” embedded within the WBS corresponding to each B&R code. The final layer
in the pyramid illustrates the contractor’s detailed translation of these various control
points for its own operational compliance and accounting purposes.

Figure 23. One NNSA Contractor Controls Example

135Figure 24. Office of Science Laboratory Controls Example

3.

Comparisons with Other FFRDCs

The Commission’s benchmarking efforts were revealing, particularly with respect to
the National Aeronautics and Space Administration (NASA) as another science andtechnology agency with the Jet Propulsion Laboratory (JPL) as its core FFRDC. When
the Commission requested a somewhat analogous outline for NASA’s appropriations andthe “budget atomization” for its laboratories and service centers, NASA headquarters
provided Figure 25, a snapshot of obligations for all of NASA’s appropriations.

136

Source: NASA, Office of the Chief Financial Officer.

Figure 25. NASA Full Cost Model

Similar to DOE, Congress does establish numerous legal controls, which is the firstpoint of subdividing the appropriations into funding buckets. 177 Also, any movement offunds among missions, themes, and project reporting attributes (PRAs) requires
congressional notification and (in practice) approval. NASA’s financial management isdone in “full cost,” where labor, travel, and procurement are all funded within the same
6-digit project code. NASA’s Chief Financial Officer (CFO) has authority to move funds
among missions and themes; the Mission Directorate and program offices allocate funds
among programs, PRAs, projects, and centers; and center CFOs allocate funds among fullcost elements within their center project allocation.
The apparent similarity between DOE and NASA with respect to congressional
controls is striking. However, officials at JPL offered three fundamentally different
aspects of how NASA makes budget allocation decisions and fields funding to JPL. First,
JPL works closely with NASA headquarters to formulate their operational plans;adjustments to these plans are done in collaboration with headquarters.

177

All of NASA’s funds have 2 years of availability, except the Construction & Environmental
Compliance and Restoration (CECR), which has 6 years.

137

Second, and most important, funding is provided to JPL at the program level and not
broken into smaller projects. As a result, the funding for the International Space Station(ISS) program was provided to JPL as a single budget line item of about $250 million
each year. JPL management was responsible for managing those funds to achieve theoverall program goals, including hardware procurement, software development, mission
planning and analysis, and so on. Within the DOE structure, one could think of theweapons life extension programs as being of similar scale, but those funds are allocatedto the labs in very much smaller increments.
Finally, in addition to joint planning for implementation of NASA’s major research,
NASA headquarters retains a percentage of funding from each allocation to addresscontingencies that arise. JPL officials suggested that there is rarely a need to move funds
between PRAs. Instead, program managers at headquarters can address any acuteshortfalls through the contingency funding they retain at the outset. This provides
evidence of trust between HQ and the Lab.
a. NNSA and NASA Program-Level Comparison
The differences between NNSA and NASA funds distribution processes become moreevident at the program level. While the agency-level view underscores many similarities, acomparison of two large, complex programs at these respective agencies reveals starkdifferences between NASA and NNSA. Figure 26 and Figure 27 depict the various levels oflegal and managerial controls on NASA’s funding for the International Space Station (ISS)
Program and NNSA’s funding for the B61 Life Extension Program (LEP).
As previously mentioned, NASA headquarters has the authority to hold backfunding for “unallocated future expenses” (i.e., reserves) in its development programs. In
practice, however, headquarters generally distributes funding to the field centers as soon
as there are contracts or grants to which funds can be obligated. In the case of the ISS
Program depicted above, NASA headquarters generally fully distributes the funding inaccordance with a plan developed by the ISS Program Office at Johnson Space Center.
NASA headquarters ensures that the plan conforms to Congressional control levels, butotherwise accepts the Program Office’s plan. If changes are requested by the Program
Office in the execution year, headquarters will adjust the funds so long as the change
does not violate any Congressional controls. Should the Program Office’s plannecessitate movement of funds between Congressional Controls, NASA headquarters
generally will propose an operating plan change to the Appropriations Committees.

138Source: NASA, Office of the Chief Financial Officer.

Figure 26. NASA International Space Station (ISS) Program Full Cost Model

On major projects and in accordance with the proposed operational plan, NASA
gives full authority to the implementing project manager within an agreed upon overallbudget, and conducts regular reviews to assess progress versus expenditure. In addition,
the project at the Center gives full visibility and transparency in its expenditures andtechnical progress through regular communications between the project manager at theCenter, and the corresponding executive at NASA headquarters. Rather than reliance on
restrictive budgetary controls, these communications are anchored on trust between theparties with routine “verification” of progress.

139

Figure 27. NNSA B61 Program Control ModelAt the appropriations, Congressional controls, and B&R or PPA levels, theseagencies would appear to have similar constraints and processes in the fielding of funds
for program execution. The same legal controls exist contingent on appropriationscommittee actions, and each agency’s headquarters further subdivides the congressional
allocations prior to fielding. However, the similarities disappear below the program officelevel. As illustrated in Figure 27, for the B-61 LEP there is a single Congressionallyimposed control and only four NNSA-imposed B&R codes. However, at the next level ofproject office controls, these four B&R codes proliferate into just under 650 separate
funding increments. Such fragmentation does not occur at NASA because of a trust-based
allocation of funding and because full discretion for major projects is given to therelevant project manager. NASA’s “reporting” process takes the form of routine
measures of verification based on transparency between project managers, Centers andNASA headquarters. The equivalent does not hold true in the alignment and control offunds for the B61 LEP.
At the same time, the B61 pyramid presents a false picture with respect to how
Congressional controls impact the actual execution of the B61 LEP. As both an R&D andproduction effort, any LEP relies on the capabilities and unique assets at various sites for
successful execution. As the Augustine/Mies panel found, the LEP budget is heavily

140

segmented by Congress and not aligned to a single program manager to ensure priorities
can be addressed in a timely and efficient fashion. 178

C. Summary Remarks
The causes of budget atomization are diffuse and its effects vary greatly across theenterprise. The atomization issue generally hinders laboratories’ flexibility to pursue theirresearch missions and engenders unnecessary transactional costs for headquarters as wellas the laboratories. But the constraints created by smaller funding buckets and tighter
controls are by no means identical or even similar across the enterprise. Staff at somelaboratories even suggested that budget atomization is not an issue for them at all.
Additionally, as pinpointed in the Galvin report, some aspects of the atomization
problem result from how the laboratories operate in a radically changed environment.
This was particularly evident for the larger, multi-purpose laboratories.
The congressional language that creates legal controls at the PPA level under a CR
has a hugely negative impact on headquarters’ fielding of funding to the laboratories,
while also undermining the laboratories’ effectiveness in making decisions aboutpriorities. Still, no simple fix will address all the effects of budget atomization,
particularly those that result from a broken budget process or institutional fragmentation.
A key issue for the weapons program is alignment of resources across eight sites
and the flexibility to address contingencies in the production schedule as they arise. Thistranslates into frustrations over the congressional OCLs when there is a serious budgetary
shortfall. With over 80 OCLs applicable to the weapons program, the means to address
any major contingency will hinge on a 3- to 6-month process to garner congressional
approval for the movement of funds. No other program within DOE’s broad mission area
is comparable to the complexity of the weapons program, particularly the Life Extension
Programs, as it pertains to resource alignment and mission execution. 179
EERE was repeatedly mentioned during interviews and laboratory visits as having
the most tightly controlled funding increments. At the laboratories surveyed specificallyon this problem, the suggestion was that these controls were the result of inflexible
WBSs. In 2014, EERE leadership established a policy for its program managers to assign
fewer, larger projects to the laboratories. 180 The guidance was to double the size andhalve the number of funding buckets. In addition, the new EERE policy decreased the178

Augustine/Mies panel, A New Foundation for the Nuclear Security Enterprise, 44, 57.

179

Ibid.

180

The policy changes are reflected in DOE Energy Efficiency and Renewable Energy (EERE), EERE –National Laboratory Guiding Principles (Washington, DC: DOE, March 9, 2015).

141number of milestones to one per quarter. These milestones are to be well-defined,
quantitative and rigorous. Accountability is still key in that every 12 to 18 months, theoffice makes a go/no-go decision on a project based on the work accomplished to date.
The Commission fully supports these efforts.
The budget atomization problem at the laboratory level depends on which DOE
program office sponsors the laboratory, whether it is a single-program or multi-programlaboratory, the nature of the work conducted at the laboratory (basic or applied), and thesize of the laboratory’s SPP portfolio.

D. Findings and Recommendations
Because budget atomization is a systemic problem with varying impacts across the
program areas within DOE, the Commission concluded that budget atomization canlargely be addressed by Department-wide focus on and adherence to a few principles in
its funds allocation process.
Recommendation 14: To reduce the number of funding buckets and minimize theaccompanying transactional burden, DOE and its program offices should adopt andadhere to the following principles:• Increase the size of funding increments through consolidation of B&R codes at
the highest level possible within each program area.

• Extend timelines and minimize milestones for each increment of funding. Work
breakdown structures must be formulated to focus on strategic goals rather thantactical milestones and reporting requirements.

• Within legal limits, institutionalize mechanisms for laboratory flexibility via

notification, rather than formal approval, to move money between B&R codes oncross-cutting R&D objectives or closely interrelated research areas among DOE
program offices.

The Commission recognizes that this effort will extend beyond the current
Secretary’s tenure. Therefore, we encourage the current DOE leadership to
institutionalize these principles and processes to ensure continuity and comprehensive
implementation.
Recommendation 15: Congress should repeal Section 301(d) of the FY 2015
Consolidated Appropriations Act as soon as feasible to remedy the transactionalburden it creates for OMB, DOE Headquarters, and the laboratories when
operating under a continuing resolution.
The Commission also endorses the Augustine/Mies panel’s recommendation that
calls for the Congress, Secretary, and NNSA Administrator to “adopt a simplified budget142

and accounting structure” through reduction of OCLs and to “better align resources” forefficient mission execution. In addition, the NNSA Administrator should reduce theinternal budget control lines to the “minimum number needed to assign funding for major
programs and mission-support activities across the sites.” 181

181

Augustine/Mies panel, A New Foundation for the Nuclear Security Enterprise.

143

7.

Alignment and Quality of the Laboratories

As the steward of the 17 National Laboratories, DOE is responsible for aligningwork with mission priorities, ensuring the quality of the research and research programs,
monitoring for duplication, and providing sufficient resources to allow the laboratories to
execute the Department’s missions.

A. DOE and Laboratory Strategic Planning
One of the Department’s most critical roles as a steward is to provide strategic
direction to the laboratory system. Strategic review, planning, and implementation are
essential for alignment among the laboratories, the laboratories’ sponsors, and theDepartment’s priorities, but few processes exist that provide this type of strategic
direction to the laboratory system as a whole. There are new initiatives, such as the
Crosscuts and Science and Energy Plan that serve this function in part. While these
activities are creating strategic links across Departmental programs and between
programs and laboratories, they have either been focused on a single, albeit broad, topic(in the case of the Crosscuts) or have focused on pieces of the mission (in the case of the
Science and Energy Plan which excludes the nuclear and environmental management
missions).
The Commission strongly believes that strategic planning for both the Department
and the laboratories is best accomplished jointly, with DOE, the DOE program offices
and the laboratories working together. The level of laboratory involvement in DOE
strategic planning varies by office. For example, the SC laboratories are involved in SC’s
Laboratory Strategic Planning process, described in more detail subsequently, but they
may be absent from broader discussions involving SC’s overall direction, priorities, andfunding levels. In contrast, the Office of Nuclear Energy (NE) recently updated its R&D
roadmap through a process that involved the deputies and representatives from all the
National Laboratories. Idaho National Laboratory was responsible for collecting this
input, which NE used to make its final decisions on the R&D strategic plan.
The consensus among current laboratory management is that Secretary of Energy
Moniz is committed to and taking steps to increase laboratory involvement in DOE’s
strategic planning. The Commission concurs with this assessment and notes, for example,
the Big Ideas Summits, which involve the laboratories in discussions of ways in which
their capabilities could help solve grand challenges. Secretary Moniz has also been astrong supporter of the National Laboratory Directors’ Council during his tenure, which145

has improved communication between the laboratories and DOE’s senior management.
In addition, the Department has initiated system-wide strategic planning throughprogrammatic Crosscuts. One key to the success of the crosscut initiative is the treatmentof laboratories as partners in the strategic planning exercise. As experts in their fields,
laboratory scientists and engineers have much to contribute to determining the most
likely course of scientific and technological developments. The Commission believes thatthe Department urgently needs to institutionalize laboratory involvement in DOE
strategic thinking in order to ensure a consistent and productive relationship between thelaboratories and DOE management that is not subject to fluctuation as a result of changes
in DOE’s leadership.

B. Processes to Ensure Alignment of Research and Research Programs
SC has established effective formal processes to ensure proper alignment between
the research being done at its laboratories, its research programs and the Department’s
missions and strategic priorities. These processes are used to both encourage anddiscourage the development of new technical capabilities. Alignment is assessed during
the annual review process, which involves both the Laboratory Strategic Planning process
and the Performance Evaluation and Measurement Plan (PEMP). 182 During theLaboratory Strategic Planning process, SC asks the laboratory leadership to define along-range vision for their respective laboratories. This information provides a starting
point for discussion about each laboratory’s future directions, immediate and long-range
challenges, and resource needs. DOE and the laboratory leadership settle on new research
directions and the expected development or sustainment of capabilities. In addition,
program external advisory committees provide advice on establishing research andfacilities priorities; determining proper program balance among disciplines; andidentifying opportunities for inter-laboratory collaboration, program integration, andindustrial participation.
An excellent example of this is the recent report spearheaded by SC’s Office ofHigh Energy Physics. In 2014 the Particle Physics Project Prioritization Panel (P-5), a
subpanel of the High Energy Physics Advisory Panel (HEPAP), which jointly advises
NSF, published a 10-year strategic plan for high energy physics in the United States. 183
The panel included leading experts in the field not only from the DOE laboratories, butalso from universities and other laboratories in both the U.S. and abroad. This P-5 report
showcases a unified, community-led effort to communicate realistic priorities to SC. It

182

The PEMP is described in more detail in section C.1 of this chapter.

183

Particle Physics Project Prioritization Panel (P-5), Building for Discovery: Strategic Plan for U.S.
Particle Physics in the Global Context (Washington, DC: DOE, 2014).

146was the product of a year-long community-wide study and recommends a prioritized andtime-ordered list of facility upgrades and research projects that address five scientificdrivers. The SC program directors are in the process of implementing the report’s
recommendations by phasing out certain projects and initiating funding for others.
NNSA’s planning processes are unavoidably more complex because there are few
technically competent reviewers outside the weapons complex capable of contributing
effectively to the strategic planning process. Each program office in NNSA reviews its
strategic plans with the laboratories. For example, Defense Programs (NA-10)
coordinates the Stockpile Stewardship and Management Plan, a congressionallymandated 25-year program and capabilities-focused document that is a collaborative
effort involving all the sites and stakeholders. 184 Semiannually, the Defense Nuclear
Non-Proliferation Office (NA-20) uses an Assistant Laboratory Director “science
council” with all the laboratories to discuss strategic direction and core capabilities thatare critical to the NA-20 mission. However, since these reviews are program based andnot integrated, the effectiveness at providing overall strategic direction to the three
weapons laboratories remains unclear. NNSA has also recently instituted a processsimilar to the PEMP, but the NNSA process has focused more on operations than on
strategic direction over the past several years.
According to interviewees, other offices rely on informal processes that can beeffective for ensuring proper alignment between the laboratories and DOE. For example,
some kind of continuous dialogue between the laboratory and DOE headquarters can be
an effective alignment and planning mechanism, beyond what formal processes canaccomplish. This underscores the importance of staff rotations between the laboratories
and the program offices in DOE headquarters, an idea discussed elsewhere in this report.
The effectiveness of informal processes may depend on the involvement of a relatively
small number of participants. The NNSA Office of Counterterrorism andCounterproliferation (NA-80), for example, includes a small community of researchersand DOE staff, and its small size allows for frequent dialogue to control alignment andstrategic direction.
An essential cultural difference also exists between SC and many of DOE’s otherprogram offices. That is the principle of stewardship for the laboratories that exists within
SC. The basic orientation of SC leadership in its planning processes is one of
responsibility to ensure the long-term health and scientific excellence of each of its
laboratories. That principle is not consistently embraced to the same degree in the other184

The Stockpile Stewardship and Management Plan’s (SSMP) validity as an executable plan remains an
issue of debate between the DOD customer and NNSA. See Augustine/Mies panel, A New Foundation
for the Nuclear Security Enterprise.

147

program offices. In some cases, it depends completely upon the orientation of thepolitical leadership of the program office at the time, and has varied from indifference toa solid commitment

C. Processes to Ensure High-Quality Research and Research
Programs
SC has relatively mature processes in place for assessing the quality of the research
being done by the ten laboratories under its stewardship. The office also has numerous
processes to assess the quality of the research portfolio in each of its programs. The
processes in place at the other DOE program offices are not as mature.
1.

Office of Science Annual Review Process: Performance Evaluation andMeasurement Plan (PEMP)

SC conducts an annual evaluation of the scientific, technical, managerial, andoperational performance of its ten laboratories. This process is coordinated by SC’s
Office of Laboratory Policy185 on behalf of SC’s Director. These evaluations provide thebasis for determining annual performance fees and the possibility of winning additional
years on the contract through an “Award Term” extension. They also serve to inform
DOE decisions regarding whether to extend or to recompete the M&O contracts when
they expire.
The current laboratory appraisal process started in 2006 and was designed to
improve the transparency, increase the involvement of SC leadership, standardize
laboratory evaluation, and more effectively incentivize contractor performance by tying
performance to fee earned, contract length, and publicly released grades.
The SC laboratory appraisal process uses a common structure and scoring system
across all laboratories. It is structured around eight performance goals, each of which iscomprised of several objectives. The eight performance goals and objectives are given in
Table 26.

185

Note that SEAB has recently suggested this name be changed to the Office of Lab Policy
Implementation, as it does not formulate policy.

148

Table 26. Eight Performance Goals and Objectives Used in the PEMP
Performance Goals
1. Mission Accomplishment (Delivery of S&T)

2. Design, Construction and Operation of
Research Facilities

•
•
•
•
•
•

3. Science and Technology Project/Program
Management•••

4. Leadership and Stewardship of theLaboratory••

5. Integrated Environment, Safety and HealthProtection
6. Business Systems

•
•
•
•
•
•
•

7. Facilities Maintenance and Infrastructure••

8. Security and Emergency Management

•
•
•

149

Objectives
Impact (significance)
Leadership (recognition of S&T
accomplishments)
Design of Facility
Construction of Facility/Fabrication ofComponents
Operation of Facility (e.g., availability,
reliability, and efficiency of facility)
Utilization of Facility to Grow and Support
Laboratory’s Research Base and External
User Community
Strategic Planning, Stewardship ofScientific Capabilities and Programmatic
VisionS&T Project/Program/Facilities
Management
Communications and Responsiveness to
DOE Headquarters
Leadership and Stewardship of theLaboratory
Management and Operation of theLaboratory
Contractor Value-Added
Worker Safety and Health Program
Environmental Management System
Financial Management System(s)Acquisition and Property Management
SystemHuman Resource Management Systemand Diversity Program
Internal Audit, Information Management,
Assurance, and Other Administrative
Systems
Manage Facilities and Infrastructure (F&I)
in a Manner that Optimizes Usage andMinimizes Life Cycle Costs
Plan for and acquire the F&I required tosupport future laboratory programs
Emergency Management System
Cyber-Security and Protection of Classified
and Unclassified Information
System for the Physical Security andProtection of Special Nuclear Materials,
Classified Matter, and Property

Within each objective, the SC program offices and site offices can further identify
a small number of notable outcomes that illustrate important features of thelaboratory’s performance. The performance goals, objectives, and notable outcomesare documented at the beginning of each year in the PEMP, which is appended to thelaboratory’s M&O contract.
At the conclusion of each fiscal year, the organizations that fund work at thatlaboratory evaluate its S&T performance (Goals 1–3 in Table 26). In addition to the SC
science programs, SC solicits input from all organizations that spend more than $1
million at the laboratory. This input is weighted according to the dollars spent. Each Site
Office evaluates the laboratory’s performance against the M&O objectives (Goals 5–8).
Site Offices and the SC program offices provide input regarding the contractor’s
performance with respect to Goal 4 to SC’s leadership to determine the laboratory’s scorein this area. In determining these grades, the SC program offices and the Site Officeconsider the laboratory’s performance against the notable outcomes, defined in the
PEMP, as well as other sources of performance information that become available
throughout the year. These sources might include independent scientific program andproject reviews; external operational reviews conducted by GAO, DOE OIG, and otherparts of DOE; and the results of SC’s own oversight activities. The evaluation processconcludes with meetings for all the performance goals, during which the variousorganizations involved report their proposed scores and work to ensure a consistent andfair approach across all ten SC laboratories.
The PEMP process uses a five-point grading system. The grade for each of theperformance goals is based on a weighted computation of the scores of the individual
performance objectives identified for each Goal. SC uses the resulting performance goal
grades to create annual “report cards” for each laboratory that are publicly available on
the SC website.
Other significant assessment activities also occur within the SC program offices.
These reviews include division-led laboratory management reviews that provide strategic
vision for the research programs, including discussion of topics for current and proposed
white papers and related LDRD activities. They not only cover the status of each project,
but also include relevant programmatic activities such as recruitment, infrastructure,equipment, and instrumentation. SC also carries out a triennial science/operational review
of its user facilities, which is an essential part of the performance assessment of thesefacilities. Each review takes 2 to 3 days to complete, involves numerous subject matter
experts, and considers the following key performance metrics:•

The number of unique users served;•

Facility operational hours and reliability;•

Number of peer reviewed publications;
150

2.

•

User satisfaction and staff morale;•

Environmental and health/safety factors;•

Effectiveness of Advisory Committees; and•Strategic planning for the future.

Office of Science External Review Processes

Each of the programs within SC has established Advisory Committees to provide
independent advice to SC’s Director regarding the scientific and technical issues thatarise in the planning, management, and implementation of the programs. These
recommendations include advice on establishing research and facilities priorities;
determining proper program balance among disciplines; and identifying opportunities forinter-laboratory collaboration, program integration, academic collaboration and industrial
participation. The Advisory Committees include representatives of universities, researchlaboratories, and industries involved in energy-related scientific research. Membership ofthese committees is also increasingly including international participants. Particularattention is paid to obtaining a diverse membership with a balance of disciplines,
interests, experiences, points of view, and geography.
The SC Director also charges the Advisory Committees to assemble Committees ofVisitors (COVs) “to assess the efficacy and quality of the processes used to solicit,
review, recommend, monitor, and document funding actions and to assess the quality of
the resulting portfolio.” 186 The national and international standing of the research is partof the evaluation. Every program must be reviewed by a COV at least once every three
years. Each panel is made-up of scientists and research managers recognized to havesignificant expertise in the appropriate field. Although panel members are familiar with
DOE research programs, a significant fraction of the COV members do not receive DOE
funding. The COV prepares a report that is reviewed by the Advisory Committee, which
may make modifications prior to acceptance. Following acceptance, the report istransmitted to the SC Director and released publicly. The Associate SC Director in chargeof the program element under review must provide a response within 30 days of theacceptance of the report.
Another type of external review process used by the SC program offices is theComparative Research Review. These reviews provide independent comparativeevaluations of supported research activities as a means to ensuring the quality and impactof the science supported by SC. For example, in SC’s Office of Nuclear Physics (NP) a
186

DOE, Office of Science website, “Committees of Visitors,” last modified March 18, 2013,
http://science.energy.gov/sc-2/committees-of-visitors/.

151Comparative Review is held of all the research grants across the entire NP portfolio toassess the relative and absolute competitiveness of the grants within each NP subfield(Low Energy Nuclear Physics, Medium Energy Nuclear Physics, Heavy Ions, andNuclear Theory). These reviews provide a critical assessment of all grants, resulting in
the identification of those efforts to be phased out so that funding can be re-competed.
The Comparative Review carried out by NP in FY 2013 resulted in approximately 25
percent of the least competitive grants being closed out. Not only did the review provide
important input to NP regarding the quality and balance of its research portfolio, but it
also helped establish a strategic vision for U.S. nuclear science developed in partnershipwith the broader research community.
3.

Competitive Funding of Office of Science ProgramsPeer review and competitive funding are essential for ensuring high-quality scienceand technology research. SC makes extensive use of peer review to maintain the highquality of the research it funds. Its review methods, which closely resemble the welldeveloped methods of NSF and NIH, take one of three forms: mail reviews, panel
reviews, and site visits. Mail reviews are generally used for open solicitations in which
proposals arrive throughout the year. Reviewers are usually given 6 weeks to review the
proposal and return the review. Panel reviews are created for targeted solicitations whenmany proposals arrive simultaneously. Multiple panels of 10–15 people each convene in
Washington, DC, to evaluate the proposals and submit reviews. For a large solicitation,
the total number of panelists at any given time can total in the hundreds. Site visits arecoordinated for large group programs, such as EFRCs or large facility competitions.
Researchers make presentations to the site visit team who then may interact with and ask
questions of the investigators. The site visit team members then submit independent
reviews to DOE.
The SC budget supports research (~39 percent in FY 2014); facility operations (~37
percent in FY 2014); construction (~14 percent in FY 2014) and other (~9 percent in FY2014), which supports Federal staff, Small Business Innovation Research (SBIR) and Small
Business Technology Transfer (STTR) programs, and a few small other activities. These
percentages have remained constant to within about 1 percent over the past decade.187
The percentage of SC’s overall budget given to the laboratories, universities andindustry for FY 2009 to FY 2014 is presented in Table 27.

187

Private Communication from P. Dehmer, July 7, 2015.

152

Table 27. Office of Science, FY 2009–FY 2014 Laboratory versus Universities versus
Industry Funding
FY 2009*

FY 2010

FY 2011

FY 2012FY 2013

FY 2014SC Labs

72.5%

71.7%

73.9%

73.9%

74.1%

72.9%

Universities

16%

16.4%

14.8%

14.7%

14.8%

15.8%

Industry

1.8%

1.9%

2.1%

5.5%

5.4%

5.6%

Other

9.7%

9.9%

9.2%

5.9%

5.7%

5.7%

* FY 2009 does not include Recovery Act funding.

The research portion of SC’s budget supports single investigators, small and large
groups, and center activities (e.g., Energy Frontier Research Centers, Bioenergy ResearchCenters, and Energy Innovation Hubs) at both universities and laboratories. These
activities normally are competed at their inception and reviewed at 1- to 3-year intervals
thereafter. Depending on the nature of the activity, the competition may be open tovarious combinations of universities, laboratories, and industry. Examples from two of
the program offices within SC provide important insight into the level of competitive
funding within DOE’s SC.
In FY 2014, SC’s Basic Energy Science (BES) program funded research at morethan 170 academic institutions located in all 50 states and at 15 DOE laboratories.
Research funds were generally competed openly to the community and awarded on thebasis of peer-reviewed quality, without regard to affiliation. Of the FY 2014 BES
research budget, 47 percent was awarded to universities and 53 percent to laboratories.
During that year, university proposal success rates were in the range of 15–20 percent for
new grants and 65–70 percent for renewals. These rates declined from those of prioryears because of the full funding requirement, which was initiated starting in FY 2014,
for grants totaling under $1 million. 188
Likewise, in FY 2014, SC’s High Energy Physics (HEP) program funded researchin about 100 academic institutions located in 38 states and in 9 DOE laboratories. These
research funds were also generally competed openly to the community and awarded on
the basis of scientific merit and impact, as judged by peer-review. Of the FY 2014 HEP
research budget, 32 percent was awarded to universities, and 68 percent to thelaboratories. University proposal success rates were approximately 20 percent for new
grants and 80 percent for renewals. Again, these rates were lower than those of prioryears because of the requirement to fully fund new grants totaling less than $1 million.
188

Ibid.

153

Renewals and new grants are competed together according to the same review andselection criteria. For DOE laboratory projects, proposals for new efforts are peerreviewed and existing research efforts undergo triennial comparative peer-reviews among
the participating HEP laboratories. Low-performing efforts at the DOE laboratories are
restructured or redirected. 189
4.

Assessment Processes at Other DOE Program Offices

Those interviewed by the Commission generally agree that SC’s processes forassessing the quality of both the research conducted by their ten laboratories and of theresearch portfolio in each SC program are far more mature than those in the other DOE
program offices. For this reason, it is often suggested that the other DOE program offices
adopt these processes. Some factors, however, necessarily limit the applicability of SC’s
processes to other programs. For example, because the research at the NNSA laboratories
is often classified, there are far fewer investigators with the requisite technicalcapabilities and so there is inherently less competition. The classified nature of the work
also affects NNSA’s use of Advisory Panels and Committees of Visitors. Nonetheless,the SC processes have influenced other DOE program offices. For example, NE has
adopted a PEMP-like process modeled after SC, but with greater emphasis on safety.
Also, NNSA is working with SC to establish project assessment processes similar to
those in SC’s Office of Project Assessment. The Commission also notes that an ongoing
National Academies study is reviewing peer review and design competition at NNSA’s
three national security laboratories (Los Alamos, Lawrence Livermore, and Sandia). 190
5.

Conference Attendance

In 2012, partly as a result of the 2010 GSA conference scandal, OMB released amemorandum that, among other things, outlined new policies and practices to reduce
spending in areas such as travel and conference attendance. 191 Subsequently, the DOE
Deputy Secretary released guidance on the implementation of the new OMB
requirements. 192 At every laboratory visited, the Commission was told that the resulting
conference management rules and their implementation have discouraged scientists andengineers from attending technical conferences, thereby hindering the laboratory’s ability
189

Ibid.

190

Further information can be found at
http://www8.nationalacademies.org/cp/projectview.aspx?key=49632.

191

J. D. Zients, Promoting Efficient Spending to Support Agency Operations [Memorandum](Washington, DC: OMB, 2012).

192

D. B. Poneman, Promoting Efficient Spending to Support Agency Operations [Memorandum](Washington, DC: DOE, 2012).

154

to maintain contact with researchers at the leading edge. A lengthier approval process forconference attendance had led many laboratory scientists to choose not to submit and/or
present papers at scientific conferences for fear they would not be able to attend.
According to the National Academy of Sciences, scientific conferences provide a venue
for researchers to collaborate with others in their field and allow access to the latest
research findings, which may not be published in scientific journals in a timely
fashion. 193 The Commission strongly believes that attendance at professional conferences
is essential to maintain the highest quality research at the National Laboratories, and to
attract and retain the highest quality scientific and technical staff. Very recently DOE,
working closely with the laboratories, updated its guidance on conference-related
activities and spending. The new guidance “refines the Department’s conference
management policies and procedures using a risk-based approach.” 194 The changes are
expected to streamline approval processes and reduce transactional oversight of thelaboratories thereby better enabling participation in scientific/technical conferences.
Highlights of the new guidance are as follows:•

According to the new guidance, conferences are divided into two categories:(1) conferences sponsored by DOE and (2) conferences sponsored by external
entities that DOE and the laboratories attend, but have no role in supporting.
Under the new guidance, management focus will be on conferences sponsored
by DOE and the laboratories.

•

The M&O contracts will be modified to hold the laboratories accountable forresponsibly managing and tracking costs for participation in external
conferences without additional transactional oversight.

•

The new guidance promotes greater accountability by having each Under
Secretary whose organization or laboratory is sponsoring a conference withcosts to the Department greater than $100,000 approve the conference.
Currently, all Under Secretaries with staff/contractors attending a given
conference must sign the approval package.

•

Streamlining the data collected for conferences over $100,000. 195

The revised conference policy provides the laboratories with more autonomy inmanaging conferences, but makes them responsible for ensuring that tax payer funds are

193

National Research Council (NRC), Strategic Engagement in Global S&T: Opportunities for Defense
Research (Washington, DC: National Academy of Sciences, 2014).

194

E. Sherwood-Randall, Updated Guidance on Conference-Related Activities and Spending[Memorandum] (Washington, DC: DOE, August 17, 2015).

195

Ibid.

155

used appropriately. The Commission strongly endorses both DOE’s updated guidance
and the laboratories’ involvement in the revision process.

D. Alignment with DOE’s Objectives and Level of Duplication of
Research
1.

Alignment with DOE’s Strategic Priorities

Research funded by the stewarding program office of the laboratory is likely alignedwith the strategic priorities of the office and so will also be aligned with DOE’s strategic
priorities so long as the office itself is aligned with those priorities. 196 The question ofalignment or misalignment usually arises when one considers research funding fromother program offices within the Department, other Federal agencies, or other entities
altogether. As with everything involving the laboratories, the magnitude of this issuevaries when one looks at different laboratories across the laboratory system. For example,
over 97 percent of Fermi’s budget is provided by SC’s Office of High Energy Physics,
which enables a significant amount of control over its research activities by its
stewarding office. On the other hand, only 58 percent of Sandia’s funding originates fromNNSA and only 20 percent of Pacific Northwest’s funding comes from SC, which makes
this process more complicated. The National Laboratories also currently have theauthority to spend up to 6 percent of their funds on LDRD. Depending on the size of thelaboratory budget, this amount can represent a sizable investment in new research areas.
The Commission notes that there are examples of the National Laboratories
changing their research focus in response to changes in DOE strategic priorities, national
needs or a changing research landscape. An excellent, and current, example is Fermi’s
response to the P-5 Report mentioned earlier. As a result of the P-5 Report, Fermi ismoving away from accelerator-based high energy physics (most of which is now being
done at CERN, the European Organization for Nuclear Research) and is focusing muchof its research on neutrino physics using its accelerator complex. Another example is the2013 Office of Nuclear Physics review of research it supports in the fields of heavy ions,
medium energy, nuclear structure and nuclear astrophysics, nuclear theory, andfundamental symmetries. The review provided important input regarding the quality andbalance of its research portfolio and helped establish the strategic vision for U.S. nuclear
science developed in partnership with the broader research community.
Based on its observations, the Commission believes that the National Laboratories’
research programs and capabilities are well-aligned with DOE’s missions and strategic
196

Issues related to program office alignment with DOE strategic priorities are outside the scope of theCommission’s charge.

156

priorities. There are robust processes in some program offices to provide strategic
oversight, evaluation and direction to the laboratories, and there is progress in
implementing such processes in other offices.
2.

Alignment with the Broader Science and Technology Enterprise

DOE is a steward of the important national assets and capabilities that exist at the
National Laboratories. A crucial point is that these assets and capabilities benefit theentire science and technology community. Often when activities at the laboratories areperceived as “misaligned” with DOE strategic priorities, the activities do, in fact, alignwith the needs of this broader community, the strength of which is certainly of strategic
importance to DOE, as well as the Nation.
A historical example involves DOE’s work on the human genome. Los Alamos andother DOE laboratories were integral to the successful completion of the Human Genome
Project. DOE originally announced its Human Genome Initiative in 1986 and was
ultimately joined by the National Institutes of Health (NIH) in a combined project.
Stemming from the laboratory’s expertise in the biological effects of irradiation, Los
Alamos had developed the capacity to isolate, clone, and package chromosomes into
libraries and operated a public gene data bank. The Battelle Technology Partnership
Practice estimated the economic impact of genomic research to be $796 billion, a returnon investment of 141:1. 197 Despite the tremendous social, technological, and economic
impact, DOE’s involvement in the Human Genome Project is often criticized as “mission
drift.” 198 The Commission notes, however, that Los Alamos’s initial work was clearly
mission-related, and that while one might argue that the Human Genome Project shouldhave been initiated by NIH, the fact is that the Nation is currently accruing the benefits ofthis effort in large part because DOE had the foresight and necessary capabilities toaddress this challenge.
Currently, many tens of thousands of scientists utilize the user facilities at the
National Laboratories each year, including thousands funded by the NIH and the National
Science Foundation (NSF). Essentially all DOE user facilities are oversubscribed, a signof their critical importance to the broader research community and an argument for
expanding, rather than contracting, their work in this domain. For example, according to
Argonne, the Center for Nanoscale Materials accommodates roughly 70 percent of197

S. Tripp and M. Grueber, Economic Impact of the Human Genome Project (Battelle Memorial
Institute, 2011).

198

Senate Appropriations, Energy and Water Development Subcommittee, testimony at the July 2014
CRENEL Commission meeting.

157

meritorious user proposals and the Advanced Photon Source accommodates only about
30 percent.
Another example of the National Laboratories supporting a broader range of
missions, beyond their core activities for DOE, involves their work for the Department ofHomeland Security (DHS). DHS has authority equal to DOE’s to request technical andscientific assistance from the National Laboratories in order to address specific DHS
science and technology needs. In creating DHS, Congress intended that the new officeshould take advantage of existing facilities and capabilities, including the DOE National
Laboratories, and saw no need to establish a new system of DHS laboratories. 199 The
laboratories also serve a vital role enabling the Department of Defense, Department ofState, the Intelligence Community, and others to meet their missions. 200
The Commission believes the laboratories need some measure of flexibility to beable to pursue valuable research in service of the broader science and technology
community, but the flexibility must be within reason. The Department, through its
strategic oversight of the laboratories, should provide feedback when activities seem toveer from DOE’s core mission. DOE must take care in its supervision, however, because
relevance to mission often takes time to become apparent. This can be accomplishedthrough an agreed-upon strategic plan that describes the vision for the laboratory and anannual operating plan for how the strategy will be executed. .
3.

Appropriate Levels of Duplication

Competition and therefore a certain amount of duplication are integral to scientificadvancement. Scientific progress is made through exploring many avenues of inquiry at thesame time, and the chance of success increases with the number of people who try different
ideas and strategies. The reality of finite resources must, of course, also be recognized—the
government simply cannot fund every idea in every field. In addition, spreading resources
too thinly across too many researchers is inefficient. A balance must therefore be struck
between allowing creativity and innovation to blossom and appropriately managing
resources to maximize productivity. Resources should allow the maximum number ofparticipants and different ideas to thrive during the genesis of a new field or technology. But

199

In addition to the equal access provision in the Homeland Security Act of 2002 regarding DOE
laboratories, the act also authorized the Secretary of Homeland Security, acting through the Under
Secretary for Science and Technology, to establish one or more federally funded research anddevelopment centers. DHS currently sponsors two of its own FFRDCs: the Homeland Security
Systems Engineering and Development Institute and Homeland Security Studies and Analysis
Institute. More information on the roles performed by these centers is available at
http://www.dhs.gov/science-and-technology/ffrdcs.

200

Support of other Federal agencies is discussed further in Chapter 9.

158once a specific scheme has proved superior to others, resources should be directed there. As
such, DOE should give the laboratories the flexibility to pursue new lines of inquiry using,for example, LDRD, so long as the funds align with mission priorities. Once research has
matured beyond a certain threshold, the Department should then provide expert strategic
oversight and guidance for the laboratories to coordinate and potentially consolidate theirprograms to achieve the most efficient use of resources.
An area in which the question of competition and duplication is more subtle involves
the two nuclear weapons physics design laboratories, Los Alamos and Lawrence Livermore.
The U.S. has relied on design competitions and an inter-laboratory peer review competitive
process to develop and maintain its nuclear deterrent for over 50 years. Los Alamos andLawrence Livermore have participated in vigorous competitions for the design of all nuclear
explosive packages currently in the stockpile. Sandia has been and continues to be
responsible for engineering all parts of the weapons, other than the nuclear explosive
package. In contrast to the current policy which forbids testing of the nuclear explosive
package, Sandia components and systems can be tested experimentally.
Through managed peer competition, the NNSA laboratories invented weapon
concepts that are the basis for all current U.S. warheads; they designed, engineered andtested warheads to meet Cold War requirements; tailored weapons for different military
applications; and developed modern safety features. Now the principle challenge of thethree NNSA laboratories is to maintain confidence in the nation’s smaller nuclear
weapons stockpile, while continuing to improve its safety and security, without nuclear
explosive testing. This is an enormous scientific and technical challenge, and it isessential that the government continue to have the benefit of the judgments from twostrong, independent physics laboratories responsible for the nuclear explosive package,
which use different computational codes and experimental techniques short of nuclear
explosive tests.201
Since the cessation of nuclear weapons explosive testing in the early 1990s, we haverelied on science-based stockpile stewardship (SBSS). SBSS requires a redundancy inapproach that entails a unique mix of competition, collaboration, and duplication, which
has been remarkably successful. It is sometimes argued, however, that since we aredesigning no new nuclear weapons, we no longer need two design laboratories. The basic
premise of this argument is flawed. We are still involved in nuclear weapons science anddesign. In fact, in the weapons modernization program the design is getting more

201

For a more in depth look at this subject the reader is referred to the recently released National
Academies report entitled “Peer Review and Design Competition in the NNSA National Security
Laboratories” which can be found at http://www.nap.edu/catalog/21806/peer-review-and-designcompetition-in-the-nnsa-national-security-laboratories.

159

complicated. Consider, for example the W-80-4. Although the scope of this LEP is not
yet fully defined, this is the first LEP that will put an adaptation of an existing warhead ina new delivery system. There will also be significant new safety and security features
added. In addition, since the start of the Stockpile Stewardship Program, Los Alamos andLawrence Livermore have continued to discover problems not revealed by the earlier
nuclear explosive testing and have occasionally even solved problems that nuclear testing
did not. For example, starting with different hypotheses about the aging behavior ofplutonium, Los Alamos and Lawrence Livermore, after an intense scientific competition,
both eventually came to the conclusion that the plutonium pits in nuclear weapons weremore stable than originally thought, providing greater confidence in the reliability of thepits and the stockpile. As a result, taxpayers were saved the cost of designing andconstructing a multibillion-dollar Modern Pit Facility. Another example involves theinterpretation of past nuclear test data. Historically, Los Alamos and Lawrence
Livermore developed different way of inferring the yield of a weapon from theunderground test data. The two laboratories are now engaged in a process to generate acommon understanding of this issue. This, in turn, has led to an enhanced understandingof the processes that take place within a nuclear weapon. Resolution of the longstanding
energy balance problem, an enduring discrepancy in the nuclear test database, is yet
another example of the nuclear weapons science ongoing at these laboratories.
The rate of age-related changes in the stockpile is likely to increase over the next
decade. We have little experience with weapons significantly older than 30 years, andsuccessive refurbishments of existing warheads will result in a steady departure from theweapon configurations validated by nuclear explosive testing. These issues will poseincreasing risks over the long term. Expert judgment, validated through a comprehensive
assessment process that includes in-depth, competitive peer review underpinned bymultidisciplinary science, will be vital to success. 202
The current Annual Assessment Process, which is a central element to stockpile
stewardship, has included the Independent Nuclear Weapons Assessment Process(INWAP) since 2010. INWAP employs assessment teams from one physics laboratory to
independently develop and refine nuclear performance baselines for weapons types thatare the responsibility of the other physics laboratory. The technical experts on theseteams are uniquely qualified to conduct these assessments because they draw from theonly organizations that have the experimental and computational capabilities necessary to
conduct such technical evaluations as well as the personnel who possess the required
security clearances. The results of these independent annual assessments are reported to
the responsible laboratory Director, who uses them as one element of the overall annual
202

Ibid.

160

assessment process to evaluate the certification basis of the weapons types for which thelaboratory is responsible.
The technical experts on these teams are an essential strength of the process,providing independent technical reviews with the demanding rigor required for thescientific assessment of warhead certification. The Nation’s nuclear stockpile remains
viable because the competencies of each laboratory are strengthened through thiscompetitive process. In fact, in 2007 the JASON recommended expanding interlaboratory peer review to improve the rigor of the current weapons certification process.
According to the JASON, a more comprehensive peer review approach, using stockpile
stewardship tools and nuclear weapons experts at the two physics design laboratories,
will enhance confidence in weapons certification, significant findings analyses, LEPs andreplacement warhead design, if needed.
Because of the core expertise in nuclear materials and properties and uniquescientific facilities, Lawrence Livermore and Los Alamos are also able to support
activities aimed at reducing the threats posed by the proliferation of nuclear weapons andother weapons of mass destruction (WMD). These activities include nuclear forensics anddevelopment of a broad range of radiation, chemical, and biological detectors. Because of
the complementary nature of the technical capabilities at Los Alamos and Lawrence
Livermore, elimination of one physics design laboratory would seriously threaten work toprevent proliferation at its source, detect and reverse proliferation activities, respond to
the threatened or actual use of such weapons, and avoid surprise regarding the WMD
capabilities and intentions of others. 203
Any viable alternative to maintaining two nuclear explosive package designlaboratories must provide the same high level of confidence in the nuclear weapons
stockpile that is currently ensured by the independent peer review process that has been
key to U.S. nuclear weapons R&D since the 1950s. Any proposed alternative must also
retain key personnel and facilities. The Commission strongly believes that such an
independent review process requires the technical capabilities of both Los Alamos andLawrence Livermore and that these capabilities must remain separate and independent.
In-depth, independent expert review can best exist through the inter-laboratory peer
review process. Since nuclear weapons research involves classified information andexplores ranges of temperatures, pressures and other physical regimes not usuallyaccessed by the general scientific community, the cumulative knowledge, expertise, andexperimental capabilities that allow a researcher to become an expert only exist at the

203

Ibid.

161

nuclear weapon physics design laboratories. These capabilities must be maintained fornational security reasons. 204
a. Large User Facilities
Because of the significant resources involved, the Department has developed
processes for prioritizing user facilities 205 and avoiding duplicative facilities. These
processes are often led by external topic-based advisory panels and involve multiple
Federal agencies—for example, the Basic Energy Sciences Advisory Committee(BESAC) 206 and the previously noted HEPAP, 207 which reports to DOE and NSF jointly.
The success of these processes in planning large user facilities may be best
illustrated by recent changes to DOE’s thinking about new light sources. SC significantly
amended its strategy for synchrotron light sources as a result of the BESAC report,
Future X-Ray Light Sources. As a result of this report, SC tasked SLAC to modify its
plans for the Linac Coherent Light Source II (LCLS-II) to integrate new functionality;
Argonne to incorporate diffraction limited storage ring technology into its Advanced
Photon Source Upgrade (APS-U); and terminated Lawrence Berkeley’s proposed Next
Generation Light Source (NGLS). This strategic restructuring of facility upgrades andtermination of a proposed facility has been claimed to have saved between approximately$250 million and $850 million, while simultaneously ensuring the United States remains
at the forefront of light source and storage ring science. 208 It also ensures that the broader
S&T community will have the facilities it needs.
DOE also collects user community input in less formal ways. Throughout theplanning stages for the upgrade to the National Synchrotron Light Source (NSLS) at
Brookhaven National Laboratory, DOE, NIH, and the laboratory hosted scientificworkshops, working groups and advisory panels. Life sciences research constitutes about
40 percent of the users of the NSLS and one-third of these users are funded by NIH. 209
A question sometimes asked is why NSF, NIH, or the National Institute ofStandards and Technology (NIST) is not the steward of the large national scientific user
204

Ibid.

205

See Appendix J for more information on DOE user facilities.

206

For more information, see http://science.energy.gov/bes/besac/. DOE has not requested NSF’s
participation in BESAC, a fact that several interviewees criticized.

207

For more information see http://science.energy.gov/hep/hepap.

208

DOE Office of Science, FY 2015 Budget Request to Congress for DOE’s Office of Science(Washington, DC: DOE, 2014).

209

V. Peña, S. Howieson, and S. Shipp, Federal Partnerships for Facilities, Infrastructure, and Large
Instrumentation. IDA Document D-4937 (Alexandria, VA: Institute for Defense Analyses, 2013).

162

facilities. The Commission notes that DOE is by far the largest funder and the mostexperienced manager of basic research in physical science in the government. 210 As theabove examples illustrate, DOE has developed vehicles whereby the Nation’s scientificcommunity has significant input to the strategic planning that is important when dealing
with facilities as large as these. In essence, the decision to create user facilities is basedon the mission needs of DOE and guided by advice from the scientific community; DOE
then constructs and operates them and NSF and NIH funds much of the research that uses
the facilities. The DOE SC user facilities support important areas of science, and theiroperations are funded and governed in a manner that insures the most competitive
proposals are able to use the facilities so that science is advanced in an optimal way. It istherefore the Commission’s view that DOE understands the need, priorities and market
for these facilities and is the appropriate department to construct and manage them.
b. Research and Development Activities
The processes for R&D activities and those for large user facilities are not entirely
distinct. For example, the P-5 report involved both planning and prioritization exercises foruser facilities and strategic direction for R&D activities. Since large user facilities affect thedirection of R&D activities across many programs, the processes must often be intertwined.
As an example of a new process for coordinating R&D across program areas of the
Department and the laboratory system, Secretary Moniz has organized two Big Ideas
Summits (in 2014 and 2015) with the National Laboratories. The laboratories bring topics
for consideration to become large DOE initiatives. For three of the ideas discussed during
the 2014 event (grid modernization, subsurface science, and the nexus of energy andwater) DOE created Federal program manager “Tech Teams” to explore the creation of
initiatives across the laboratory system. 211
Grid modernization is now a top-down initiative from DOE and is becoming wellcoordinated across the program offices and the laboratories. This area is recognized as
one of the grand challenges that need a broad R&D approach. Originally, several
laboratories performed research related to the electric grid. After grid modernization wasrecognized as an important program at the DOE level, a consortium of ten laboratories

210

NSF, National Center for Science and Engineering Statistics. Science and Engineering Indicators 2014
(Arlington, VA: NSF, 2014), See Figure 4-20 and Appendix Table 4-37.

211

DOE created Tech Teams in advanced computing, clean energy, manufacturing, supercritical carbon
dioxide, subsurface technology and engineering, water energy, and grid modernization. See Basic
Energy Sciences Advisory Committee to the U.S. Department of Energy, Public Meeting Minutes July
29-30, 2014, North Bethesda, MD, 11.

163

was created co-led by NREL and Pacific Northwest. 212 The laboratories collaborate witheach other and cooperate with the private sector electric utility industry, universities andother research organizations, such as the Electric Power Research Institute (EPRI) and
NIST. This consortium approach is intended to demonstrate that organized laboratory
collaboration can be implemented by DOE in addressing grand challenges. One importantquestion in this connection concerns the timing of the move from numerous independent
research projects to a well-coordinated, multi-laboratory effort in partnership with other
Federal agencies and the private sector. The Commission believes that, while important,
the grid modernization program was initiated across the Department later than it shouldhave been, perhaps by as much as a decade. As a result of the Department waiting thislong to act, the laboratories doing work in this area have been competing against one
another for funds, undertaking smaller, less coordinated projects.
This is an example of the laboratories freelancing in early stages of new R&D areas.
The underlying issue is one of trust: the National Laboratories may not fully trust DOE
and therefore maintain secrecy about some of their actions, operating below the radar to
create new programs and compete for turf in new and emerging areas.
c. Appearance of Duplication
The laboratories have scientific and technical facilities and capabilities that may
appear duplicative at a high level but in fact are often complementary and coordinated.
The subsections that follow provide three illustrative examples.
1) Synchrotron Light Sources
DOE is the steward of five synchrotron light sources: the Advanced Light Source(ALS) at Lawrence Berkeley; the Advanced Photon Source (APS) at Argonne; the Linac
Coherent Light Source (LCLS), which is currently undergoing an upgrade to LCLS-II, at
SLAC; the NSLS-II, which is an update from its original NSLS, at Brookhaven; and the
Stanford Synchrotron Radiation Light Source also at SLAC (Figure 28). 213 As a whole,
the light sources serve over 10,000 users across the fields of biology (including medicine
and environmental science), chemistry (including pharmacology), geology, materials
science, and physics.

212

The laboratories involved in the consortium are Ames, Brookhaven, Idaho, Los Alamos, Lawrence
Berkeley, Lawrence Livermore, NREL, Oak Ridge, Princeton Plasma Physics, Pacific Northwest, andSandia. More about the funding and coordination can be found at
http://energy.gov/sites/prod/files/2014/10/f18/07Keynote-PHoffman-WParks.pdf.

213

More information about DOE light sources can be found at http://science.energy.gov/bes/suf/userfacilities/x-ray-light-sources/.

164

Figure 28. Properties of the Light Beams at Each of the Synchrotrons

Although all the light sources produce intense beams of light, as suggested by
Figure 28, each facility is unique in terms of its spectral output. The wavelength of thelight determines the nature of the research for which the light source is best suited. For
example, hard X-rays (short wavelengths) can study the structure of materials on thelength scale of an atom, whereas soft X-rays and vacuum ultraviolet light (longer
wavelengths) are best suited to study chemical reactions and biological materials.
Synchrotrons are used in many fields and produce relatively similar science, but the user
communities working at the different light sources are notably different.
Another important issue in this connection involves access to these light sources.
Within the scientific community, it is generally agreed that regional access to user
facilities is critical. Illustrating this point are the concerns voiced by the biology
community prior to the upgrades of the NSLS:
Much of the growth in beamline number, quality and capability in recent
years has occurred…in the mid-west and the Bay area. While thesedevelopments are welcomed by all because of their positive impact on thenation’s scientific capabilities, they pose a significant logistical problem
for investigators based on the east coast, who increasingly find themselves
having to travel long distances to collect data hands-on at state-of-the-art
beamlines. 214
2) Nanoscale Science Research Centers
Through the National Nanotechnology Initiative (NNI), SC is the steward of fiveNanoscale Science Research Centers (NSRCs): the Center for Functional Nanomaterials(CFN) at Brookhaven, the Center for Integrated Nanotechnologies (CINT) at Sandia and
Los Alamos, the Center for Nanophase Materials Science (CNMS) at Oak Ridge, the214

BioSync, Biological Applications of Synchrotron Radiation: An Evaluation of the State of the Field in
2002 (Stanford, CA: Structural Biology Synchrotron users Organization, 2002), 10.

165

Center for Nanoscale Materials (CNM) at Argonne, and the Molecular Foundry at
Lawrence Berkeley. 215 Smaller and more focused nanotechnology research centers exist
in other Federal agencies as well, including the National Cancer Institute, NIST, andNSF, which has fourteen facilities located at universities across the country.
The locations of the NSRCs were strategically chosen through peer-review
competition by the Office of Basic Energy Science in SC based on the capabilities of the
National Laboratories that house them, and their differentiating characteristics parallel
the differences in research at the laboratories (Table 28). The DOE NSRCs also leverage
the capabilities of their co-located user facilities. For example, the CNM at Argonne has adedicated beamline on the APS that uses hard X-ray nanoprobes. Similarly, theMolecular Foundry at Lawrence Berkeley works with both the ALS and the National
Energy Research Scientific Computing Center (NERSC).

215

More information about DOE NSRCs can be found at http://science.energy.gov/bes/suf/userfacilities/nanoscale-science-research-centers/ or https://nsrcportal.sandia.gov/Home/About.

166

UnderstandCharacterizeCreateTable 28. Detailed Description of Capabilities of the DOE Nanoscale Research Centers
CFN

CINT

CNMS

CNM

Molecular Foundry

Block Co-polymer SelfAssembly

Giant
Nanocrystal
Quantum Dots

Stable-isotope
labeled soft matter

Hybrid Nanomaterials

Bio and biomimetic
nanostructures

Semiconductor
Nanowires

Carbonnanostructures

Oxide Molecular Beam Epitaxy

Robotic synthesis ofcolloidal nanocrystals

Biomimetic
Membranes

Chemistry in
confinement

Nanocarbon Materials

Metamaterials

Direct-write EBID
nanostructures

Bio inspired hybrid materials

High-Mobility
MBE

Anionic polymer
synthesis

DNA-Mediated SelfAssembly of
Nanomaterials
Electrophoretic
Deposition of
Nanomaterials

In-Operando
Nanocatalyst
Characterization by
Electron Microscopy
and Synchrotron LightBased Spectroscopy
Aberration-Corrected
Environmental
Transmission Electron
Microscopy
Ambient-Pressure X-ray
Photoemission
Spectroscopy
Aberration-Corrected
Photoemission Electron
Microscopy
Ultrafast Optical
Spectroscopy inElectrochemical
Environments
Reactor Scanning
Tunneling Microscopy
Bridging from Atomicscale Theory to
Nanoscale Phenomena
Theory of Directed
Assembly in Soft and
BioNanomaterials

Complex oxide
heterostructures(PLD)

Nanomechanical devices andnovel nanofabrication
techniques

Hybridorganic/inorganic
mesoscale materials
Nanostructured porous
frameworks
Sub 10 nm
nanofabrication

Engineered nanoparticles

Photonic andmechanical nanoprobe

Discovery
Platforms

Band Excitation
scanning probe
microscopy

Hard X-ray nanoprobe: nanodiffaction, fluorescence, and 3D
nanotomography

High resolution
electron scattering

Nanomechanics

STEM Imaging andSpectroscopy

Ultra high vacuum STM

In-situ probing andimaging

Super-resolution
Optical Imaging

Atom probe andelectrontomographies

In Situ and Scanning Probe
Microscopies

Imaging of magnetic
surfaces

He-ion microscopy

Non-linear phenomena

Hyperspectral Nanooptical dynamic
Imaging

Operando Electron
Microscopy

Time-resolved UV-VIS-NIR-IR
emission and absorption
spectroscopy

Tomography of single
proteins andnanoparticles

Ultrafast
Spectroscopy/C
arrier Dynamics
OpticalNanoprobes
In Situ
Microscopies
Classical DFT at
Interfaces
Non-adiabatic
DFT
Soft Material
Molecular
Dynamics

Computational
electronic structure
theoryLarge-scale abinitio molecular
dynamics
Computational
quantum manybody theory
Stochastic
interactions in
confinement

Electrodynamics, quantum
dynamics of light-matterinteractions
DFT, molecular dynamics ofmolecular conversion and ionictransport
Atomistic simulations of friction
and other physical properties ofnanoscale materials

Ultrasensitive Liquid
AFM
Interfacial Electronic
Structure/Dynamics
Ab initio ExcitedStates/Spectroscopy/T
ransport
Statistical Mechanicsof Self-Assembly

Source: Adapted from DOE Nanoscale Research Centers, https://nsrcportal.sandia.gov/Home/Capabilities.

3) High Performance Computing
The National Laboratories have had a significant impact on high performancecomputing (HPC) in two ways—by conducting the up-front research necessary to field
first-of-a-kind systems (e.g., developing code optimized for new computing architectures)and through their procurement, via R&D partnerships with vendors, of several
generations of high performance computers. By enabling industry, the DOE laboratories
have helped make these machines available to a broad community. Recently, this has
resulted in the development of the Cray and IBM BlueGene lines of supercomputers, both167

of which underwent a long period of co-development at the laboratories before being
introduced to a broader, commercial audience. The laboratories’ roles as key sponsors
and customers of supercomputers also drive the technology and the industry in importantways. For example, the laboratories played an important role in establishing floatingpoint arithmetic (rather than logical operations) as the key performance metric defining
high performance computing. This role for the National Laboratories continues as HPC
moves into exascale computing.
The DOE laboratories currently boast 32 of the world’s 500 fastest
supercomputers. 216 Leading in computing, however, is not just dependent on hardware.
Most of the laboratories have a substantial HPC capability with scientists and engineers
who utilize the computing power for applications in energy, science, and national
security. Differences among these HPC facilities and programs lie in the technicalspecifications of the machines, and the applications of the research projects. Like the
NSRCs, computing centers support their co-located facilities. The SC Advanced
Scientific Computing Research (ASCR) Program funds and manages three
supercomputing facilities and advanced scientific networks located at Oak Ridge,
Argonne, and Lawrence Berkeley.
In addition to purview, the machines and computing centers across the laboratories
differ in architecture and computing codes. Highlighting these differences is the newly
developed Collaboration of Oak Ridge, Argonne, and Lawrence Livermore National
Laboratories (CORAL), which is a procurement and collaboration project among thethree laboratories, NNSA and SC. The plan includes new procurements at each laboratory
and will be supported by the ASCR Oak Ridge Leadership Computing Facility (OLCF),
the ASCR Argonne Leadership Computing Facility, and the NNSA Advanced Simulation
Computing (ASC) program. According to the public release, Oak Ridge’s new system,
Summit, and Argonne’s new system will “have architecturally diverse computers tomanage risk during a period of rapid technological evolution.” 217
Generally, differentiated HPC programs benefit mission-driven science at thelaboratories. 218 In the case of national security, the NNSA Stockpile Stewardship216

B. Dotson, “Supercomputers: Extreme Computing at the National Labs.” Last modified September 4,
2013.

217

“Collaboration of Oak Ridge, Argonne, and Livermore (CORAL).” DOE Office of Science andNational Nuclear Security Administration. Last modified December 17, 2014.

218

See SEAB, Report of the Task Force on Next Generation High Performance Computing (Washington,
DC: DOE, 2014).

168

Program depends on the computing capability of the NNSA laboratories to “assess thesafety, security, and effectiveness of the stockpile” in the absence of testing. 219

E. Findings and Recommendations
Based on its work, the Commission observes the following:

219•

The National Laboratories’ research programs and capabilities are well-alignedwith DOE’s missions and strategic priorities. There are robust processes in some
program offices to provide strategic oversight, evaluation and direction to thelaboratories. However, those processes are not consistently utilized throughout
the Department.

•

Strategic planning for both the Department and its laboratories is best
accomplished jointly between DOE and laboratory leadership. Currently, thelevel of laboratory involvement in DOE strategic planning varies by office.

•The current Secretary and his management team are making advances towards
more fully involving laboratory leadership in Departmental strategic planning. It
is important to institutionalize these improvements so the Department andlaboratories may continue to benefit from these practices in the future.

•

SC has relatively mature processes in place for assessing the quality of both theresearch conducted by their ten laboratories and of the research portfolio in each
SC program. The processes used by SC have begun to influence other DOE
program offices.

•

Attendance at professional conferences is essential to maintain the highest
quality research at the National Laboratories, and to attract and retain the highest
quality scientific and technical staff.

•

The National Laboratories have scientific and technical facilities and capabilities
that may appear duplicative at a high level but in fact are complementary. The“duplication” that exists in R&D programs and user facilities is intentional,
managed and beneficial to the Nation.

•

In the absence of nuclear explosive testing, the nation’s confidence in thestockpile ultimately rests on the technical and scientific judgments of the NNSA
laboratories. Each of these laboratories has its own processes, culture, andorganization to address stockpile challenges. By providing critical “checks andNational Nuclear Security Administration, “NNSA Stockpile Stewardship Program Quarterly
Experiments,” http://nnsa.energy.gov/ourmission/managingthestockpile/sspquarterly.

169balances” senior decision makers are provided a credible second opinion thatcan lead to alternative policy options and validate technical recommendations.
•

Considering the duplication among and the maturity of research programs:–

At very early stages, it is beneficial to have many laboratories, universities,
and other institutions exploring potential avenues for research.

–

In the intermediate stages, DOE may have waited too long in the past to
provide strategic guidance to the National Laboratories. As a result, there
was some period during which the laboratories were competing with one
another to lay claim to new research areas in a manner that was not
strategic.

–

At late stages, in “mature” R&D programs, it is appropriate to have expert
peer review teams from universities, industry and other relevant
communities guiding DOE on where there should be centers of excellence,
how much duplication to support, etc.

Based on theserecommendations:observations,theCommission

makes

the

following

Recommendation 16: Other DOE program offices should adapt to their contexts theprocedures and processes that DOE’s Office of Science has in place for guiding
and assessing the alignment of the laboratories under its stewardship with DOE’s
missions and priorities.
Recommendation 17: The processes that the Office of Science has in place forassessing the quality of the research being done by the 10 laboratories under its
stewardship, and for assessing the quality of the research portfolio in each of its
programs, should be adapted by the other DOE program offices.
Recommendation 18: There must be a government-wide reconsideration of theconference travel restrictions to enable conference participation at levels
appropriate to both the professional needs of the existing scientific staff and to
attract the highest quality staff in the future. The Commission is encouraged by
DOE’s recently revised guidance on conference-related activities and spending andnotes that the laboratories have been given more autonomy on this issue, while atthe same time being held accountable for the appropriate use of taxpayer funds.

170

Recommendation 20: 220 DOE should manage the National Laboratories as a systemhaving an overarching strategic plan that gives the laboratories the flexibility to
pursue new lines of inquiry, so long as the research aligns with mission priorities.
Once the research has matured to the point that a preferred or most promising
approach can be identified, the Department should provide strategic oversight andguidance, including expert peer review, for the laboratory system to coordinate andpotentially consolidate their programs to achieve the most effective and efficientuse of resources.
Recommendation 21: Congress should recognize that the technical capabilities
currently housed within the NNSA laboratories are essential to the Nation.
Maintaining the nuclear explosive package capabilities in separate and independentfacilities has proven effective and should continue, thereby providing seniordecision makers the highest possible level of confidence in the country’s nuclear
weapons stockpile.

220

We have preserved the numbering of recommendations from Volume 1, which results in someanomalies in numbering in Volume 2.

171

8.

Laboratory-Directed Research andDevelopment (LDRD)

As science advances and the Nation’s priorities change, the National Laboratories
must keep an eye to the future, adapting and updating their skills and capabilities to meet
evolving mission needs. The ability to invest in staff, capabilities, and enter new researchareas as needed is crucial to laboratory performance. Laboratories rely on LDRD
programs to achieve these goals.
Congress has charged the Commission to analyze the effectiveness of the use of
LDRD to meet DOE’s science, energy, and national security goals; to evaluate
departmental oversight of the LDRD program for statutory compliance; and to quantify
the extent to which LDRD supports recruitment and retention of qualified staff.

A. Background
LDRD is a program designed to support researcher-initiated work of a creative andstrategic nature. It allows laboratories to provide a means to seed fund promising researchideas, attract top talent, and address challenging strategic questions in innovative ways.
Authority to fund and manage discretionary research programs within the laboratories
was authorized in the Atomic Energy Act of 1954, and institutionalized as an official
DOE program in NDAA FY 1991.
LDRD’s five primary objectives as articulated by DOE Order 413.2B 221 are to:•

Maintain the scientific and technical vitality of the laboratories;•

Enhance the laboratories’ ability to address current and future DOE missions;•

Foster creativity and stimulate exploration of forefront science and technology;•

Serve as a proving ground for new concepts in research and development;•

Support high-risk, potentially high-value research and development.

The LDRD program meets these goals through the competitive solicitation andfunding of projects, awarding projects by merit using a peer-review process that employs
both external and internal peer reviewers. LDRD projects might serve as proofs of

221

DOE, Order 413.2B (2011).

173

concept in emerging fields, address significant technical challenges facing laboratory
programs, or explore innovative concepts to address DOE missions. Many laboratories
also depend on LDRD to support the recruitment and retention of qualified staff.
Laboratories acquire funding for LDRD as an overhead fee on R&D performed at thelaboratory. Authorizing legislation caps total LDRD expenditures to a set percentage of thelaboratory’s annual operating budget. The current cap for LDRD is 6 percent annually,
reduced from 8 percent in FY 2014 under the Consolidated Appropriations Act for FY
2014. 222 Before FY 2006, research projects funded by LDRD were not charged overhead
fees. Since the Consolidated Appropriations Act of 2006, LDRD projects are charged fullyburdened overhead rates for researcher time and the use of laboratory facilities.
1.

LDRD Is Implemented by Laboratories and Overseen by DOE

When crafting LDRD programs, laboratory directors balance individual laboratoryneeds with the strategic interests of DOE and other major customers. Proposed plans forthe size of each laboratory’s LDRD program are reviewed by their stewarding program
offices at DOE. Once funding levels are approved, laboratories distribute LDRD funds toresearchers based on a competitive, merit-based review of project proposals. To ensure
the objectivity and quality of review, laboratories use both internal research staff andexternal reviewers from industry and universities to assess the scientific merit ofproposals.
Laboratory directors design LDRD proposal solicitations to meet specific laboratoryneeds, and often emphasize projects that directly relate to major laboratory andDepartment strategic initiatives. Laboratories tend to organize their LDRD portfolios into
strategically solicited topics and seed funding for exploratory research. Because LDRD is
proposal-based, laboratories can capture innovative ideas of high scientific merit that falloutside of explicit strategic initiatives but still relate more broadly to DOE’s missions.
DOE site office and headquarters staff are required to review and approve all projects
within the LDRD portfolio for mission alignment and compliance with the Department’s
statutory requirements. These requirements prohibit the use of LDRD funds for projects
that would require non-LDRD funds to accomplish their technical goals, for general
purpose capital expenditures, and as substitution for programmatic projects where
funding has been limited by Congress or DOE.
Congress has previously raised concerns over the discretionary nature of the LDRD
program, and identified as potential issues the improper use of LDRD funds,
mismanagement of the program, and lack of mission alignment within the project

222

Consolidated Appropriations Act, 2014, 113th Congress, January 17, 2014.

174

portfolio. 223 Responding to these concerns, recent reviews and audits of LDRD havejudged the program favorably. In its most recent report on LDRD, GAO answered elevencongressional questions related to LDRD and found that the program met statutory
requirements and that laboratories clearly communicated the costs of LDRD tocustomers. 224 More recently, DOE’s Inspector General reported in an audit to determine
whether Lawrence Livermore was effectively managing its LDRD program that “nothingcame to [the IG’s] attention to indicate that controls were not in place over initial LDRD
project approval and subsequent project management,” and made no recommendations
regarding the program’s management. 225
Interviewees at DOE headquarters and laboratories report that the current LDRD
program is well-managed to support DOE and other Federal agency missions and thatexisting oversight mechanisms ensure compliance of LDRD with Department regulation.
Oversight is important to ensure that laboratories use LDRD funds appropriately, but theCommission believes that the statutory requirement that every LDRD project be
individually reviewed—which in FY 2014 totaled 1,662 projects—may be excessively
costly and burdensome to both Departmental and laboratory staff. Though bothlaboratories and DOE HQ report that the process of review and approval is not overly
burdensome, the Commission finds the degree of oversight to be counter to tenets oftrusted partnership. The Commission suggests, as a potential alternative, a set of periodic
audits or a sampling of each year’s project pool, which may be sufficient for complianceand a more efficient alternative to the current oversight.
2.

LDRD Funding Levels Vary Across the Complex, Based on Size and Mission
Needs

Funding levels for LDRD are set by each laboratory in agreement with thelaboratory stewarding office and vary widely across laboratories, reflecting the diversityof the laboratories in terms of size and mission needs. Figure 29 presents reported LDRD
spending as a percentage of total laboratory expenditures in FY 2004, FY 2009, and FY
2014, arranged by stewarding office (NNSA, SC, and other). During FY 2004 and FY
2014, the percentage cap on LDRD spending was 6 percent, versus 8 percent from FY
2006 to FY 2013.

223

FY 2005 House Report 198-554 and FY 2006 House Report 109-86 raise specific concerns about theaccounting policies and management of LDRD. Similarly, GAO released reports in 2001 and 2004 in
response to congressional concerns over whether LDRD programs met DOE selection guidelines andstatutory requirement, and whether LDRD costs were being clearly communicated to customers.

224

GAO, Information on DOE’s Laboratory-Directed R&D Program. (Washington, DC: GAO, 2004).

225

DOE IG, Audit Report, Lawrence Livermore National Laboratory’s Laboratory Directed Researchand Development Program (Washington, DC: November 2014).

175

7.00%
6.00%
5.00%
4.00%
3.00%
2.00%

NNSA

SC

FY04

FY09

Idaho

NREL

Savannah River

Fermi

Thomas Jefferson

SLAC

BrookhavenAmes

Princeton Plasma Physics

Oak Ridge

Lawrence Berkeley

ArgonnePacific Northwest

Lawrence Livermore

0.00%

Sandia1.00%
Los Alamos

LDRD Expense as % of Total Lab Expense

8.00%

Other (EERE, EM,
NE)

FY14

Note: Data derived from DOE Fiscal Year 2004 and Fiscal Year 2014 LDRD Reports to Congress. In FY
2004 and all other fiscal years prior to FY 2006, LDRD-funded projects were unburdened. After FY 2006,
Congress mandated the burdening of LDRD, such that LDRD-funded projects pay the appropriate shareof overhead. The percent cap on LDRD was also raised to 8% during the same year, to be reduced to 6%
while maintaining the burden in FY 2014. In terms of FTE hours of work, an 8% burdened cap enables
less research to be conducted than with a 6% unburdened cap. Laboratories that did not report LDRD
data for specific years did not have LDRD programs during those years. As a GOGO, NETL does nothave an LDRD program.

Figure 29. Reported LDRD Spending as a Percentage of Total Laboratory Expenditures,
FY 2004, FY 2009, and FY 2014176

Total spending on LDRD in FY 2014 totaled $526.9 million, represented indescending order by laboratory in Table 29.
Table 29. FY 2014 LDRD Costs by Laboratory
LDRD Costs ($M)

LDRD Costs (%)

Sandia

151.3

5.63%

Los Alamos

118.5

5.73%

Lawrence Livermore

78.2

5.54%

Pacific Northwest

38.9

3.96%

Oak Ridge

36.3

2.95%

Argonne

29.2

3.87%

Lawrence Berkeley

23.6

3.00%

Brookhaven

9.6

1.70%

SLAC

4.4

1.55%

Princeton Plasma Physics

2

1.96%

NNSA

SC

Ames

1

1.89%

Fermi

0.2

0.06%

Thomas Jefferson

0.2

0.19%

Other (EM, NE, EERE)
Idaho

17

2.05%

NREL

10.3

2.89%

Savannah River

6.2

3.29%

Total LDRD Costs

526.9

n/a

Source: Data derived from DOE Fiscal Year 2014 LDRD Report to Congress.

NNSA laboratories were responsible for 66 percent of total LDRD expenditures for
FY 2014, compared to 27.6 percent at SC laboratories and 6.6 percent at the remaining
laboratories. These proportions have remained roughly constant over time, as represented
in Figure 30. The drop in funding seen in FY 2014 reflects the reduction of thepercentage cap on LDRD from 8 percent to 6 percent, which primarily impacted the
NNSA laboratories.

177

450
400

$M (Adjusted to FY14)350

LDRD cap raised to 8%
burdened from 6%
unburdened in FY06.

300
250

298.4
220.7

200

375.7

326.6

50

LDRD cap reduced from
8% burdened to 6%
burdened in FY 2014.

122.8

133.6 135.2

139.1 145.4

104.9

110.7

25.2

29.3

32.1

36.7

42.8

42.0

37.2

33.5

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

66.5

88.7

90.9

9.4

13.9

17.9

FY04

FY05

FY06

62.2

338.4

238.9

150
100

386.6
348.0

332.5
322.7

384.3

0
NNSA

SC

Other (EERE, EM, NE)

Note: Data derived from DOE Fiscal Year 2004–2014 LDRD Reports to Congress.

Figure 30. Total LDRD Spending, FY 2004–FY 2014

NNSA laboratories spend more on LDRD in both percentage and absolute terms.
This is a result of both greater total laboratory expenditures and different mission needs.
Staff recruitment and retention was cited as one of the major outcomes of LDRD
programs at NNSA laboratories. Interviewees reported that defense and nonproliferation
programs at the three NNSA laboratories lack extensive opportunities for researchers to
pursue investigator-driven, program-independent research. Independent research isimportant to staff scientists, so NNSA laboratories use LDRD to provide research staff
these opportunities. In doing so, laboratories are able to recruit the highest quality
researchers in a field where laboratories must compete with academia and industry fortalent. In addition, LDRD allows the laboratories to recruit researchers who do not yet
have security clearances and to give them leading edge scientific work while they await
their clearances. LDRD’s broader scope also lets laboratory researchers engage withpeers in the scientific community, exposing them to new ideas and preventing them frombecoming isolated from progress in their fields. While this may give the impression thatLDRD programs are not sufficiently mission-focused, broadened scope ensureslaboratories can effectively develop their workforce and anticipate needs for futurenational security challenges. NNSA oversight still ensures that projects remain pertinent
to the broader DOE mission.

178

Non-NNSA laboratories elect lower LDRD rates for a variety of reasons.
Interviewees reported that science and energy laboratories rely less heavily on LDRD to
recruit and retain staff due to the research opportunities already available through science
programmatic work and the appeal of energy missions to many academic researchers.
Furthermore, while all laboratories collaborate with academic and industry partners, nonNNSA laboratory directors must be especially considerate of costs to customers when
determining LDRD overhead rates. High overhead fees discourage these partnerships,
limiting a laboratory’s ability to disseminate the products of its research to the Nation.
These cost considerations prompt laboratories to elect lower LDRD and other overheadrates, rather than spend as close to the statutory limit as possible.

B. LDRD Programs Support Vitality of National Laboratories inMultiple Ways
Interviewees reported many positive outcomes of LDRD, including (1) the fosteringof capabilities and development of major scientific and technical programs;(2) recruitment, development, and retention of talented staff, especially pertinent for
weapons science; and (3) promoting a culture of innovation and providing a source of
cutting-edge research ideas.
1.

LDRD Builds Capabilities to Develop New Programmatic Areas and Meet
Shifting Mission Needs

Interviewees attribute the success and development of many noteworthy laboratory
programs to the development and fostering of capabilities by earlier LDRD investments.
For competitively awarded programs such as the Joint Center for Energy Storage
Research at Argonne, the Joint Bioenergy Institute (JBEI) program at Lawrence
Berkeley, and an Energy Frontier Research Center led by NREL, LDRD funds built thefoundational expertise needed to develop and implement these programs. Seeded byrelatively small early investments, these programs produced large returns, both scientificand financial. The $250 million JBEI program at Lawrence Berkeley—established in
2007—arose from $484,000 in LDRD funding that began in prior years, and has helped
create and transfer many inventions to the private energy industry. Under the direction offormer Lawrence Berkeley Director and former Secretary of Energy Steven Chu,
Lawrence Berkeley’s LDRD program actively encouraged and awarded projects that
focused on renewable energy technologies. These projects brought together a core teamof researchers and developed the technical foundations that allowed laboratory leadershipto argue strongly for JBEI’s placement at the laboratory. In FY 2008, Lawrence Berkeley
secured not only the JBEI program but the $500 million contract for the Energy
Bioscience Institute (EBI), an internationally competed Institute funded by British
Petroleum. Other major programs cited by interviewees as supported by early-stage179

LDRD include the Molecular Foundry at Lawrence Berkeley, both the original Advanced
Photon Source and its upgrade at Argonne, and work on the Human Genome Project.
As leaders of large scientific and technical enterprises, laboratory directors are wellpositioned to discern potential future mission challenges in the areas of energy, science,and national security. In the 1990s, laboratory leadership at Sandia identified the growing
importance of biosciences to the Nation’s long-term, strategic interests, and used LDRD
to begin establishing a core technical capability in biosciences. 226 These early
investments prepared Sandia to participate in DOE initiatives in bioenergy and chemicalbiological nonproliferation and enabled Sandia to respond to advances in biosciences andgrowing national security concerns over the threat of biological and chemical weapons.
Today, programmatic work at Sandia related to biosciences, energy, safety, security, anddefense totals $50–60 million. 227
2.

LDRD Is Vital to Recruitment, Development, and Retention of the Laboratory
Workforce, Especially at NNSA and Non-SC Laboratories

NNSA laboratories heavily rely on LDRD programs to support laboratory efforts torecruit the workforce and develop necessary technical skills to carry out the NNSA’s
mission of stewarding the Nation’s nuclear security and weapons programs. Technicalexpertise in nuclear weapons science exists exclusively within the NNSA laboratories,
and that expertise can only be preserved by recruiting, training, and retaining new staff.
Post-doctoral researchers (post-docs) are a crucial source of the NNSA laboratories’
scientific workforce. A substantial proportion of post-doctoral researchers at NNSA
laboratories are supported by LDRD and many are transitioned to full-time staff. Table
30 presents the percentage of post-docs at NNSA laboratories recruited and retained
through LDRD programs. NNSA laboratories must often hire people who have not yet
received their security clearance—a process which can take up to a year or longer—sohaving a flexible unclassified pool of funds is critically important for hires at all levels.
Interviewees from both DOE headquarters and laboratories concur in emphasizing thecriticality of LDRD to support recruitment and retention for the nuclear security mission.

226

As reported through correspondence with representatives at Sandia.

227

Ibid.

180

Table 30. LDRD Recruitment/Retention Metrics at NNSA Laboratories (FY 2008–FY 2012)
SandiaLawrence
Livermore*

Los Alamos

Post-doctorates supported by LDRD

56%

51%

59%

LDRD post-doctorates converted to fulltime staff

77%

74%

49%

*Data for Lawrence Livermore collected for FY 2010-FY 2013 and provided by NNSA.

Non-NNSA laboratories also recruit through LDRD. Many early career staff at thelaboratories cited the ability to pursue research through LDRD as an important factor in
their decision to work at the laboratories. Table 31 presents LDRD support of post-docs
in FY 2013 broken down by laboratory. At non-SC laboratories in FY 2013, LDRD
programs supported 50 percent of the total post-doc population (594 of 1,186 postdoctoral students, as shown in Table 31). Since LDRD programs provide laboratory staff
the opportunity to pursue new research concepts, laboratories where those opportunities
are scarcer must make greater use of flexible LDRD funds to recruit talented new
researchers. Overall, LDRD supported 26.3 percent of the total post-doc population at the
DOE laboratories in FY 2014. 228
Table 31. Post-Doctorates Supported by LDRD at National Laboratories, FY 2013

Laboratory
Savannah River
Los Alamos
Idaho
Lawrence Livermore
SandiaNREL
Pacific Northwest
ArgonneBrookhaven
Lawrence Berkeley
Oak Ridge
Princeton Plasma
Physics
SLAC
Ames

Percentage ofPost-Docs
Supported by
LDRD
64%
57%
46%
46%
45%
29%
26%
25%
16%
13%
12%

Stewarding
Office
EM
NNSA
NE
NNSA
NNSA
EERE
SC
SC
SC
SC
SC

Number of
Post-Docs
11
602
13
241
216
103
265
404
169
677
567

Post-Docs
Supported by
LDRD
7
343
6
111
97
30
69
101
27
88
68

SC

20

2

10%

SC
SC

133
50

12
1

9%
2%

Source: Data provided by SC. Fermi and NETL did not support LDRD programs during FY 2013.

228

DOE, Fiscal Year 2014 Report to Congress on LDRD at the DOE National Laboratories (Washington,
DC: DOE, January 2014).

181

Among SC laboratories, LDRD is also used for workforce development throughpost-doc fellowships, university partnerships, and strategic hires in critical areas, though
LDRD is not relied on to the extent it is at non-SC laboratories.
3.

LDRD Fosters an Innovative Environment and Generates Cutting-Edge
Research Ideas

One of the LDRD’s stated objectives is to support high-risk, potentially high reward
R&D, enabled by the program’s investigator-driven proposal system. Solicitation
processes vary to some degree across the system, but typically researchers are invited tosubmit proposals either within strategically pre-determined categories or ideas that fit themissions of the laboratory broadly. Selection for projects at both pre-proposal andproposal phases of review was highly competitive across the laboratories.
DOE collects three metrics to measure LDRD’s scientific productivity: number ofpeer-reviewed publications, patents, and invention disclosures. 229 These metrics are
published by the DOE CFO’s Office in its annual report to Congress on LDRD. LDRD
projects at some laboratories produce a disproportionately large volume of scientificoutput when compared to the percentage of funds dedicated. For example, close to 50
percent of Lawrence Livermore’s 1,126 patents filed between FY 1999 and FY 2013
arose out of LDRD-associated projects, though LDRD represented less than 6 to 8
percent of the laboratory’s annual funding. 230,231
The impact of the LDRD program cannot be captured completely through metrics
such as follow-on funding, recruitment statistics, or measures of scientific productivity.
Certain advances and scientific outputs of LDRD can only be captured through a broader
understanding of how LDRD supports future programmatic activities. At Lawrence
Livermore, for example, LDRD investments advanced high pressure physics techniques,measurement capabilities, and analytical tools to compare the performance of new andaged plutonium samples. Lawrence Livermore used these techniques to find that theplutonium pits in the Nation’s stewarded weapons could last longer than previously
expected, effectively extending the lifetime of the nuclear stockpile. These findings
contributed to the decision to scrap plans to build the Modern Pit Facility, estimated tocost $4–10 billion. Interviewees reported the impacts of this LDRD project as one of thelargest successes of the stewardship program. LDRD outcomes like these are not always
229

As a metric of LDRD outcomes, some individual laboratories track the amount of subsequent
programmatic funding that follows from research conducted through LDRD, but DOE does not collectthis data at the central level.

230

Lawrence Livermore National Laboratory, LDRD FY 2007Annual Report (LLNL, 2007). Additionally,
all other Annual Reports through FY 2013.

231

Based on the percentage cap on LDRD funding during that fiscal year.

182

evident through official reported metrics, but are nonetheless an important product of
LDRD programs.

C. Congressional Changes to LDRD Accounting Policies
In FY 2006, Congress required the laboratories to burden LDRD, changing the cap
from an unburdened 6 percent to a burdened 8 percent. 232 Then in FY 2014, Congress
reduced the LDRD cap from 8 percent to 6 percent, still burdened. 233 In 2015 Congress
added another restriction, requiring the 6 percent cap to be applied program by program,rather than at the total R&D funding level, further reducing flexibility for the labs. The
Commission investigated how these changes impacted the availability of LDRD funds.
Responses to the congressional reduction in cap were mixed. Some laboratories
reported that the burdening and reduced cap on LDRD significantly reduced the amountof LDRD work that could be done, while others reported only modest to minimal impact.
The Commission heard a concern from some interviewees that the burdening of LDRD
represented double-counting that effectively halved the purchasing power of LDRD
funds. This was not true in the case of all laboratories, with some reporting that theburdening of LDRD was more of an administrative change than a real reduction.
Overhead costs associated with LDRD projects had always been accounted for, and theburdening change merely institutionalized current practice. That said, the quantitative
difference between burdening and unburdening LDRD is significant. To reach the levelof real funding provided by a 6 percent unburdened LDRD program under burdening, alaboratory with an 80 percent overhead rate would require a cap of roughly 10 percent
burdened. 234 Given the mission importance of LDRD, the Commission strongly endorsesa reconsideration of LDRD policy.
It is noteworthy that even when laboratories had discretion to spend more on
LDRD, most laboratories did not spend “to the cap,” due to a combination of sensitivity
to passing on additional overhead costs to customers and the fact that lower LDRD
spending was sometimes sufficient to meet a laboratory’s needs. These factors counterthe view that LDRD is a program of unbridled “excess.” Rather, LDRD is a carefully
considered research portfolio, sized to appropriately meet mission needs at the discretion
232

Energy and Water Development Appropriations Act, 2006 (Public Law 109-103). “Burdened” means
overhead is charged to LDRD projects.

233

Consolidated Appropriations Act, 2014 (Public Law No. 113-76).

234

For 6% unburdened, each $1M of laboratory R&D budget would provide $60K in LDRD funds.
Assuming an 80% overhead rate, the same $1M would provide ~$45K under an 8% burden and only~$33K under a 6% burden. To reach levels comparable to the 6% unburdened policy, the cap would
need to rise to 10% burdened (i.e., $1M budget would produce $100K LDRD, of which ~$56K would
go to real work while the remainder ~$44K would be collected as overhead.

183

of laboratory leadership. For those laboratories with programs closer to the cap—
primarily the NNSA laboratories—the decrease from 8 percent to 6 percent resulted in
cuts to the size of recruitment and retention programs, number and size of projects, andfunding for specific types of projects, such as exploratory research.
The Commission acknowledges that there are reasonable arguments for either
burdening or not burdening LDRD funds. The Commission did not take a position whether
LDRD should be burdened, focusing instead on the amount of LDRD work that can actually
be performed. Congress should set the cap at a level that supports an amount of direct R&D
work that fulfills the purposes of the LDRD program. In the judgment of the Commission,that should be comparable to historical levels prior to the changes in 2006.

D. Findings and Recommendations
LDRD is an investment in the future. The purposes of LDRD are clear and crucial:
to recruit, develop, and retain a creative workforce and to produce the innovative ideas
vital to a laboratory’s ability to produce the best scientific and future mission work. For
these reasons, the Commission strongly endorses the need for LDRD programs, both now
and into the future.
The Commission has formulated the following findings with regard to LDRD:•

LDRD has a long history of support and accomplishments, dating back to 1954
when it was first authorized by the Congress. Formal requirements for LDRD
projects, external review, and DOE oversight ensure that projects are selectedcompetitively and that they explore innovative, new areas of research notalready covered by existing programs.

•

LDRD is a resource for supporting cutting edge exploratory research prior to thetime that a research program is identified and developed by DOE. Multiple
LDRD projects at various laboratories may be funded in the same topic area as ameans of exploring different potential paths for an ultimate program in the field.
These small, early stage projects provide valuable insights for the peer-review,
strategic assessments by DOE as part of the program planning process.

•LDRD is an important recruitment and retention tool for the National Laboratories.
This is especially critical at the NNSA laboratories, which must attract new staff
into the laboratories in order to maintain a highly-trained workforce to support the
NNSA’s nuclear weapons and national security missions.

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The Commission has the following recommendations for the Department andCongress with regard to LDRD:
Recommendation 19: 235 The Commission strongly endorses LDRD programs, both
now and into the future, and supports restoring the cap on LDRD to 6 percent
unburdened, or its equivalent. The Commission recognizes that, in practice,
restoring the higher cap will have the largest impact on the LDRD programs of the
NNSA laboratories.

235

We have preserved the numbering of recommendations from Volume 1, which results in someanomalies in numbering in Volume 2.

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9.

Diverse Support of Other Agencies

DOE defines Strategic Partnership Projects (SPP) 236 as “the performance of workfor non-DOE entities by DOE contractor personnel and/or utilization of DOE facilities
that is not directly funded by DOE appropriations.” 237 Such work can emanate from therequirements of other Federal agencies, state or local governments, academia, andindustry. As outlined in DOE Order 481.1C, and consistent with 48 CFR 970-1707, thepurposes of SPP are to:•Provide non-DOE entities access to highly specialized DOE facilities, services,or technical expertise (to include working in classified environments);•

Assist other Federal and non-Federal agencies in accomplishing otherwise
unattainable goals and avoiding possible duplication of efforts;•

Maintain core competencies at the laboratories;•

Enhance science and technology capabilities;•

Increase R&D interactions between the laboratories and industry, in the interestsof technology transfer, development, and commercialization; and•Retain and attract high-quality personnel. (SPP can appear to be more “relevant”
to real-world issues, especially for those at NNSA laboratories.)

SPP offers opportunities for the cross-pollination of ideas among the broad
scientific and engineering community. It also helps to ensure greater use of existing
facilities; enables some Federal agencies to perform work they would not otherwise beable to do since they do not possess the capabilities and assets themselves; and cansustain S&T capabilities that the DOE budget may not be able to fully support in a given
year, but which are important to maintain for the long term.
This chapter describes the scope of SPP performed for various Federal agencies andwithin the laboratories. It then assesses not only how well Federal agency SPP aligns
with DOE missions, but also what unique capabilities the National Laboratories offer to
236

Under DOE Order 481.1, DOE has renamed Work for Others (WFO) as Strategic Partnership Projects(SPP). DOE defines SPP as “work for non-DOE entities that is performed by DOE/contractor
personnel and/or utilizes DOE facilities and is not directly funded by DOE appropriations.”

237

DOE. Order 481.1. Work for Others (Non-Department of Energy Funded Work). (Washington, DC:
DOE, 1997).

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these other Federal users. It next focuses on the range of customer views about thelaboratories’ performance, and concludes with a review of the mandate and performanceof the Mission Executive Council (MEC) to date.

A. Varied Scope of SPP
Of the total $17.2 billion funding for the laboratories in FY 2013, SPP accounted for
14 percent ($2.43 billion). Of that amount, by far the largest customer was the
Department of Defense (DOD), accounting for $1.49 billion (61 percent). 238 The othermajor Federal agencies supplying funding are: the Intelligence Community (IC);
Department of Homeland Security (DHS); Department of Health and Human Services(DHHS), specifically in the form of grants from the National Institutes of Health; NASA;and the Nuclear Regulatory Commission. 239 Other Federal agencies, representing a lower
level of funding, include: Department of State, Federal Bureau of Investigation (FBI),and National Oceanic and Atmospheric Administration (NOAA). Figure 31 depicts thesefunding levels for FY 2013, including non-Federal funding sources.
A review of total SPP funding since FY 2009 shows little variation year to year, andfairly steady levels of funding from DOD, DHHS, and NASA. In contrast, funding from
DHS and the Nuclear Regulatory Commission has fallen by 37 percent (from $472 million
to $278 million) and 34 percent (from $80 million to $53 million), respectively. According
to discussions with the Commission and staff, these declines have generally not been as aresult of dissatisfaction with the laboratories’ performance, but rather due to overall budget
reductions. There is a concern that continued budget cuts coupled with continued increased
costs for work at the laboratories may well result in the inability of these agencies to havethe necessary work done for their missions. 240 During this same time period, other Federal
funding increased by 36 percent and non-Federal funding by 20 percent. Of note, the levelof funding from the IC has increased appreciably since 2001.

238

This figure does not include funding for the existing nuclear weapons and naval reactors programs.

239

For purposes of this unclassified report, the extent of the IC’s use of the National Laboratories isnecessarily discussed in generic terms. The Office of the Director of National Intelligence (ODNI) wasestablished to manage intelligence efforts across a number of Federal organizations (seehttp:www.intelligence.gov/mission/member-agencies, accessed 8 January 2015). As such, IC inputs to
the Commission were coordinated through the ODNI, although individual not-for-attribution
interviews were also conducted with IC representatives from several organizations.

240

As noted in DHS, “Utilization of the DOE National Laboratory Complex: The DHS Perspective,”
presentation for the Commission to Review the Effectiveness of the National Energy Laboratories(Alexandria, VA, October 6, 2014), and in not-for-attribution interviews conducted by staff supporting
the Commission, November 21, 2014, and January 14, 2015.

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Total SPP $2.43

Source: DOE, Office of Science, “Work for Others Program: Interagency
Work,” presentation to the Commission to Review the Effectiveness of
the National Energy Laboratories, October 2014.

Figure 31. Actual FY 2013 SPP Funding, by Customer ($B) for all Laboratories

Just as there are appreciable differences across Federal sponsors of SPP at thelaboratories, so too are there considerable differences both in the dollar value of SPP and
the percentage SPP represents of each laboratory’s overall budget. Figure 32 provides
data on the latter point in aggregate for FY 2009–FY 2013, as executed. 241 In bothcategories, Sandia stands out in terms of SPP’s significant role: some $900 million in
SPP in FY 2013 accounted for about 35 percent of Sandia’s overall budget.

241

There have not been large variations in the amount of SPP funding each laboratory has received overthese 5 years, with two exceptions. One was a dramatic increase in Fermi’s funding in FY 2013 due tothe state of Illinois funding a building; the second was a marked increase, especially in FY 2012 andFY 2013 at NREL, which was primarily driven by greater DOD investments in energy efficiency,
renewables, and microgrids work.

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40%
35%
30%
25%
20%
15%
10%
5%
0%

Source: Data provided by DOE to the Commission, October 2014.

Figure 32. SPP for other Federal Agencies as a Percentage of Average Total Budgets,
FY 2009–FY 2013, by Laboratory

B. SPP Support of DOE Missions and Other Agencies’ Needs
DOE has processes in place to ensure that SPP aligns with the Department’s
missions. The laboratories falling under SC, for example, are required to prepare asection in their annual report (to SC) describing the current SPP portfolio, near-term
issues, and overall SPP strategy. NNSA laboratories must identify any capability or
facility for which external funding is more than 25 percent. 242 DOE reports that SPP has
historically been synergistic with DOE core mission work, and that it has “frequently
resulted in cost avoidance at DOE, improved capability for core mission work, and/or
workforce development.” 243 Multiple Federal agencies have identified a range of core
DOE mission areas and capabilities that are also part of their mission sets, which the
National Laboratories help them address through SPP; these include: modeling andsimulation; non-proliferation and weapons of mass destruction threat reduction; physicalprotection of nuclear materials and facilities; nuclear forensics; knowledge about foreign
S&T capabilities; energy efficiency; and wide area surveillance technologies.
Another important dimension of SPP is the extent to which the National
Laboratories are able to provide unique capabilities and facilities to these customers.
242

DOE, Office of Science “Work for Others Program: Interagency Work,” presentation to theCommission, 3.

243

Ibid, 2.

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Some of these capabilities—such as genome sequencing at Los Alamos and bio-riskmanagement at Sandia—are widely recognized being world-class. Customers also
identified the benefit of being able to use the laboratories’ highly qualified personnel fortechnical advice and as unbiased third-party evaluators. Examples include the Nuclear
Regulatory Commission’s reliance on the unique expertise at the laboratories in dose
assessment and reactor risk and reliability assessment and analysis, and NASA’s relianceon four of the laboratories for their radioisotope power systems. Other unique assets usedby other Federal agencies include: the National Ignition Facility (NIF) and Z-division(which provides technical assessments of foreign nuclear programs and weapons
capabilities), both at Lawrence Livermore, as well as the synchrotron light sources at
Argonne, Brookhaven, Lawrence Berkeley, and SLAC.

C. Federal Agency Satisfaction with Laboratories’ PerformanceWith few exceptions, those interviewed and those who testified before theCommission noted an overall good-to-high level of satisfaction with the work thelaboratories do for them, based on their responsiveness and the overall quality of theirwork. However, some laboratories are seen to perform better than others; as one
interviewee put it, there are “islands of excellence” but also “pockets of mediocrity.”244
As a result, individual responses in any given organization can run the gamut, and candepend on individual personalities, but the overall consensus is that the laboratories
produce high-quality work. Indeed, a number of people from various agencies
underscored the important point that SPP customers have the ability to “vote with theirpurse.” The fact that SPP funding has remained steady thereby demonstrates the generallevel of satisfaction. Finally, there is across-the-board recognition that effective
communications and interactions, both with the laboratories and with DOE headquarters,
are vital to ensure an understanding of SPP needs now and in the future. Initiatives suchas personnel exchanges and having a designated laboratory employee frequently visit
major customers (serving as a “customer relationship manger”) can help provide thesenecessary communication channels.
Satisfaction is much lower with the role that DOE headquarters plays in SPP.
Customers across the Federal agencies make a point of distinguishing between thelaboratories who “know what they’re doing, and they do it well,” and DOE, which is seen
more often as an impediment and a source of frustration. 245 Another source of frustration
244

Interview with DOD official, October 21, 2014.

245

Few have been as vocal about these frustrations as the nuclear weapons sponsors in DOD, who point tofrequent schedule delays and cost overruns (often created by burdensome headquarters-imposed
requirements), the lack of transparency in how DOE is spending the funds, and a belief that too muchwork is focused on “science,” to the detriment of the Life Extension Programs. Technically, however,191with DOE headquarters is the lengthy process required to obtain SPP approvals,
especially within the NNSA laboratories, and the fact that this process is usually the samefor a small level of effort as it is for a multi-million dollar initiative. While there has beensome progress in using standardized umbrella agreements, which identify acceptableareas of work, this has yet to be applied consistently across the system. 246 An additional
improvement has been NNSA’s creation of the position of Director of Interagency Work,one of the aims of which is to shorten the timeline of the SPP approval process.
Aside from the Life Extension Programs, DOD customers are generally satisfied
with the overall relationship, and note the important roles the laboratories play in a
number of DOD areas of responsibility, such as threat reduction and energy efficiency, an
area of growing interest to DOD. In fact, the NNSA laboratories’ efforts to transition to
being national security laboratories have made them more useful to other agencies, suchas DOD. There are some initiatives under way to ensure that the ease of sending work to
the DOE laboratories (relative to non-FFRDCs) has not led DOD customers to rely too
heavily on them. In at least one case, such an initiative resulted in the decision to have a
specific project performed outside the laboratory system, but the process took ninemonths longer, the cost was ultimately the same, and the DOD office’s confidence in thequality of the product to be delivered is substantially lower. 247 In the cases of DHS andthe IC, strategic investments have been made in some cases to ensure that a capability
critical to their missions is maintained. 248
Both DHS and the Nuclear Regulatory Commission have instituted performance
reviews of the National Laboratories, soliciting inputs from the program managers on theextent to which the laboratories are meeting their mission needs and whether they areproviding value-added work. 249 Scoring by both agencies across the laboratories averages

the Life Extension Programs and other work related to the nuclear weapons program is not Work for
Others, but part of the core mission of DOE.
246

This issue and recommendations to improve the process have been identified most recently in twoother studies: Augustine/Mies panel, A New Foundation for the Nuclear Enterprise, and NRC,
Aligning the Governance Structure of the NNSA Laboratories.

247

Interview with DOD official, October 17, 2014.

248

Among DHS’ long-term investments are the National Infrastructure Simulation and Analysis Center at
Sandia and Los Alamos; the Industrial Control Systems Cyber Emergency Response Team (ICSCERT) at Idaho; the Biodefense Knowledge Center at Lawrence Livermore; the National Visualization
and Analytics Center at Pacific Northwest; and the Interagency Modeling and Atmospheric
Assessment Center at Lawrence Livermore. As noted in DHS, “Utilization of the DOE National
Laboratory Complex: The DHS Perspective.”

249

The Office of National Laboratories in the Science and Technology Directorate of DHS has done theseassessments, National Laboratory Performance Assessment, for FY 2011, FY 2012 and FY 2013. The
Nuclear Regulatory Commission has done so only for FY 2014, DOE Survey Results, because it has192

3.6–3.9 out of a total possible 4.3 points, meaning they “exceed” or “notably exceed
expectations.” While noting a generally high level of satisfaction, DHS identified twoareas as challenges: (1) that the laboratories are often not as focused on the turn-aroundtime DHS requires (typically 18–24 months) and (2) that they are not as oriented toward
technology transition. 250 As a way of addressing its satisfaction with the laboratories’
performance, the Nuclear Regulatory Commission, DOD, IC, and FBI customers all
noted that if performance is not up to expectations, they will not do future work with thatlaboratory or specific principal investigator; it is a “vote with the purse” system.
As noted earlier, the IC has expanded its use of the National Laboratories
considerably since the events of 9/11. 251 The IC stresses the importance of knowing thatcapabilities are there to make a difference for a given IC mission, and knowing whether
those capabilities are healthy or are at risk. The IC has also developed a way of funding
work at the laboratories which aligns well with meeting its needs and is therefore
satisfied with the support the National Laboratories provide. 252
Many interviewees noted that the cost of doing business with the laboratories is seen
to be high relative to other entities due to their overhead rates (as well as the 3 percent tax
that is levied on all SPP to cover administrative costs associated with managing thework). 253 These high costs can be a deterrent, and may well become a greater factor if
Federal agency budgets are further trimmed. While most SPP customers feel they are
getting their money’s worth, and they recognize that there are expensive facilities andassets at the laboratories that must be maintained, some argue that they are not relying on
the laboratories for these facilities, but rather the subject matter expertise, and therefore
the rates are excessively high for the type of work being performed.

D. Mission Executive Council
The Mission Executive Council (MEC) was established in July 2010 through thesigning of the document “Governance Charter for an Interagency Council on the Strategic
Capability of DOE National Laboratories as National Security Assets,” by the leaders of
only just recently consolidated working with the laboratories into one office, the Acquisition
Management Division.
250

DHS, “Utilization of the DOE National Laboratory Complex: The DHS Perspective” (Washington,
DC: DHS, 2014).

251

Description of the IC’s use and satisfaction with the laboratories is based on a coordinated input
received from ODNI as well as not-for-attribution interviews with representatives from the Central
Intelligence Agency and the Intelligence Advanced Research Projects Activity.

252

No further detail about this process can be provided in an unclassified report.

253

At the same time, it is important to note that SPP does not pay for major equipment or facilities. As
such, DOE is not recovering all its costs, even though the overhead rates are high.

193

DOE, DOD, DHS, and the Office of the Director for National Intelligence (ODNI). 254
The MEC’s purpose is to match the laboratories’ technical capabilities with the technicalneeds of the other agencies, thereby providing long-term strategic planning forcapabilities that are unique to the DOE laboratories, identifying common areas of interest
across these agencies, and (ideally) ensuring the capabilities to address these areas aremaintained. The MEC is therefore meant to serve as the mechanism for these agencies tointeract with the National Laboratories on a strategic level. The MEC does not, however,involve any financial obligation on the part of any of the signatory agencies.
The MEC consists of two members from each of the four signatory agencies at theundersecretary level; in addition, the Chairman of the DOE National Laboratory Director’sCouncil and the DOD Director for the Defense Laboratories Office regularly attend the
MEC’s quarterly meetings. About two years ago, the MEC’s processes were improved by
the creation of a planning group, comprised of senior staff from the four departments, whichmeets much more regularly, thereby providing greater continuity and stability. The MEC isrequired to report annually, focusing on the following issues: assessing the adequacy ofnational security science, technology, and engineering capabilities at the laboratories in
identified cross-cutting areas; identifying science, technology, and engineering capabilities
that need interagency attention; and recommending what capabilities should be developed orsustained in order to close identified gaps. The MEC was further tasked in the National
Defense Authorization Act (NDAA) FY 2013 to submit a report on how effective it has
been, whether the SPP program has been strengthened, and whether it has worked on ways
to increase cost sharing.
A recent National Research Council (NRC) report that looked in detail at the MEC
and its performance noted the failure to date of the MEC to fulfill its mandate in many
respects and emphasized the need for the MEC to play a greater strategic role. 255 This
Commission similarly notes that assessments among those it has interviewed about the
MEC’s utility to date are tepid at best. While the purpose of the MEC—ensuring thepreservation of a technology base to meet government-wide, national needs—is laudable,
the question has been raised whether the MEC can have the desired effect without moreresources. However, this Commission supports the findings of the NRC report, whichargues that the MEC should be reinvigorated to fulfill a strategic role by ensuring that theagencies are aware of the skills of the laboratories and that the laboratories are aware of
the major challenges confronting the agencies now and in the future. The NRC report
also found that the MEC does not need additional authorities to serve as the interagency

254

Its membership and responsibilities are described in 10 U.S. Code § 188, Interagency Council on theStrategic Capability of the National Laboratories.

255

NRC, Aligning the Governance Structure of the NNSA Laboratories.

194integrator in identifying future S&T needs and that the MEC should work with OMB, theOffice of Science and Technology Policy (OSTP), and Congress to advocate fornecessary investments in laboratory facilities and equipment, as appropriate.

E. Findings and Recommendations
The Commission has the following findings:•

The National Laboratories are national assets that perform important work that
goes beyond DOE’s own programs and supports other Federal agencies, public
institutions, universities, and the private sector. The laboratories provide uniquecapabilities in terms of expert personnel capable of providing both large-scale,
long-term support and meeting rapid response needs. They also build andoperate large-scale, state of the art research facilities that are used extensively by
the broader science and technology community in support of many diverse
public and private needs.

•

DOE has policies in place to ensure that SPP meets necessary criteria and, inappropriate areas, aligns with the Department’s missions.

•

On the whole, SPP customers are very satisfied with the quality and value of thework performed by the laboratories. However, many customers feel thatlaboratory costs are high relative to other institutions. They are also less satisfied
with interactions with DOE headquarters.

•

Absent established relationships with DOE or the laboratories, it is sometimes
unclear to SPP customers where to find the needed capability within the
National Laboratory system. Various forms of communication, to include
personnel exchanges and “customer relationship managers” have been tried insome areas and have proven helpful.

•

There is insufficient strategic planning involving other Federal agencies
regarding their future needs for expert personnel and facilities to support SPP.

•

The Mission Executive Council, consisting of the DOE, DOD, DHS, and the IC,
is not as effective a coordination resource as it was intended to be.

•Some Federal agencies have established an annual process to evaluate their levelof satisfaction with the DOE laboratories performance, but this is not done
systematically across all SPP sponsors nor do the existing evaluations
differentiate notably among the laboratories.

Based on these findings, the Commission makes the following recommendations
with respect to SPP:

195

Recommendation 22: DOE should establish policies and procedures to make theStrategic Partnership Projects (SPP) process more efficient, especially for workthat is consistent with the annual operating plans, such as institutionalizing
ongoing efforts to streamline the contracting process through more consistent useof umbrella SPP agreements and oversight mechanisms dedicated to shortening thetimeline of the approval process; encouraging greater use of personnel exchanges
and “customer relationship managers”; and creating a central point of contact in
DOE headquarters to field questions from other Federal agency customers about
where specific capabilities lie within the laboratory system.
Recommendation 23: DOE should support efforts to strengthen the Mission
Executive Council.
Improvements to the Mission Executive Council should include efforts alreadyidentified in other recent reports: 256•

Provide the mechanism for interagency strategic S&T planning, including thedevelopment of a mission statement for the laboratories for their “national
security mandate.”•

Develop a systemic approach, to include working with OMB, OSTP, andCongress, to advocate for necessary investments in laboratory facilities andequipment.
–

•

256

Serve as the vehicle for SPP customers to offer more predictable mission
sets for the next several years to help guide the laboratories’ investments instaff and facilities.

The coordinating office for contacts with the laboratories within all major
Federal SPP agencies should establish annual evaluation processes, drawing on
the processes already established at DHS and the Nuclear Regulatory
Commission. For all these agencies, these evaluations should be made more
rigorous so that the evaluations better highlight areas of excellence and areas
needing improvement.

Recommendations 2, 3, and 5 in NRC, Aligning the Governance Structure of the NNSA Laboratories,
and Recommendation 19 in Augustine/Mies panel, A New Foundation for the Nuclear Security
Enterprise.

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10. Collaboration with the
Academic Community
It is mutually beneficial for academia and the DOE laboratory community to beclosely linked. The laboratories benefit from university ties as a way to enhance
recruitment and retention, and as a means of interacting with academic scientists working
at the cutting edge of basic research. Academia also provides enhanced external guidance
to the laboratories through the academic peer review process. Academics, for their part,
benefit from involvement in the large, long-term, multidisciplinary projects that arecommon at the DOE laboratories and from access to DOE’s user facilities.

A. Laboratory/University Researcher Collaborations
To understand both the level of collaboration that exists between the DOE
laboratories and other entities and to understand who the laboratories are collaborating
with, the Commission performed a bibliographic analysis of the laboratories’ publications
between 2004 and 2014. The intent of this effort was to determine if, as is often
suggested, the laboratories are separate, insular, entities or if they collaborate with others,
including other DOE laboratories. Elsevier’s Scopus was chosen as the initial data source
as it is one of the most comprehensive peer-reviewed literature abstract and citation
databases available. In this analysis the number of affiliations serves as a proxy for thelevel of collaborative research on-going at the laboratories, and the type of affiliations
shows who the laboratories are collaborating with. The analysis looked at collaborations
between each DOE laboratory and the other laboratories in the system, academia,
industry and miscellaneous organizations, including consortia, non-academic research
centers, and other government laboratories. In total, roughly 300,000 laboratory
publications were included.
Figure 33 shows the number of different affiliations 257 for the years between 2004
and 2014, broken out by the type of collaborator. It represents a roll-up of the data fromall 17 of the National Laboratories. It is interesting to note that almost 75 percent of theresearch performed at the laboratories involves some form of collaboration and that thisnumber has stayed relatively constant over the last decade. The graph also shows that257

An “affiliation” is defined to mean another DOE laboratory, an academic institution, an industry
laboratory or any other research organization that is collaborating with a given DOE laboratory.

197

collaborations with the academic community dominate. In fact, over the last decade 68
percent of the laboratories’ collaborations have involved academia.
There is some variation in the distribution of collaboration across the sectors that ismainly related to the type of research being done at a given laboratory. For example, at
the SC laboratories, 71 percent of the collaborations involved academia, whereas at theapplied laboratories (Idaho, NETL, NREL and Savanah River) this number was closer to59 percent. Because of the nature of their work, one might expect that the three NNSA
laboratories would collaborate less with academia than other laboratories in the system.
Interestingly, the data does not bear this out. Over the last decade the percentage ofcollaborations involving academia for the weapons laboratories is higher than the appliedlaboratories, although lower than the SC laboratories (Lawrence Livermore: 62 percent,Los Alamos: 67 percent, and Sandia: 61 percent). This is illustrated in Figure 34.

Note: “Other” includes consortia, non-academic research centers, and other government laboratories.
“Management” refers to the M&O Contractor.

Figure 33. Co-authorship Analysis Examining the Collaborations between the DOE
Laboratories and Other Laboratories in the DOE Laboratory System, Academia, Industry
and “Other” Organizations

198

Note: The horizontal line represents the average for all of the laboratories (68 percent).

Figure 34. Percentage of Collaborations Involving Academia for Different Segments of the
DOE Laboratory System

The interaction between the DOE laboratories and industry, as measured by the
number of affiliations, is relatively small. Over the last 10 years only 4.7 percent of thelaboratories’ collaborators in the open scientific literature have involved industry. This isperhaps not surprising as scientific publications are generally not the objective of theseinteractions. Thus, joint publications may not be an accurate measure of industrial
collaborations. There is also considerable variation among the laboratories, again related
to the type of research being done at a given laboratory. At the science laboratories (bothsingle purpose and multi-program) only 2.9 percent of the laboratories’ publishingcollaborators were from industry, whereas at the applied laboratories this number was
close to 15 percent. It is interesting to note that 6.7 percent of the NNSA laboratories’
publication collaborations involved industry. This number is largely driven by Sandia,
where 15 percent of their publications involved an industrial partner (Figure 35).

199

Note: The horizontal line represents the average for all of the laboratories (4.7 percent).

Figure 35. Percentage of Collaborations in Published Papers in the Scientific Literature
Involving Industry for Different Segments of the DOE Laboratory System

The interaction among the laboratories themselves, as measured by the number ofcollaborations, is smaller than one might expect. Over the last decade only 7.8 percent of
the laboratories’ collaborators have involved another DOE laboratory. Here again thismay be a result of the fact that metrics related to scientific publications do not catch manyof the interactions that occur between the laboratories and so may not be a complete
proxy for the laboratory’s interactions with each other. For example, such metrics may
not capture collaborations such as the support being provided by Lawrence Berkeley,Argonne, Thomas Jefferson and Fermi in SLAC’s upgrade to the Linac Coherent Light
Source (LCLS). They may also not capture collaborative efforts among the laboratories
that characterize DOE’s emergency response efforts around the globe. There is again
wide variability in the level of collaboration related to the type of research being done at
a given laboratory. For example, at the SC laboratories, only 7.1 percent of thelaboratories’ collaborators were other DOE laboratories, whereas at the appliedlaboratories this number was close to 12 percent, and 9.8 percent of the NNSA
laboratories’ collaborations involved another DOE laboratory (Figure 36).

200

Note: The horizontal line represents the average for all of the laboratories (7.8 percent).

Figure 36. Percentage of Collaborations Involving other DOE Laboratories for Different
Segments of the DOE Laboratory System

B. Multi-institution Funding Contracts
In addition to researcher collaborations, DOE has initiated multi-institution
partnerships through initiatives such as the Energy Innovation Hubs, Energy Frontier
Research Centers (EFRCs), and the Bioenergy Research Centers (BRCs). Each of thefour multi-million dollar Energy Innovation Hubs focuses on a particular energy
challenge that had been resistant to solution by conventional R&D management. Three ofthe four Hubs are led by a National Laboratory. The EFRCs are multi-investigator,
multidisciplinary centers led by universities, National Laboratories, and private research
institutions. The 46 EFRCs launched in August of 2009 involve 850 senior investigators;
2,000 students, post-doctoral fellows, and technical staff; 115 institutions; and over 260
scientific advisory board members from 13 countries and over 40 companies. The three
BRCs are vertically integrated research institutes, and two of them are led by National
Laboratories.
The ultimate goal of these multi-institutional mechanisms is to combine innovation,risk tolerance, and disciplined project management to identify and support a portfolio of
projects that are risky and exploratory and focused on delivering innovative products into
real applications. 258 SEAB recently completed a review of these constructs and found thateach has been successful in encouraging collaboration of the National Laboratories with
258

SEAB, Task Force Report to Support the Evaluation of New Funding Constructs for Energy R&D in
the DOE (Washington, DC: DOE, 2014).

201

academia (in the case of the EFRCs) and with both academia and industry (in the case of
the BRCs and Hubs), but it recommended more disciplined management on the part of
DOE. 259 One criticism of the Hubs is that the system results in the proposal “losers”
being excluded from the project, when they likely could still make valuable contributions
to the endeavor.

C. Findings and Recommendations
Based on its work, the Commission observes the following:•

The DOE laboratories are often portrayed as separate, insular entities thathave little or no interaction with the broader S&T community. This
portrayal is patently false. The evidence suggests that almost 75 percent of
the research performed at these laboratories involves some form ofcollaboration and that this number has stayed relatively constant over thelast decade.

•Collaborations with the academic community dominate the interactions of
the National Laboratories with the broader S&T community. Over the last
decade 68 percent of the laboratories’ collaborators, as measured by joint
publications, have involved academia.

•

The three NNSA laboratories collaborate extensively with universities,
although somewhat less than the SC laboratories. The applied laboratories
collaborate with industry relatively more than the other laboratories,
reflecting their different missions and work.

•

New funding approaches for collaborative and multi-institution R&D for the
National Laboratories, academia and the private sector appear promising.
These include the Energy Frontier Research Centers and the Energy
Innovation Hubs.

Based on these observations, the Commission makes the recommendation withrespect to the laboratories’ support to the broader S&T community:
Recommendation 24: DOE and its laboratories should continue to facilitate andencourage engagement with universities through collaborative research andvehicles such as joint faculty appointments and peer review.

259

Ibid.

202

11. Partnering with Industry andTransitioning Technology
The National Laboratories partner with industry and transition technology throughmany channels. Table 32 describes various ways laboratories transmit their work tosociety. Laboratory impacts on the market and society can be captured in part throughmetrics such as patents, invention disclosures, and cooperative research and development
agreements (CRADAs). These measures attest to direct transfers of laboratory
knowledge, but laboratories also disperse innovative ideas and technologies through theother mechanisms described. The impacts of some of these mechanisms are harder toquantify in terms of return on investment but they still support the diffusion of important
technological concepts. The diversity of mechanisms speaks to the different sorts ofcollaborations that occur at the National Laboratories.
Table 32. Mechanisms for Technology Transfer
Indirect Pathway
Mechanisms
Conference papers
Education Partnership
Agreements
Field days
Hiring students
Publications
Seminars
Teaching
Workshops

Direct Pathway
Mechanisms

Network Pathway
Mechanisms

Invention protection
Invention disclosures
Patent applications
Issued patents
Direct transfer of property
Material Transfer Agreements
Patent licenses
Collaborative Research
Agreements
Cooperative Research andDevelopment Agreements
Resource Use Agreements
Commercial Test Agreements
User Facility Agreements
Strategic Partnership Projects
Participation in startups bylaboratory researchers

Commercialization
Assistance Program
Entrepreneurship-inresidence programs
Entrepreneurship training
Mentor-protégé program
Personnel Exchange
Agreements
Partnership Intermediary
Agreements
Venture capital forums

Source: M. E. Hughes et al., Technology Transfer and Commercialization Landscape of the Federal
Laboratories, IDA Paper NS P-4728 (Alexandria, VA: Institute for Defense Analyses, 2011). Adapted from
R. Ruegg, “Delivering Public Benefits with Private-Sector Efficiency” in Advanced Technology Program:
Assessing Outcomes, edited by C. W. Wessner (Washington, DC: National Academies Press, 2000); andFederal Laboratory Consortium (FLC), The Green Book: Federal Technology Transfer Legislation and
Policy (Washington, DC: FLC, 2009).

203

Data for FY 1999 to FY 2012 for many of the direct mechanisms can be found in
Table 33.
Table 33. DOE Laboratory Technology Transfer Data

FY

Total Active
CRADAsNew
CRADAsInvention
Disclosures

PatentApplications

IssuedPatents

New
Invention
Licenses

2001

558

204

1,527

792

605

226

2002

872

192

1,498

711

551

206

2003

661

140

1,469

866

627

172

2004

610

157

1,617

661

520

168

2005

644

164

1,776

812

467

198

2006

631

168

1,694

726

438

203

2007

697

182

1,575

693

441

164

2008

711

178

1,460

904

370

177

2009

744

176

1,439

775

520

139

2010

697

176

1,616

965

480

166

2011

720

208

1,820

868

460

169

2012

742

184

1,661

780

483

192

Source: NIST, Federal Laboratory Technology Transfer Fiscal Year 2011: Summary Report to the President
and Congress, September 2013; NIST, Federal Technology Transfer Data 1987–2009, October 2011.

A. DOE and Technology Transfer
Since the 1980s, technology transfer has been a formal responsibility of alllaboratory scientists and engineers consistent with their mission responsibilities.260
However, for decades, DOE has endured varying and often contradictory politicalpressure, oscillating between criticisms for favoring industry too much and condemnation
for not doing enough to boost the economy. For a period in the mid-1990s, Congressprovided DOE with funds to support researchers in CRADA participation, which led to arise in the number of CRADAs at the National Laboratories. An article in The
Philadelphia Inquirer derided the practice as “corporate welfare.” 261 The GAO
determined that the elimination of this type of CRADA and other funding programs
resulted in a 40 percent decrease in the number of DOE CRADAs between 1996 and260

Federal Technology Transfer Act of 1986 (P.L. 99-502), codified at 15 U.S. Code § 3710(a)(2).

261

G. M. Gaul and S. Q. Stranahan, “How Billions in Taxes Failed to Create Jobs,” Philadelphia Inquirer,
June 4, 1995.

204

2001. According to GAO, many industry partners cancelled CRADAs when they learned
that they would have to cover all the research costs. 262
The pendulum swung the other way when, about a decade ago, Congress directed
DOE to increase its focus on technology transfer through the Energy Policy Act of2005. 263 The act required DOE to establish a technology transfer coordinator, atechnology transfer working group and an energy technology commercialization fund topromote energy technologies for commercial purposes. The fund was intended to be anannual set-aside of 0.9 percent of applied research and development funds. 264 Up until
now, the Department has met the obligation by counting CRADAs and similar
technology transfer agreements. 265
More recently DOE and its laboratories have been the subject of a number of reports
criticizing their lack of engagement with industry to bolster national and regional
economic development. Turning the Page: Reimagining the National Laboratories in the
21st Century Innovation Economy by a coalition of think tanks argued that in order toturn the laboratories into “21st century engines of innovation,” three areas must be
reformed: (1) the troubled relationship between DOE and the laboratories, (2) the stove
piping of research funding and strategy, and (3) the weak link between laboratories andthe market. 266 Brookings Institution’s Going Local: Connecting the National
Laboratories to their Regions for Innovation and Growth criticized DOE and thelaboratories for inconsistent economic missions, the difficulty small firms have accessing
the laboratories, the laboratories’ lack of regional engagement, and the restrictions caused
by DOE’s micromanagement. 267
Not surprisingly given this history, DOE has not taken a consistent department-wide
stance on technology transfer and partnering with industry. This has led to differences inemphasis on and mechanisms used for technology transfer at the National Laboratories,
262

GAO, Technology Transfer: Several Factors Have Led to a Decline in Partnerships at DOE’s
Laboratories (Washington, DC: GAO, 2002).

263

Energy Policy Act of 2005 (P.L. 109-58).

264

Ibid, Sec. 1001(e) Technology Commercialization Fund.—The Secretary shall establish an Energy
Technology Commercialization Fund, using 0.9 percent of the amount made available to the
Department for applied energy research, development, demonstration, and commercial application foreach fiscal year, to be used to provide matching funds with private partners to promote promisingenergy technologies for commercial purposes.

265

T. Michael, “The Mysterious Tech Commercialization Fund.” Innovation 11 (3, 2013).

266

N. Loris, S. Pool, J. Spencer, and M. Stepp, Turning the Page: Reimagining the National Labs in the
21st Century Innovation Economy (Washington, DC: The Information Technology and Innovation
Foundation, 2013).

267

S. Andes, M. Muro, and M. Stepp, Going Local: Connecting the National Labs to their Regions forInnovation and Growth (Washington, DC: The Brookings Institution, 2014).

205

which is largely dependent on the laboratory’s stewarding office. As the lead laboratory
for DOE’s EERE, NREL stresses transferring applicable energy technologies moreheavily than basic research-focused SC laboratories. Individuals within SC havespecifically argued that products of DOE basic research laboratories are too far removed
from the market to justify funding their advancement through mechanisms such astechnology maturation funds. These laboratories have traditionally relied more heavily on
dissemination through publications and conferences, rather than industry partnerships.
The Commission recognizes the importance of a positive culture for engaging intechnology transfer and partnering with industry. Researchers will be more likely toparticipate in these activities if they feel leadership at both their laboratory and DOE is
supportive of their efforts. The Commission also recognizes that each laboratory is likely
to have its own approach to technology transfer and economic development, reflecting
the laboratory’s unique mission, culture and geographic setting.

B. Barriers to Industry Partnerships
Multiple barriers to productive laboratory-industry interactions have been identified
by the Commission’s research, past studies and a 2009 request for information (RFI)
issued by DOE to industry.
1.

Required Terms

Certain legally required terms, namely indemnification clauses and advanced payment
for CRADAs and non-Federal SPP, can be significant challenges, especially for small andmedium-sized businesses. These requirements shield the government from risk, but limit
potential opportunities for collaboration and inhibit technology transfer. DOE has madestrides to reduce the burden of advanced payment by decreasing the requirement from 90 to
60 days of expected cost. In addition, advance payment requirements may be waived forstate and local governments that have a constitutional prohibition. Industry has also
identified royalty-free licenses to practice (or “government-purpose rights”), rights tocompel a license (or “march-in rights”), and heightened DOE U.S. manufacturing
requirements as impediments to industry engagement. 268 There is presently no option torelax these terms and industry partners must take them or leave them.

268

15 U.S.C. §3710a(c)(4)(B) requires a preference U.S. manufacturing for any intellectual property
stemming from a CRADA, but DOE has specific guidance that makes this requirement more stringent
than other agencies.

206

2.

Negotiation Complexity and Length

There is flexibility for certain terms, such as intellectual property, but any use of nonstandard language leads to a lengthier DOE review and approval process. According to one
laboratory, any change will add three to four months to the negotiation time. This may
cause some partners to walk away from the deal. Not to say that this is wholly DOE’s fault
as the delay can be at least equally attributable to industry partner attorneys. In extreme
cases, one sentence in a contract can hold up an agreement for more than a year. Somepartners complain that non-uniform applications, intellectual property and contractual
terms, and scheduling processes across the laboratory network makes partnerships
cumbersome for institutions and industry that seek expertise from multiple laboratories.
Yet, this may not be an issue for large, sophisticated companies that are accustomed tonegotiating different contracts with different partners as a matter of routine.
3.

Too Early Stage

Many technologies under development at DOE laboratories are at too early a stage toignite industry interests. There is often a gap between where the laboratories stop
working on a technology and where industry is willing to pick it up, but no funding isprovided to work in that gap. Absent technology maturation funds or private sector
funding, these technologies stagnate in the development pipeline and never reach themarket. This technological “valley of death” is widely recognized, and many past efforts
have sought to tackle the issue. Even if all other administrative and legal barriers are
addressed, technology maturation remains a time- and resource-intensive process that
requires dedicated investment to succeed. When Foundation Capital reviewed IP at Oak
Ridge as part of an Entrepreneur in Residence (EIR) program, they found that, while thelaboratory had strong IP in specialized technologies, most of it was too far fromcommercialization to serve as the foundation of a new start-up. 269~
In addition to the above barriers, the Commission was presented with a number ofother issues. Many reported that working with laboratories was expensive, citing highlaboratory overhead rates as the greatest barrier to partnership. Also the timescale fordoing experiments at DOE laboratories often does not match industry requirements.
For their part, laboratories argued that technology transfer is to some degree an“unfunded mandate” with unrealistic expectations: laboratories are obliged to produce
positive benefits to society, but without dedicated funding from DOE to support
269

One of the filters for review was the technology must be fit for private funding within 12 months of the
EIR program start. M. Bauer, “Foundation Capital EiR1 at ORNL,” presentation to Commission, May
22, 2015.

207

technology transition and industry partnerships. Others felt the main barrier was
identifying prospective partners and recognizing what really has commercial potential.

C. Innovative Practices
Partnerships between laboratories and industry benefit the Nation by transitioning
laboratory technologies to broad application. To facilitate these partnerships, DOE andlaboratories have developed innovative tools and mechanisms to make the laboratories
more accessible.
1.

Centers and Institutions

At some laboratories, centers and institutions support technology transition andindustry partnerships explicitly. For example, at Fermi, the Illinois Accelerator ResearchCenter interfaces with industry and seeks possible commercial applications foraccelerator technologies. Similarly, Lawrence Livermore and Sandia have jointly
established the Livermore Valley Open Campus initiative. Launched in 2010, the campus
supports industrial collaboration in research and development in unclassified areas,
allowing Lawrence Livermore and Sandia researchers to apply their non-weapons skills
and work more easily with industry. LVOC is a campus-like environment withcollaborative space, providing ready access for all partners, including foreign nationals.
In 2011, Lawrence Livermore also opened its High Performance Computing Innovation
Center, which will facilitate cross cutting partnerships and academic alliances incomputing and manufacturing through co-location of facilities and people. 270 The Critical
Materials Institute at Ames enables researchers to engage industry and determine whichmaterials actually have commercial potential. The Combustion Research Facility at
Sandia was born out of the gasoline crises of the 1970s and has had several high profile
success stories including Cummins’ first computationally designed diesel engine. This
engine can now be found in over 200,000 Dodge Ram Heavy Duty Pickup Trucks. 271
2.

External OutreachLaboratories have recognized the importance of engaging external advisors to assist
in identifying and transitioning promising technology. Lawrence Berkeley is in theprocess of creating and consulting an industry advisory group. 272 Lawrence Livermore
270

R. A. Rankin, “LLNL Technology Transfer,” presentation to Commission to Review the Effectivenessof the National Energy Laboratories (May 2015).

271

B. Hwang, “Combustion Research Facility—Industry Interactions and Impact,” presentation to
Commission to Review the Effectiveness of the National Energy Laboratories (May 2015).

272

E. Quaite-Randall, “Technology Transfer at Berkeley Lab,” presentation to Commission to Review the
Effectiveness of the National Energy Laboratories (May 2015).

208

utilizes what they call an expanded entrepreneur network, which involves an industrial
advisory board and entrepreneurs-in-readiness, and developing a deep bench of industry
experts. 273 The NREL Venture Capital Advisory Board meets quarterly and provides
advice to the technology transfer office and reviews the laboratory’s technology
maturation fund proposals.
3.

Maturation Funding

DOE and the laboratories have also attempted to overcome the barrier that theirtechnologies are too early stage through technology maturation funds. There have beentechnology maturation fund programs over the past 20 years at both the laboratory andheadquarters level. Among them are the DOE Office of Science Laboratory Technology
Research Program (1992–2004) and the more recent EERE Technology
Commercialization Fund (2007–2008). Both centralized programs have since been
discontinued, but laboratories continue to invest in their own technology maturation
programs using funds gathered from royalties, DOE funding, and state government
support. These include Argonne’s technology maturation program and PacificNorthwest’s Technology Maturation Program. One of Pacific Northwest’s most visible
transitions of technology is the millimeter-wave body scanner that is widely used by theTransportation Safety Administration at airports throughout the U.S. Technology
maturation funds from Battelle were used to optimize the algorithms required to addressprivacy concerns, thus facilitating a license to fully deploy and commercialize thetechnology. Dedicated funding to laboratories for technology maturation is not uniformly
supported by offices within DOE. 274
4.

Legal Mechanisms

Legal hurdles can often discourage collaborations with industry, leading somelaboratories to explore new creative legal mechanisms to increase partnerships. For
example, Lawrence Berkeley has created CalCharge, a modified “umbrella” CRADA thatallows companies to join in as few as 6 weeks and is especially favorable to small
businesses that may not have the capital to invest fully in a traditional CRADA. Sixty
small California companies are currently involved in CalCharge, and SLAC has also
adopted the CalCharge model. Los Alamos’ preferred mode of operation is to useumbrella CRADAs.

273

Rankin, “LLNL Technology Transfer.”

274

S. Howieson, E. Sedenberg, B. Sergi, and S. Shipp. Department of Energy Technology Maturation
Programs. IDA Paper P-5013 (Alexandria, VA: Institute for Defense Analyses, 2013).

209

In 2011, DOE began a 3-year pilot program for its Agreements for Commercializing
Technology, conceived as a simpler and more nimble alternative to the more
contractually complicated CRADAs and SPP. 275 Eight laboratories initially opted toparticipate in the pilot and the program has been extended. As of May 2014, four of theeight laboratories had a total of 73 ACTs with a total value of over $60 million. 276 Onelimitation of ACT is that no Federal funding may be used to pay for the laboratory’s
services. This includes Small Business Innovation Research (SBIR) or Small BusinessTechnology Transfer (STTR) grants, and there is concern that this may limit theeffectiveness of the mechanism itself. DOE should consider lifting the prohibition on
using Federal funding for an ACT project to increase the pool of eligible business
partners for the laboratories. 277
Recently DOE established the Fast Track CRADA Program. The Fast Track
CRADA Program streamlines the execution of CRADAs by forgoing individual agency
approval for each agreement so long as the agency has approved an annual strategicplan. 278 However, Fast Track CRADAs can only contain “standard, pre-approved terms
and conditions without substantive modification,” which do not typically involve long
review times under the normal system. Lengthier review times are associated withCRADAs or SPPs that deviate from standard terms and conditions. DOE publishedseveral options for particular articles found in CRADAs, such as Personal Property andProduct Liability. 279 It would be helpful if DOE could delineate the range of acceptableterms and conditions for all articles in CRADAs and SPP agreements to decreasenegotiation and review time.
5.

Lowering Barriers for Small BusinessLaboratories and DOE have also taken some steps to lower the costs of partnerships
and facilitate access to the laboratories’ facilities. America’s Next Top Energy Innovator
Program works to lower costs of an option agreement for up to three patents and275

S. Howieson, B. Sergi, and S. Shipp, Department of Energy Agreements for Commercializing
Technology. IDA Paper P-5006 (Alexandria, VA: Institute for Defense Analyses, 2013).

276

DOE IG, Audit Report: The Department of Energy’s Implementation of the Pilot Program forAgreements for Commercializing Technology, OAS-M-15-04 (Washington, DC: DOE, June 2015).

277

Howieson, Sergi, and Shipp, Department of Energy Agreements for Commercializing Technology.

278

The Fast Track CRADA Program at DOE facilities streamlines the execution of CRADAs by forgoing
individual agency approval for each agreement. Under 15 U.S.C. § 3710a (a), directors ofGovernment-owned, contractor-operated laboratories may enter into CRADAs to the extent provided
in an agency-approved joint work statement (JWS), or if permitted by the agency, in an agencyapproved annual strategic plan (ASP).

279

DOE, Order 483.1A, Alternate Clauses, Additional Articles and General Guidance (November 2013).

210

deferring patent costs for startup companies. 280 The five laboratories with Nanoscale
Science Research Centers have established a single entry point, simplifying the process
and avoiding duplicative applications. DOE also launched the $20 million Small Business
Vouchers Pilot in 2015. Five laboratories—Oak Ridge, NREL, Lawrence Berkeley,
Sandia, and Pacific Northwest—were selected as the leads for the pilot, which will
provide vouchers to more than 100 small businesses so they can access laboratory
expertise and tools. 281
6.

Facilitating Researcher Engagement

Recognizing that people are key to the actual transfer of technology, laboratories
have made strides to facilitate researcher engagement. Multiple laboratories—including
Oak Ridge, Princeton Plasma Physics, Sandia, and Thomas Jefferson—have attempted toencourage their researchers to engage in entrepreneurial activities through entrepreneurial
leave programs. For example, Sandia has established the Entrepreneurial Separation toTransfer Technology program. The program allows employees to leave to start a
company and guarantees reinstatement if the researcher returns within 2 years.
Researchers can request an extension for a third year. Between 1994 and 2008, nearly
140 Sandia employees participated. Entrepreneurial Separation to Transfer Technology
program alumni have started 44 and expanded 46 companies. 282 Thomas Jefferson
researchers used its Entrepreneurial Leave Program to found BNNT, LLC (Boron Nitride
Nanotubes), which began construction on a factory May 1, 2013 in Newport News, VA.
Other strategies include establishing a commercialization manager for eachdirectorate (Pacific Northwest) and providing entrepreneurial training (Lawrence
Livermore). In 2014 DOE launched Lab-Corps to better train and empower National
Laboratory researchers to successfully transition their discoveries into high-impact, realworld technologies in the private sector. 283

D. State/University Partnerships for Economic Development
The Commission would like to highlight (once again) the value of DOE laboratories
establishing partnerships with states and universities. In addition to the benefits already280

K. Edmonds, “America’s Next Top Innovator: Lab Tech for Startups,” March 27, 2013.

281

D. Danielson, “New National Labs Pilot Opens Doors to Small Businesses,” July 9, 2015.

282

Sandia National Laboratories, “Sandia Entrepreneurial Program Is Back,” News Release, November
24, 2008

283

DOE, “Energy Department Announces New Lab Program to Accelerate Commercialization of Clean
Energy Technologies,” October 29, 2014.

211

mentioned, these relationships can greatly facilitate technology transition andlaboratories’ ability to contribute to regional economic development.
DOE laboratories with university managers have the option to use the university
technology transfer office for many of their patenting and licensing needs. This allows
the laboratory to tap into university expertise and free up scarce laboratory technology
transition resources and staff. At Princeton Plasma Physics, for example, all invention
disclosures are screened and administered through the Princeton University office.
University partners may also assist in securing partnerships by minimizing the negative
impact of required terms. Ames’s relationship with Iowa State University helps thelaboratory obtain outside partners for its Materials Preparation Center. Under DOE rules,
the laboratory must collect a cash advance for any materials ordered. Iowa State
University extends Ames a $200,000 line of credit to cover any partners that are
unwilling or unable to submit advanced payment. Ames also works closely with theuniversity research foundation on patents, plans, and licensing.
In addition, laboratories have partnered with states and universities to create centersof economic activity. Battelle and DOE have partnered with the Port of Benton,
Washington State University—Tri-Cities and a private developer to create the TriCities
Research District. The designated area of the District includes the campuses of PacificNorthwest and Washington State University—Tri-Cities, and a 90,000 square foot hightechnology business incubator. The District is designed to connect “private sector
companies, entrepreneurs and investors to a highly educated workforce of engineers andscientists to further develop, innovate and commercialize new products,” 284 and promises
to greatly enhance the laboratory’s access to the external world.

E. Findings and Recommendations
The Commission has found the following with respect to technology transition andpartnering with industry:•

284

Technology transition and partnering with industry is an important part of themission of the National Laboratories. While there are hundreds of CRADAs andother forms of collaboration with the private sector throughout the laboratory
system, support for technology transfer is inconsistent across the laboratories
and across the DOE program offices. This is at least partially due to oscillating
political pressure that swings from criticisms for favoring industry too much andcondemnation for not doing enough to boost the economy.

Tri-Cities Research District website, “What We Are and What We Provide,”
http://tricitiesresearchdistrict.org/?cat=2.

212

•

The barriers to partnership seem to be significant for many entities, particularly
small businesses. These include the early stage of development of available
technology, the financial cost of collaboration with the National Laboratories,
including the advance funding requirement, the complexity of many required
contract terms, the length of negotiation and approval times, and the inability ordifficulty of National Laboratory researchers to consult.

•

Laboratories and DOE have experimented with many innovative mechanisms
for engaging industry to make such collaboration easier, faster, less expensive,and more effective. These include physical institutions, targeted funding, andprograms to encourage laboratory researchers to engage in technology transfer.
DOE has also focused specifically on addressing barriers to partnership forsmall businesses through such initiatives as the Small Business Vouchers Pilot.

•

Relationships with states and universities can greatly facilitate technology
transition and laboratories’ ability to contribute to regional economic
development.

Based on these findings, the Commission makes the following recommendations
with respect to technology transition and industry partnerships:
Recommendation 25: All DOE programs and laboratories should fully embrace thetechnology transition mission and continue improving the speed and effectivenessof collaborations with the private sector. Innovative technology transfer andcommercialization mechanisms should continue to be pursued and best practices inother sectors, including academia, should be examined.
DOE should encourage the laboratories to adopt the innovative mechanisms theirfellow laboratories have piloted. Specific recommendations include:•

DOE and the laboratories should utilize industry advisory groups for researchplanning and quality reviews just as they use academic peer groups.

•

DOE should facilitate technology maturation through the creation of a centrally
funded technology maturation fund.

•Congress should permit Federal funding to be used for ACT agreements•

Laboratories should review and improve their policies related to consulting andentrepreneurial leave.

•

DOE should conduct evaluations to more accurately capture the return on
investment of the laboratory network’s contributions.

213

Recommendation 26: DOE should determine whether the annual operating plans
proposed by the Commission in Recommendation 3 could qualify as the “agencyapproved strategic plan” under the Stevenson-Wydler Technology Innovation Act
of 1980, and the Fast-Track CRADA Program, and, if not, Congress should amend
the law accordingly. For CRADAs with non-standard terms and conditions, DOE
should define the acceptable range for each term and condition to greatly expedite
negotiation and review/approval time.
Recommendation 27: Laboratories should pursue innovation-based economic
development by partnering with regional universities.

214

12. Operating User Facilities
DOE user facilities are federally sponsored research facilities available for external
use to advance scientific or technical knowledge (See Appendix J for a complete list ofuser facilities). The facilities operate under the following conditions:
•
•
•

•
•

•

The facility is open to all interested potential users without regard tonationality or institutional affiliation.
Allocation of facility resources is determined by merit review of the proposed
work.
User fees are not charged for non-proprietary work if the user intends topublish the research results in the open literature. Full cost recovery is requiredfor proprietary work.
The facility provides resources sufficient for users to conduct work safely andefficiently.
The facilities support a formal user organization to represent the users andfacilitate sharing of information, forming collaborations, and organizing
research efforts among users.
The facility capability does not compete with those from an available private
sector entity. 285

A. Value to the S&T Community and the National Economy
The Commission considers DOE user facilities to be an indispensable resource to
DOE, the broader S&T community, and the Nation as a whole. The user facilities benefit thebroader S&T community and the Nation through user communities whose research is often
funded through other sources, such as NSF, NIH, NASA, DOD, and private industry. 286 The

285

DOE Office of Science. “User Facilities,” last modified November 24, 2014.

286

In a hearing to the House Subcommittee on Energy and the Environment, Dr. Antonio Lanzirotti, the chairof the National User Facility Organization, described the collective user community at the time to include
45 Fortune 500 companies, over 600 universities, and 45,000 scientists. 7,000 of these users were
estimated to be students and postdoctoral researchers. The list of these companies and universities can befound in the hearing proceedings. Statement of Dr. Antonio Lanzirotti, Department of Energy User
Facilities: Utilizing the Tools of Science to Drive Innovation through Fundamental Research: Hearing
before the Subcommittee on Energy and Environment and the Committee on Science, Space, andTechnology, United States House of Representatives. 112th Cong. 21-61 (2012).

215

SC light sources alone are utilized by over 30 Fortune 500 companies and hundreds ofuniversities.287
In addition to the service provided to the entire S&T community, the laboratories
use and operate these facilities to conduct research to support the missions of DOE andother Federal agencies and to attract and to retain top talent. 288 Access to user facilities
allows a large number of outside researchers, tens of thousands each year, to perform
R&D that often could not be done otherwise. In addition to the capabilities of themachines and facilities themselves, the technical expertise of the laboratory scientists andengineers who use and operate the user facilities are at the foundation of the value added
to the government, university, and industry scientists who use these assets in theirresearch. During testimony to the Commission, industry representatives attested to thevalue of the user facilities and the technical expertise that comes along with them. 289
In the charter for a House subcommittee hearing on user facilities, the light sourceswere specifically mentioned as having made “numerous breakthroughs and innovations
ultimately applied to advances in industrial sectors such as aerospace, medicine,semiconductors, chemicals, and energy.” 290 The far-reaching breakthroughs andinnovations due to use of the light sources just one type of user facility and further
testimony in that subcommittee hearing indicate that single examples of research
conducted at these user facilities are not sufficient to convey the full impact of the user
communities. 291 However, almost all parties at that hearing (representatives from
Congress and from user facilities) specifically mentioned that the collection of user
facilities housed by the DOE and its laboratories could not be supported by the resourcesof any other institution or company.
The number of user facilities across the DOE laboratory system is between 30 and
80 user facilities. The variability in this value is based on the differing designations for a
287

From SC Deputy Director Patricia Dehmer’s testimony to the Commission on September 15, 2014. The
SC light sources are the Advanced Light Source at Lawrence Berkeley, the Advanced Photon Source at
Argonne, the Linac Coherent Light Source at SLAC, the National Synchrotron Light Source II at
Brookhaven, and the Stanford Synchrotron Radiation Lightsource at SLAC.

288

During site visits, many early career scientists and engineers mentioned that large user facilities were a key
factor in applying for and eventually accepting positions at DOE laboratories.

289

From testimony to the Commission on November 4, 2014.

290

Department of Energy User Facilities: Utilizing the Tools of Science to Drive Innovation throughFundamental Research: Hearing before the Subcommittee on Energy and Environment and the Committee
on Science, Space, and Technology, United States House of Representatives. 112th Cong. 21-61 (2012).

291

At its November 2014 meeting at Argonne, the Commission heard from industry representatives whose
companies are involved with the user facilities. On the whole, these industry representatives are satisfied
with the value they receive from the laboratories and the user facilities. Any issues dealt with operationaland efficiency concerns.

216

“user facility.” 292, 293, 294, 295 SC, DOE, the National User Facility Organization (NUFO),and the laboratories each have slightly different criteria to qualify facilities as “user.”
Although some commonality exists, the lists are not entirely the same. As described bySC, user facilities generally provide technical expertise, foster user communities forcollaboration and information dissemination, and choose users through “merit review of
proposed work.” 296
User facilities are in high demand, and the Commission was repeatedly told thatsome user facilities are up to 300 percent oversubscribed. 297 The primary complaint fromcurrent and potential users regarding the user facilities involves the difficulty in securing
access due to the overwhelming demand.

B. Operation of User Facilities
User facility planning and operating budgets are determined by the laboratory’s
stewarding office. SC determines the future of its user facilities with the user
communities and the laboratories collaboratively through its strategic review process(described in Chapter 7), which has the capacity to create new facilities and to terminate
older user facilities. 298 SC allocates about 40 percent of its funding to the operation ofscientific user facilities. 299

292

The majority of the laboratory complex’s user facilities are located at SC laboratories, and work proposals
are selected through a merit review process to allocate facility resources. A list of the user facilities
designated “user” by each laboratory is provided in Appendix J.

293

DOE Office of Science. “U.S. Department of Energy Office of Science User Facilities, FY 2015,” lastmodified October 1, 2014.

294

Note that on September 30, 2014, the Electron Beam Microcharacterization Centers at Ames, Lawrence
Berkeley, and Oak Ridge were merged with their co-located Nanoscale Science Research Centers. Notealso that the National Synchrotron Light Source (NSLS) has ceased operations for the new facility, NSLSII. DOE, “DOE Designated User Facilities,” last modified October 21, 2013.

295

National User Facility Organization. “Facilities,” accessed January 15, 2015.

296

DOE Office of Science. “User Facilities,” last modified November 24, 2014.

297

Oversubscription of user facilities is also discussed in Department of Energy User Facilities: Utilizing theTools of Science to Drive Innovation through Fundamental Research: Hearing before the Subcommittee
on Energy and Environment and the Committee on Science, Space, and Technology, United States Houseof Representatives. 112th Cong. 21-61 (2012) (statement of Dr. Persis Drell).

298

Most recently, the Tevatron Collider at Fermi and the Holifield Radioactive Ion Beam Factory at Oak
Ridge were discontinued, and the upgrade of NSLS (NSLS-II) at Brookhaven was confirmed. SC also
funds user facilities that are not located within the DOE laboratory complex, including the General
Atomics DIII-D Tokamak and the Michigan State University construction and operation of the Facility
for Rare Isotope Beams (FRIB).

299

From testimony to Commission, from interviews, and in House user facility hearing proceedings(112th Cong. 21-61 (2012)).

217

Laboratories have found that DOE offices have a variety of policies and practices
for covering operating costs of facilities, but this is likely by design. DOE funds user
facilities differently depending on the development level of the research being performed
there. If the research is very early stage, DOE expects to support all the baseload costs
and research costs. At the other end of the spectrum, for late stage research, DOE expects
all users to be industrial users, who pay full cost recovery because of the proprietarynature of their work, thereby precluding the need for operating funds from DOE. For user
facilities supporting research that falls somewhere in between, DOE supports a portion of
the operating costs but not all.
Based on this model, it is understandable that SC includes operating costs in thelaboratory budget when it builds a new facility because of the early stage of its researchareas. Of course, if industry uses SC facilities for proprietary research, they may do so by
providing full cost recovery. However, other offices have built facilities at laboratories
without committing any money to operation because they are relying on industry
contributions. Laboratories complain that this leads to a requirement for higher cost
recovery, which severely limits their ability to attract users, especially from smaller
companies. In these situations, there appears to be a difference in opinion between DOE
and laboratories of the agreed upon funding model for particular user facilities.
Although most DOE user facilities are located at SC laboratories, the applied energy
and NNSA laboratories also operate user facilities. At NREL, EERE funded the building
and operation of the Energy Systems Integration Facility (ESIF). ESIF, like SC user
facilities, provides the expertise of experienced scientists and engineers as part of the
facility, and in its first year, confirmed 40 partnerships with industry and academia. To
ensure success, EERE provides ESIF’s operating costs, which the Commissioncommends. In contrast, the FLEXLAB at Lawrence Berkeley has not been afforded thisflexibility by EERE, which has resulted in increased dependence on external partnerships
to run the facility.
The NNSA laboratories also have user facilities, including the National Ignition
Facility (NIF) at Lawrence Livermore. These facilities support the laboratories’ programs
and allow facility access to external researchers. The NNSA laboratories also havefacilities that benefit other Federal agencies, and although this type of facility is not open
to the entire scientific community, the laboratories argue that the value to the users issimilar to the SC user facilities.

C. Findings and Recommendations
The Commission has found the following with respect to user facilities:•

The user facilities at the National Laboratories are a unique and enormously
valuable national resource to researchers at other Federal agencies, academic

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institutions, and the private sector here and abroad. For example, researchers
funded by NSF and NIH account for as many as half of the users at some key
DOE user facilities. Many of the scientific user facilities run competitive, peerreviewed processes to allocate time among potential researchers, and all of the
SC user facilities designate time in this way. Many key user facilities areoversubscribed, some by as much as a factor of 3.
•

The strategic planning process regarding user facilities is very strong. The bestrun processes, such as those of SC, involve extensive work by peer review
panels that utilize experts from the DOE National Laboratories, other Federal
agencies, universities, and the private sector. These processes aim to develop
long-term technical and funding plans for new and existing user facilities thatmeet national R&D needs and avoid inappropriate duplication. This strong
strategic planning extends to go/no-go decisions concerning user facilities andheavily relies on the expertise of peer review panels.

The Commission has the following recommendations with respect to user facilities:
Recommendation 28: DOE, the Administration and Congress should continue tosupport user facilities at the DOE laboratories. Peer review by relevant external
advisory groups should continue to be used to decide which facilities to build andwhere to put all future upgrades and new and replacement user facilities.

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13. Overhead
Without exception, the Commission found all of the National Laboratories to beconcerned and proactive about containing overhead cost, all the more so in times of
constrained budgets. As one laboratory director aptly put it, every dollar spent towards
overhead is one less dollar to the experiment, the research outcome, the scientific result.
Laboratories are often criticized for being too expensive, and specifically for having
excessive overhead or indirect costs. These costs are a normal part of doing business,
however, and institutional functions such as accounting, payroll, information technology,
and maintenance are essential if the laboratories are to fulfill their missions.
At the same time, while overhead is unavoidable, it is controllable. Pursuing
opportunities to reduce overhead without reducing work quality is an important
responsibility for both DOE and laboratory contractors. With these considerations in
mind, the Commission addressed the question of whether overhead costs at the National
Laboratories are too high by comparing them to overhead rates at research universities.

A. Background
Overhead or indirect costs are those expenses not directly attributable to specificprojects. These include major equipment purchases used by multiple researchers,
facilities-related expenses such as utilities, maintenance, and security, as well as
administrative costs such as legal and financial services, executive management, payroll,and human resources. In contrast, direct costs are those associated with a single project.
These include labor, project-related travel, and raw material costs.
Different institutions sometimes pool, allocate, and define direct and indirect costs
differently. For example, a university might distribute the costs of its electricity across allof its functions, whereas a laboratory with energy-intensive user facilities could choose to
charge a portion of utility costs directly to individual researchers based on hours offacility use. Neither method of allocation is wrong. Rather, institutions develop
accounting systems that best match their specific situation.
1.

Overhead Rates Are a Representation of Institutional Efficiency

Overhead rates approximate an organization’s efficiency and cost of doing businessby comparing indirect and direct costs. Rates can be calculated and conceptualized indifferent ways, however, and these differences must be reconciled to ensure that rates

221

from two different institutions—two laboratories, or a laboratory and a university—
capture truly comparable qualities.
The term “overhead rate” is used to describe two related but fundamentally different
ideas. First, overhead rates can describe a material reality in the form of a ratio
comparing direct costs and indirect costs incurred. This rate accounts for all the costs an
institution incurs and is meant to be primarily descriptive. The other use of the term refers
to a multiplier applied to direct expenses as a means of determining price. For instance, if
a nonprofit law firm has a 40 percent overhead rate, then if an hour of a lawyer’s time
costs $100, the price to purchase that time would in fact be $140, where the 40 percent isapplied on the $100 base to cover costs such as office supplies, building rent, andsecretarial salaries. While this price-determining multiplier may be based on the material
reality, it is not synonymous with the ratio of indirect and direct costs. Certain costs may
be excluded from pricing calculations, or additional margin added for profit. This study
uses overhead rates in the sense of the first definition in an attempt to capture moreclosely the material reality of laboratory costs, rather than pricing.
As a baseline, overhead rate can be calculated using the following formula:
𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂ℎ𝑒𝑒𝑒𝑒𝑒𝑒 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 =𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐
𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐%(1)This formula makes clear how sensitive overhead rates can be to the assignment of costs
to direct or indirect pools. If, for instance, facility costs are not included in the indirect
cost pool, the overhead rate would be correspondingly lower. Furthermore, if a cost istreated as direct by one institution and indirect by another, the resulting rates will be lessaccurate as a representation of relative institutional efficiency.
Like laboratories, universities are R&D institutions that play an important role in the
Nation’s scientific enterprise. For research funded by Federal agencies, universities
negotiate the appropriate overhead rate to cover the indirect costs of federally funded
research with the DOD Office of Naval Research or the Department of Health andHuman Services. This facilities and administrative (F&A) rate is calculated using thefollowing formula:
𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐

𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂ℎ𝑒𝑒𝑒𝑒𝑒𝑒 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 (𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢) = 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 (𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀) %(2)

Modified total direct costs (MTDC) exclude subcontracts and large capital purchasesfrom direct costs, the argument being that subcontracted work and capital purchases do
not incur indirect costs in the same way or at the same rate as on-site work does. Note,however, that depreciation of capital purchases in proportion to their support of research
will be in the indirect costs (numerator). In addition, universities also have different

222

negotiated F&A rates for on-site and off-site work. Comparisons between university andlaboratory overhead rates are discussed in greater detail in following sections.
2.

Overhead Rate as a Comparison Metric—Useful, but Not Comprehensive

When different institutions provide a similar product, overhead rates can be a usefulcomparison metric. If a product’s material and labor expenses are uniform acrossorganizations—the denim in a pair of jeans, for instance—a lower overhead rate moreclosely reflects a leaner, more efficient organization.
Overhead rates alone cannot determine a product’s value, however. Indirect costs do
not describe fully a product’s quality, since expertise of labor, quality of raw materials,
and the like are all variations in direct cost. Comparisons are further complicated by thefact that laboratories sometimes treat similar costs differently. NNSA directly funds the
portion of their laboratories’ safeguards and securities costs which is not StrategicPartnership Projects, whereas other laboratories include those costs in their overhead fee.
Similarly, laboratories with major facilities that consume large amounts of electricity may
fund those utilities as a direct cost associated with research time, rather than as a general
overhead expense. National Laboratories operated by universities also benefit fromunique leveraging opportunities, since university M&O contractors can sometimes covercertain costs for its laboratory. Benefits can range, for example, from coverage of snow
removal, leases, and subsidized occupational medicine, to joint faculty appointments andtechnology transfer support from the host institution.
Additionally, less immediately comparable products or business models are difficult
to assess through overhead comparisons. While both universities and National
Laboratories conduct federally sponsored research, these institutions fulfill different
major functions. Universities both educate students and conduct research, and not all
university funding is Federal. On the other hand, the National Laboratories aregovernment-owned FFRDCs. Their missions include stewarding open user facilities
beyond the scale of those offered at most universities and conducting R&D in areas ofclassified national security-related research.
Even among themselves, laboratories are diverse. Differences in mission scope,nature of facilities, and location can have major impacts on costs and the comparability oflaboratory rates. Laboratories that work with special nuclear materials require increased
safeguards and security, while those in the Bay Area face a highly competitive labormarket for highly-skilled, technical positions. Factors as mundane as the market price forelectricity or the need for winter heating can impact laboratories’ costs in material ways.
In addition, the Commission had to deal with considerable uncertainty in its
analysis. Complete data on what is included in overhead calculations is not publicly223available, requiring us to make reasonable assumptions to fill in the gaps. There is likely
considerable error in our estimates, as discussed further below.
Despite these complications, overhead rates bear scrutiny, if for no other reason thanthe belief held by many that rates are too high. Comparisons are made and discussed in
the following section, taking into account the factors described above.

B. Overhead Rates at Laboratories Are Comparable to Official Rates
at Research Universities
In order to address the question of whether the National Laboratories are too
expensive, the Commission compared the indirect costs at Laboratories to those at
selected major research universities. Universities were chosen for comparison because
they also perform a significant amount of research for the Federal government. The
Commission also investigated comparisons with five other R&D performing
institutions—the Aerospace Corporation, APL, Draper Laboratories, JPL, and Lincoln
Laboratories—but was unable to get enough of a sample to support reliable comparisons.
As a preliminary step, we divided 15 of the 17 laboratories into two categories.
There are similarities among each category that bear on their overhead costs. Twolaboratories—Savannah River and NETL—are excluded from the pool (due to reasonsdescribed in the note to Table 34). Table 34 shows the overhead rates for the twocategories of National Laboratory. Overhead rates were calculated by dividing reported
total indirect costs by total direct costs.
Table 34. Unadjusted Indirect Costs as a Percentage ofTotal Direct Costs at National Laboratories
Category

Overhead Rate (Mean)

Standard Deviation

NNSA

79%

8%

Non-NNSA

50%

10%

Notes: Percentages represent the mean overhead rate for eachlaboratory category, calculated by dividing total indirect costs
by total direct costs. Laboratory data are derived from theDOE Institutional Cost Report for FY 2014. NNSA
laboratories include Los Alamos, Lawrence Livermore, andSandia. Non-NNSA laboratories include Ames, Argonne,
Brookhaven, Fermi, Lawrence Berkeley, NREL, Oak Ridge,
Pacific Northwest, Princeton Plasma Physics, SLAC, andThomas Jefferson. NETL and Savannah River are excluded
from this data since these laboratories do not report into the
ICR data base (NETL is a GOGO laboratory and SavannahRiver data are reported only as aggregated with theSavannah River Site).

224

NNSA laboratories have higher overhead rates than the other laboratories due tofactors associated with their national security and nuclear missions. These costs include
legacy facilities; increased security and safety needed for on-site nuclear materials andfor the secure conduct of weapons R&D and operating nuclear facilities; and specialized
technical requirements and equipment needed for the national security mission.
To make the numbers in Table 34 comparable with university overhead rates,
adjustments were made to address differences in how universities and laboratories define
and pool their direct and indirect costs, as described in the subsections that follow.
1.

Laboratories and Universities Account for Capital Expenditures and Major
Facility Construction Differently

A major difference between university and laboratory rates relates to how facilities
and capital construction costs are accounted. Laboratories do not account for depreciation
as an indirect cost, meaning that the overhead rates in Table 34 underrepresent actual
facilities costs.
Following Federal standards, laboratories report expenditures for major capitalconstruction as direct costs only in the fiscal year that those costs are incurred.
Depreciation and debt-related interest on buildings and equipment are not accounted for
as a direct or indirect cost. In contrast, when universities construct research buildings orpurchase major research equipment, the depreciation costs and annual interest on debt
related to the financing of these investments are added to the indirect cost pool andcollected over the estimated useful lives of the facilities. Initial construction costs are also
excluded from official F&A pricing rate negotiations. This difference has a large impact
on rate calculations, especially at laboratories undergoing large construction projects.
When accounting for facilities costs this way, the direct cost base at laboratories increases
while the indirect cost base decreases, deflating the overhead rate.
To better compare rates at universities and laboratories, funding of line item
construction projects from SC Program Offices and the Science Laboratory Infrastructure(SLI) program were excluded from the direct cost base. Similarly, the portion of NNSA
maintenance and repair costs that are directly funded was excluded. A list of theseprojects and their costs are included in Table 35.
Some safeguards and security costs are also funded at the three NNSA laboratories
through direct programmatic funding, since these costs are related to the unique nature ofwork conducted at weapons laboratories. Even though it is reasonable for NNSA to fundthese costs directly, they are by nature support functions. Therefore, for the purpose of
greater comparability in our analysis, these costs were treated as indirect costs.

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Table 35. Direct Funding for Construction Projects andMaintenance at National Laboratories, FY 2014 ($M)
Project

Sponsor

Total Project Cost
(TPC)

SLAC

LCLS-II facility construction

SC-BES$85.7

Brookhaven

NSLS-II facility construction

SC-BES$53.7

ThomasJefferson

CEBAF upgrade

SC-NP

$30.0

Fermi

Long Baseline Neutrino Facility

SC-HEP

$26.0

Fermi

Muon to Electron Conversion Experiment

SC-HEP

$35.0

Fermi

Utilities Upgrade

SC-SLI$34.9

ThomasJefferson

Utility Infrastructure Modernization

SC-SLI

$29.2

SLAC

Science and User Support Building

SC-SLI$25.5

Los Alamos

Direct-Funded Maintenance and Repair

NNSA

$66.4

Lawrence
Livermore

Direct-Funded Maintenance and Repair

NNSA

$17.4

SandiaDirect-Funded Maintenance and Repair

NNSA

$4.5

Laboratory

Note: TPC includes Total Estimated Costs (TEC) and, if appropriate, Other Project Costs (OPC). TEC
includes design, contingency, and construction phase costs such as construction and equipment
management. OPC include conceptual design, R&D, start-up, and contingency funds. OPC for SLI
projects are funded through overhead, and are not included in TPC. OPC for non-SLI construction are
funded through operational funds. TPC figures are drawn from the FY 2014 enacted costs as reported in
the Basic Energy Sciences, High Energy Physics, Nuclear Physics, Science Laboratories Infrastructure,
and NNSA FY 2016 Budget Requests to Congress.

The effect of the exclusions in Table 35 is to increase the overhead rates listed inTable 34. This is reflected in the adjusted rates shown in Figure 37 and discussed
further subsequently.
Having removed construction costs from the Labs’ direct costs, comparability with
university rates would be further improved if depreciation and interest expense were added
to the Labs’ indirect costs. In the absence of data to support such an analysis, we considered
this different treatment of facilities costs as a source of error in our comparisons. This isdiscussed further in the next subsection, along with other sources of error.
2.

Overhead Rates Are Comparable after Adjustments Are Made for Different
Accounting Practices and Business Models

Adjusted laboratory rates and university official F&A rates are compared in Figure
37. NNSA laboratories have higher rates than both their non-NNSA and university
counterparts. The non-NNSA laboratories’ rates are comparable to the universities’ rate.
The figure shows them to be almost equal, but, as discussed previously and later, the rates
may not in fact be so close due to uncertainties and certain incomparable elements.

226

Two primary factors influence our comparison between laboratory and university
rates. First, and largest, are facilities costs. As noted above, universities include
depreciation and interest expenses associated with facilities while the Laboratories donot, although some facilities costs (e.g., operation and maintenance expenses) are treatedas indirect costs at both types of institution. Based on public information available at six
major research universities we estimated that the depreciation and interest expenses
represent 14.5 points (or 25.4 percent of the mean 57 percent university F&A rate).
Offsetting to some extent the error introduced by facility cost is the second primaryfactor: the cap on university administrative rates. In 1991, OMB imposed a cap of 26
percent on the amount of administrative expenses that universities could charge toFederal grants that would be reimbursed by the Federal government. Actual
administrative costs at universities, however, are higher than 26 percent. In 2010, GAO
published a report assessing Federal policies for reimbursement of university F&A
costs. 300 In their survey of schools receiving more than $10 million in federal grants in
FY 2007, schools reported as the uncapped administrative component of F&A rate amean of 30.9 percent, leading to an undocumented 4.9 point difference.
Combining these two sources of error, overhead rates at both NNSA laboratories
and non-NNSA laboratories could be higher than the values identified in Figure 37, by
about 10 points. Nevertheless, we find the rates between non-NNSA laboratories anduniversities to be comparable, especially when one considers that there are many
university indirect costs of research which will be lowered by the university’s ability to
spread those costs over non-research functions. In contrast, laboratories are required bylaw to fully recover costs for all work, eliminating the possibility of unaccounted
expenses. Taking this into account would further reduce the potential error.
The overhead rates at the NNSA laboratories are higher than both the major
research universities and the non-NNSA laboratories by about 25 percentage points. Thatdifference is understandable given the special nuclear and classified nature of themissions of the NNSA laboratories. Recall that for purposes of this analysis, theCommission allocated the NNSA costs for safeguards and security to the indirect, rather
than the direct, cost categories.

300

GAO, University Research—Policies for the Reimbursement of Indirect Costs Need to be Updated.
GAO-10-937. (Washington, DC: GAO, 2010).

227

100%
85%

90%
80%

Overhead Rate

70%
58%

60%

57%

50%
40%
30%
20%
10%
0%
NNSA

Non-NNSA

Top-Funded R1 Universities(Official Rate)

Note: Percentages represent the mean overhead rate for each class of laboratory, as calculated by dividing
total indirect costs by total direct costs, and universities. Error bars represent one standard deviation.
Laboratory data is derived from the DOE Institutional Cost Report for FY 2014. Two laboratories—NETL
and Savannah River—are excluded from the rate calculation. University data is derived from publishedF&A rate agreements for FY 2013 at top-funded research universities. Top-funded R1 universities include
only “Research I” universities, as designated by the Carnegie Foundation within the NSF Higher
Education Research & Development (HERD) Survey and ranked by total R&D expenditures. Institutions
reporting data as an aggregate of multiple campuses were excluded from the rankings. Laboratory data
have been adjusted to reflect the direct funding of construction and maintenance/repair at the laboratories
as discussed in the text and shown in Table 35.

Figure 37. Adjusted Indirect Costs as a Percentage of Direct Costs at National
Laboratories (Grouped by Class) and Top-Funded R1 Universities, Adjusted for Direct
Laboratory Construction

Are the overhead rates at National Laboratories higher than at universities? Yes, but
probably not significantly, at least for the non-NNSA laboratories. This should be
expected as laboratories face some costs that universities do not, such as nuclear safety
and security, and universities can spread overhead costs over non-research missions.
Although the overhead rates at the NNSA laboratories are higher, the difference is inlarge part a result of the unique mission undertaken at these facilities.

228

C. Laboratory Cost Accounting and DOE Management—Balancing
Flexibility and Transparency
As the steward of Federal funds, it is DOE’s responsibility to ensure that taxpayer
dollars are not being spent wastefully. To fulfill this responsibility, DOE needs to have arobust understanding of laboratory cost accounting.
In the spirit of the government-owned, contractor-operated model of FFRDCs,
laboratories are given the flexibility to determine—within the bounds of Federal costaccounting standards—how costs are pooled and allocated. This flexibility allows
National Laboratories to leverage the strengths of their M&O contractors, and apply
accounting practices that match the diverse nature and scope of work across laboratories.
Laboratory accounting practices are federally regulated, and reviewed by different
parts of DOE, including the CFO’s Office, the IG, and Program Offices. Laboratories
outline their cost models and accounting practices in detail to the DOE’s CFO office inannual disclosure statements. These statements require approval and are vetted for costaccounting standards compliance. Additionally, laboratories report all their costs into
STARS, the DOE-wide cost reporting system, on a biweekly basis. Prior review oflaboratory financials from 2013 identified some laboratories as at-risk for cost manipulation,
which DOE and the laboratories have sought to address. 301 More recent audits havetypically not encountered evidence of non-compliance with cost accounting standards.302
Financial systems used at laboratories are designed primarily for accounting andinternal management, however, and not cross-system analyses. Transforming financial
data into a form that allows for management decision-making and identification of cost
drivers is a resource and time-consuming process. Most recently, DOE has developed, in
partnership with the National Laboratories CFO’s Working Group, the Institutional Cost
Report (ICR) as one way to supply high-level systematic data to the Department andother stakeholders regarding costs at the laboratories. While the system continues tomature, ICR holds promise as one mechanism by which DOE can better understand costs
across all of the National Laboratories.
1.

Institutional Cost Report (ICR) Provides a Mechanism to Assess Costs thatShould Continue to Be Improved

In 2010, DOE initiated the Institutional Cost Report (ICR) as a mechanism to collecthigh-level cost data from a number of DOE’s contractors, including 15 of the 16 FFRDC
301

GAO, National Nuclear Security Administration—Laboratories’ Indirect Cost Management Has
Improved, but Additional Opportunities Exist, GAO-13-534 (Washington, DC: GAO, 2013).

302

DOE IG, Allocation of Direct and Indirect Costs—Cost Accounting Standard 418—at LLNL(Washington, DC: DOE, 2013).

229

laboratories (Savanah River is excluded). Developed jointly by DOE and the National
Laboratories, laboratories report their costs into a set of high-level categories. These total
costs are then compared against the internally audited DOE financial system. Bycollecting data in this form, ICR seeks to present financial data in a format that allows the
Department to glean insights and survey costs across the system, as well as provide
laboratories the opportunity to benchmark their costs among themselves.
ICR data from FY 2011 to FY 2014 has been collected in two exhibits. The firstexhibit breaks down costs by their original category: salaries, benefits, travel,
procurement (including breakouts for utilities versus capital expenditures), subcontracts,
and so forth. These costs are not broken down into direct versus indirect: wages andsalaries of laboratory directors, administrative staff, technicians, and researchers all fall
into the salaries category. The second exhibit allocates costs to direct costs and twentyeight categories of indirect cost.
Laboratories differ in how data are collected for ICR, due to variations in how eachlaboratory translates information from its own accounting systems into the ICR template.
Differences are addressed through ongoing laboratory peer reviews that seek to improvedata quality by ensuring that data is collected as consistently as possible. That said, theICR is not audited, and is designed primarily to provide high-level survey data. ICR data
are also limited in their ability to benchmark to outside R&D institutions except at a highlevel, due to the specificity of categories to laboratory work.
ICR can identify when certain cost types are rising, either as a percent of totallaboratory costs or in total dollars. The DOE CFO’s Office has used these data in the past
to identify and address cost concerns with regard to pensions and travel costs. ICR is also
useful for determining when laboratories are outliers with respect to specific types ofcost, and can prompt DOE and other auditing bodies to inquire after costs that appear
anomalous, overrun, or unreasonable.
The Commission has observed from ICR data that National Laboratories spend aroughly proportional percent of their individual budgets in most of the categories ofoverhead cost reported in the ICR. For costs where larger ranges are observed (safeguards& security, environmental safety and health, and facilities-related maintenance), greater
variance is expected due to factors including the differing nature of work and thecondition of aging facilities. Overall, measured against each other through internalbenchmarking, laboratory indirect costs appear reasonably consistent.
ICR data will become more useful as consistency of data collection improves withsubsequent years. With more fiscal years of data, ICR can be used not only for crosslaboratory comparisons, but for analyzing trends within a single laboratory, where
differences in how laboratories translate their own financial systems into the common
format of the ICR are less influential.

230

2.

For the Purpose of Public Disclosure and Greater Accountability, DOE Should
Publish Laboratory Overhead Rates in an Annual Public Report

The National Laboratories were founded in service of the Nation, and, as publiclyfunded institutions, they have achieved unprecedented advances for science andAmerica’s national security. Key to this success was the innovation of a governmentowned, contractor-operated business model, which allowed the Federal government to tap
the expertise of the Nation’s universities and industrial sector. Under the FFRDC/M&O
model, government and contractor strove together as partners in a relationship of clearly
understood roles. Government set the “what” of strategic direction and provided funding,while contracted university and industry partners enjoyed the flexibility to determine
precisely “how” to meet the technical and scientific challenges confronting the Nation.
Perhaps the greatest strength of the FFRDC/M&O model is the freedom it grants
contractors to innovate and apply their best practices to meet national need. This
freedom, however, comes not granted but earned, through proven ability to deliver andtime-fostered trust with the Federal government. As the vast majority of the work at theseventeen laboratories is publicly funded, it is reasonable to ask for the purpose of greater
accountability and transparency that laboratory financial data be made available to the
public. Public disclosure also provides an additional incentive for laboratories to be
mindful of their overhead rates. For these reasons, DOE should publish an annual reportof the overhead rates at the National Laboratories, and require a consistent method forreporting indirect costs across all laboratories.

D. Summary Remarks
To ask whether overhead costs at the National Laboratories are too high should
prompt an immediate follow-up question: How best can overhead costs at laboratories be
reduced? During its visits to the laboratories, the Commission learned that thelaboratories have taken strides in recent years to reduce indirect costs. One laboratory
succeeded in streamlining its business while also initiating a burgeoning LDRD program.
By taking care to balance the growth of its LDRD program with savings elsewhere, thelaboratory increased its own research output with no increase in costs to the customer.
Similar stories were told across the system.
As with all other R&D institutions, the internal pressure at laboratories to keep
overhead rates low is significant. While perhaps not quite so competitive as for-profit
businesses or research universities, laboratories do compete with one another for research
projects and funding, and laboratories with lower overhead rates may have a competitive
advantage in making the case that research or major projects should go to them over theircompetitors. Along with regular financial audits and review of laboratory systems,
meaningful positive incentives and well-managed competition can be powerful tools
available to DOE for the purpose of reducing laboratory overhead costs.
231

In this chapter, the Commission used financial data to assess overhead costs atlaboratories and universities. Though useful, this approach has difficulty quantifying“stealth overhead,” or the losses in productivity that result from staff spending an
excessive amount of time on bureaucratic or administrative tasks, rather than missionrelated work. Financial data can signal, but not always pinpoint these sorts of costs. The
Commission is greatly concerned with the impacts of stealth overhead on theeffectiveness and efficiency of the National Laboratories, and addresses these questionsin other sections of its report. The Commission expects these types of cost to decline if
the Commission’s recommendations are implemented, because the amount of resources
devoted to transactional oversight will be reduced.

E. Findings and Recommendations
The Commission has formulated the following findings with regard to overhead andcost accounting:•National Laboratories are diverse institutions with cost drivers that reflect
notable differences in mission scope, condition of facilities, location, and otherfactors. These differences demand that benchmarking efforts take into
consideration how contextual differences impact costs.

•

NNSA laboratories have higher overhead rates than other National Laboratories
and research universities. This difference appears to be due to the uniquefacilities and mission of those laboratories.

•

Overhead rates at non-NNSA laboratories are also higher but remain comparable
to the negotiated rates at research universities once institutional differences areaccounted for.

•As government-owned, contractor-operated FFRDCs, the National Laboratories
have the flexibility to develop cost accounting systems that best meet the needsof their laboratory while remaining compliant with cost accounting standards.

•

Laboratory financial systems are vetted for compliance by DOE, and regularly
audited by other organizations, including the IG and GAO. Recent audits have not
identified non-compliance with cost accounting standards; reports from 2013 andearlier, however, have identified some laboratories as at-risk for cost manipulation.

•

As a survey instrument, ICR allows DOE to (1) identify trends in cost drivers
within one or multiple laboratories and (2) identify outlier laboratories andassess whether costs at a laboratory are reasonable by comparing across the
National Laboratories.
–

Laboratories allot a similar percent of their total operating budgets to mostcategories of overhead cost reported into ICR. Costs that are not rationalized232

by the diverse contexts in which the Laboratories operate are areas ripe forfurther inquiry.
The Commission has the following recommendations for the Department andlaboratories with regard to overhead and cost accounting:
Recommendation 29: DOE should continue implementing the ICR as a consistentmethod for tracking indirect costs across all laboratories, and encourage
additional peer reviews to help mature the ICR as a tool for DOE, thelaboratories, and other stakeholders.
Recommendation 30: DOE should provide greater transparency into laboratory
indirect costs and publish an annual report of the overhead rates at each
National Laboratory.

233

14. Facilities and Infrastructure
A. Background
DOE laboratory facilities and infrastructure include research and development(R&D) buildings, such as research centers, laboratories, reactors, and particle
accelerators; major equipment and instrumentation for R&D, such as telescopes,
supercomputers, workstations for beamlines, industrial 3D printing machines, anddetectors; and infrastructure associated with the laboratory, such as utility plants androadways. User facilities fall within this definition, but were discussed in more detail in
Chapter 12.
1.

Current State of DOE Laboratory F&I

The laboratory network as a whole consists of over 800,000 acres, which house over
5,000 buildings and trailers. Table 36 provides an overview of the magnitude and cost of
facilities and infrastructure at the 17 DOE laboratories.

235

Table 36. Overview of DOE Laboratory Facilities and Infrastructure
Buildings and Trailers
Total Square Feet
Total Square Feet
Leased327,6640

Replacement
Plant Value (RPV)($M)$75,937,104

Deferred
Maintenance (DM)
Costs ($M)
$1,501,376# of Acres
8

Total
Count
12

Argonne

1,521

105

5,088,372

340,710$2,177,197,935$91,505,157

Brookhaven

5,628

344

4,865,753

0$2,294,501,997$112,430,818

Fermi

6,811

424

2,488,064

0$709,712,766$5,813,388

Idaho

560,180508

5,771,058

1,202,678$3,970,756,549$137,344,582

Lawrence Berkeley

85

141

2,039,300

362,115$1,114,486,306$62,201,268

Lawrence Livermore

7,741

537

7,024,436

59,937$5,011,450,662$277,864,318

Los Alamos

National Laboratory
Ames

25,375981

8,629,803

435,114$11,304,829,490$607,665,259

NETL

243

115

1,195,715

36,759$444,808,692$11,367,931

NREL

329

37

1,202,060

202,056$454,686,899$13,4760*368

5,602,238

1,043,028$2,145,858,819$132,508,369

751

67

2,205,600

955,420$687,679,668$4,103,043

Oak Ridge

236

Pacific Northwest
Princeton Plasma Physics

8932

759,9030$271,422,490$62,326,230

193,520

1,028

7,619,270

397,876$4,627,289,482$477,462,579

~35**

92

859,978

58,850$1,169,811,174$86,514,895

SLAC

452

187

1,646,814

654$821,239,851$10,322,107

Thomas Jefferson

174

87

966,166

76,151$347,103,807$4,682,867

802,942¥

5,065

58,292,194

5,171,348$37,628,773,689$2,085,627,663

SandiaSavannah River

Total

Source: Data provided by DOE from the Facilities Information Management System (FIMS) database, FY 2014 Snapshot, manually assigned National Laboratory.
Figures do not include “Other Structures and Facilities (OSF),” which account for non-buildings, such as roads, fencing, storage reservoirs, and stacks (when nota part of a building).
Notes: DOE Leased includes DOE Leases, GSA Occupancy Agreements, and Contractor Leases. Replace Plant Value is the cost, in current year dollars, to designand construct a notional facility to replace an existing facility at the same location. Deferred Maintenance is the total cost of all repairs that have been postponed.
*Land assets for the Oak Ridge are managed by the Oak Ridge Office and therefore not listed for the laboratory in FIMS.
**Savannah River is located at the Savannah River Site (SRS). The SRS is comprised of almost 198,000 acres (approximately 310 square miles) of DOE owned
land and supports facilities assigned not only to the SRNL but also other DOE Program Offices. While the Site maintains a single land record in FIMS,
approximately 35 acres is managed by the Savannah River contractor.
¥Total # of acres excludes Oak Ridge.

2.

Impact of F&I on Laboratories

Facilities and infrastructure are essential elements of laboratory research andoperations, and inadequate functionality and other limitations can have a profound impact
on mission performance. For example, in FY 2014, three HVAC failures at Lawrence
Livermore resulted in program delays in optics, machining and sample inspections. 303 In
addition, substandard or outdated facilities and infrastructure can have negative impacts
on the environmental, safety and health condition of the laboratory. According topersonnel at Oak Ridge, 25 percent of the injuries are due to facility legacy issues. 304
Failure to modernize facilities and infrastructure will lead to higher maintenancecosts which lead to increases in overhead. Higher overhead costs make it more difficult
for the laboratory to stay competitive within the DOE system and the broader S&T
enterprise, impeding its ability to attract and secure research funding. There is also asignificant cost associated with the upkeep of excess facilities that are no longer used orneeded by laboratory staff but that remain at the laboratory due to a lack of funding for
disposal (discussed further in the Section B.1.b).
Leadership across DOE and the laboratories has reported that poor infrastructure has
led to problems recruiting and retaining high-quality scientists and engineers. Competingfor top talent with universities and industry becomes that much more difficult when thecondition or functionality of the workspace is deficient. One laboratory found that new to
mid-career employees were leaving because of the sorry state of the facilities andinfrastructure. On the other hand, NREL reported that new facilities have improved theirrecord of recruiting and retention.
3.

Funding Structure

DOE laboratory facilities and infrastructure construction and renovation are fundedprimarily through centrally-controlled budget lines or locally-controlled General Plant
Projects (GPP) and Institutional General Plant Projects (IGPP). GPP are funded throughresearch program funding and must be necessary projects: to adapt facilities to new or
improved research, development, or production techniques; to affect economies ofoperation; and to reduce or eliminate health, fire, and safety problems. IGPP are fundedthrough overhead because they serve the entire site and cannot be attributed to a single

303

R. Haldeman, “Maintaining the Infrastructure to Support the Nuclear Security Enterprise,” presentation
to the Commission to Review the Effectiveness of the National Energy Laboratories, February 24,
2015.

304

J. Smith, “The Importance of Core Infrastructure,” presentation to the Commission to Review the
Effectiveness of the National Energy Laboratories, February 24, 2015.

237

research program. Both GPP and IGPP are limited to $10 million per project and, as such,generally constitute maintenance, light renovation of existing facilities, or construction of
new facilities. Though congressional approval is not required, DOE notifies Congress ofany project above $5 million as a courtesy. In the FY 2016 budget request, DOE included$107 million for GPP carved out of program budgets. 305
Congressional approval is required for projects greater than $10 million. Given thecost, new construction or substantial renovation generally requires Congressional
approval. SC runs the Science Laboratories Infrastructure (SLI) Program that amounted
to $79 million in the FY 2015 budget request. Larger NNSA projects are funded by
Congress through the Readiness in Technical Base and Facilities (RTBF) Program thatwas $2.055 billion in the FY 2015 budget request. The RTBF program is split roughly
evenly among the three weapons laboratories. Previously, NNSA used the Facilities
Infrastructure Recapitalization Program (FIRP) to reduce deferred maintenance and the
Roof Asset Management Program (RAMP) to rehabilitate or replace roofs, but both have
expired.
Unlike universities, industry, and many state and local governments, the Federal
government does not use a capital budget, but instead an operating budget that presents
the government’s expenditures and revenues for each fiscal year. A capital budget
distinguishes certain types of investments from other expenditures in the budget. For
example, cash spending on capital projects would be segregated in a capital budget anddepreciation on Federal capital assets would be reported in the regular budget. This
would allow current costs to be allocated to future time periods. The private sector takes
advantage of this approach to spread capital costs over the period when benefits are
accruing from the investment. Various government bodies have considered the idea of theFederal government moving to a capital budget, but have dismissed it because of theincreased complexity, diminished transparency and the increase in sensitivity of theFederal budget to external factors such as depreciation rates. 306
4.

Planning Processes

Facilities and infrastructure planning occurs at multiple levels—at each individuallaboratory, within each stewarding office, and across the Department as a whole.

305

SC, $22.4M, NNSA, $47.8M; EM, $12.5M, NE, $23.2M, and FE, $1.25M.

306

See, for example, Congressional Budget Office (CBO), Capital Budgeting (Washington, DC: CBO,May 2008), which references past studies that rejected a capital budget for the Federal government,
including the 1967 President’s Commission on Budget Concepts and the 1999 President’s Commission
to Study Capital Budgeting.

238

As required by DOE Order 430.1B, each laboratory must document real property
asset site planning and performance in a Ten Year Site Plan that is kept current andcovers a 10-year planning horizon. 307 SC laboratories’ site plans are now integrated into
the Annual Laboratory Review and Plan, which ties mission readiness to laboratory
facilities and infrastructure by identifying gaps and plans to fill those gaps. Mission
readiness is determined using a framework illustrated by Figure 38.

Source: L. Eberhardt, Office of Science National Laboratories Facilities & Infrastructure: Mission
Readiness Model, December 9, 2009.

Figure 38. Mission Readiness Assessment Process

Each SC laboratory site plan includes an overview of site facilities andinfrastructure, the results of the Laboratory Operations Board (LOB) conditionassessments, a campus strategy, gaps and proposed investments. The LOB condition

307

DOE, Order 430.1B Change 2, Real Property and Asset Management. (DOE, 2003).

239

assessments determined the relative percentage of adequate, substandard, and inadequate
assets for each category of facilities and infrastructure (see Figure 39 for an example). 308
SC also organizes a Mission Readiness Peer Review among its laboratories where it
sends facilities and infrastructure personnel from SC laboratories to assess the facilities
and infrastructure processes of other SC laboratories. 309 The peer review focuses on theoverall quality and credibility of facilities and infrastructure plans as an avenue for
improving the Mission Readiness assessment process. Laboratories involved in the peer
review team are asked to evaluate whether the process is comparable to one that would be
produced by their own laboratory. Peer reviews of all the SC laboratories are completed
on a three-year cycle.
In FY 2013, NNSA moved to a Twenty-Five Year Site Plan for its laboratories toencompass the entire approximate facility life cycle. According to the NNSA, the mostimportant component of the site plan is “how attainment of the [program’s] infrastructure
goals sustains core capabilities and meets mission commitments.” 310 The NNSA
laboratory site plans include a site overview and snapshot; changes from the prior year
site plan; future vision and core capabilities for the tactical planning horizon (5 year planof President’s Budget plus 5 years) and strategic planning horizon (plus 20 years), andreal property asset managementa brief discussion of the site’s footprint management
and gross square feet reduction, future space plans, facility condition, maintenance,
security infrastructure and how management is addressing the program goals.
Because the demand for facilities and infrastructure project funding is greater thanavailable resources every year, DOE must develop a prioritized list for the system. For
the Science Laboratories Infrastructure Program, SC holds an annual meeting to solicit
input from site offices and laboratory Chief Operating Officers on projects identified ineach Annual Laboratory Plan and to provide feedback on the projects. NNSA personnel
may be invited to presentations for laboratories with extensive NNSA work. During aclosed-door Federal session, the Associate Directors for each research program give their
input on how the projects will impact their missions. The SC Director then decides which
projects will be put forth in the budget request, subject to the Secretary’s final approval.

308

LOB is discussed further in Section C.

309

See as an example, Peer Review Report of Jefferson Laboratory’s Implementation of the Mission
Readiness Process. September 8-10, 2010.
https://www.jlab.org/div_dept/dir_off/oa/secure/TJNAF%20Mission%20Readiness%20Peer%20Revie
w%20Final%20Report%20(11-2-10).pdf. Individuals from Ames, Fermi, Princeton Plasma Physics,
and Pacific Northwest composed the peer review team.

310

NNSA, Twenty Five Year Site Plan (TYSP) Narrative Guidance (Washington, DC: DOE, May 2012).

240

241

Source: Office of Science, The U.S. Department of Energy’s Ten-Year-Plans for the Office of Science National Laboratories, FY 2014. August 2014.

Figure 39. Oak Ridge Condition Assessment, FY 2014

NNSA uses the Construction Working Group to prioritize projects. The voting
membership of the Construction Working Group includes members from NNSA
headquarters, NNSA laboratories, production plants and the Nevada Test Site. After eachlaboratory—working with its field office—provides a list of projects with their rationale
described in mission gap statements, the Construction Working Group scores all the
projects. All members score the operational and business goals criterion; only NNSA
headquarter personnel score the mission deliverables criterion; and field office managers
score the improvement of safety criterion. The group deliberates and makes final
decisions over a two day meeting in Washington, DC.

B. Issues
The most pressing issues facing DOE laboratory facilities and infrastructure
relate to the condition of facilities and infrastructure, planning and construction, andlack of resources.
1.

Condition of Facilities and Infrastructure

The condition of laboratory facilities and infrastructure across the network is being
hampered by deferred maintenance and excess facilities.
a. Deferred MaintenanceDeferred maintenance refers to facility and infrastructure repairs that were
postponed in order to lower short-term costs, meet budget levels, or liberate funding for
research. These projects can include roofing repair or replacement, correction of
structural defects, and repair or replacement of installed utility and distribution
systems. 311 At the DOE laboratories, deferred maintenance is a significant issue, sinceresearchers and program managers typically want to invest their limited dollars in sciencerather than in items such as roofs. In addition, at certain sites, maintenance can only takeplace during the summer when temperatures are above freezing. This also coincides withthe end of the fiscal year when pots of money are smallest. While a program might set
aside maintenance funding at the beginning of the fiscal year, unpredictable incidents will

311

According to DOE Order 430.1B, Deferred Maintenance does not include:
•
•
•
•
•
•
•

Regularly scheduled janitorial work such as cleaning and preserving facilities and equipment.
Work performed in relocating or installing partitions, office furniture, and other associated activities.
Work usually associated with the removal, moving, and placement of equipment.
Work aimed at expanding the capacity of an asset or otherwise upgrading it to serve needs different from or significantly
greater than those originally intended.
Improvement work performed directly by in-house workers or in support of construction contractors accomplishing an
improvement.
Work performed on special projects not directly in support of maintenance or construction.
Non-maintenance roads and grounds work, such as grass cutting and street sweeping.

242

eat into that allocation over the year. But the longer maintenance is deferred, the larger
and more expensive the problem becomes. With neglect, minor repair work can evolve
into more serious conditions. Failures are increasing in frequency and severity as
facilities and infrastructure age and deferred maintenance grows.
The current estimated cost of clearing the entire deferred maintenance backlog forthe laboratory and plant complex is over $5 billion; the laboratory portion is over $2
billion. While all laboratories have deferred maintenance, three laboratories holdapproximately 64 percent ($1.4 billion) of the total deferred maintenance backlog of $2.2
billion. 312 NNSA laboratories and plants account for about $3.5 billion; NNSA
laboratories account for approximately $1.3 billion. However, it is important to note that
not all deferred maintenance is created equal; some is by design, such as from excess
facilities that will eventually be demolished. Generally, deferred maintenance costs are
consistent with the size of each laboratory across the system.
NNSA attempted to get a handle on their sites’ deferred maintenance problem
through targeted funding. The Facilities and Infrastructure Recapitalization Program(FIRP) was a decade-long program created to reduce the substantial backlog of facility
maintenance, repair and demolition projects across NNSA’s eight sites, but it ended in
2013. 313 It averaged $170 million a year and was still insufficient to address NNSA’sdeferred maintenance needs. From 2002 to 2012, deferred maintenance in NNSA wentfrom $2.5 to $3 billion. FIRP was supposed to be replaced by the Capabilities Based
Facilities and Infrastructure (CBFI) Program in FY 2013, but in the midst of sequester,
CBFI was not funded. In the two years since FIRP ended, deferred maintenance hasgrown by another $500 million to $3.5 billion. NNSA staff stated that while set aside
money is essential, FIRP was not as focused on the most critical maintenance needs as it
could have been. According to personnel at Sandia, decreases in the RTBF program havealso led to an increase in deferred maintenance.
Laboratory staff expressed concern because the costs of maintaining their facilities
and infrastructure are greater than the funds provided by the Department. Lawrence
Livermore personnel argued that they need ~$50 million in equipment investments and~$50 million in facility life extension programs, and they cannot fix infrastructure
problems of this magnitude with indirect funds. They believe it requires line item
support. Brookhaven already spends 10 percent of its overhead on deferred maintenance

312

Laboratory portion estimate from FIMS database, FY 2014 Snapshot.

313

NNSA, “NNSA Completes Successful Facilities and Infrastructure Recapitalization Program,” Press
Release (February 20, 2013).

243

($80–$100 million per year) but 33 percent of its facilities are inadequate or substandard
according to the results of the LOB assessment. 314
b. Excess Facilities
Facilities are deemed “excess” if they have no present or future mission. The naturalconclusion to the facilities life cycle is disposition through demolition, sale, transfer, etc.
Contaminated facilities require deactivation and decommissioning (D&D) prior todisposition. 315 Excess facilities that have not yet been deactivated and decommissioned
must be stabilized and then surveilled and maintained until their D&D. Under the current
system, programs are responsible for construction and operation of facilities, but there is
no assigned responsibility for D&D. Laboratories have contaminated and noncontaminated excess facilities that they cannot afford to D&D. The rough order ofmagnitude cost for D&D of excess facilities at SC laboratories is $2 billion. 316
The cost of the D&D process is especially significant if facilities are contaminated.
DOE established the Office of Environmental Management (EM) in 1989 to oversee
cleanup of its weapons research and production legacy. The total cost of cleanup was
estimated to be $280 billion in 2013. As of 2015, EM has determined that 234 additional
facilities meet its transfer criteria, but it does not have the funding to accept them for
remediation. 317 Therefore, the stewarding offices remain responsible for keeping thefacilities stable, including the necessary surveillance and maintenance costs. 318 These
costs can be significant. Lawrence Livermore, for example, spent $2.5 million on
operating and maintenance for the B251 Heavy Element Facility since 2008 and Argonne
spent over $19 million on the Alpha Gamma Hot Cell Facility. The stewarding offices
have also identified an additional 140 excess contaminated facilities that EM has yet toassess. According to DOE’s Inspector General (IG), the transfer of these contaminated314

Discussed further in Section C.

315“Deactivation is the process of placing a contaminated, excess facility in a stable condition to minimize
existing risks to workers, the public and the environment. Decommissioning takes a facility to its
ultimate end-state through decontamination and dismantlement.” DOE IG, Audit Report: The
Department of Energy’s Management of High-Risk Excess Facilities (Washington, DC: DOE, January2015).

316

Smith, “The Importance of Core Infrastructure.”

317

This figure includes both laboratories and production plants. Ibid; M. T. Janaskie, T. J. Kliczewski, A.
P. Szilagyi, C. Urland, M. Gresalfi, and C. Negin. “The Transfer of Excess Facilities, Materials, andWastes into DOE’s Environmental Management (EM) Program: Successes Resulting from EM’s
Transfer Review Process-11246,” WM2011 Conference, February 27–March 3, 2011, Phoenix, AZ.

318

The IG found offices had spent more than $380M on operating and maintenance for the 234 facilities
between 2008 and 2015.

244

facilities may not occur until 2025 or even 2035. 319 In addition to the issue of cost of
surveillance and maintenance for the program offices, these contaminated excess
facilities continue to pose a risk to mission, workers, the public and the environment. One
serious problem with transferring additional excess contaminated facilities to EM is thatthe program already has insufficient budget to meet its state compliance agreements. 320
The Department has been criticized for not conducting a comprehensive look acrossits excess facilities portfolio to determine which are either the riskiest facilities or thelowest hanging fruit. According to the DOE IG, “Environmental Management and thevarious program offices focused their respective budgetary resources based on individual
program priorities instead of on the highest risk facilities across the Department.”
Laboratory personnel asserted that EM’s prioritization process is largely site specific;
meaning specific projects with high need but in lower priority sites (e.g., Savannah River)may not be highlighted. Argonne is trying to get out of the “nuclear business” but it has a
few excess radioactive facilities that have not been transferred to EM and are in the D&D
queue. Even though these facilities could represent “easy wins,” they are not rising to the
top in the EM prioritization process. The LOB has recently initiated a review of excess
facilities, which will be discussed further in Section C.
The issue of excess facilities is not felt uniformly across the laboratories. Somelaboratories do not have a problem at all. For example, Ames has no excess square feetand Sandia personnel asserted that, if anything, it needs more space. But excess facilities
are negatively impacting the bottom line of other laboratories. Excess facilities at Los
Alamos cost $3 per square foot, which is covered by overhead. See Figure 40 for excess
square footage for selected SC laboratories. DOE personnel noted that data maintained in
the Facilities Information Management System (FIMS) database does not support theseexcess square footage figures because many of the buildings that laboratories label“excess” have not yet officially been changed to excess status. 321 The difficulty inproviding an accurate picture of the true extent of the excess facilities problem is part ofthe issue facing the laboratories and the Department.
319

DOE IG, Audit Report: The Department of Energy’s Management of High-Risk Excess Facilities.

320

The Comprehensive Environmental Response Compensation and Liability Act and the Resource
Conservation and Recovery Act authorize the states to enter into legally enforceable complianceagreements that provide for establishing enforceable schedule milestones that govern the work to be
done. In addition to the above type of state compliance agreements, there are agreements with otherfederal agencies, court-ordered agreements with states, and other agreements, such as orders to enforce
state hazardous waste management laws. In total, DOE has approximately 70 compliance agreements
in place at 23 waste cleanup sites.

321

According to the FIMS database, FY 2014 Snapshot, Argonne has 0 square feet, Oak Ridge has
226,028 square feet, Brookhaven has 47,011 square feet, and Lawrence Berkeley has 55,756 square feetof excess facilities.

245

1,344k

1,240k185k

ArgonneOak Ridge

Brookhaven

63k
Lawrence
Berkeley

Source: J. Smith, “The Importance of Core Infrastructure,”
presentation to the Commission to Review the Effectivenessof the National Energy Laboratories, February 24, 2015.

Figure 40. Gross Excess Square Feet in Selected SC Laboratories

2.

Resources for Facilities and Infrastructure

The primary concern related to resources for DOE laboratory facilities andinfrastructure is the sheer magnitude of need to maintain and revitalize the system. For
example, SC laboratories have identified $6 billion of needed investments over the next
10 years (Figure 41). Nearly $700 million of these investments are needed for basic
systems that form the backbone of the laboratories, including electrical systems, water
systems, and waste systems.
Facilities and infrastructure at the laboratories also suffer because of the uncertainty
of funding. DOE began construction at NETL on a test bed facility for fossil energy
similar to the user facility at NREL, but the programs ended funding before construction
was complete. Since the Department did not provide resources for repurposing thepartially built facility, it never got off the ground and industry was unable to use it.

246Ten-Year Needs for General Purpose Laboratory Infrastructure,
All Funding Sources ($M)$261
Construct and renovate facilities
Upgrade core infrastructure
Remove excess space
Maintain and repair infrastructure
ORNL nuclear infrastructrue$1,755$2,561$1,182$204
Source: J. McBrearty, Office of Science Briefing to the Commission to
Review the Effectiveness of the National Energy Laboratories (CRENEL).
February 24, 2015.

Figure 41. SC Laboratory Facilities and Infrastructure Investment Needs

a. Alternative Financing
Alternative financing or third party financing describes leasing agreements between
the government and the private sector for construction, renovation, modernization, anddisposal of real property assets. Two types of alternative financing that are relevant forlaboratory facilities and infrastructure are operating leases and Enhanced Use Leases(EULs).
1) Operating Leases
The Federal Government contributes the real property or land and a private entity
borrows the initial capital to develop or renovate it. A lease agreement allows nonFederal entities or contractors to occupy the real property for a defined time period while
the agency repays the financed amount through lease payments. The Office ofManagement and Budget (OMB) decides whether the lease is an operating or capitallease using “scoring criteria” found in Appendix B of OMB Circular A-11. OMB, theCongressional Budget Office, and the Congressional budget committees are collectively
responsible for the substance of the criteria. A capital lease is considered a capitalacquisition, meaning an agency must request and allocate full budget authority up-front247

in the amount equal to the asset’s total cost. 322 On the other hand, an operating lease isconsidered an annual operating expense, which means that agencies request and allocate
budget authority in the amount equal to an annual lease payment every year until the endof the lease term.
DOE formally submitted 13 laboratory and plant facility projects to OMB from 2001
to 2010. Eight of these projects qualified as operating leases, but none have done so since2007. The Department has found several of the scoring criteria listed in Appendix B ofOMB Circular A-11 particularly challenging to overcome and has (thus far unsuccessfully)
proposed modifications. The second criterion prohibits a bargain-price purchase option.
After a capital asset has been fully depreciated, private entities are typically willing to sell
the fully depreciated asset at a bargain price—even for as little as $1—but this type ofagreement is disallowed by OMB regulations. Also since 2000, there has been a newinterpretation of the fourth criterion, which states, “[t]he present value of the minimum lease
payments over the life of the lease does not exceed 90 percent of the fair market value of theasset at the beginning of the lease term.”323 OMB now requires this calculation be
performed using private construction cost rather than government construction cost, making
the standard very difficult to meet. In addition, the fifth criterion requires the asset be “ageneral purpose asset rather than being for a special purpose of the Government,” and OMB
has generally taken a narrow view of the definition.
After a multi-year hiatus, the Department and laboratories are renewing efforts todevelop operating lease proposals to submit to OMB for approval. 324
Proponents of alternative financing using operating leases argue that it allows
laboratories to pursue construction projects in times of budget austerity. Instead of
securing the entire cost of the facility up front during the agency appropriation process,the laboratory borrows the money from a private financier and pays off the loan throughoverhead over a period of decades. Supporters also assert that when comparing the fulllife-cycle costs of an alternatively financed facility to a line item, they found thealternatively financed projects had lower costs for construction, lower costs for operation

322

Office of Management and Budget (OMB). Circular A-11, “Appendix B – Budgetary Treatment of
Lease-Purchases and Leases of Capital Assets” (Washington, DC: OMB, 2014).

323

OMB, Circular A-11, “Appendix B – Scoring Lease-Purchases and Leases of Capital Assets”(Washington, DC: OMB, 2000).

324

At least two laboratory alternative financing proposals are in development, one at Brookhaven and one
at Savannah River.

248

and quicker building times. 325 Once the debt is retired, rent payments end, which is key tothe finding that alternative financing leads to a cost savings in the long run.
Critics of alternative financing using operating leases do not approve of DOE
mortgaging the government when there is no guarantee the Nation will continue to see a
mission need for maintaining a laboratory. 326 It is also an issue of control; Congress is the“keeper of the purse” and ought to be the final arbiter for these significant financial
decisions, not the executive branch. There has also been some doubt expressed regarding
the conclusions of the laboratories’ economic analysis—critics do not understand how
alternative financing can prove to be less costly when it is always more expensive for theprivate sector to borrow money than it is for the government.
The Commission has been disappointed by the lack of independent analysis ofalternative financing using operating leases, particularly cost benefit analyses. There is
one GAO study from 2004, which analyzed two types of third-party financing projects—
public-private partnerships for facilities and infrastructure and energy savings
performance contracts (ESPCs). 327 GAO planned to perform a cost analysis of six ESPCs
and five public-private partnerships for facilities and infrastructure—including cash flowschedules, expected savings and costs, such as principal payments, interest payments,
measurement and verification fees, operations and management, and energy service
company markups. However, the GAO conducted only a cost analysis of the ESPCs
because data were insufficient to analyze public-private partnerships for facilities andinfrastructure. By comparing data from six ESPCs and similar federally contracted
projects, the GAO concluded that the acquisition of capital through ESPCs is from 8 to56 percent more expensive than through full, up-front appropriations. CBO 2005 cites
this ESPC-specific estimate for all third-party financed projects, including public-private
partnerships for facilities and infrastructure.
The GAO emphasized that for the five public-private partnerships for facilities andinfrastructure it studied, it was difficult to assess how much the projects would have cost
under up-front appropriations. However, the GAO 2004 report did include a cost

325

Contractor Financial Management Alliance, Economics of an Alternatively Financed Facility: Four
Case Studies. Authors reviewed the cost data and operational experience from four recent alternatively
financed projects: Pacific Northwest’s Biological Sciences Facility and Computational Sciences
Facility, Oak Ridge’s Multiprogram Research Facility, and Argonne’s Theory & Computing Sciences(TCS) Building.

326

Supporters argue this point is nullified by the 365 termination clause in case of end of mission needthat is part of every lease.

327

GAO, Capital Financing: Partnerships and Energy Savings Performance Contracts Raise Budgetingand Monitoring Concerns (GAO, 2004). CBO also released a study in 2005 but it bases its costestimates on the GAO analysis. CBO, Third-Party Financing of Federal Projects (CBO, 2004).

249

comparison related to the interest rates of bonds obtained by the private developer. In
several cases, the present value of the long-term lease payments exceeded the value of thebonds due to the project’s interest rates. Yet, the analysis does not consider other possibly
important costs, such as opportunity costs, associated with Federal contracts if approved
through full, up-front appropriations.
2) Enhanced Use Lease (EUL)
Non-contaminated excess facilities could be leased to interested third parties if DOE
was granted Enhanced Use Lease (EUL) authority. EULs are long-term leases on agencyowned property in exchange for cash or in-kind consideration. Federal agency EUL
programs have allowed private or non-profit entities to develop vacant land or occupy
excess Federal facilities such as power plants, housing and healthcare facilities, officespace, and parking facilities. While DOE does not have EUL authority, five agencies do:
the Department of Agriculture, the Department of Defense, the Department of State, theDepartment of Veteran Affairs, and the National Aeronautics and Space Administration,
but the authorities vary in the maximum length of lease, permitted properties, andpossible leasing terms. DOD has used it to lease excess land at military bases forrenewable energy systems, such as solar arrays. While GAO has criticized agencies for
failing to accurately account for the costs associated with their EUL programs, agencies
claim the program helps them better utilize unused facilities and enhance mission
activities, and that they benefit from the associated cash revenue and in-kindconsideration. 328 If DOE were granted EUL authority, it could generate funds that could
be used to address the facilities resource needs, while offloading some of its excess
square footage.

C. Current Efforts to Improve
Recent efforts to improve the facilities and infrastructure state of affairs have been
undertaken at the Department-level, stewarding office level and laboratory level.
1.

Department Efforts

Secretary Moniz reestablished the National Laboratory Operations Board (LOB) in July
2013 to “tackle the administrative issues affecting the laboratory system using an enterprisewide approach.” 329 The LOB reports to the Office of the Under Secretary for Management
and Performance. Members of the LOB include headquarters and laboratory personnel.
328

GAO, Improved Cost Reporting Would Help Decision Makers Weigh the Benefits of Enhanced Use
Leasing. GAO-13-14 (Washington, DC: GAO, December 2012).

329

B. Geman, “Moniz reshuffles Energy Department management structure,” The Hill, July 19, 2013.

250

In 2013 and 2014, the Infrastructure Assessment Subgroup of the LOB, which wasco-chaired by the SC Chief Operating Officer (COO) and the Thomas Jefferson COO,
carried out a significantly revised approach to infrastructure assessments. 330 The change
was intended to combat a credibility gap, inconsistent definitions and criteria,
inconsistent data, the fact that a financial proxy had been used for infrastructure condition
instead of mission orientation, and the lack of an enterprise view of infrastructure. The
Infrastructure Subgroup set out to establish consistent definitions and an inventory of
mission unique facilities, assess the condition of assets to support program capabilities,
link functionality of space and its utilization to capabilities, establish linkages between
strategic plan, core capabilities and the assets that underpin them, and align reporting tocore capability and DOE strategic objectives. The outcomes of the exercise wereconsistent definitions, criteria and data for the Department and a uniform assessment of
all assets, allowing for credible, data-driven infrastructure decisions aligned with program
capabilities at the laboratory level, program level and enterprise level. 331
The infrastructure managers involved in this LOB effort have proposed a plan thatwould institutionalize an “Infrastructure Strategic Plan” as an enterprise-wide process.
This would be spearheaded by a new “Infrastructure Executive Committee,” which
would also ensure continued visibility of general-purpose infrastructure issues. The
committee would be responsible for analyzing the status of the Department’s general
purpose infrastructure, routinely briefing senior leadership on the enterprise view, andformulating recommendations
Another working group was stood up under the LOB to focus on excess facilities.
The leadership is a blend of headquarters and laboratory personnel; there is one co-chairfrom a laboratory, one from NNSA and one from the Office of Environmental
Management (EM). The group is currently compiling data to get an accurate assessmentof the magnitude of the problem—the deadline for laboratories to provide excess
facilities information was June 1, 2015. When the group initially set out to perform anenterprise-wide assessment of excess facilities, it found that the DOE real property
database FIMS had insufficient information, such as missing cost information, disposal
readiness, complexity of disposal, and mission impact.
Current DOE leadership is also attempting to address the deferred maintenancebacklog. The Secretary has announced the policy of no net increase in deferred

330

U.S. DOE National Laboratory Operations Board Infrastructure Assessment Subgroup Charter.
http://fimsinfo.doe.gov/Downloads/Infrastructure_Assessment_Group.pdf.

331

J. McBreatry, “Briefing to the Commission to Review the Effectiveness of the National Energy
Laboratories (CRENEL),” presentation to the Commission to Review the Effectiveness of the National
Energy Laboratories, February 24, 2015.

251

maintenance. The policy requires that program offices provide sufficient funding forinfrastructure maintenance to avoid any further increase in the level of deferred
maintenance for the FY 2016 budget request and beyond. 332 The budget also provides for$100 million for the most critical general purpose plant projects identified by the LOB.
2.

Office of Science Efforts

SC emphasized facilities and infrastructure in the FY 2014 Annual Laboratory Plans
and Reviews for its ten laboratories. Not only was each laboratory required to present on
infrastructure during its performance review for the first time, but also to include a
campus strategy in its Annual Plan. The campus strategy includes a rigorous conditionassessment of current assets; definition of future capabilities needed; a gap analysis that
identifies the infrastructure to provide those capabilities, as well as excess assets that canbe eliminated; a comprehensive evaluation of alternatives to fill gaps; and a reasonable
path forward for needed investments.
SC has also been making a concerted effort to decrease deferred maintenancethrough laboratory and line item investments (Figure 42).

Source: J. McBrearty, Office of Science Briefing to the Commission to Review the
Effectiveness of the National Energy Laboratories (CRENEL). February 24, 2015.
Note: Large drop in funding between 2009 and 2010 is due to the higher than typicalfunding from ARRA in 2009.

Figure 42. Deferred Maintenance at SC Laboratories (2009–2013)332

See DOE website, “FY 2016 Budget Justification,” http://energy.gov/cfo/downloads/fy-2016-budgetjustification.

252

3.

NNSA Efforts

NNSA is evolving to Enterprise Risk Management, a risk-based management
structure involving quantifiable decision-making. According to NNSA personnel,
prioritization decisions were made using the gross categories of mission critical, mission
dependent, and not mission dependent. These bins do not accurately capture thecomplexity of facility conditions and can lead to counterintuitive results. For example, at
Los Alamos multiple facilities generate low-level liquid waste. All of these facilities are
mission critical. However, all these facilities send their waste to a single facility fortreatment and disposal. If the facilities are unable to dispose of their waste they cannot
operate, yet the waste treatment facility is only considered mission dependent. Under thissystem, five mission critical facilities are reliant on a mission dependent, low-level waste
facility. If one of the mission critical facilities goes down, it goes down alone, but if themission dependent facility goes down, it takes five other facilities with it.
To address the above deficiency, NNSA is moving to a matrix system of high to low
failure risk and high to low consequence of failure (Figure 43). The location of the
facility in the matrix determines how its repair needs are handled. High consequence,high failure risk facilities are subject to active risk reduction. High consequence, lowfailure risk facilities are maintained or maintenance is deferred during tight budget
periods. Low consequence, high failure risk facilities are slated for D&D because of theirhigh liability and low return on investment of repair. Lastly, low consequence, low failure
risk facilities are repurposed.
NNSA is also currently focusing its efforts on improving the timeliness and qualityof facilities and infrastructure data. It has adopted BUILDER, a facilities andinfrastructure data management system used by the Army Corps of Engineers, which
provides information at a system rather than asset level. 333

333

BUILDER is a data management system developed by the Army’s ERDC’s Construction Engineering
Research Laboratory and endorsed by DOD for use across all military departments. BUILDER serves
as an inventory tool and provides information on condition, functionality, mission dependency, andgeneral F&I information to generate work schedules for future maintenance. Conveniently, F&I staff
conducting condition assessments can use a pen-based electronic clipboard to enter data directly into
BUILDER’s Remote Entry Database during inspections. Moreover, the IMPACT modeling tool within
BUILDER forecasts maintenance, repair, and replacement work requirements over the next 10 years.
BUILDER has been used by the Navy for 2 years and is being tested throughout the Air Force andArmy. Engineer Research and Development Center (ERDC). BUILDER Condition Assessment Manualfor Building Component-Sections. (Champaign, IL: ERDC, 2006).

253

Source: R. Haldeman, “Maintaining the Infrastructure to Support the Nuclear Security
Enterprise,” presentation to the Commission to Review the Effectiveness of the
National Energy Laboratories, February 24, 2015.

Figure 43. NNSA’s Improvement Strategy

4.

Laboratory Efforts

DOE laboratories have been pursuing a variety of infrastructure planning strategies
and funding sources to attempt to revitalize their campuses in this time of budget austerity.
Many laboratories have sophisticated and comprehensive infrastructure plans. For
example, Brookhaven’s Ten-Year Brookhaven Campus Vision, which will focus Federal
investments on critical core buildings to enable the scientific agenda, make research safe
and cost effective by downsizing the campus and demolishing old buildings, ensure
scientific reliability through targeted utility infrastructure investments, and support thegrowing population of critical scientific users through “Discovery Park.” “Discovery
Park” aims to improve regional development and partially eliminate aging infrastructure
through a public-private partnership (Figure 44).

254

Source: L. Bates, “A 10-Year Strategic Infrastructure
Plan to Deliver the Full Potential of Brookhaven
National Laboratory,” presentation to theCommission to Review the Effectiveness of the
National Energy Laboratories, February 24, 2015.

Figure 44. Brookhaven’s Campus Proposal Including Discovery Park

Another key component of Brookhaven’s Vision is the “Space Reduction Plan,”which is an ongoing multi-year plan to consolidate out of and demolish old inadequatebuildings.
Oak Ridge is taking a portfolio approach to revitalizing its facilities andinfrastructure by tapping into the whole suite of funding sources, including line item
funding, ESPCs, private sector funding, IGPP, and State funding (See Figure 45).

255

DOE

Major sciencefacilities andinfrastructure• Pushing the edge of scienceand engineering• Single-purpose “machines”• Basic stewardship responsibility

State

Joint institutes
with Universityof Tennessee• Building collaborations
for shared research opportunities• Training of faculty and students• Economic development for the state

PrivateSectorCommercial
laboratory
and office space• Public/private partnership enables
government access to private financing• Takes advantage of commercial practices –faster and cheaper

Source: J. Smith, “The Importance of Core Infrastructure,” presentation to the Commission to Review the
Effectiveness of the National Energy Laboratories, February 24, 2015.

Figure 45. Oak Ridge’s Portfolio Approach to Facilities and Infrastructure Revitalization

D. Findings and Recommendations
The Commission has formulated the following findings for DOE laboratory
facilities and infrastructure:•

Facilities and infrastructure are critical to the ability of laboratories to meet their
missions as well as attract and retain high-quality scientists and engineers.

•

Deferred maintenance and demolition of excess facilities must be addressed orelse the problem will continue to worsen.

•

The natural tendency of researchers and program managers is to spend theiravailable resources on either R&D or new facilities, not maintenance or disposalof aged facilities.

•

The Environmental Management portfolio only includes a small portion offacilities ready for D&D.

•

Alternative financing is not being fully utilized as a potential mechanism toconstruct and renovate facilities and infrastructure. In addition, no independent
economic analyses of laboratory operating leases have been completed.

•

Recently the department and laboratories have been making strides to address
the facilities and infrastructure issues, first by accurately assessing the scope of
the problem. These efforts have appropriately been a collaborative effort
between the Department and the laboratories.

256

The Commission has the following recommendations for Congress, the Department,
and the laboratories for facilities and infrastructure:•

DOE should continue department and laboratory efforts, which have been
particularly successful due to participation by both DOE and laboratories.

•

DOE should establish the Infrastructure Executive Committee that includes both
Department officials (programmatic and functional) and laboratory personnel.
–

DOE should conduct enterprise-wide facilities and infrastructure planning
using rigorous risk assessment models and tools to better inform funding
priorities.

Recommendation 31: The DOE should consider whether a capital budget will better
serve its internal facilities and infrastructure budgeting and management needs.
•

Revitalize existing laboratory infrastructure.
–

Address the issue of excess facilities through the following mechanisms:o Congress should set aside funding for D&D of excess facilities.
o DOE should develop a strategic, integrated plan that schedules D&D ofexcess contaminated facilities and allocates Environmental Management
and mission program funding to risk reduction until the D&D iscompleted.
•

DOE should conduct an accurate cost benefit analysis of excess
facilities that compares the costs of maintaining excess facilities withthe cost of D&D.

•

DOE should perform a new review of contaminated facilities that isbased on priority rather than the current site-based approach. The
review should consider a portfolio of investments based on hazards,
costs and value, as well as “easy wins.”o Congress should grant DOE pilot legislative authority for enhanced use
leases.
– DOE should maintain or decrease the level of deferred maintenance acrosslaboratory system.
Recommendation 32: DOE and the laboratories should continue efforts to improvelaboratory facilities and infrastructure by halting the growth in deferred
maintenance and speeding up the deactivation and decommissioning of excess
facilities. DOE should work with Congress and OMB to agree upon the size andnature of the resources shortfall for facilities and infrastructure, and to develop a
long-term plan to resolve it through a combination of increased funding, policychanges, and innovative financing.
257

•Embrace a diversity of funding options:–

DOE should pursue a portfolio approach to revitalizing infrastructure,including alternative financing and leveraging funding across sectors,
including other Federal agencies and State governments.

–

DOE should identify effective practices to engage with local institutions(academic, industry) and international partners to provide resources forfacilities and infrastructure.

–

Congress or DOE should conduct or mandate an independent economic
analysis of laboratory operating leases.

–

OMB (with approval from CBO and the Congressional budget committees)should revise OMB Circular A-11 rules to allow bargain-price-purchase
options (or establish a new mechanism for financing transactions and scoringthat allows agencies pursuing operating leases to obtain equity in an asset overtime), reinstate the original interpretation of 90 percent of fair market value as
the true government cost rather than what it would cost the private sector toconstruct the facility, and interpret the definition of a “general purpose” asset
more liberally.

–

DOE should evaluate the possibility of establishing separate enterprise-widebudget accounts to fund construction, recapitalization, maintenance andoperations, and disposition of laboratory facilities and infrastructure that aligns
with the establishment of an enterprise-wide strategic planning process.

–

Congress should adopt a Federal capital fund for construction, recapitalization,
maintenance and operations, and disposition of laboratory R&D facilities andinfrastructure to better plan for needs across the Federal laboratory enterpriseand strategically address life-cycle management.

–

Congress should raise the threshold for IGPP and GPP to allow laboratories
more flexibility in making funds available for smart infrastructure
improvements.

Recommendation 33: DOE, the laboratories, Congress, and OMB should actively
work together to identify appropriate situations and methods for utilizing
innovative financing approaches, such as third-party financing, enhanced use
leases, and other methods, including State funding, gifts, and leveraging
partnerships with other Federal agencies.
•

DOE should develop and implement a well-defined user facility funding
model matrix to increase transparency and certainty for laboratories operatinguser facilities.

258

15. Project and Program Management
A. Introduction
This chapter focuses on project and program management performance at the DOE.
A project normally involves construction of a building or facility. For DOE, projects canmean first-of-a-kind, complex construction where, for example, nuclear materials arehandled. A program is a broader concept that may or may not involve construction
projects, an example being the ongoing program within the NNSA to extend the life of
nuclear weapons.
DOE’s management of projects and programs has become an increasingly highpriority over the last 10 years given the constrained budget environment coupled withgrowing concerns expressed by various congressional committees, GAO, OMB andother stakeholders.
The Commission examined both the historical and current record of performanceacross the Department. It also reviewed reforms undertaken by DOE more recently. This
assessment involved:•

Reviewing the historical record of project and program performance reviews.
These included reviews by government organizations, such as the GAO, but also
by non-government entities, such as the National Academy of Public
Administration and the Congressional Advisory Panel on the Governance of the
Nuclear Security Enterprise (Augustine/Mies panel).

•

Analyzing available DOE-provided data on project performance. In 2009, DOE’s
Office of Acquisition and Project Management (APM) developed a project data
set called the Project Assessment Rating System (PARS) II that allows forstandardized project performance comparisons over time and across program
offices on all capital asset projects over $10 million. PARS II is a relatively new
information tool for the Department’s use in decision-making that is also helpful
for oversight entities, including Congress, GAO, and OMB.

•

Focusing on a few large projects. The Commission gained a greater understandingof some of the large-project issues—those completed, terminated, and underway.

•

Reviewing numerous DOE documents and conducting in-depth interviews withpresent and former senior DOE officials. Officials with responsibilities for projectand program performance across the Department provided insight into the kindsof reforms DOE is instituting to achieve better performance.
259

B. History of DOE’s Project and Program Performance1.

Outside Reviews and DOE’s Response

In 1990, GAO placed DOE on its High-Risk List of agencies and programs becauseof their susceptibility to fraud, waste, abuse, and mismanagement. The list is updated
every 2 years or at the start of a new Congress. Independent studies in the 1990s
indicated that DOE projects took longer and cost about 50 percent more to complete thancomparable projects at other Federal agencies or in the private sector. 334 Average
expenditure on DOE projects then was about $4 billion, which underscored the potential
magnitude of inefficiency.
In 1996, GAO reported the results of its review of 80 DOE projects completed
between 1980 and 1996, which were designated as major system acquisitions. GAO
found that DOE completed 15 of them, most of them finished behind schedule and withcost overruns. Three of these were not used for their intended purpose. Another 31
projects were terminated prior to completion after expenditures of over $10 billion. The
remaining 34 were described as ongoing; with many having cost overruns and scheduleslippages. GAO identified four principal causes for these problems: (l) flawed incentives
for employees and contractors; (2) insufficiently skilled DOE contract managers; (3)poorly defined or changing project missions; and (4) incremental project funding. 335
Since then, numerous studies and reviews, including DOE’s own, have identified ahost of interrelated causes of project management challenges and failures:•

Diffuse project ownership; unclear lines of authority and accountability
throughout DOE 336•

Shrinking pool of qualified project management or technical expertise 337•

Lack of independent assessment function with access to senior DOE officials 338334This figure is from an internal DOE document written in the early 2000s, Legislative History of DOE’s
Project Management.

335

GAO, DOE: Opportunity to Improve Management of Major System Acquisitions. RCED-97-17.
(Washington, DC: GAO, 1996).

336

GAO, Department of Energy: DOE Lacks an Effective Strategy (Washington, DC: DOE, 1998); GAO,
Status of Contract and Project Management Reform (Washington, DC: GAO, 2003); and DOE,
Improving Project Management: Report of the Contract and Project Management Working Group(Washington, DC: DOE, 2014).

337

DOE, Root Cause Analysis Contract and Project Management: Corrective Action Plan (Washington,
DC: DOE, 2008); and GAO, Office of Science Has Kept Majority of Projects within Budget(Washington, DC: GAO, 2008).

260

•

Cost estimation and other budget issues—poor cost estimates; understatedcontingency reserves; incremental funding 339•

Insufficient attention to contractor’s prior performance record; need for major
construction projects and highly important programs to be assessed under standalone laboratory or contractor evaluation factors 340•

Inadequate planning upfront 341•

Requirements growth with cost consequences 342•

Lack of alignment between contractor incentives and good project management 343•

Organizational culture and insufficient attention from DOE or laboratory
leadership 344•

Lack of Department-wide risk assessment in allocating environmental
management resources 345

In 2000, the DOE Deputy Secretary approved a new Office of Engineering andConstruction Management (OECM), issued DOE Order 413.3 on project management, 346
and created a Project Management Initiative directing changes in the Department’s
project management effort. A principal guide behind these efforts was a report by the
National Research Council (NRC), Improving Project Management in the Department ofEnergy. Throughout the late 1990s, congressional appropriators and authorizers had, on

338

NRC, Improving Project Management in the Department of Energy, 1999; and DOE, Improving ProjectManagement: Report of the Contract and Project Management Working Group (Washington, DC: DOE,
2014).

339

GAO, Status of Contract and Project Management Reform (Washington, DC: GAO, 2003); GAO,
Actions Needed to Develop High-Quality Cost Estimates for Construction and Environmental Cleanup
Projects (Washington, DC: GAO, 2010); and DOE, Improving Project Management.

340

NAPA, Positioning DOE’s Laboratories for the Future (Washington, DC: NAPA, 2013); DOE IG,
Management Challenges at the Department of Energy (Washington, DC: DOE, 2011); and DOE,
Improving Project Management.

341

NRC, Progress in Improving Project Management at the Department of Energy (Washington, DC: NRC,
2001); and DOE, Root Cause Analysis Contract and Project Management: Corrective Action Plan
(Washington, DC: DOE, 2008); and DOE, Improving Project Management.

342

DOE, Improving Project Management.

343

GAO, Contract and Project Management Concerns at the National Nuclear Security Administration and
Office of Environmental Management (Washington, DC: GAO, 2009).

344

DOE, Improving Project Management.

345

DOE IG, Management of High-Risk Excess Facilities (Washington, DC: DOE, 2015).

346

DOE, Order 413.3, Program and Project Management for the Acquisition of Capital Assets (2000).

261

several occasions, expressed concerns about project management. They supported the
new OECM office by providing increased funds for it.
In 2008, Congress directed DOE to develop an action plan to remove it from theHigh-Risk list. In that same year, DOE issued a report, which highlighted departmental
efforts to address causes of its significant project management issues.
In November 2010 and in response to congressional direction and criticism from
GAO and OMB, the Deputy Secretary of Energy significantly updated the then-current
version of DOE Order 413.3A (July 6, 2006) with 413.3B, which has the goal to “deliver
every project at the original performance baseline, on schedule, within budget, and fully
capable of meeting mission performance, safeguards and security, quality assurance,sustainability, and environmental, safety, and health requirements.” 347 The revised DOE
Order develops a framework for different project phases to achieve this goal, but, theDOE noted in its 2014 internal report that the order is not well-understood, followed, or
enforced. 348
In May 2012, APM was established, combining the project and contract
management oversight offices of OECM and the Office of Procurement and AssistanceManagement. APM has the responsibility for improving and monitoring project
management across the Department; it provides an independent assessment of a project’s
progress in monthly reports that are posted on the Department’s website. It plays animportant role in some of the most recent reform initiatives of the Secretary of Energy,
particularly in integrating Department-wide policies, regulations, standards, andprocedures related to acquisition, program, and project management.
GAO has acknowledged DOE’s efforts by removing pieces of its portfolio from theHigh-Risk List. SC was removed in 2009 and the high-risk designation for NNSA andEM was narrowed to projects valued at over $750 million in 2013. Nevertheless, GAO
still has concerns about the Department’s capacity overall to address fully its contract andproject management challenges. 349
2.

DOE’s Historical Data on Project Performance

APM monitors construction projects across the Department in the PARS II databaseusing standardized metrics. The Commission compared data for all projects over $10
million between 2009 and 2014.
347

DOE, Order 413.3B, Program and Project Management for the Acquisition of Capital Assets (2010).

348

DOE, Improving Project Management: Report of the Contract and Project management Working
Group (Washington, DC: DOE, November 2014).

349

GAO, High-Risk Series: An Update.GAO-15-290 (Washington, DC: GAO, February 2015).

262

Important DOE definitions, including those for project or portfolio success are as
follows:•

Directed Change: DOE policy directives or statutory or regulatory actions
initiated by entities external to the Department, including congressional funding
reductions. Directed change decisions are reviewed and verified by APM andOMB and follow a baseline management process.

•Project Success: Projects completed (referred to by DOE as CD-4) within theoriginal scope baseline and not to exceed 110 percent of the original approved
cost baseline (referred to by DOE as CD-2), unless otherwise impacted by adirected change. 350•

Program Office Portfolio Success: On a program portfolio basis, 90 percent ofprojects must meet the criteria for project success criteria over a 3-year rolling
timeframe.

Table 37 displays project success for each DOE program office between 2009 and2014. As noted above, the DOE target for each program office is a 90 percent successrate. Based on the data, SC has consistently hit or exceeded this target. In addition, the“Other” category, which combines the Offices of Fossil Energy (FE), Nuclear Energy(NE), and Energy Efficiency and Renewable (EERE), has improved over time andmaintained a 100 percent success rate for the last few years. On the other hand, EM and
NNSA show a negative trend. However, APM notes that an alternative measure gives amore positive outlook for NNSA and EM completed projects. The percent of project
dollars going to successful NNSA projects in the last three years was 92 percent ($673
million out of a total of $728 million). For EM, it was 75 percent ($2.58 billion out of a
total of $3.44 billion).
Prior to 2009, standardized metrics on project success across DOE are not available.
However, SC has tracked final project cost and schedule outcomes since the late 1980s.
An SC capital asset project is defined as having a total project cost (TPC) of $10 million
or greater. SC defines “success” as a project completed within the original cost andschedule baseline. There is no allowance for a 10 percent cost variance as there is in themeasure currently used by APM for DOE-wide reporting.

350

The stages of the capital acquisition process within DOE start at CD-0 and end at CD-4 (projectcompletion); they are described later in this chapter. See also DOE, Order 413.3 B.

263

Table 37. DOE’s Historical Record of Project Success
Percentage of Success (Actual)
FY 2007–09

FY 2008–10

FY 2009–11

FY 2010–12FY 2011–13

FY 2012–
14

SC

91

92

100

100

100

100

NNSA

75

68

75

81

64

55

EM Const.*

—†

—

0

0

0

0

EM Clean-up

—

100

94

86

84

67

EERE/NE/FE***

67

0

83

100

100

100

79

78

89

87

84

76

Capital AssetAll

Source: These data come from APM and cover all capital asset projects, both those managed by National
Laboratories and commercial contractors. The percentages are based on a three-year rolling timeline.
*EM = Environmental Management**EERE = Energy Efficiency and Renewable Energy; NE = Nuclear Energy; FE= Fossil Energy†Dashes in a table cell mean there were no projects. A “0” means there were some (usually a very small
number) but none was successful.

SC-provided data show that 68 projects were completed between 2002 and 2014
(Table 38). 351 One was canceled and four were unsuccessful; 94 percent (64 projects)
were successful in terms of cost and 93 percent (63 projects) were successful in terms ofschedule performance. SC exceeded the current DOE target of 90 percent over this 12year period. In two cases, directed changes, resulted in upward baseline adjustments
without a negative impact on the project success metric.

351

S. W. Meador, “Office of Science Projects Perspective,” presented at the Department of Energy
Acquisition and Project Management Workshop (Washington, DC: DOE, 2015).

264

Table 38. Office of Science Projects Completed Between 2002 and 2014
Cost Success

Site

Number ofCompleted
Projects Number Percentage

Schedule Success

Number Percentage

Total Project
Cost (TPC)
InitialBaseline
($M)

Final
($M)

Percentage
Cost
Increase

Argonne

5

5

100%

3

60%

$60

$60

0%

Brookhaven

12

12

100%

12

100%

$261

$260

–1%

Fermi

10

10

100%

10

100%

$1,069$1,096

2%

ThomasJefferson

2

2

100%

2

100%

$84

$84

0%

Lawrence
Berkeley

13

12

92%

12

92%

$440

$435

–1%

13

13

100%

13

100%

$1,702$1,773

4%

1

1

100%

1

100%

$224

$224

0%

3

2

67%

2

67%

$141

$143

1%

Oak
Ridge
Pacific
Northwest
Princeton
PlasmaPhysics
Sandia

1

1

100%

1

100%

$76

$76

0%

Stanford

8

6

75%

7

88%

$595

$638

7%

Total
Projects

68

64

94%

63

93%

$4,653$4,7893%

Source: Office of Science, Office of Project Assessments.
Note: SC defines “success” as a project completed within the original cost and schedule baseline.

SC practice is to establish credible cost and schedule objectives supported byrigorous pre-project planning, firm funding commitments by project owners, and regular
independent project reviews. SC then executes projects using a “build to cost” approach.
This method incentivizes project teams to maintain good project performance in order todeliver scope that maximizes scientific capability.
When asked about how often de-scoping occurs in the context of the build-to-cost
approach, a senior SC representative confirmed that all of the office’s successful projects
in Table 38 actually met the baseline scope. The SC representative explained that thisachievement was possible given careful estimation and disciplined execution ofcontingencies, which cover costs resulting from incomplete design, unforeseen andunpredictable conditions, or uncertainties within the defined project scope. The
representative underscored that a contingency is not a substitute for making an accurate
estimate of expected cost.
According to SC officials, large and complex projects require about 40–50 percent
contingency for the conceptual design phase; 30–40 percent at the time of theperformance baseline; and over 25 percent through the execution of the project. Once
those contingency amounts are established for any project, they are held by and265

controlled by the Federal Project Director, and only released to the project through acarefully managed formal change control process.
3.

Three Large DOE Projects

Despite the generally favorable record for at least a portion of the portfolio, DOE
project management, as a whole, has been viewed as lacking. This may be due to a few
high profile projects that struggled or failed, two of which are described in more detail in
the following subsections. We also include an example of a successful project to provide
a more balanced picture.
a. National Ignition Facility (NIF)
NNSA completed construction of NIF at Lawrence Livermore in 2009. It is theworld’s largest and highest energy laser. NNSA considers NIF critical to creating—in thelaboratory—the high-energy density conditions that exist within a nuclear weapon. Given
the moratorium on nuclear testing, the goal is to validate computational codes used forassessing the safety and reliability of the Nation’s nuclear weapons stockpile. NIF is an
important means of replicating nuclear test conditions and also is a critical element of theInertial Confinement Fusion (ICF) program. NIF is therefore, a major component of thehigh-energy density physics activities planned by the Stockpile Stewardship Program. In
a 1996 review by the independent defense advisory panel known as “JASON,” themembers agreed about the value of the NIF for stockpile stewardship. 352 The facility was
designed to achieve ignition within two to three years of project completion.
In 1994 and 1997 internal program documents, DOE also noted the significant
potential commercial application of ICF in electric power generation over the long term
and referenced NIF’s potential for unique and valuable experiments relevant to areas ofbasic science. 353 Instead of simply proposing the project with the main goal of
stewardship of the nuclear weapons stockpile, DOE stressed the inertial confinement
fusion energy program, with a focus on achieving ignition as the first step to creating a
new energy source.
The approved baseline cost for NIF in 1994 was $1.2 billion. After the project ran
into unforeseen technical difficulties and the project director was replaced in 1999, DOE
subsequently required a new baseline of $3.5 billion ($2.25 billion plus another $1.25

352

JASON, Inertial Confinement Fusion (ICF) Review, JSR-96-300 (McLean, VA: The MITRE
Corporation, March 1996).

353

DOE, The Role of the NIF in Science-Based Stockpile Stewardship (Washington, DC: DOE, 1997);
DOE, Memorandum to the Secretary from Victor Reis on key decision one for the National Ignition
Facility (Washington, DC: DOE, 1994).

266

billion for a NIF demonstration program). This more comprehensive figure was almost
three times the original baseline cost. The project stayed within the new baseline cost,
and the Project Management Institute awarded NIF the 2010 Project of the Year award,
citing groundbreaking technical achievement and exemplary management.
At the request of Congress, GAO reviewed the NIF in 2010, 354 and NNSA
implemented GAO’s recommendations. GAO pointed out that achieving ignition was not
likely. From conversations with NNSA and laboratory officials, GAO also concluded that
this would not be a critical gap in the Stockpile Stewardship Program in the short run,
although it could become more serious over time. In September 2009, Lawrence
Livermore scientists began using NIF to validate NNSA’s data and models on weapon
performance under non-ignition conditions. Between 2010 and 2012, the facility tried but
failed to achieve ignition.
Since 2013, experimental shots of the 192 lasers have reproduced fusion at least
four times. NIF was the first facility to reach the milestone of achieving fuel gains greaterthan one (where the energy generated through the fusion reaction exceeds the amount ofenergy deposited into the fusion fuel, an important step towards realizing ignition, but along way from showing overall system energy gain). Scientists in the program consider
the agreement between their experimental results and those from the modeling/simulation
efforts to be of the greatest importance. The review of the National Ignition Campaign,
initiated in October 2010, highlighted the importance of this validation, because itsupports the use of the computer models in the weapons program.
The early emphasis on NIF achieving ignition, thereby opening a potential pathway
for fusion energy, and the subsequent failure to do so, has overshadowed the remarkabletechnical achievements of this project for both science and stockpile stewardship. Thissituation can serve as a lesson to DOE and the laboratory about the important role ofmarketing in project management.
b. Superconducting Super Collider (SSC)
Another large project, SSC, was an SC project that was cancelled before
completion. It had an optimistic beginning followed by 5 years of conflict and problems.
Had it been completed, SSC would have been the largest, most costly scientific machine
ever constructed. It could have led scientists into unknown territory beyond the “Standard
Model” of particles and fields. 355 The realm of “inner space” was considered a new
354

GAO, Actions Needed to Address Scientific and Technical Challenges and Management Weaknesses at
the National Ignition Facility. GAO-10-488 (Washington, DC: GAO, April 8, 2010).

355

L. Hoddeson, L. M. Bron, M. Riordan, and M. Dresden, eds., The Rise of the Standard Model: Particle
Physics in the 1960s and 1970s (New York: Cambridge University Press, 1997).

267

frontier at the time, and the SSC was going to help discover and understand this world.
The project was also supposed to help restore U.S. competitiveness with Europe in highenergy physics. 356
The SSC was designed between 1983 and 1988. Cornell University physicist,
Maury Tigner, led the Reference Designs Study from 1983–1984, which was followed by
the efforts of the Central Design Group (CDG). The CDG completed their report in 1986,
concluding that the SSC was technically feasible and that cost and schedule estimates
were reasonable. Once the U.S. President announced the Administration’s support for
SSC, DOE started the process of finding an appropriate site. In April 1987, DOE invited
proposals from around the country and received 43—a measure of the excitement
generated by this project— and it determined 36 were qualified. The National Academyof Engineering reviewed the proposals and found 8 of the 36 to be “best qualified.” Oneproposer (from New York) withdrew, leaving seven (those from Arizona, Colorado,
Illinois, Michigan, North Carolina, Tennessee, and Texas).
The Texas proposal ultimately won the competition. It described an accelerator thatwould collide two beams of high-energy protons from opposite directions within a racetrack ring of about 53 miles. The accelerator, which was to operate for 25 to 30 years,
circled the town of Waxahachie, Texas.
The SSC’s original cost was $4.4 billion in 1987. By 1991, it had almost doubled;
DOE’s official baseline cost was $8.25 billion and it projected that the SSC would becompleted by 1999. 357 One of the cost drivers was a single design change concerning theaperture of the magnets. The aperture size was a critical decision from a cost perspective
because of the number of magnets involved. 358 The CDG originally decided on 4
centimeters, but later increased it to 4 to 5 centimeters, which amounted to a billion dollar
change. 359

356

Fermilab History Collection (Batavia, Illinois), SSC Papers, Afterwards FHC: The Superconducting
Super Collider, pamphlet of the Central Design Group (Washington, DC: Universities Research
Association, 1988).

357

GAO, Federal Research: Supercollider Is Over Budget and Behind Schedule (Washington, DC: GAO,
1993).

358

From interview with Professor Roy Schwitters. See also Lillian Hodeson and Adrienne W. Kolb, “TheSuperconducting Super Collider’s Frontier Outpost, 1983–1988,” Minerva 38: 271–310.

359

From interview with Professor Roy Schwitters of University of Texas and former SSC director in
Waxahachie, Texas.

268

Project management issues emerged, particularly during the transition from the
CDG efforts to the execution of the project. 360 Differences in operating styles of key
players negatively affected the project’s smooth progress. An article in Scientific
American in 2013 concluded that the project’s scale was 20 times bigger than anythingphysicists had ever managed before, and cultural differences between the scientific sideof the accelerator’s management and DOE led to conflicts and an overall lack of trust.”361
Until 1987, the SSC had largely been controlled by laboratory physicists. By late 1988, it
was clear that their approach to managing “their large project” was competing withcongressional concerns about cost, the need for competition, and abiding by various
acquisition or other Federal requirements, such as producing an Environmental Impact
Statement. 362
By 1993, the cost estimate had ballooned to $11 billion because of further costescalations and a loss of funding from non-Federal sources, including an expected $2.6
billion from foreign governments. Japan was potentially a significant contributor (asmuch as $2 billion), but ultimately decided not to provide financial assistance. The
momentum to bring international participants into the SSC evaporated. Congress was also
facing a decision about funding the International Space Station, which had a similar cost.
Arguments surfaced that many smaller scientific experiments of equal merit could be
funded for the same cost, and the project was canceled.
At the point of cancellation, around $2 billion had been spent ($1.6 billion inFederal monies and $400 million in Texas funds) and about 20 percent of the project wascompleted. Two dozen kilometers of tunnel were drilled, with 17 access shafts built and
18,600 square meters of buildings erected. Today, the SSC buildings are occupied by a
Waxahachie, Texas chemical manufacturer. Shafts have been filled in, but the tunnels
remain.
c. National Synchrotron Light Source (NSLS) IINSLS at Brookhaven is a research facility that has been serving about 2,500
academic, industrial, and government users annually. 363 Using the peer-review-based
processes described earlier, it was decided to build a second NSLS, referred to as NSLS-

360

See, F. T. Anbari, Case Studies in Project Management: Superconducting Super Collider Project(Washington, DC: Project Management Institute, 2005); also GAO, Status of DOE’s Superconducting
Super Collider, GAO/RCED-91-116 (Washington, DC: GAO,1991).

361

D. Appell, “The Supercollider That Never Was,” Scientific American, October 15, 2013.

362

Hodeson and Kolb, “The Superconducting Super Collider’s Frontier Outpost, 1983–1988.”

363

Peña, Howieson, and Shipp, Federal Partnerships for Facilities, Infrastructure, and Large
Instrumentation.

269

II, to take advantage of new developments in light source technology. This SC project
was completed in March 2015 $2 million below its planned budget of $912 million andslightly ahead of schedule. Additionally, the scope (within the original design) was
adjusted upward, according to an SC official. Two primary factors enabled significant
scope enhancement. A depressed regional construction environment in 2008–2009
resulted in awarding a contract for much less than estimated and the receipt of significant
American Recovery and Reinvestment Act (ARRA) funds allowed the project toaccelerate schedule. The ARRA funds did not add to the TPC but offset the need forplanned base funds later on. 364
NSLS-II is a state-of-the-art, medium-energy electron storage ring that offers
scientific and industrial researchers an array of beamlines with x–ray, ultraviolet, andinfrared light. The facility enables multi-disciplinary discoveries in clean and affordable
energy, high-temperature superconductivity, molecular electronics, environmental
science and medical research. 365 All research proposals are subject to peer review andranked against competing proposals based on scientific merit.
The success of NSLS-II highlights the quality of SC’s project oversight. Further, theproject benefited cost-wise from the depressed economic environment and supplemental
ARRA funds during initial construction. Another contributing factor to project successwas SC’s relationship with the National Institutes of Health (NIH). SC involved NIH
early in its planning for the project. Because a prominent research priority for the NSLSII was the field of life sciences, 366 NIH became a key partner and helped evaluate what
research capabilities were necessary at NSLS-II. NIH and DOE signed a memorandum ofagreement on their mutual responsibilities, whereby NIH agreed to fund additional
beamlines while DOE was the main steward of operations. Given that the precursor
NSLS led to Nobel prizes in chemistry in 2003, 2008, and 2009, the likelihood is high forfurther discoveries in the life sciences with NSLS-II.

364

Interview with Steve Meador, Director, Office of Project Assessment, Office of Science365

See Brookhaven National Laboratory website, “About National Synchrotron Light Source II,”
http://www.bnl.gov.

366

Peña, Howieson, and Shipp, Federal Partnerships for Facilities, Infrastructure, and Large
Instrumentation.

270

C. Review of Ongoing DOE Projects
1.

Overview of DOE’s Capital Asset Process

DOE Order 413.3B describes DOE’s current project life-cycle process from start tofinish, which involves five critical decisions. 367 DOE’s first project guidance actuallydates back to 1987 when DOE Order 4700.1 was issued, before being replaced by DOE
Order 413.3 in 2000. The project guidance evolution will continue as APM incorporates
recent Secretarial policy memoranda into DOE Order 413.3B.
DOE Order 413.3B became mandatory across DOE for all capital asset projects
with a total project cost equal to or greater than $10 million on June 8, 2015. Exemptions
are allowed for those DOE offices meeting certain criteria. Even though SC is the only
office that has met the criteria, it has still opted to comply with the order’s requirements.
For projects, the five critical decision points (CDs) are:CD-0: Approve mission need for project—DOE certifies that the project isneeded for a DOE mission.
CD-1: Approve selection of alternative and cost range—DOE decides on
the preferred alternative and its cost and schedule and confirms that it is
the optimal solution. As CD-1 progresses to CD-2, the cost estimate isrefined. If the cost estimate increases either by 50 percent or more above
the top end of the CD-1 cost range or by more than $100 million, theacquisition executive must review the selection of the alternative andconfirm a new alternative or reaffirm the existing alternative showing thehigher cost range.
CD-2: Approve Performance Baseline—DOE approves a definitive scope,schedule, and cost baseline with all cost components adding to the Total
Project Cost (TPC). A CD-2 decision requires enough solid information toestablish a performance baseline. The CD-2 becomes the official cost andschedule plan against which the project is assessed from then on—theproject is not assessed against earlier cost estimates at CD-0 or CD-1.
CD-3: Approve Start of Construction or Execution—DOE confirms the
project is ready for implementation.
CD-4: Approve Project Completion—DOE confirms the project is readyfor turnover or transition to operations.
The CD-0 and CD-1 stages of the project planning process are crucial for up-front
planning, examining alternatives, reviewing technical feasibility issues, and developing

367

DOE Order 413.3B, Program and Project Management for the Acquisition of Capital Assets.

271

solid cost and schedule estimates that will ultimately feed into the CD-2 performancebaseline against which the project will be evaluated.
Problems with large projects, in particular, occur prior to CD-2 because of
inadequate up-front planning and design detail, poor-quality cost estimates, andinsufficient analysis of alternatives. Projects are more likely to be successful if more timeand focused effort is spent on these early stages. The costs of pre-CD-2 activities do not
represent a major share of the TPC. According to DOE officials, for complex nuclear
facilities or projects with significant outside stakeholder involvement, such as those in
EM, these costs range from 8 to 15 percent of the TPC. For less complex, non-nuclear
projects, they range from 3 to 7 percent.
For CD-2 projects, DOE’s APM Director issues monthly assessments after
consulting with the program offices and taking into account various earned value
indicators, reports, reviews, and other information. The assessments use a straightforward
stoplight metric:•

Green means that the project is expected to meet its performance baseline asestablished at CD-2.

•

Yellow means that the project is at risk of breaching its performance baseline.

•

Red means that the project is expected to breach its performance baseline.

For transparency, project assessments are placed on the DOE website and theinformation is shared with GAO and OMB.
2.

Analysis of DOE’s Current Project Dataa. All DOE Projects

As of May 2015, DOE’s APM is reporting a total construction portfolio of 79
projects costing a little over $73 billion in aggregate, as shown in Table 39. Of the 79
current capital projects, 46 projects are in the earlier stages (referred to in the table as“pre CD-2” or “on hold”) and have a total estimated cost of over $48 billion. These 46
projects do not have officially approved scope, cost, or schedule baselines. The largest
portion of the pipeline sits within EM, which has 19 projects with a total preliminary costof $34 billion waiting in the wings.
The remaining 33 projects total just over $25 billion. They are referred to as postCD-2, meaning they have officially approved cost and schedule baselines against which
DOE judges their performance. The $25 billion figure for post-CD-2 projects represents amajor decline from 2008 when there were 121 projects (with a total cost of $65 billion) inpost CD-2 status. A funding spike in 2008 was due to the ARRA, under which EM

272

received a one-time infusion of $6 billion for environmental cleanup and was able tocomplete 123 projects at 17 sites.
According to DOE in May 2015, 11 of the post CD-2 projects (1/3) were at risk of
breaching or were expected to breach their performance baseline. Three of the mostinfamous of the “red” projects are very large and are managed by commercial
contractors, not laboratories. One is an NNSA project, and the other two are EM legacy
projects. The following sections give in-depth background on these three projects tohighlight the management challenges they pose, though they are unrelated to laboratory
management. As discussed further in Section b, there are no “red” laboratory projects.
Table 39. Current DOE Project Summary: Laboratory and Non-Laboratory Projects

Total
Project
Portfolio

Total OnHold
Projects
Pre CD-2

SC

27

4

NNSA

19 $14.9B

EM

30 $51.6B

EERE/NE

3 $563M

Program

Total

$6.2B

Total
ActiveProjects
Pre CD-2$1.8B 1011

6

79 $73.2B 10$1.7B 132
$3.5B 36

Total
ActiveProjects
Post CD-2

Total
Projects
Post CD-2
Green$3.2B 13

$1.2B 13

$1.2B

$9.1B

8

$5.8B

4

$285M

$31.9B 11$18.0B

4

$2.6B

$485M

$78M

1

$78M

$25.1B 22

$4.1B

1

$44.6B 33

Total
Projects
Post CD-2
Yellow

3

3

$652M

$652M

Total
Projects
Post CD-2
Red% of Post CD2 Projects or
Total
Program $with
Acceptable
Status
100%

100%

1

$4.9B

88%

16%

7

$15.5B

36%

14%

100%

100%

76%

19%

8

$20.3B

Note: The last column has two sub-columns with percentages based on two measures of success provided
by APM. On the left is the percentage of a program office’s projects that are successful. On the right isthe percentage of program dollars in successful projects. DOE includes yellow projects in the “successful”
category.

1) Mixed Oxide (MOX) Fuel Fabrication Facility
In 2000, the U.S. and Russia signed a Plutonium Management and Disposition
Agreement for the disposal of surplus weapons grade plutonium. Under the agreement,each country was to dispose of at least 34 metric tons of plutonium by converting it tomixed oxide fuel that can be used in commercial nuclear power reactors. To carry out the
U.S. responsibilities under the agreement, NNSA is constructing the MOX facility at theSavannah River Site near Aiken, South Carolina. The MOX facility is currently managed
and operated by Shaw AREVA MOX Services, LLC.
DOE recently delineated the problems of the MOX facility: (l) inadequately
experienced Federal or contractor staff on the project teams; (2) inadequate nuclear
experience and expertise due to atrophy of the nuclear industry; and (3) inadequate

273

contract structure and incentives, including misalignment of contract incentives to best
support project execution. 368
Potential new cost estimates for construction are much higher than the official CD-2
cost baseline of $4.9 billion. The contract estimates construction cost of $6.7 billion,
while DOE’s APM forecasts $12 billion. NNSA estimates a MOX facility life-cycle costof $30 billion or more when including both construction and 30 years of operations (butnot decommissioning and demolition). The current facility must be critically examinedalongside other options and associated costs in order to complete the important plutonium
disposition mission in the most cost effective manner. DOE has completed a preliminary
review of these options, but has not decided on the path forward. 369
2) Waste Treatment and Immobilization Plant (WTP)
The purpose of this EM multi-facility legacy project in Richland, Washington is todesign, construct, and transition to an operating contractor a chemical processing plant.
The plant will treat 56 million gallons of hazardous chemical and radiological waste toprepare it for disposal at a permanent national geological repository. In general, most of
the cleanup activities at Hanford are carried out under the Hanford Federal Facility
Agreement and Consent Order, to which DOE, the Washington State Department of
Ecology, and the Environmental Protection Agency are parties.
The agreement, initially signed in 1989, establishes a series of legally enforceable
milestones for completing many major waste treatment and clean-up activities at
Hanford. Due to continuing delays in the WTP project, Washington State sued DOE in
Federal court and, in 2010, the Department and the State entered into a consent decreethat included various milestones leading up to completion of WTP construction by 2019and initial operation by 2022. Primarily because of unresolved technical issues, many ofthese dates are unlikely to be met. Beginning in 2013, DOE and Washington State
attempted to negotiate a modification to the consent decree, but agreement could not bereached and both sides have since submitted motions to Federal court with different
versions of a modification. The parties are waiting for the court’s ruling, which may befollowed by further hearings on work scope and schedule. The court’s ruling on the
motions could substantially affect the path forward for the project. Because of theexisting consent decree, DOE cannot unilaterally deviate from the plan to complete the
WTP.
368

DOE, Root Cause Analysis of Cost Increases for the Mixed Oxide Fuel Fabrication Facility and Waste
Solidification Building Projects, and Other Cost Information, Report to Congress (Washington, DC:
DOE, January 2015).

369

DOE, Report of the Plutonium Disposition Working Group: Analysis of Surplus Weapons-Grade
Plutonium Disposition Options (Washington, DC: DOE, April 2014).

274

The WTP’s CD-2 cost baseline—revised in 2006—has an estimated cost of $12.3
billion with a completion date of November 2019 (the original approved cost in 2003 was$5.8 billion with a completion date of July 2011). Even with the new baseline, APM
scores this project “red” on scope, schedule, and cost. Due to the uncertainties of the legal
process, no official new cost or schedule has been developed for the project. 370
3) River Corridor Closure ProjectThis EM project at the Hanford, Washington site has a CD-2 baseline cost of $2.3
billion. The purpose of this project is to clean up areas of the Hanford site located in the
Columbia River Corridor to a condition suitable for preservation, recreation andindustrial uses, as appropriate. Over 500 contaminated waste sites need to be remediated,
480 facilities demolished, and 5 plutonium production reactors put in interim safe
storage. According to APM, the project remains red because of significant anticipateddelays and cost growth. The project is in the process of being re-baselined. 371
The following additional findings stem from the DOE project data:•

The number of projects in the Department at the CD-2 stage has dropped
significantly over the last 7 or 8 years, largely because of the decline in budget
resources after the one-time spike of almost $6 billion in ARRA funding.

•About 42 percent of all projects are at the post CD-2 stage, that is, they haveofficially approved cost and performance baselines. The subset of post CD-2
laboratory projects is performing well.

•Of the post CD-2 projects, there is a distinct performance pattern along sizelines, consistent with GAO’s high-risk assessment report that removed smaller
EM and NNSA projects off of its High-Risk list. Based on APM’s data, smaller
NNSA and EM projects are faring well, while larger ones are not.

•Forty-six (58 percent) of the pre-CD-2 projects are on hold or in an earlier stageof development. Six of these pre-CD-2 projects are large (equal to or over $750
million). The two most costly are EM projects: the Calcine Disposition Projectat Idaho ($2 billion to $16 billion cost range); and the Integrated Facility
disposition Project ($9.3 billion to $14.1 billion cost range) at Oak Ridge.

370

DOE APM, May 2015 Monthly DOE Project Portfolio Status Report (Washington, DC: DOE, 2015).
Also, information received in email from APM.

371

Ibid.

275

b. Laboratory-Only Projects
As shown in Table 40, laboratory-only projects constitute 47 (just under 60 percent)of the 79 total projects. Nineteen of these 47 are post CD-2 active projects. There is asingle “yellow” laboratory project, and all other laboratory projects have green scoresfrom DOE as of May 2015. One smaller project at Los Alamos was assessed by DOE to
be at risk of breaching its baseline (see yellow column). Moreover, in contrast with nonlaboratory projects, none of the post CD-2 laboratory projects are expected to breach theirperformance baseline. The total cost of the 19 post-CD-2 laboratory projects is just $1.6
billion, with an average cost of about $84 million.
Table 40. Current DOE Project Summary: Laboratory Projects Only

Program

Total
Project
Portfolio

SC 27

$6.2B

NNSA 10$2.5B

EM$16.7B

7

Total OnHold
Projects
Pre CD-2
4

Total 47

$26.0B$1.8B 10

1 $560M

EERE/NE 3 $563M
5

Total
ActiveProjects
Pre CD-2

Total
ActiveProjects
Post CD-2$3.2B 13

Total
Projects
Post CD-2
Green$1.2B 13

Total
Projects
Post CD-2
Yellow

$1.2B

100%

100%

100%

$2.2B

4 $299M

3

$207M

5

$16.1B

1$31M

1$31.0M100%

100%

2 $485M

1

$78M

1

$78M

100%

100%

$1.6B 18

$1.5B

100%

100%

$22.0B 191$92.7M100%

6$2.3B 23

1

Total
Projects
Post CD-2
Red% of Post CD2 Projects or
Total
Program $with
Acceptable
Status$92.7M

Note: The last column has two sub-columns with percentages based on two measures of success provided
by APM. On the left is the percentage of a program office’s projects that are successful. On the right isthe percentage of program dollars in successful projects. DOE includes yellow projects in the “successful”
category.

Another 28 laboratory projects are pre-CD-2 (both active and on hold) and they
have an aggregate preliminary cost of just over $24 billion—almost $17 billion of that isdevoted to six EM projects. Fourteen of the pre-CD-2 projects are in SC at a combined
cost of $4 billion, highlighting their smaller average project size.
3.

Case Studies of Earlier-Stage (pre-CD-2) Large Projects

Below are descriptions of two ongoing large projects that are in earlier stages ofdevelopment. A fundamental challenge posed by such large projects is their need for highlevels of resources, especially when juxtaposed against a constrained budget
environment.
One of these is located at a laboratory and the other is located at a production plant.
Both have received high levels of scrutiny.

276

a. Chemistry and Metallurgy Replacement Research (CMRR) Facility at Los
Alamos National Laboratory
NNSA has considered CMRR critical to maintaining the Nation’s plutonium
infrastructure capability, a key part of the nuclear Stockpile Stewardship Program. Somecritics concerned about non-proliferation have raised questions about the need for
CMRR, in particular, voicing concerns about its link to increased pit production, andwhether that is necessary or desirable.
The original plan for the CMRR facility was to proceed in three phases at Los
Alamos. The first phase was to construct the Radiological Laboratory, Utility, and Office
Building (RLUOB); the original 2005 cost for this phase was $164 million. The final cost
to finish it in 2010 was $199 million.
The second phase for the RLUOB equipment installation was completed in 2013
with a final cost of $197 million (original cost in 2009 was $199 million). The third phase
was the Nuclear Facility (CMRR-NF), the costs of which increased significantly in ashort period. In 2009, the cost range was $745 to $975 million; by 2010, Los Alamos
estimated it to be $3.7 billion to $5.9 billion. The purpose of this facility was to increase
the capacity to produce plutonium pits, provide replacement laboratory space foractivities currently occurring in aging facilities at Los Alamos, and provide additional
storage space for plutonium and other nuclear material.
Given the high costs of CMRR-NF, construction was first deferred for 5 years andthen the project was cancelled in 2014. In lieu of constructing the Nuclear Facility,
NNSA developed a new plutonium infrastructure strategy, with the first two steps of thisstrategy funded in the FY 2015 President’s budget. This strategy was endorsed in a caseanalysis jointly conducted by DOE, NNSA and DOD’s Office of Cost Assessment andProgram Evaluation. The new strategy will maximize use of the RLUOB, reuse theexisting 35-year-old plutonium facility, and evaluate options for modular additions to theexisting facility. According to NNSA, the total cost of the project under the new strategy
will be between $2.4 billion and $2.9 billion. 372
b. Uranium Processing Facility (UPF)
UPF will be located at NNSA’s Y-12 National Security Complex to store andprocess enriched uranium in a single centralized area. This will support nuclear
nonproliferation and provide uranium as feedstock for fuel for naval reactors. The UPF

372

See DOE APM, May 2015 Monthly DOE Project Portfolio Status Report; see also DOE, FY 2016
Budget Request—National Nuclear Security Administration (Washington, DC: DOE, February 2015),
343.

277

cost estimates have escalated: at CD-0, the cost range was $600 million to $1.1 billion; at
CD-1, the range estimate was $4.1 billion to $6.4 billion.373
While UPF is not located at a laboratory, NNSA tasked a group of laboratory staff
members to review the project’s cost, schedule, and scope challenges. In its final report,
the laboratory “Red Team” concluded that the facility did not have to be a single big box
facility but rather could be a series of smaller, segregated facilities designed andconstructed to meet individual safety and security criteria. 374 The “Red Team”
recommended minimizing the nuclear footprint, building non-nuclear buildings whereappropriate, and using existing infrastructure at Y-12. The report concludes that the costof the new approach will be at the high end of the CD-1 cost range—$6.4 billion. NNSA
plans to continue to refine the final project cost and schedule baseline following 90percent completion of the design.

D. Why Office of Science Has Better Performance
Both historical and current project performance data underscore SC’s superior
performance, even with having constructed the world’s largest collection of 27 scientificuser facilities. 375
To explain their successful record, SC officials credited their disciplined culture,
which dates back several decades. SC’s Office of Project Assessment has played andcontinues to play a significant and effective role in project oversight. SC also engages ina collaborative peer review process within the scientific community. These peer reviews
are regular, recognized by the science community, and facilitate active sharing of lessons
learned from other projects. Internal project advisory committees and users of sciencefacilities also provide valuable input throughout the project life-cycle.
NNSA established a similar project management office only recently, staffing it inAugust 2011. Furthermore, due to its national security mission, NNSA is a more closed
environment than SC. It also has to have a close working relationship with DOD incarrying out its mission, which complicates project management and can lead todisagreements about who sets the requirements and who pays the bill. Furthermore, highlevels of classification in nuclear security issues can hinder transparency and independent
high-quality peer reviews.

373

Ibid.

374

T. Mason (chair), Final Report of the Committee to Recommend Alternatives to the Uranium
Processing Facility Plan in Meeting the Nation’s Enriched Uranium Strategy (Oak Ridge, TN: ORNL,
April 2014).

375

Meador, “Office of Science, Projects Perspective.”278

SC projects are technically complex; they can involve high energies, extreme
temperatures, strong magnetic fields, exotic materials, demanding tolerances and highreliability requirements. However, generally they do not have to meet nuclear facility
safety standards because they do not involve handling of special nuclear materials. Nor isSC building projects in response to or compliance with consent decrees, as is the casewith EM. Consent decrees can reduce flexibility in defining project requirements or, at aminimum, require EM to obtain buy-in from other stakeholders such as the State where
the site is located or the Environmental Protection Agency.
SC projects are typically “designed to cost” with a goal of maximizing sciencecapability. According to one NNSA official, SC’s scope requirements are more
malleable, “they can build one rather than two beamlines in their accelerator if necessary.
We do not usually have that kind of flexibility.” SC counters this argument by pointing to
the fact that it had no major de-scoping of projects after final approved baselines at CD-2
from 2002 to 2014 (as far back as it has data). SC also engages in careful up-front
planning and the estimation and execution of contingency funds as a way of protecting
cost, schedule, and scope. Contingency funds can be released only by a Federal Project
Director in order to maintain the integrity of the process.
Despite notable differences in the nature of SC projects and their operating contexts,
other offices can still learn from SC experience: 376•

Clarity of project purpose and benefits in tandem with clear communication to
all stakeholders.

•

Strong working and personal relationships within the project team.

•

Front-end planning to mitigate risk and the use of contingencies to address whatrisk remains.

•

Stable project funding.

•

Project reviews to keep the project on track and build credibility.

While some of the above are not wholly within the program office’s control—suchas stable project funding—a disciplined approach to what can be controlled has been
critical to SC’s successful record.

376

From Daniel R. Lehman, Office of Project Assessment, Office of Science, February 2011,
http://www.science.doe.gov/opa.

279

E. Recent Efforts by DOE Senior Management to Improve ProjectManagement
The level of effort by senior DOE officials to improve project and program
management has intensified recently. In December 2012, the former Deputy Secretary of
DOE issued a DOE-wide memorandum that emphasized: (l) upfront planning andrequirements definition; (2) using fixed-price contracts as an initial default or using
objective performance measures and linking fee to final outcome in the case of costreimbursable contracts; and (3) documenting contractor performance.
More recently, the Secretary of Energy has given considerable high-level attention
to project management through three major actions:
1. Reorganized DOE to create an Under Secretary for Management andPerformance focused specifically on improving project management andperformance. As of the writing of this report, the nominee for this position has
not yet been confirmed.
2. Requested an internal working group with representatives from across DOE toexamine project management issues within the Department. In November 2014,
this group produced a report on project and contract management with 21
recommendations. 377
3. Issued mandatory guidance to the Department on December 1, 2014, and June
8, 2015, with key components stemming from the internal working group’s
recommendations. APM will amend DOE’s Order 413.3B to incorporate theguidance to institutionalize these changes. The requirements now apply to all
projects having a TPC equal to or more than $10 million (formerly it was $50
million).
Highlights of the Secretary’s guidance follow:•

377

Strengthens the role of the Energy Systems Acquisition Advisory Board(ESAAB). The ESAAB provides enterprise-wide expertise and perspective on
individual projects to the Deputy Secretary. For capital projects with a TPC of$750 million or greater, the ESAAB supplies recommendations as projects movethrough DOE’s critical decision process. The ESAAB also convenes at least
quarterly to review all capital asset projects with a TPC of $100 million or
greater, especially targeting those at risk of not meeting baselines.

DOE, Improving Project Management: Report of the Contract and Project Management Working
Group (Washington, DC: DOE, November 2014).

280

•

Establishes a new Project Management Risk Committee comprised of
DOE’s project management experts across its major program offices. This
committee provides project management risk assessment and expert advice to
the Secretary, other senior DOE officials, and the ESAAB, on cost, schedule,
and technical issues for capital asset projects with a TPC of $100 million or
greater. Based on interviews with key members across DOE, this process
appears to be working well.

•

Designates a clear project owner for each project (the person who identifies
the mission need and is responsible for the budget to support the mission need).
Each Under Secretary is also to establish a clear line of functional responsibility
that extends from the Under Secretary to the project owner to the Federal Project
Director.

•

Establishes, if it does not exist, a project assessment office within eachprogram office. These offices do not have line management responsibility for
project execution, but have a direct line of responsibility to the appropriate
Under Secretary. Within their program purview, they are responsible for
conducting peer reviews of projects that have a TPC of $100 million or greater.

•

Conducts an alternatives analysis for projects independently of thecontractor organization responsible for the proposed project. Program
Offices must conduct the alternatives analysis at a minimum at CD-1, but may
also perform one if there is a deviation from the performance baseline or if newtechnologies or solutions become available.

•

Requires that nuclear construction projects achieve at least 90 percent
design completion before approval of a performance baseline, which must
include up-to-date and detailed cost estimates. For non-nuclear project
construction designs, the requirement is less specific. The designs must be
sufficiently mature for the program to ensure, with at least 80 percent
confidence, a complete and accurate project baseline. All projects greater than$100 million still go through a review at CD-1 by the DOE-wide ProjectManagement Risk Committee.

•

Uses established methods and best practices in developing andcommunicating project costs. Such estimates will be consistent with methods
and the best GAO practices and, when applicable, with requirements of theFederal Acquisition Regulation.

•

Fully funds projects of $50 million or less. Full funding was not requested in
DOE’s FY 2016 budget request because it was too late. DOE officials report that
this new policy will begin with the FY 2017 request.

281

•

Establishes a Project Leadership Institute. The goal of this institute is tocreate and sustain a culture of project delivery excellence within the entire
Department. Unsurprisingly, SC has the lead.

F. DOE Program Management
The management of large programs, as opposed to construction projects or
acquisition of capital assets, presents both different and similar management challenges.
The range of challenges include: achieving goals that may take years or even decades;
addressing extraordinary technical complexity; meeting nuclear safety standards;
maintaining and developing needed workforce capability; managing organizational
complexity both within and outside DOE (contractors, State and local governments, other
Federal agencies); estimating out-year program costs and schedules; and implementing
programs within an increasingly difficult budget environment both in terms of theprocesses and overall fiscal constraints.
The Commission did not review all programs across DOE, nor is there a centralized
data set available on program management, as there is for project management. The
Commission instead focused on two large multi-billion-dollar program areas
administered by the Department: Environmental Management (EM) and the group of Life
Extension Programs (LEPs) for nuclear weapons. Combined, they represent about one
half of the DOE budget (approximately $15 billion in the 2016 request). The EM
program is primarily administered by non-laboratory contractors within a highly
regulated framework of consent decrees. The LEP programs are executed by the NNSA
laboratories—Lawrence Livermore, Los Alamos, and Sandia.
1.

Environmental Management

One of the major missions of the Department is the clean-up of the legacy of
nuclear weapons production and government-sponsored nuclear research. DOE has spentalmost $160 billion to date on cleanup and has completed restoring 91 of 107 major sites,
although many of the completed sites are small with only slight contamination. EM is
still working on the most challenging and high-risk sites. Deferral of this work hassignificantly increased the life-cycle cost of the EM program.
DOE estimates that the cost of this work could range from $187 to $223 billion
over the next 10 years but that assumes expenditures consistent with a “compliancebudget” (that is, meeting all requirements and milestones of DOE-signed consent
decrees). However, the resource needs of a full “compliance budget” considerably282

exceeds the annual funding that EM has received in recent years (about $5 to $6 billion
annually). 378
According to SEAB, the current EM budget for technology development is about
0.2 percent of the EM budget, or around $13 million. Yet, direct funding for technology
development is not the only source of funds for EM R&D. For example, Savannah River
National Laboratory reported its FY 2015 budget was $215 million, stemming fromNNSA and other Federal agencies, among other sources. 379
Completion of the most-difficult-to-clean-up sites will depend greatly on newtechnology. In 1995, the NRC noted that an effective technology-development program
should focus on new technology and processes to reduce the costs of, or risks associatedwith, remediation and waste management. The authors also underscored the need formore basic science researchers to be involved in the challenges of DOE’s remediation
effort, with more interaction between creative and innovative researchers and the“customers” with the remediation or waste minimization problems.380 In a similar vein, a
recent SEAB report recommended:
•

•
•
•

more budgetary resources for new technology development and new
research programs focused on EM challenges (bringing the research anddevelopment share of the EM budget to about 3 percent or between $140 to$185 million);broad participation of universities, National Laboratories, and industry inthese programs;
rigorous peer reviews; and,periodic evaluations of program effectiveness.

The SEAB review concluded that there is a need for a comprehensive
reexamination of the EM program because of fundamental conflicts among deadlines incompliance agreements, regulatory requirements, budget resources, and available
technology. 381

378

SEAB, Report of the Task Force on Technology Development for Environmental Management (DOE,2014); also, Presentation to the Task Force by the Office of Environmental Management (July 15,2014).

379

From information provided to the Commission by staff of the Savannah River National Laboratory.

380

NRC, Improving the Environment: An Evaluation of DOE’s Environmental Management Program,”Committee to Evaluate the Science, Engineering, and Health Basis of the Department of Energy’s
Environmental Management Program (Washington, DC: NRC, 1995), 21.

381

SEAB, Report of the Task Force on Technology Development for Environmental Management.

283

2.

Life Extension Programs (LEPs)

DOE, through NNSA, has responsibility for overseeing the nuclear weapons cycle,
including development, production, maintenance, and retirement. DOE and NNSA carryout these activities in partnership with DOD. The primary challenge is to repair or replacecomponents of nuclear weapons thereby ensuring reliability of the aging stockpile. By
extending the “life” of nuclear weapons for 20 to 30 years, NNSA can maintain ameaningful nuclear deterrent without producing new weapons. Each facility in the
nuclear weapons complex contributes to this process.
NNSA’s leadership asked the Aerospace Corporation to conduct an independent
assessment of the LEPs, which was completed in 2012. The assessment focused on:(1) plans in place to manage staffing and workforce; (2) cost and schedule estimating andbudgeting processes; (3) technology and manufacturing readiness; and (4) systems
engineering and risk management. 382 The final report provides in-depth observations
about some of the management challenges in this program. Selected observations andfindings emphasize:•

Strong concern about the adequacy of skills and experience of the workforce. The
report notes a high percentage of the workforce is eligible for retirement and thatchallenges in recruiting and retaining those with sufficient critical skills put themission at risk. 383•

Need for improved cost estimation and program-budget presentation.

•

Need for weapons focused technology development. One recommendation states:“Establish a program, open to all sites and laboratories, and commercial industry
to allow for competition on a selected set of targeted technology
developments.” 384•

Inadequate validation of requirements by an independent entity. 385•

A disconnect between DOD and NNSA that increases the possibility of the NNSA
contractor teams working towards different goals and objectives than those
officially recognized by the relevant DOD organizations.

382

Aerospace Corporation, Independent Assessment of Life Extension Program Phase 6.X Process, Report
No. ATR-2012(5709) (Washington, DC: NNSA, 2012).

383

Aerospace Corporation, Independent Assessment, 23.

384

Aerospace Corporation, Independent Assessment.

385

GAO also criticized NNSA for inadequate validation of requirements. See GAO, Nuclear Weapons:
NNSA and DOD Need to More Effectively Manage the Stockpile Life Extension Program, GAO-09385 (Washington, DC: GAO, 2009).

284

The 2014 report by the Augustine/Mies panel also noted year-to-year variation incosts and schedules for the delivery of several major LEPs and nuclear facilities. 386 GAO
identified a $27 billion increase in the estimates from 2014 compared with the 2012
estimates for the same twenty year time period. GAO has recommended that DOE require
the use of widely accepted best practices in cost estimating. 387 As an example, it notedthat NNSA did not require NNSA program managers or its contractors to follow any
DOE or NNSA requirements or guidance for the development of a program cost estimate
when developing the estimate for the B-61 LEP. 388
NNSA has taken steps to address some of these concerns. NNSA designated a
Federal program manager for the major LEP activities underway. NNSA has also
recently implemented earned value management principles for LEP activities. According
to NNSA, its organizations will “work closely with the laboratories and plants to detailwork scope and schedules for specific activities needed to support the LEPs.” These
actions will “improve NNSA’s LEP management, coordination and decision-making
rigor.” 389
In response to a requirement in the National Defense Authorization Act for FY 2014,
NNSA also established the Office of Cost Estimating and Program Evaluation (CEPE) to
provide independent, data-driven analysis of all aspects of the nuclear security enterprise.
CEPE’s functions are intended to parallel those of the office in DOD referred to as Cost
Assessment and Program Evaluation (CAPE).
CEPE must build capability in the areas of cost estimation, program evaluation, cost
data collection, and system engineering. It is slated to lead analyses of alternatives for
major programs and projects, which will serve as the basis for assessing and validating
program requirements. But how these activities will be implemented and their effect onprogram and project decision-making are yet to be determined.

G. Findings and Recommendations
The Commission has formulated the following findings for DOE project andprogram management:

386

Augustine/Mies panel, A New Foundation for the Nuclear Enterprise.

387

GAO, Project and Program Management: DOE Needs to Revise Requirements and Guidance for Cost
Estimating and Related Reviews (Washington, DC: GAO, November 2014).

388

GAO, Department of Energy’s Contract Management for the National Nuclear Security
Administration and Office of Environmental Management,” 2015 High Risk Report (Washington, DC:
GAO, February 2015).

389

NNSA, Comments on the Final Report of the Congressional Advisory Panel on the Governance of the
Nuclear Security Enterprise, Report to Congress (Washington, DC: NNSA, May 2015).

285

•

The subject of DOE project and program management has been addressed invarious reviews and reports over many years. DOE has responded to concernswith a series of policy and organizational changes. Such efforts have intensified
recently.

•

The primary challenge going forward is one of institutionalizing the policychanges from headquarters and making sure that changes are implemented in a
disciplined manner throughout DOE and its contractor community. If they are not,DOE’s progress toward continued improvement will be at risk.

•

DOE’s efforts are having some success as measured by the data analysis
presented here. GAO has acknowledged the good management performance ofSC overall and of NNSA and EM for smaller projects. Current CD-2 projects
managed by National Laboratories also indicate a positive record.

•

DOE is moving in the direction of building capacity for project and program
management and developing a more singular management culture across the
Department, but sustained effort is needed.

•

Funding instability adds to project management challenges and can hurt project
performance. A good part of meeting this challenge is outside the purview of
those running the programs or projects and points to the need for more certainty
of funding.

•Significant or potential performance issues still exist for large EM and NNSA
projects (equal to or over $750 million in cost) that often have both technical andorganizational complexity. Such projects may deal with special nuclear materials
for weapons or radioactive waste and sometimes involve two major departments
or other levels of government that do not always work well together. Mostly,
these projects are managed by non-laboratory contractors.

Based on these findings, the Commission has formulated the following major
recommendations for DOE project and program management:
Recommendation 34: DOE should maintain focus on increasing institutional
capability and imposing greater discipline in implementing DOE project guidance,
which is currently being incorporated into its DOE directive 413.3 B. Expanding on
recent DOE efforts, there should be more peer reviews and “red teams” within DOE,
among laboratories, other agencies, industry, and academia when appropriate.
Recommendation 35: The Commission supports the recent SEAB Task Forcerecommendation to put more resources into science and technology development
for the EM program given the technical complexity of its projects.

286

The Commission has the following additional recommendations:•

DOE should consider adopting a lower cost threshold to trigger reexaminationof the selected alternative. Conducting serious, independent, and informed
analyses of alternatives has been a continual theme in previous reports withwhich the Commission heartily concurs. Currently, DOE uses two thresholds:
either a 50 percent or $100 million increase in the selected alternative’s cost
triggers a review. A lower threshold of 25 percent would be more in line withother Federal agencies engaged in similar projects.

•

DOE should improve the adequacy and security of project funding through full
funding, management reserves and contingencies, and more transparent budget
presentations.
–

Full funding: given the importance of stable and secure funding for effective
project management cited by several DOE officials, the Commission
applauds the Department’s move to a full funding policy for projects over
$50 million. The Commission would support raising the threshold evenhigher (such as $200 million). Moving to full funding would also bring
DOE more in line with OMB policy and practices at DOD. An alternative to
upfront funding that achieves the same benefits for project management is torequest advance appropriations where DOE would request the amount ofannual budget authority needed annually over a multi-year period andCongress would appropriate in advance those annual amounts for futureyears. DOE would have the assurance of funding for the project as needed infuture years but only be able to obligate the amounts of advanceappropriated funds in those subsequent years. (A description of how thisworks can be found in OMB Circular 11.) This approach reduces the needfor a major spike in resources in the first year that creates more difficult
tradeoffs in an era of constrained discretionary resources.

–

Management reserves and contingencies: DOE needs to improve its
estimation of contingencies according to DOE’s own internal working groupreport on project management in 2014. SC has a good practice in this regardof setting aside funds for contingencies (see earlier discussion). DOE should
also provide strong incentives to contractors to increase their management
reserves. An APM official indicates that this is beginning to happen.
Underestimating project costs occurs for several reasons but a key one isfear that DOE, OMB, or Congress will reject the project if they know thefull cost. There is a corollary incentive to keep costs down in order to spread
scarce resources around to a larger number of projects so that they can all befunded at least partially. However, in the longer run, these practices
undermine project performance, raise costs, and delay completion.
287

–

•

Capital assets, program plans and budget presentation: Lastly, DOE budget
presentations should be more transparent and show the out-year costs of all
department-wide projects and programs. Such information would clarify
existing programmatic baseline costs and multi-year costs of projects at allstages to clarify the implications for budget topline. Recent guidance by
DOE that requires each program office to develop an integrated capital asset
project priority list is a first step in this direction as it enables DOE
leadership to make more informed decisions within constrained resources.

DOE should consider whether a new process bringing high-level DOE attention
to project management should be extended, in some form, to program
management. This process could focus on selected programs where outside
reviews point to management or other issues that impede or risk satisfactory
performance. For example, the department should consider a high-level review
process recently initiated by Secretary Moniz for capital assets and construction
projects to examine, on an on-going basis, how programmatic issues identified
by these outside reviews (such as for LEP efforts) are being addressed. This isespecially merited in programs such as EM and LEPs that involve extensive
inter-departmental or inter-governmental relationships.

288

16. Lack of Meaningful Change after
Previous Reports
A. Introduction
The Commission recognizes that an abundance of studies focused on DOE mission
and management have been conducted by various external commissions or panels overthe past two decades. This Commission’s effort falls within the context of no less thanfour recently released studies specific to DOE or NNSA. 390 The Commission is therefore
concerned about the steady accumulation of lengthy reports with different scopes, diverse
objectives, and various political drivers. Despite the extensive examination of the issues,none of these reports has led to the comprehensive change necessary to address the welldocumented, persistent challenges confronting the Department and its laboratories. 391
The Commission’s approach has included in-depth analysis and use of previous studies.
The Commission’s charge is distinct relative to most other studies in its review ofthe effectiveness of all 17 of the DOE laboratories, including their alignment with DOE’s
strategic priorities; their unique or duplicative missions and core capabilities; and theirability to evolve, plan, and prepare for the future. Of the reports the Commission
reviewed, only the 1995 Galvin report, Alternative Futures for the Department of Energy
National Laboratories, and the 2013 National Academy of Public Administration(NAPA) report, Positioning DOE’s Laboratories for the Future: A Review of DOE’s
Management and Oversight of the National Laboratories, covered all of the DOE
390

Augustine/Mies panel, A New Foundation for the Nuclear Security Enterprise; National ResearchCouncil (NRC), Aligning the Governance Structure of the NNSA Laboratories; Secretary of Energy
Advisory Board (SEAB), Interim Report of the Task Force on Nuclear Nonproliferation (Washington,
DC: DOE, 2014); NRC, Peer Review and Design Competition in the NNSA National Security
Laboratories (forthcoming).

391

While not instigating Department-wide reform, these earlier reports have had some influence on
important elements of the Department’s mission. For example, the Foster Panel reports positively
impacted the technical processes relevant to certification of the nuclear weapons stockpile and the Blue
Ribbon Commission on the Use of Competitive Procedures for Department of Energy Laboratories, inpart, catalyzed important improvements to the evaluation processes adopted by the Office of Science
beginning in 2004. See Panel to Assess the Reliability, Safety, and Security of the United States
Nuclear Stockpile (“Foster Panel”), FY 2001 Report of the Panel to Assess the Reliability, Safety, andSecurity of the United States Nuclear Stockpile (Washington, DC: 2002), 2 and 23–24; and Blue
Ribbon Commission on the Use of Competitive Procedures for Department of Energy Laboratories,
Competing the Management and Operations Contracts for DOE’s National Laboratories (Washington,
DC: DOE, 2003), 17.

289

laboratories in such a sweeping fashion. Of note, despite being almost 20 years apart andhaving different emphases, some of the findings of these two reports are remarkably
similar to each other with respect to the lack of a strategic, integrated “laboratory system”
approach and the breakdown of the FFRDC model. This latter issue is associated withhighly compliance-focused government oversight, which has negative implications forthe scientific enterprise, as subsequently discussed in more detail. 392
Each of the studies conducted since the Galvin report has had a different scope orfocus related to the mission, management, and future of the National Laboratories. Not
unlike the current Commission’s study, previous studies were catalyzed by a specificissue of the time, such as mission execution, security breaches, and budgetary concerns.
Most of the studies to date have focused on the nuclear weapons mission and its
associated laboratories or production sites, but even the importance of the weapons
mission has, at times, yielded to overarching concerns regarding the management of thelaboratories or the effectiveness of security within the Department.
In the late 1990s, mounting concerns regarding the management of the weapons
enterprise, combined with security scandals and allegations of espionage, 393 culminatedin Congress establishing the NNSA in 2000 as a “separately organized” entity within the
Department of Energy. 394 However, this change has done little to address the enterprise’s
challenges in mission execution or its significant failings in program management andsecurity, major concerns highlighted by studies prior to NNSA’s establishment. 395 As themost recent study on NNSA, the Augustine/Mies panel report. noted, the “unmistakableconclusion is that NNSA governance reform, at least as it has been implemented, hasfailed to provide the effective, mission-focused enterprise that Congress intended.”396
392

SEAB, Alternative Futures for the Department of Energy National Laboratories, 6; and NAPA,
Positioning DOE’s Laboratories for the Future, 13, 23 and 75.

393

Concern surrounding the nuclear weapons mission were encapsulated by the first Foster Panel Report:
Panel to Assess the Reliability, Safety, and Security of the United States Nuclear Stockpile, FY 1999
Report of the Panel to Assess the Reliability, Safety, and Security of the United States Nuclear
Stockpile. Fears of Chinese espionage were advanced by the so-called Cox Commission Report (U.S.
House of Representatives Select Committee on U.S. National Security and Military/Commercial
Concerns with the People’s Republic of China, Final Report (Washington, DC: 1999)). Laboratory
security came to the fore in President’s Foreign Intelligence Advisory Board (PFIAB) report entitled
Science at its Best, Security at its Worst: A Report on Security Problems at the US Department ofEnergy (Washington, DC: 1999). All this was in the midst of a scandal surrounding Wen Ho Lee, aTaiwanese-born scientist at Los Alamos National Laboratory who was accused of espionage (“Trade
Secrets,” The Economist, February 7, 2002. http://www.economist.com/node/975548).

394

National Nuclear Security Administration Act (Title XXXII of the National Defense Authorization Act
for Fiscal Year 2000, P. L. 106-65).

395

These include the 1999 Chiles Commission, the 2000 Foster Panel, and the 1999 PFIAB.

396

Augustine/Mies panel, A New Foundation for the Nuclear Security Enterprise, x.

290

Although focused primarily on NNSA, the report noted that there are five systemic
disorders that permeate the Department’s culture and corresponding management
challenges that must be addressed to achieve effective and efficient mission execution. 397
Many of the reports, although heavily focused on the NNSA, emphasize thatstrategic priority setting and enforcement remain weaknesses within DOE. Effective
execution of the mission is frequently hindered by problems in contractual oversight,
unclear roles and responsibilities and the erosion of the trust upon which the FFRDC
model is based. The reports that underscore ineffective establishment and enforcement of
mission priorities suggest that this tendency is a result of inadequate planning andprogram management throughout the Department. Effective resource management is
stymied by budgetary fragmentation, which is further aggravated by excessive costs forcompliance-focused processes and duplicative oversight. These reports also make evident
the lack of effective planning and program management capabilities with respect to longterm human capital and facility and infrastructure needs. 398
Overall, the discontinuities among the previous reports on DOE largely stem fromthe scope and particular focus of each report. Despite this diversity in scope, there isremarkable convergence regarding the challenges that continue to plague the Department.
Moreover, this convergence gives rise to recurring recommendations designed to address
the identified challenges. Despite the recurrence of the same themes and the strength of
the recommendations to help resolve the challenges they evoke, few reports have brought
about the enduring, positive change intended.

397

The five disorders identified by the Nuclear Security Enterprise Governance Panel include: (1) the lossof sustained national leadership focus and priority, starting with the end of the Cold War; (2)inadequate implementation of the legislation establishing NNSA as a separately organized sub-elementof DOE; (3) the lack of proven management practices; (4) dysfunctional relationships between thegovernment and its M&O site operators, and; (5) insufficient collaboration with DOD customers. Ibid,
6.

398

For example, the reports focused on the weapons program couch this as stewardshipreadiness/responsiveness. See successive Foster Panel Reports from FY 1999, 2000, and 2001. The
S&T reports focus on the multi-faceted nature of the mission or the importance of LDRD and want thelaboratories to be given more discretion in setting the priorities. See NRC, Managing for High Qualityof Science and Engineering at the NNSA National Security Laboratories (Washington, DC: National
Academies Press, 2012). The security studies note the lack of long-term planning for tools andtechnologies to adequately address security and CI. PFIAB, Science at its Best, Security at its Worst(Washington, DC: PFIAB, 1999) and Richard Mies, NNSA Security: An Independent Review(Washington, DC: Sage/LMI, 2005).

291

B. Major Recurring Themes Produce Little Change
Even at this preliminary stage of its efforts, the Commission observes recurring
themes that have emerged from its review of prior reports, the public meetings, and its
laboratory visits to date.
Several reports describe a dysfunctional relationship between DOE and its
laboratories, generically couched as the erosion or loss of the mutual trust required by the
FFRDC model. Based on our observations, this difficulty is not uniformly experienced
across the laboratories, and its severity varies widely. The primary factors affecting
severity of the challenges faced are which office within DOE acts as the laboratory’s
sponsor and the role assumed by the leadership and personnel at each laboratory’s field
office. The operational manifestations of an eroded FFRDC model are generally
characterized by DOE’s “micromanagement” of the laboratories and a focus oncompliance as opposed to mission outcomes. This is exacerbated by confused roles andresponsibilities in conjunction with ambiguous or conflicting DOE Orders and Directives
which compel a focus on transactional compliance rather than effective risk
management. 399 This cursory overview of recurring themes and their interrelationship has
shaped the Commission’s understanding and its approach. In addition, concerns over thelack of impact from all these studies weighed heavily in the Commission’s considerations
regarding its focus and objectives in Phase 2.
1.

Broken Trust Undermines Fulfillment of the FFRDC Promise

Previous studies repeatedly underscore the breakdown of the FFRDC model as thefundamental impediment to a productive relationship between DOE and its laboratories.
As stated previously, the FFRDC model is based on the premise that these entities act as“trusted advisors” to their government sponsors; the ideal relationship is that the
government sponsor defines “what” problem or challenge needs to be addressed and the
FFRDC delineates “how” to work towards a solution. Instead DOE engages inprescriptive management and focuses on transactional compliance. This has resulted in
the imposition of additional cost due to greater oversight and in a deleterious
environment for innovation. 400 The Galvin report found that “increasing overhead cost,poor morale and gross inefficiencies as a result of overly prescriptive congressional
management and excessive oversight by the Department” and an “(in)ordinate internal

399

See NRC, Managing for High Quality of Science and Engineering at the NNSA National Security
Laboratories; and Augustine/Mies panel, A New Foundation for the Nuclear Security Enterprise.

400

See, for example, Augustine/Mies panel, A New Foundation for the Nuclear Security Enterprise.

292

focus at every level of these laboratories on compliance issues and questions ofmanagement processes…takes a major toll on research performance.” 401This theme of overly prescriptive management and emphasis on transactional
compliance can be found in almost every report over the past two decades and represents
the antithesis of how the FFRDC model was designed to operate. For example, in a
detailed depiction of specific management processes and the Department’s approach tooversight, the 2013 NAPA study concluded that a successful transition to a more
outcome-based evaluation approach would require that DOE staff in both headquarters
and the site offices “change the way they conduct business.” Such a transition would also
require that DOE staff “step back from overseeing and evaluating the laboratories at thetransaction level and embrace a systems approach to managing the laboratories…” 402
Prescriptive management and a focus on tactical compliance rather than outcomes are but
two manifestations of the breakdown in the FFRDC construct.
2.

Broken Trust Fuels Operational Impediments

In an attempt to identify the most important issues for Phase 2, the Commission
categorized recommendations from all the major studies, as well as relevant Government
Accountability Office (GAO) and DOE Office of the Inspector General (OIG) reports
from 1995 to 2014. The recommendations were then prioritized, based on frequency of
the recommendation; potential impact on the enterprise; DOE-wide or NNSA specific;
range of actors required for implementation (Office of Management and Budget [OMB],
Congress, DOE, etc.); and unambiguous regarding the desired outcome.
The following five issues stood out in terms of the criteria (with actors involved inparenthesis):•

Budget atomization, which impedes flexibility and innovation (requires OMB,
congressional, and DOE action);•

DOE Orders and Directives, which drive transactional, compliance-focused
behavior at high cost and impede innovation (requires DOE action with the
Defense Nuclear Facilities Safety Board as a significant “stakeholder”);•

Excessive and redundant audits and inspections, which partially result fromDOE Orders and Directives, but represent an issue broader than just DOE(requires multiple actors beyond DOE: non-DOE OIG, GAO, Defense Nuclear
Facilities Safety Board, Occupational Safety and Health Administration, state
regulatory agencies, etc.);

401

SEAB, Alternative Futures for the Department of Energy National Laboratories, 6.

402

NAPA, Positioning DOE’s Laboratories for the Future, 75.

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•

Enterprise-wide information management lacks comprehensive, reliable data,
which hinders planning for workforce needs, preparing budget requests,
identifying costs for activities, and ensuring validity of cost estimates (requires
DOE and M&O contractor action); and•Confused roles, responsibilities, accountability, and authority stymie a “linemanagement” approach to NNSA’s mission execution, frequently with
operational support elements (safety, security, and environment) skewing
incentives toward delay or excessively conservative approaches to risk (requires
DOE action, both headquarters and site office).

The first three of these issues fall readily under the rubric of “transactional
compliance” and could be viewed as specific, but interrelated, manifestations of atarnished (or forgotten) FFRDC model. The impacts of these issues, individually andcombined, include a further erosion of the trust requisite for proper functioning of the
FFRDC construct, an assumed cost for compliance that detracts from science, and theopportunity costs to the mission. The Commission took up the fourth issue regarding
enterprise-wide data as it pertains to laboratory overhead rates; these rates are a partialreflection of the transactional tasks requisite for compliance and highly relevant to theCommission’s charge. The final issue is handled in a comprehensive fashion by the
recent Augustine/Mies panel report. 403 The Commission fully endorses that report andurges swift action to clarify the roles, responsibilities, accountability and authorities
throughout the Department, whether or not Congress legislates the statutory changes
called for by the report.
The first four issues have been investigated in greater detail during Phase 2 of theCommission’s work. Although earlier reports have referenced these problems and haveargued for their resolution, the Commission believes that through its collection of therelevant data and extensive examination of these issues, it can proffer comprehensive,
specific recommendations that will have an enduring and positive impact on DOE’s
management of its laboratories. Resolving these challenges also would help rebuild therelationship requisite for proper functioning of the FFRDC model.

C. Why Past Reports Have Failed to Bring About Change
Past reports have failed to catalyze needed changes for a variety of reasons. One
obvious reason is that many of the recurring themes are systemic problems, both beyond
and within the DOE itself. As noted in the listing of entities relevant to the complianceissues outlined above, some of the Department’s enduring challenges can be addressed

403

Augustine/Mies panel, A New Foundation for the Nuclear Enterprise, 21–35.

294

only through a coordinated effort on the part of Congress and the Department’s
leadership, at a minimum. As the foremost historic example, the establishment of NNSA
underscores that legislation is often a blunt instrument and that successful outcomes
hinge on implementation.
A second prominent problem is lack of awareness or understanding of the DOE’s
missions and the role of the laboratories in our Nation’s S&T endeavors. This is true for abroad swath of the general public as well as for Congress. Congressional attention on
DOE frequently focuses on either a parochial issue or is embedded in larger divisive
debates such as the role of the Nation’s nuclear deterrent in today’s international security
environment or the role of government in advancing energy technology.
Another prominent problem, mentioned previously, is that despite the recurrence ofthemes and recommendations, the diverse drivers for these reports have led tovoluminous, sometimes duplicative, assessments. However, there is still no persistentmechanism for assessing the implementation of appropriate recommendations or metrics
to measure improvements for actions taken in response to any given report. Lastly, therotating leadership of the Department requires institutionalizing those high-level
activities that prove successful in remedying major problems. The Commission is
mindful of several positive steps taken by the current Secretary and has examinedpossible ways to institutionalize these activities.
The Commission is intent on ensuring its recommendations are sufficiently detailed
and specify every party accountable for any action required. To the extent feasible, theCommission offers approaches to measure successful implementation of each
recommendation with the hope of avoiding other pitfalls regarding report
recommendations; namely, lack of accountability for implementation andmisunderstandings with respect to the outcome sought. To achieve this objective theCommission has examined each of the issues listed in the previous section to identify
specific reasons for the failure to act on them or why any earlier attempts at
implementation failed.

D. How This Commission Can Be Impactful
The Commission notes the absence of a standing body or internal DOE mechanism
to advocate for implementation of recommended changes, perform systematic
assessments, and evaluate progress over time.
It would be extremely valuable if Congress and the DOE had a credible independentgroup to turn to for perspective and advice on issues relating to the National Laboratories
when questions arise, without having to create a new commission, panel or review eachtime. Such a group need not be large. It could consist of a few senior people who had
previously held responsible positions in DOE, the National Laboratories, industry,295

academia, or Congress. They might be named to such a board on a part-time basis, as
they have been when appointed to commissions such as this CRENEL commission. They
would need to be supported by a small staff.
With this in place, not only could Congress get high quality advice on a fasterturnaround time, but also DOE and the National Laboratories could be spared thedisruption of as many new review groups as they have experienced in the past. With theright composition and charter, this group could provide brief and insightful perspectiveon the broad issues regarding the relationship of DOE and the laboratories over time,such as whether changes to restore the FFRDC relationship are truly being made in
substance or only cosmetically, by both DOE and the laboratories.
A challenge, of course, is where to locate such a group in order to make it efficient,effective and independent. One possibility would be to ask the National Academies tohost it. Another possibility is to have the group report to the President’s Council ofAdvisors on Science and Technology (PCAST). Yet another option would have theSecretary of Energy establish the group to serve both the Secretary and the Congress. A
formal, though larger, example of such a group is the Nuclear Waste Technical Review
Board, which was created as an independent agency of the Federal government to provide
independent scientific peer review and recommendations to the Secretary and theCongress regarding DOE’s programs for high-level radioactive waste and spent nuclear
fuel. That group consists of eleven members who serve on a part-time basis, nominatedby the National Academy of Sciences and named by the President. Wherever it is located,
it would seem appropriate to establish it under a sunset provision, so that the entity’seffectiveness would be reviewed and reconsidered at appropriate intervals.

E. Findings and Recommendations
Over 50 prior studies and reports published over the past 40 years detailshortcomings in the relationship between the DOE and its laboratories. Though themandates for each assessment diverge in scope, objectives, and the members charged tofulfill them, they present a strikingly consistent pattern of criticism and recommendations
for improvement. These themes include:•

Micromanagement of the laboratories by DOE headquarters and site offices.

•

Excessive budget controls, which restrict the laboratories’ abilities to manage
resources flexibly to achieve mission responsibilities effectively and efficiently.

•

Oversight practices that involve excessive numbers of site inspections,transactional oversight, and burdensome data calls.

•

Past recommendations for improvement have, for the most part, had limited
impact, as demonstrated by the fact that the same problems recur in report after
report.
296

•Because root causes of these problems are hard to ascertain, recommendations
from past commissions have proven difficult, if not impossible, to implement.

•

There is no standing body, either within DOE or outside, to advocate for
implementation, perform systematic assessments, and evaluate progress overtime. Simultaneously, DOE has no institutionalized internal mechanism toassimilate, assess, and act on appropriate recommendations.

The Commission has explored options regarding future commissions, theirmandates, frequency and makeup, and a systematic way to monitor and evaluate
progress. Also, as part of its lessons-learned exercise regarding the failed implementationof past recommendations, the Commission evaluated what institutional mechanisms
might best address this shortfall and recommends the following:
Recommendation 36: A standing body should be established to track implementationof the recommendations and actions in this report, and to report regularly to DOE,
the laboratories, the Administration, and the Congress on progress, results, andneeded corrective actions. The standing body could assist congressional committees
in developing a rational plan for future evaluations of the DOE laboratories.

297

Appendix A.
Commissioner Biographies
Jared L. Cohon, Co-Chair
Dr. Jared L. Cohon is President Emeritus and University Professor of Civil andEnvironmental Engineering and Engineering and Public Policy at Carnegie Mellon
University.
Dr. Cohon served as president of Carnegie Mellon for 16 years (1997–2013). He
came to Carnegie Mellon from Yale, where he was Dean of the School of Forestry andEnvironmental Studies from 1992 to 1997. He started his teaching and research career in1973 at Johns Hopkins, where he was a faculty member in the Department of Geography
and Environmental Engineering for 19 years. He also served as Assistant and Associate
Dean of Engineering and Vice Provost for Research at Johns Hopkins. Dr. Cohon earned
a B.S. degree in civil engineering from the University of Pennsylvania in 1969 and a
Ph.D. in civil engineering from the Massachusetts Institute of Technology in 1973.
An author, coauthor, or editor of one book and more than 80 professional
publications, Dr. Cohon is an authority on environmental and water resource systems
analysis, an interdisciplinary field that combines engineering, economics and appliedmathematics. He has worked on water resource problems in the United States, SouthAmerica and Asia and on energy facility siting, including nuclear waste shipping andstorage. In addition to his academic experience, he served in 1977 and 1978 as legislative
assistant for energy and the environment to the late Honorable Daniel Patrick Moynihan,
United States Senator from New York. President Bill Clinton appointed Dr. Cohon to the
Nuclear Waste Technical Review Board in 1995 and appointed him as chairman in 1997.
His term on the Board ended in 2002. President George W. Bush appointed Dr. Cohon in2002 to the Homeland Security Advisory Council and President Barack Obama
reappointed him in 2009. His term on the Council ended in 2013.
In 2009, Dr. Cohon was named a Distinguished Member of the American Society of
Civil Engineers. He was elected to the National Academy of Engineering and to theAmerican Academy of Arts and Sciences in 2012. He has received honorary degrees
from the Korean Advanced Institute for Science and Technology, the University ofPittsburgh and Carnegie Mellon.

A-1

TJ Glauthier, Co-Chair
TJ Glauthier, President of TJG Energy Associates, LLC, is an advisor to energy
companies and public agencies. He held two Presidential appointments in the Clinton
Administration: at the White House as Associate Director of the Office of Management
and Budget from 1993–1998, and as the Deputy Secretary and COO of the Department ofEnergy from 1999–2001. He also served on President Obama’s transition team in 2008.
Mr. Glauthier was a member of the Congressional Advisory Panel on the
Governance of the Nuclear Security Enterprise in 2013–2014.
He currently serves on two corporate boards of directors: EnerNOC, a provider ofenergy intelligence software, and VIA Motors, a manufacturer of electric drive pickup
trucks and vans. He is an advisor to Booz Allen Hamilton’s energy practice and has also
served on advisory boards for numerous energy technology companies.
In addition, he is a member of the National Research Council’s Policy and Global
Affairs Committee, the Precourt Institute at Stanford University, and the Lawrence
Berkeley National Laboratory Advisory Board.
Earlier, Mr. Glauthier was CEO of the Electricity Innovation Institute, an affiliate of
EPRI, and spent twenty years in management consulting. He is a graduate of Claremont
McKenna College and the Harvard Business School.

Norman R. Augustine
Norman R. Augustine was raised in Colorado and attended Princeton University
where he graduated with a BSE in Aeronautical Engineering, magna cum laude, and an
MSE. He was elected to Phi Beta Kappa, Tau Beta Pi and Sigma Xi.
In 1958 Mr. Augustine joined the Douglas Aircraft Company in California where heworked as a Research Engineer, Program Manager and Chief Engineer. Beginning in
1965, he served in the Office of the Secretary of Defense as Assistant Director of Defense
Research and Engineering. He joined LTV Missiles and Space Company in 1970, serving
as Vice President, Advanced Programs and Marketing. In 1973 he returned to thegovernment as Assistant Secretary of the Army and in 1975 became Under Secretary of
the Army, and later Acting Secretary of the Army. Joining Martin Marietta Corporationin 1977 as Vice President of Technical Operations, he was elected as CEO in 1987 andchairman in 1988, having previously been President and COO. He served as president of
Lockheed Martin Corporation upon the formation of that company in 1995, and became
CEO later that year. He retired as chairman and CEO of Lockheed Martin in August
1997, at which time he became a Lecturer with the Rank of Professor on the faculty of
Princeton University where he served until July 1999.

A-2

Mr. Augustine was Chairman and Principal Officer of the American Red Cross fornine years, Chairman of the Council of the National Academy of Engineering, President
and Chairman of the Association of the United States Army, Chairman of the Aerospace
Industries Association, and Chairman of the Defense Science Board. He is a former
President of the American Institute of Aeronautics and Astronautics and the Boy Scoutsof America. He is a current or former member of the Board of Directors of
ConocoPhillips, Black & Decker, Proctor & Gamble and Lockheed Martin, and was amember of the Board of Trustees of Colonial Williamsburg. He is a Regent of the
University System of Maryland, Trustee Emeritus of Johns Hopkins and a former
member of the Board of Trustees of Princeton and MIT. He is a member of the Advisory
Board to the Department of Homeland Security, was a member of the Hart/Rudman
Commission on National Security, and has served for 16 years on the President’s Councilof Advisors on Science and Technology. He is a member of the American PhilosophicalSociety and the Council on Foreign Affairs, and is a Fellow of the National Academy ofArts and Sciences and the Explorers Club.
Mr. Augustine has been presented the National Medal of Technology by the
President of the United States and received the Joint Chiefs of Staff Distinguished PublicService Award. He has five times received the Department of Defense’s highest civilian
decoration, the Distinguished Service Medal. He is co-author of The Defense Revolution
and Shakespeare In Charge and author of Augustine’s Laws and Augustine’s Travels. He
holds 23 honorary degrees and was selected by Who’s Who in America and the Libraryof Congress as one of “Fifty Great Americans” on the occasion of Who’s Who’s fiftiethanniversary. He has traveled in over 100 countries and stood on both the North and South
Poles of the earth.

Wanda M. Austin
Dr. Wanda M. Austin is president and chief executive officer of The Aerospace
Corporation, a leading architect for the Nation’s national security space programs. The
Aerospace Corporation has nearly 4,000 employees and annual revenues of more than$850 million. She assumed this position on January 1, 2008. She is internationallyrecognized for her work in satellite and payload system acquisition, systems engineering,and system simulation.
Dr. Austin served on President Obama’s Review of Human Spaceflight Plans
Committee in 2009, was appointed to the Defense Science Board in 2010, and was
appointed to the NASA Advisory Council in 2014.
Dr. Austin earned a bachelor’s degree in mathematics from Franklin & MarshallCollege, master’s degrees in systems engineering and mathematics from the University ofPittsburgh, and a doctorate in systems engineering from the University of Southern
California.
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Dr. Austin is a fellow of the AIAA, and is a member of the National Academy ofEngineering, the International Academy of Astronautics, and the American Academy ofArts and Sciences. She also serves on the Board of Directors of the Space Foundation,and on the Board of Trustees for the University of Southern California and the National
Geographic Society.
Dr. Austin has received numerous awards and citations. Among them are the
National Intelligence Medallion for Meritorious Service, the Air Force Scroll of
Achievement, and the National Reconnaissance Office Gold Medal. In 2010 she received
the AIAA von Braun Award for Excellence in Space Program Management, and is arecipient of the 2012 Horatio Alger Award, the 2012 NDIA Peter B. Teets Industry
Award, and the 2014 USC Viterbi Distinguished Alumni Award.
Dr. Austin is committed to inspiring the next generation to study the STEM
disciplines and to make science and engineering preferred career choices. Under her
guidance, the corporation has undertaken a number of initiatives in support of this goal,
including participation in MathCounts, US FIRST Robotics, and Change the Equation.

Charles Elachi
Dr. Charles Elachi is the Director of the Jet Propulsion Laboratory and Vice
President of California Institute of Technology. He is a Professor of ElectricalEngineering and Planetary Science at Caltech.
Dr. Elachi was born April 18, 1947, in Lebanon. He received a B.S. in physics fromthe University of Grenoble, France and the Diplome Ingenieur in engineering from the
Polytechnic Institute, Grenoble in 1968 where he graduated first in the class, and M.S.
and Ph.D. degrees in electrical sciences from the California Institute of Technology,
Pasadena in 1969 and 1971, respectively. He later received an MBA from USC (1979)
and an M.S. degree in geology from UCLA (1983).
Dr. Elachi taught “The Physics of Remote Sensing” at the California Institute ofTechnology from 1982 to 2000. Dr. Elachi was Principal Investigator on numerous
research and development studies and flight projects sponsored by the National
Aeronautics and Space Administration (NASA). He was Principal Investigator for the
Shuttle Imaging Radar series (SIR-A in 1981, SIR-B in 1984, and SIR-C in 1994), was a
Co-Investigator on the Magellan imaging radar, is presently the Team Leader of the
Cassini Titan Radar experiment, and a Co-Investigator on the Rosetta Comet Nucleus
Sounder Experiment. He is the author of over 230 publications in the fields of space andplanetary exploration, Earth observation from space, active microwave remote sensing,electromagnetic theory and integrated optics, and he holds several patents in those fields.
In addition, he has authored three textbooks in the field of remote sensing. One of thesetextbooks has been translated into Chinese.

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In his 40-year career at JPL, Dr. Elachi played the lead role in developing the fieldof spaceborne imaging radar which led to Seasat, SIR-A, SIR-B, SIR-C, Magellan,
SRTM and the Cassini Radar. He received numerous national and international awards
for his leadership in this field.
During the late 1980s and 1990s as the Director of Space and Earth Science
programs, Dr. Elachi was responsible for the definition and development of numerous
JPL flight instruments and missions for Solar System Exploration, the Origins program,
Earth Observation and Astrophysics.
In the mid- to late 1990s, Dr. Elachi chaired a number of national and international
committees which developed NASA roadmaps for the exploration of neighboring Solar
Systems (1995), our Solar System (1997) and Mars (1998).

Paul A. Fleury
Dr. Paul A. Fleury is the Frederick William Beinecke Professor of Engineering andApplied Physics, and Professor of Physics at Yale University. He is the founding Directorof the Yale Institute for Nanoscience and Quantum Engineering. He served as Dean ofEngineering at Yale from 2000 until 2008. Prior to joining Yale Dr. Fleury was Dean of
the School of Engineering at the University of New Mexico from January 1996,
following 30 years at AT&T Bell Laboratories. At Bell Laboratories he was director ofthree different research divisions covering physics, materials and materials processing
research between 1979 and 1996. During 1992 and 1993 he was Vice President for
Research and Exploratory Technology at Sandia National Laboratories.
Dr. Fleury is the author of more than 130 scientific publications on non-linear
optics, spectroscopy and phase transformations in condensed matter systems and has coedited three books. He is a Fellow of the American Physical Society and the American
Association for the Advancement of Science; and a member of the National Academy ofEngineering, the National Academy of Sciences and a Fellow of the American Academyof Arts and Sciences. He received the 1985 Michelson-Morley Award and the 1992 Frank
Isakson Prize of the American Physical Society for his research on optical phenomena
and phase transitions in condensed matter systems.
Dr. Fleury has been a member of numerous National Research Council (NRC) study
panels, including that of the 2007 National Nanotechnology Initiative review, “A Matterof Size,” as well as the 2013 NNI triennial review committee. He has served on the
Secretary of Energy’s “Laboratory Operations Board” and the University of California
President’s Council on the National Laboratories. He has also served on review
committees for Brookhaven, Lawrence Berkeley, Oak Ridge, Sandia and Los Alamos
National Laboratories and for 6 years as a member of the Visiting Committee forAdvanced Technology for NIST. He is currently active Sandia, Oak Ridge and Los

A-5

Alamos advisory committees in addition to his service on the Board on Physics andAstronomy and the Laboratory Assessment Board of the National Academy of Sciences.
He received his Bachelor of Science and Master of Science degrees in 1960 and 1962
from John Carroll University, and his doctorate from the Massachusetts Institute ofTechnology in 1965, all in physics.

Susan J. Hockfield
A noted neuroscientist, Dr. Susan J. Hockfield was the first life scientist to serve as
President of the Massachusetts Institute of Technology, where she holds a faculty
appointment as Professor of Neuroscience in the Department of Brain and Cognitive
Sciences. Before assuming the presidency of MIT in 2004, she was Provost at Yale
University, where she had taught since 1985 and had also served as Dean of the Graduate
School of Arts and Sciences. A graduate of the University of Rochester, Dr. Hockfieldreceived her Ph.D. from the Georgetown University School of Medicine, carrying out her
dissertation research in neuroscience at the National Institutes of Health. An elected
member of the American Academy of Arts and Sciences and an elected fellow of theAmerican Association for the Advancement of Science, Dr. Hockfield holds honorary
degrees from Brown University, Duke University, Mount Sinai School of Medicine,
Tsinghua University (Beijing), University of Edinburgh, University of Massachusetts
Medical School, University of Pierre and Marie Curie (Paris), University of Rochester
and the Watson School of Biological Sciences at Cold Spring Harbor Laboratory in New
York. Additionally, she holds a jointly-awarded honorary degree from the New
University of Lisbon, the Technical University of Lisbon and the University of Porto,
Portugal. She serves as a director of the General Electric Company and Qualcomm
Incorporated, a trustee of the Boston Symphony Orchestra and the Council on Foreign
Relations, and is a member of the board of the World Economic Forum Foundation.
In 2006 under Dr. Hockfield’s leadership, MIT launched a major energy initiative,
capitalizing on the Institute’s deep strength in science, engineering, architecture,
management and economics to pioneer the leading edge of energy and environmental
research, from visionary policy recommendations to technological breakthroughs.

Richard A. Meserve
Dr. Richard A. Meserve is Senior of Counsel with Covington & Burling LLP, alarge multi-national law firm. He recently stepped down as the President of the Carnegie
Institution for Science after 11 years at the helm. The Carnegie Institution conducts basic
research in biology, astronomy and geophysics.
Dr. Meserve served as Chairman of the U.S. Nuclear Regulatory Commission from1999 to 2003. He was the principal executive officer of the Federal agency withresponsibility for ensuring public health and safety in the operation of nuclear power
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plants and in the usage of nuclear materials. He served as Chairman under bothPresidents Clinton and Bush and lead the Nuclear Regulatory Commission in responding
to the terrorism threat that came to the fore after the 9/11 attacks. Before joining the
Nuclear Regulatory Commission, Dr. Meserve was a partner in Covington & Burling
LLP. With his Harvard law degree, received in 1975, and his Ph.D. in applied physics
from Stanford, awarded in 1976, he devoted his legal practice to technical issues arisingat the intersection of science, law, and public policy. Early in his career, he served aslegal counsel to the President’s science adviser, and was a law clerk to Justice Harry A.
Blackmun of the United States Supreme Court and to Judge Benjamin Kaplan of the
Massachusetts Supreme Judicial Court. He received his undergraduate degree from Tufts
University in 1966.
Dr. Meserve has served on numerous legal and scientific committees over the years,
including many established by the National Academies of Sciences and Engineering. He
served on the Blue-Ribbon Commission on America’s Nuclear Future established by
DOE Secretary Chu at the direction of the President and currently serves as Chairman of
the International Nuclear Safety Group, which is chartered by the International Atomic
Energy Agency. Among other affiliations, he is a member of the National Academy ofEngineering, American Philosophical Society, and Sigma Xi, and he is a Fellow of theAmerican Academy of Arts and Sciences, the American Association for the
Advancement of Science, the American Physical Society, and the Phi Beta Kappa
Society. He is a Foreign Member of the Russian Academy of Sciences.
Dr. Meserve also serves on the Council of the National Academy of Engineeringand of the American Academy of Arts and Sciences. He is on the Board of Directors of
PG&E Corporation, Duke Energy Corporation, and the Universities Research
Association, Inc. He is a member of the Visiting Committee to the MIT Department of
Nuclear Science and Engineering and to the Harvard School of Engineering and Applied
Physics.

Cherry A. Murray
Dr. Cherry A. Murray is Benjamin Peirce Professor of Technology and Public
Policy and Professor of Physics at Harvard University. She was Dean of Harvard
University’s School of Engineering and Applied Sciences; John A. and Elizabeth S.
Armstrong Professor of Engineering and Applied Sciences; and Professor of Physics
from 2009 to 2014. Previously, Murray served as principal associate director for scienceand technology at Lawrence Livermore National Laboratory from 2004–2009 and waspresident of the American Physical Society in 2009. Before joining Lawrence Livermore,
Murray was Senior Vice President of Physical Sciences and Wireless Research after a 27
year long career at Bell Laboratories Research.

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Dr. Murray was elected to the National Academy of Sciences in 1999, to theAmerican Academy of Arts and Sciences in 2001, and to the National Academy ofEngineering in 2002. She received the National Medal of Technology and Innovation in
2014. She has served on more than 100 national and international scientific advisorycommittees, governing boards and National Research Council panels and as a member of
the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.
She chaired the National Research Council Division of Engineering and Physical Sciencefrom 2008 to 2014.
As an experimentalist, Dr. Murray is known for her scientific accomplishments incondensed matter and surface physics. She received her B.S. in 1973 and her Ph.D. inphysics in 1978 from the Massachusetts Institute of Technology. She has published morethan 70 papers in peer-reviewed journals and holds two patents in near-field optical data
storage and optical display technology.

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Appendix B.
Congressional Charge
The following is the language from the Consolidated Appropriations Act, 2014:
Sec. 319. (a) Establishment—The Secretary shall establish an independent commission to
be known as the “Commission to Review the Effectiveness of the National Energy Laboratories.”
The National Energy Laboratories refers to all Department of Energy and National Nuclear
Security Administration national laboratories.
(b) Members(1) The Commission shall be composed of nine members who shall be appointed by the
Secretary of Energy not later than May 1, 2014, from among persons nominated by the
President’s Council of Advisors on Science and Technology.
(2) The President’s Council of Advisors on Science and Technology shall, not later
than March 15, 2014, nominate not less than 18 persons for appointment to theCommission from among persons who meet qualification described in paragraph (3).
(3) Each person nominated for appointment to the Commission shall—(A) be eminent in a field of science or engineering; and/or(B) have expertise in managing scientific facilities; and/or(C) have expertise in cost and/or program analysis; and(D) have an established record of distinguished service.
(4) The membership of the Commission shall be representative of the broad range ofscientific, engineering, financial, and managerial disciplines related to activities under
this title.
(5) No person shall be nominated for appointment to the Board who is an employeeof—(A) the Department of Energy;(B) a national laboratory or site under contract with the Department of Energy;(C) a managing entity or parent company for a national laboratory or site undercontract with the Department of Energy; or(D) an entity performing scientific and engineering activities under contract with
the Department of Energy.
(c) Commission Review and Recommendations—(1) The Commission shall, by no later than February 1, 2015, transmit to the Secretaryof Energy and the Committees on Appropriations of the House of Representatives andthe Senate a report containing the Commission’s findings and conclusions.

B-1

(2) The Commission shall address whether the Department of Energy’s national
laboratories—(A) are properly aligned with the Department’s strategic priorities;(B) have clear, well understood, and properly balanced missions that are notunnecessarily redundant and duplicative;(C) have unique capabilities that have sufficiently evolved to meet current andfuture energy and national security challenges;(D) are appropriately sized to meet the Department’s energy and national security
missions; and(E) are appropriately supporting other Federal agencies and the extent to which it
benefits DOE missions.
(3) The Commission shall also determine whether there are opportunities to more
effectively and efficiently use the capabilities of the national laboratories, including
consolidation and realignment, reducing overhead costs, reevaluating governancemodels using industrial and academic bench marks for comparison, and assessing theimpact of DOE’s oversight and management approach. In its evaluation, theCommission should also consider the cost and effectiveness of using other research,development, and technology centers and universities as an alternative to meeting
DOE’s energy and national security goals.
(4) The Commission shall analyze the effectiveness of the use of laboratory directed
research and development (LDRD) to meet the Department of Energy’s science,
energy, and national security goals. The Commission shall further evaluate theeffectiveness of the Department’s oversight approach to ensure LDRD-funded projects
are compliant with statutory requirements and congressional direction, including
requirements that LDRD projects be distinct from projects directly funded byappropriations and that LDRD projects derived from the Department’s national security
programs support the national security mission of the Department of Energy. Finally,
the Commission shall quantify the extent to which LDRD funding supports recruiting
and retention of qualified staff.
(5) The Commission’s charge may be modified or expanded upon approval of theCommittees on Appropriations of the House of Representatives and the Senate.
(d) Response by the Secretary of Energy—(1) The Secretary of Energy shall, by no later than April 1, 2015, transmit toCommittees on Appropriations of the House of Representatives and the Senate a reportcontaining the Secretary’s approval or disapproval of the Commission’s
recommendations and an implementation plan for approved recommendations.

B-2

Appendix C.
Letter from Secretary of Energy Moniz to
Senator Feinstein

C-1

Appendix D.
Organizations Represented inInterviews and Public Meetings
Department of Energy (DOE)•

National Nuclear Security
Administration

Brookhaven Site Office (samemanagement as the Princeton Site
Office)••Office of Acquisition and ProjectManagement

Chicago Office of the Integrated
Support Center••

Office of the Chief Financial
Officer

Environmental Management
Consolidated Business Center•

Fermi Site Office•

Office of Environmental
Management•

Idaho Operations Office•

Office of Fossil Energy•

Golden Field Office•

Office of Inspector General•

Livermore Field Office•

Office of Independent Enterprise
Assessments•

Los Alamos Field Office•

Oak Ridge Site Office•

Office of Nuclear Energy••

Office of Science

Oak Ridge Office of the Integrated
Support Center•

Office of the Secretary•

Pacific Northwest Site Office•

Office of the Under Secretary forManagement and Performance•

Sandia Field Office•

Savannah River EM Site Office•

Office of the Under Secretary for
Science and Energy•

Savannah River NNSA Site Office••

Albuquerque Complex•

Ames Site Office

SLAC Site Office (samemanagement as the Berkeley Site
Office)•Argonne Site Office•Thomas Jefferson Site Office•

Advanced Research Projects
Agency-Energy•

D-1

Laboratory and Other M&O Contractor Personnel•

Argonne National Laboratory•

Lockheed Martin Corporation•

Battelle Memorial Institute•

Los Alamos National Laboratory•

Bechtel Corporation••

Brookhaven Science
Associates/Stony Brook University

National Laboratories Director’sCouncil••Fermi National Laboratory

National Renewable Energy
Laboratory•

Idaho National Laboratory••

Kansas City Plant

Savannah River National
Laboratory•

Lawrence Berkeley National
Laboratory•

Savannah River Nuclear Solutions••

Lawrence Livermore National
Laboratory

SLAC National Accelerator
Laboratory•

University of Chicago•

Office of Science and Technology
Policy•Office of the Director of National
Intelligence•

Office of the Secretary of Defense(OSD)-Acquisition, Technology,
and Logistics (AT&L), Installations& Environment•

OSD-AT&L, Research &Engineering•

OSD-Operational Energy Plans andPrograms•

United States European Command•

United States House ofRepresentatives, Subcommittee on
Energy and Water Development•

United States Pacific Command•

United States Senate,
Subcommittee on Energy andWater Development•

United States Southern Command

Other Federal Agencies•

Central Intelligence Agency•

Department of Defense•

Department of Homeland Security•

Department of State•

Defense Threat Reduction Agency•

Federal Bureau of Investigation•

Government Accountability Office•Intelligence Advanced Research
Projects Activity•

National Aeronautics and Space
Administration•

National Research Council•

Naval Facilities Engineering
Command•Navy Strategic Systems Programs•

Nuclear Regulatory Commission•

National Science Foundation•

Office of Information Resources•

Office of Management and Budget

D-2

Other Stakeholders•

AKHAN Technologies, Inc.

••

American Association for the
Advancement of Science

Institute for Molecular Engineering,
University of Chicago••

American Federation of Labor andCongress of Industrial Organizations

Institute of Applied Research,
University of Illinois at UrbanaChampaign•

BASF Corporation•

Johnson Controls Power Solutions•

Booz Allen Hamilton Inc.

•

Metal Improvement Corporation•

Brookings Institution•

Michigan State University•

Center for Protection of Workers’
Rights•Nanosys, Inc.

••

Decker, Garman, Sullivan & Associates
LLC

National Academy of Public
Administration•

Natural Resources Defense Council•

Dow Chemical Company•

Nuclear Watch New Mexico•

Eli Lilly and Company•

Project on Government Oversight•

Energy Efficient Buildings Hub,Philadelphia Navy Yard•

Sentient Energy•

Forum on Industrial and Applied
Physics, of the American PhysicalSociety•

The Heritage Foundation•

The Information Technology &Innovation Foundation•

General Atomics••

Harvard Kennedy School

Tri-Valley Communities Against aRadioactive Environment•

Henry L. Stimson Center•

United States Council for Automotive
Research•

Howard Hughes Medical Institute•

University of Texas, Austin

D-3

Appendix E.
Descriptions of Department of Energy
National Laboratories
Ames National Laboratory

Millions of Dollars (2014)

60.0
50.0
40.0
30.0
20.0
10.0
0.0

FY04
32.8

FY05
34.4

FY06
30.4

FY07
28.5

FY08
28.0

FY09
31.1

FY10
32.0

FY11
32.4

FY12
31.2

FY13
44.3

FY14
51.3

% of DOE Lab Budget 0.3%

0.3%

0.3%

0.3%

0.2%

0.2%

0.3%

0.3%

0.3%

0.4%

0.4%

$M (2014)$M (2014)

0.5%
0.5%
0.4%
0.4%
0.3%
0.3%
0.2%
0.2%
0.1%
0.1%
0.0%

% of DOE Lab Budget

Figure E-1. Ames National Laboratory: Total Spending and Budget as Percentage of DOE
National Laboratories Budget, FY 2004-FY 2014

Core Capabilities• Condensed Matter Physics andMaterials Science••

Chemical and Molecular
Science

E-1

Applied Materials Science andEngineering% of Total DOE Laboratories Budget

Established in 1947, Ames is managed by Iowa State University and stewarded by
the Department of Energy (DOE) Office of Science.

Argonne National Laboratory

700.0

7.0%

600.0

6.0%

500.0

5.0%

400.0

4.0%

300.0

3.0%

200.0

2.0%

100.0

1.0%

0.0
$M (2014)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
434.1 434.2 422.4 443.4 451.3 541.1 577.8 654.5 629.6 654.4 602.6% of DOE Lab Budget 3.6%

3.7%

3.8%

4.1%

4.0%

$M (2014)

4.2%

4.8%

5.3%

5.3%

5.8%

0.0%

5.2%

% of DOE Lab Budget

Figure E-2. Argonne National Laboratory: Total Spending and Budget as Percentage of
DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Particle Physics•

Nuclear Physics•

Accelerator Science andTechnology•

Condensed Matter Physics andMaterials Science•

Chemical and Molecular
Science•

Applied Mathematics•

Advanced Computer Science,
Visualization, and Data

E-2•

Applied Nuclear Science andTechnology•

Applied Materials Science andEngineering•

Chemical Engineering•

Systems Engineering andIntegration•

Large Scale User Facilities /Advanced Instrumentation% of Total DOE Laboratories Budget

Millions of Dollars (2014)

Established in 1946, Argonne National Laboratory is managed by the University of
Chicago, Argonne LLC and stewarded by the DOE Office of Science.

Brookhaven National Laboratory

6.0%

800.0
Millions of Dollars (2014)

700.0

5.0%

600.0

4.0%

500.0
400.0

3.0%

300.0

2.0%

200.0

1.0%

100.0
0.0

$M (2014)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14467.9 503.7 487.7 506.6 507.0 592.5 673.6 620.8 644.6 523.9 532.7% of DOE Lab Budget 3.9%

4.3%

4.4%

4.6%

4.5%

$M (2014)

4.6%

5.6%

5.1%

5.4%

4.6%

0.0%

4.6%

% of Total DOE Laboratories Budget

Established in 1947, Brookhaven National Laboratory is managed by Brookhaven
Science Associates, LLC and is stewarded by the DOE Office of Science.

% of DOE Lab Budget

Figure E-3. Brookhaven National Laboratory: Total Spending and Budget as Percentage of
DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Particle Physics•

Nuclear Physics•

Accelerator Science andTechnology•

Condensed Matter Physics andMaterials Science•

Chemical and Molecular
Science•

Climate Change Science•

Biological Systems Science

E-3•

Applied Nuclear Science andTechnology•

Applied Materials Science andEngineering•

Chemical Engineering•

Systems Engineering andIntegration•

Large Scale User
Facilities/Advanced
Instrumentation

Fermi National Accelerator Laboratory

480.0

3.9%

460.0

3.8%
3.7%

440.0

3.6%

420.0

3.5%

400.0

3.4%
3.3%

380.0

3.2%

360.0
340.0

3.1%
FY04
395.0

FY05
393.6

FY06
390.2

FY07
395.2

FY08
389.8

FY09
431.8

FY10
454.5

FY11
437.3

FY12
421.0

FY13
379.8

FY14
426.3

% of DOE Lab Budget 3.3%

3.4%

3.5%

3.6%

3.5%

3.4%

3.8%

3.6%

3.5%

3.4%

3.7%

$M (2014)$M (2014)% of DOE Lab Budget

Figure E-4. Fermi National Accelerator Laboratory Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004-FY 2014

Core Capabilities• Particle Physics••

Accelerator Science andTechnology

E-4

Large Scale User Facilities /Advanced Instrumentation

3.0%% of Total DOE Laboratories Budget

Millions of Dollars (2014)

Established in 1967, Fermi National Accelerator Laboratory (Fermi) is managed by
the Fermi Research Alliance, LLC and stewarded by the DOE Office of Science.

Idaho National Laboratory

Millions of Dollars (2014)

1400.010.5%

1200.010.0%

1000.0
800.0

9.5%

600.0

9.0%

400.0

8.5%

200.0
0.0

$M (2014)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY141113.7 1068.8 1070.1 1043.4 1094.0 1235.9 1242.3 1174.2 1100.0 992.8 1060.0% of DOE Lab Budget 9.3%

9.2%

9.6%

9.5%

9.7%

$M (2014)

9.7%

10.3%

9.6%

9.2%

8.8%

8.0%

9.1%

% of DOE Lab Budget

Figure E-5. Idaho National Laboratory: Total Spending and Budget as Percentage of DOE
National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Modeling and Simulation••

Fuel Cycle Research andDevelopment

Explosives Detection andTesting•Armor and Defense Systems•

Light Water Reactor
Sustainability•

Hybrid Energy Systems•

Advanced Reactor Researchand Development•

Non-traditional Hydrocarbons••

Space Nuclear Systems andTechnology

Advanced Energy Storage
Performance Science•

Clean Energy and Water•

Next Generation Nuclear
Program Research andDevelopment•

Biofuels Feedstock Science andEngineering•

Energy Critical Materials•

Nuclear Nonproliferation••

Critical Infrastructure
Protection

Clean Energy Grid Integration
Modeling and Validation••

Industrial Control Systems
Cyber Security

Energy Systems Diagnostics
and Control•

Materials Performance Science•

Electric Grid Resiliency

E-5% of Total DOE Laboratories Budget

Established in 1949, Idaho National Laboratory is managed by the Battelle Energy
Alliance, LLC and stewarded by the DOE Office of Nuclear Energy.

Lawrence Berkeley National Laboratory

Millions of Dollars (2014)

Established in 1931, Lawrence Berkeley National Laboratory is managed by the
University of California and stewarded by the DOE Office of Science.
700.0

6.0%

600.0

5.0%

500.0

4.0%

400.0

3.0%

300.0

2.0%

200.0

1.0%

100.0
0.0

$M (2014)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
488.6 506.0 471.5 490.6 546.4 627.2 647.8 645.5 633.2 636.3 644.0% of DOE Lab Budget 4.1%

4.3%

4.2%

4.5%

4.9%

$M (2014)

4.9%

5.4%

5.3%

5.3%

5.6%

0.0%

5.5%

% of DOE Lab Budget

Figure E-6. Lawrence Berkeley National Laboratory: Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Particle Physics•

Advanced Computer Science,
Visualization, and Data•

Computational Science•

Applied Nuclear Science andTechnology•

Nuclear Physics•

Accelerator Science andTechnology•

Condensed Matter Physics andMaterials Science••

Chemical and Molecular
Science

Applied Materials Science andEngineering•

Chemical Engineering•

Biological Systems Science••

Environmental Subsurface
Science

Systems Engineering andIntegration••

Climate Change Science

Large Scale User Facilities /Advanced Instrumentation•

Applied Mathematics

E-6

Lawrence Livermore National Laboratory

1800.016.0%

1600.014.0%

1400.012.0%

1200.010.0%

1000.0

8.0%

800.0

6.0%

600.0
400.0

4.0%

200.0

2.0%

0.0
$M (2014)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
1612.6 1603.8 1469.6 1464.8 1302.3 1317.2 1257.0 1327.2 1355.0 1206.2 1163.5% of DOE Lab Budget 13.5% 13.8% 13.2% 13.4% 11.6% 10.3% 10.5% 10.8% 11.4% 10.7% 10.0%$M (2014)% of DOE Lab Budget

Figure E-7. Lawrence Livermore National Laboratory: Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• High Performance Computing•

Climate Change andAtmospheric Science•

Biodetection and Diagnostics•

Computational Materials andChemistry•Engineered Materials•

High Energy-Density Science•

Nuclear Physics andRadiochemistry•

Radiation Detection Systems•

Actinide Materials•

Energetic Materials••

Computational Geomechanics
and Seismology

Chemical and Isotopic
Signatures•

Lasers and Optical Materials•

Computational Mathematics••

Computational Engineering

All-Source Intelligence
Analysis•

Nuclear Design

E-7

0.0%

% of Total DOE Laboratories Budget

Millions of Dollars (2014)

Established in 1952, Lawrence Livermore National Laboratory is managed by
Lawrence Livermore National Security, LLC and stewarded by the National Nuclear
Security Administration.

Los Alamos National Laboratory

Millions of Dollars (2014)

2400.02300.02200.02100.02000.01900.01800.01700.0$M (2014)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY142163.0 2252.9 2181.5 2045.8 2079.0 2144.5 2041.7 2281.0 2067.1 1915.1 2003.1% of DOE Lab Budget 18.1% 19.3% 19.6% 18.7% 18.5% 16.8% 17.0% 18.6% 17.3% 17.0% 17.2%$M (2014)% of DOE Lab Budget

Figure E-8. Los Alamos National Laboratory: Total Spending and Budget as Percentage of
DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Nuclear Weapons Stockpile•

Nuclear Nonproliferation•

Emerging Global Threats•

Energy Security•

Physics•

Astrophysics and Cosmology

E-8•

Materials Science•

Sensors and Materials
Signatures•

Plutonium and Actinide
Science•

High-Performance Computing

20.0%
19.5%
19.0%
18.5%
18.0%
17.5%
17.0%
16.5%
16.0%
15.5%
15.0%

% of Total DOE Laboratories Budget

Established in 1943, Los Alamos National Laboratory is managed by Los Alamos
National Security, LLC and stewarded by the National Nuclear Security Administration.

National Energy Technology Laboratory

Millions of Dollars (2014)

1200.08.0%
7.0%

1000.0

6.0%

800.0

5.0%

600.0

4.0%
3.0%

400.0

2.0%

200.0
0.0

$M (2014)

1.0%
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
783.1 635.7 679.2 661.5 753.1 973.7 702.9 792.6 727.6 664.0 693.4% of DOE Lab Budget 6.6%

5.5%

6.1%

6.1%

6.7%

$M (2014)

7.6%

5.8%

6.5%

6.1%

5.9%

0.0%

% of Total DOE Laboratories Budget

Established in 1910, the National Energy Technology Laboratory is a governmentowned, government-operated laboratory with no managing contractor. It is operated by
the DOE Office of Fossil Energy.

6.0%% of DOE Lab Budget

Figure E-9. National Energy Technology Laboratory: Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Chemical and molecularscience•

Mechanical design andengineering•

Computational science•

Cyber and information sciences•

Applied geosciences andengineering•

Decision science and risk
analysis•

Applied materials science andengineering•

Systems Engineering andIntegration•

Chemical engineering

E-9

National Renewable Energy Laboratory

400.0

4.0%

350.0

3.5%

300.0

3.0%

250.0

2.5%

200.0

2.0%

150.0

1.5%

100.0

1.0%

50.0

0.5%

0.0
$M (2014)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
255.9 235.8 204.5 372.0 322.0 339.1 313.7 322.8 274.9 316.5 292.3% of DOE Lab Budget 2.1%

2.0%

1.8%

3.4%

2.9%

$M (2014)

2.7%

2.6%

2.6%

2.3%

2.8%

0.0%

2.5%

% of DOE Lab Budget

Figure E-10. National Renewable Energy Laboratory: Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Energy Systems Integration•

Bioenergy Science andTechnology•

Materials & Chemistry Scienceand Technology••

Materials and Chemistry
Science and Technology

Mechanical and ThermalEngineering•

Strategic Energy Analysis

E-10% of Total DOE Laboratories Budget

Millions of Dollars (2014)

Established in 1977, NREL is managed by the Alliance for Sustainable Energy,
LLC and stewarded by the DOE Office of Energy Efficiency and Renewable Energy.

Oak Ridge National Laboratory

1400.012.0%

1200.010.0%

1000.0

8.0%

800.0

6.0%

600.0

4.0%

400.0

2.0%

200.0
0.0

$M (2014)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
944.7 1031.9 958.7 1059.7 1097.4 1305.2 1293.1 1245.8 1191.5 1084.0 1135.4% of DOE Lab Budget 7.9%

8.9%

8.6%

9.7%

9.8% 10.2% 10.8% 10.1% 10.0% 9.6%

$M (2014)

0.0%

9.8%

% of Total DOE Laboratories Budget

Millions of Dollars (2014)

Established in 1943, Oak Ridge National Laboratory is managed by UT-Battelle,
LLC and stewarded by the DOE Office of Science.

% of DOE Lab Budget

Figure E-11. Oak Ridge National Laboratory: Total Spending and Budget as Percentage of
DOE National Laboratories Budget, FY 2004-FY 2014

Core Capabilities• Nuclear Physics•

Advanced Computer Science,
Visualization, and Data•

Computational Science•

Accelerator Science andTechnology•

Plasma and Fusion Energy
Sciences•

Applied Nuclear Science andTechnology•

Condensed Matter Physics andMaterials Science•

Applied Materials Science andEngineering•

Chemical and Molecular
Science•

Chemical Engineering•

Climate Change Science•

Systems Engineering andIntegration•

Biological Systems Science••

Environmental Subsurface
Science

Large Scale User
Facilities/Advanced
Instrumentation

E-11

Pacific Northwest National Laboratory

700.0

6.0%

600.0

5.0%

500.0

4.0%

400.0

3.0%

300.0

2.0%

200.0

1.0%

100.0
0.0

FY04
357.5

FY05
420.3

FY06
405.1

FY07
410.4

FY08
563.5

FY09
566.6

FY10
632.0

FY11
546.7

FY12
551.5

FY13
644.4

FY14
582.8

% of DOE Lab Budget 3.0%

3.6%

3.6%

3.8%

5.0%

4.4%

5.3%

4.5%

4.6%

5.7%

5.0%

$M (2014)$M (2014)% of DOE Lab Budget

Figure E-12. Pacific Northwest National Laboratory: Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Chemical and Molecular
Science•

Applied Nuclear Science andTechnology•

Climate Change Science••

Biological Systems Science

Applied Materials Science andEngineering•

Environmental Subsurface
Science•

Chemical Engineering••

Advanced Computer Science,
Visualization, and Data

Systems Engineering andIntegration•

Large Scale User Facilities /Advanced Instrumentation

E-12

0.0%

% of Total DOE Laboratories Budget

Millions of Dollars (2014)

Established in 1965, Pacific Northwest National Laboratory is managed by Battelle
Memorial Institute and stewarded by the DOE Office of Science.

Princeton Plasma Physics Laboratory

Millions of Dollars (2014)

120.0

0.9%
0.8%

100.0

0.7%

80.0

0.6%
0.5%

60.0

0.4%

40.0

0.3%
0.2%

20.0
0.0

0.1%
FY04
94.5

FY05
95.3

FY06
88.6

FY07
82.8

FY08
83.9

FY09
82.2

FY10
85.8

FY11
84.6

FY12
81.5

FY13
77.0

FY14
89.1

% of DOE Lab Budget 0.8%

0.8%

0.8%

0.8%

0.7%

0.6%

0.7%

0.7%

0.7%

0.7%

0.8%

$M (2014)$M (2014)% of DOE Lab Budget

Figure E-13. Princeton Plasma Physics Laboratory: Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Plasma and Fusion Energy
Sciences•

E-13

Large Scale User Facilities /Advanced Instrumentation

0.0%% of Total DOE Laboratories Budget

Established in 1951, Princeton Plasma Physics Laboratory is managed by Princeton
University and stewarded by the DOE Office of Science.

Sandia National Laboratory

Millions of Dollars (2014)

2500.0

18.0%
16.0%

2000.0

14.0%
12.0%

1500.010.0%
8.0%

1000.0

6.0%
4.0%

500.0
0.0

$M (2014)

2.0%
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
2022.9 1918.7 1744.6 1700.7 1490.3 1498.3 1501.6 1510.9 1701.0 1627.9 1777.5

0.0%% of DOE Lab Budget 16.9% 16.5% 15.7% 15.6% 13.3% 11.7% 12.5% 12.3% 14.3% 14.4% 15.3%$M (2014)% of DOE Lab Budget

Figure E-14 Sandia National Laboratory: Total Spending and Budget as Percentage of DOE
National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• High Reliability Engineering•

Safety, Risk and Vulnerability
Analysis•

Sensors and Sensor Systems•

Microsystems•

Cyber Technology•

Natural and Engineered
Materials•

Reverse Engineering•

Modeling and Simulation•

Pathfinders

E-14% of Total DOE Laboratories Budget

Established in 1949, Sandia National Laboratory is managed by Sandia Corporationand stewarded by the National Nuclear Security Administration.

Savannah River National Laboratory

Millions of Dollars (2014)

250
200
150
100
50
0

FY04
122

FY05
120

FY06
123

FY07
133

FY08
140

FY09
154

FY10
164

FY11
140

FY12
138

FY13
184

FY14
204

% of DOE Lab Budget 1.3%

1.3%

1.3%

1.4%

1.4%

1.3%

1.5%

1.2%

1.2%

1.7%

1.8%

$M (2014)$M (2014)% of DOE Lab Budget

Figure E-15. Savannah River National Laboratory: Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Environmental Remediation
and Risk Reduction•

Nuclear Materials Processingand Disposition

E-15

•

Nuclear Detection,
Characterization andAssessments•

Gas Processing, Storage andTransfer Systems

2.0%
1.8%
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%

% of Total DOE Laboratories Budget

Established in 1951, Savannah River National Laboratory is managed by SavannahRiver Nuclear Solutions, LLC and stewarded by the DOE Office of Environmental
Management.

SLAC National Accelerator Laboratory

450.0

4.0%

400.0

3.5%

350.0

3.0%

300.0

2.5%

250.0

2.0%

200.0

1.5%

150.0
100.0

1.0%

50.0

0.5%

0.0

FY04
280.6

FY05
338.0

FY06
371.0

FY07
408.6

FY08
332.9

FY09
358.2

FY10
331.4

FY11
356.3

FY12
343.5

FY13
359.8

FY14
406.4

% of DOE Lab Budget 2.4%

2.9%

3.3%

3.7%

3.0%

2.8%

2.8%

2.9%

2.9%

3.2%

3.5%

$M (2014)$M (2014)% of DOE Lab Budget

Figure E-16. SLAC National Accelerator Laboratory: Total Spending and Budget as
Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Particle Physics•

Accelerator Science andTechnology•

Condensed Matter Physics andMaterials Science

E-16

•

Chemical and Molecular
Science•

Large Scale User Facilities /Advanced Instrumentation

0.0%% of Total DOE Laboratories Budget

Millions of Dollars (2014)

Established in 1962, SLAC National Accelerator Laboratory (SLAC) is managed by
Stanford University and is stewarded by the DOE Office of Science.

Thomas Jefferson National Accelerator Facility

Millions of Dollars (2014)

200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0

1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
FY04
119.0

FY05
109.2

FY06
96.1

FY07
106.9

FY08
108.3

FY09
142.3

FY10
160.3

FY11
175.7

FY12
165.3

FY13
137.3

FY14
165.9

% of DOE Lab Budget 1.0%

0.9%

0.9%

1.0%

1.0%

1.1%

1.3%

1.4%

1.4%

1.2%

1.4%

$M (2014)$M (2014)

0.0%% of DOE Lab Budget

Figure E-17. Thomas Jefferson National Accelerator Facility: Total Spending and Budget
as Percentage of DOE National Laboratories Budget, FY 2004–FY 2014

Core Capabilities• Nuclear Physics•

Accelerator Science andTechnology

E-17

•

Applied Nuclear Science andTechnology•

Large Scale User Facilities /Advanced Instrumentation% of Total DOE Laboratories Budget

Established in 1984, Thomas Jefferson National Accelerator Facility (Thomas
Jefferson) is managed by Jefferson Science Associates, LLC, and stewarded by the DOE
Office of Science.

Appendix F.
Contract Award Fees of Department of Energy
National Laboratories
Table F-1. Contract Award Fees of the National Laboratories
Laboratory
Ames National Laboratory
Argonne National Laboratory

F-1

Brookhaven National
Laboratory
Fermi National Accelerator
Laboratory
Idaho National Laboratory
Lawrence Berkeley National
Laboratory
Lawrence Livermore National
Laboratory
Los Alamos National Laboratory
National Energy Technology
Laboratory
National Renewable Energy
Laboratory
Oak Ridge National Laboratory

Budget from DOE(FY 2014)*
50.00

AvailableAward Fee
($M)
0.34

Award Fee
Earned ($M)
0.31

Total Fee
Received
0.81

Available Fee
as % of DOE
Budget1.68

Base Amount0.5

600.00

5.3

4.98

0.0

5.3

4.98

0.88

530.00

7.4

6.96

0.0

7.4

6.96

1.40

430.00

3.88

3.65

0.0

3.88

3.65

0.90

1,100.00

18.7

18.14

0.0

18.7

18.14

1.70

640.00

4.5

4.17

0.0

4.5

4.17

0.70

1,200.00

27.6

23.9

18.3

45.9

23.9

3.83

2,000.00

40

0

6.2

63.4

6.2

3.17

690.00NA

NA

290.0071100.00

11.2

Total
Available Fee
0.84

NA

NA

NA

NA

6.5

0

7

6.5

2.41

10.53

0

11.2

10.53

1.02

Laboratory
Pacific Northwest National
Laboratory
Princeton Plasma Physics
Laboratory
Sandia National Laboratories
Savannah River National
Laboratory
SLAC National Accelerator
Laboratory
Thomas Jefferson National
Accelerator Facility

Budget from DOE(FY 2014)*
580.00AvailableAward Fee
($M)
11.9

Award Fee
Earned ($M)
11.19

Total
Available Fee
11.9

Total Fee
Received
11.19

Available Fee
as % of DOE
Budget
2.05

90.00

1.86

1.69

0

1.86

1.69

2.07

1800.00

9.8

7.96

18.3

28.1

26.26

1.56

204

4.75

4.71

0

4.75

4.71

2.33

410

4.85

4.56

0

4.85

4.56

1.18

170

3.1

2.91

0

3.1

2.91

1.82

Source: DOE Office of Management and Savannah River National Laboratory

Base Amount0

F-2

Appendix G.
Summary of Findings and Recommendations on
Contract Requirements from Past Studies
The Commission reviewed 15 studies published over two decades—from 1995 to 2015—by previous Commissions, task forces,and other independent groups. The Commission compiled the findings and recommendations relevant to contract requirements,
including those related to governance, management, and oversight of DOE’s National Laboratories.
G-1

Table G-1. Summary of Findings and Recommendations Relevant toContract Requirements from 15 Commission and Other Studies
Year

Study

1995

Task Force on Alternative
Futures for the Departmentof Energy National
Laboratories (Galvin report).
Prepared by the Secretary ofEnergy Advisory Board.
February.

Findings
Inordinate internal focus at every level on complianceissues and questions of management processes, whichtakes a major toll on research performance and costs
Management systems at the laboratories that do notexhibit best business practices, and thus compound the
management challenges of these complex institutions

Recommendations
Develop a “far-less-federal system” and empowerlaboratories to take on greater discretion and responsibility
Sustained improvements in DOE management andleadership are needed both at senior levels in the
Department and in positions below the Deputy Assistant
Secretary level
Move towards a “not-for-profit framework for governance ofthe laboratories” (implementation not discussed in detail)

Year

Study

Findings

Recommendations

1997

The Organization andManagement of the Nuclear
Weapons Complex.
Alexandria, Virginia: Instituteof Defense Analysis.

Defense Programs'-and, more generally, DOE's-practices
for managing environmental, safety, and health concerns
are constipating the system

Senior DOE leadership should trust but verify and fulfill theappropriate roles and responsibilities for guidance andoversight of requirements

DOE’s practices undermine accountability and prevent
timely decisions

Fewer people in the oversight role can streamline theorganization and improve results

No systematic process to assess programmatic andfunctional requirements with resource implications andweigh decisions
1999

Commission on Maintaining
United States Nuclear
Weapons Expertise (“Chiles
Commission”). March.

DOE’s management structure “exhibits fuzzy lines ofauthority, no accountability, and inconsistent direction,
stemming from a lack of a defined oversight process andthe fact that government overseers have not established acommon understanding of what it means to be safe”

G-2

Program line management is operating in parallel to an
operations chain of command
Excessive oversight staff and environmental, health andsafety problems are undermining workplace morale andthe shared sense of mission
Contractors lack flexibility in personnel practices to recruitand retain critical personnel

Establish clear lines of authority within DOE•

Eliminate excessive oversight and overlapping,unclear roles•

Assistant Secretary for Defense Programs should
be given direct line management authority over all
aspects of the weapons complex

Provide contractors with greatly expanded latitude andflexibility in personnel matters•

Allows contractors to compete more effectively intoday’s market for scientific and technical personnel•

DOE and its contractors need to review
contemporary industry initiatives and those ofcomparable federally funded organizations forrecruitment and retention so as to identify andimplement the best practices

Year

Study

Findings

Recommendations

2002

Science and Security in the
21st Century: A Report to theSecretary of Energy on the
Department of Energy
Laboratories. Commission
on Science and Security.
April.

Continuing management dysfunction, including DOE
headquarter, field, contractor, and laboratory relationshipthat created a complicated layered structure in which
identifying accountability is difficult

DOE leadership should clarify line management
responsibilities for security, safety, and operational matters
between federal and laboratory line managers

2005

G-3
2009

Policy development and management, including strong
leadership, lack clarity, consistency, and strategic planning
There is no system-wide approach for assessing risks toestablish priorities and effective management practices,which in turn has an adverse impact on science andDOE’s missions

DOE must change the management culture that supports
and encourages micromanagement of DOE’s laboratories
To remedy staff usurping line management responsibilities,
layers of management and excesses of staff must be
eliminated from the field and headquarters
Commit to the true GOCO model giving laboratory directors
responsibility to manage the laboratory and supplement withstrong and effective oversight

Report of the Nuclear
Weapons Complex
Infrastructure Task Force.
Recommendations for the
Nuclear Weapons Complexof the Future. Secretary ofEnergy Advisory Board. July.

Many administrative orders and procedures designed forthe DOE civilian research and science laboratories are notwell suited to the risks of the NNSA complex

Support organizations (e.g., DOE, NNSA and field offices)
who issue rules should also help NNSA line organizations
and contractors identify effective implementation

NNSA laboratories face substantial quasi-regulatory
influence from the Defense Nuclear Facilities Safety Boardon safety operations; stemming from DOE’s lack ofmechanisms to assess implementation of DNFSB
recommendations

DOE orders and regulations be issued on a risk-informed
basis, with due consideration of potential costs weighedagainst benefits; including DNFSB recommendations

Stimson Center Task
Force. Leveraging Science
for Security. Congressional
Commission on the Strategic
Posture of the UnitedStates. America’s Strategic
Posture, United States
Institute for Peace. March.

The laboratories operate within a highly complex
bureaucratic relationship between DOE and NNSA

Create a new and full autonomous agency

Rather than NNSA telling the laboratories “what” and thelaboratories responding with “how,” the laboratories aredefining “what” and NNSA is micromanaging “how”
Laboratories require greater strategic guidance fromNNSA without unnecessarily curtailing their management
and operational flexibility
DOE and NNSA compliance and process requirements
increase the percentage of employees’ time that is spenton administrative tasks rather than technical and scientificpursuits

Conduct internal (laboratory) and external reviews, strategic
prioritization and oversight to address mission growth,creep, and redundancy

Year

Study

2009

America’s Strategic Posture:
The Final Report of theCongressional Commission
on the Strategic Posture of
the United States, UnitedStates Institute for Peace.

The governance structure and heavily bureaucratic
approach of NNSA is not delivering the needed results

National ResearchCouncil. Managing for High
Quality Science andEngineering at the NNSA
National Security
Laboratories (Phase I
report).

There is conflict and confusion over management roles
and responsibilities of organizations and individuals

Institute for Defense
Analyses. Federal Security
Laboratory GovernancePanels: Observations andRecommendations. January.

There are increased regulatory requirements andoversight affecting Federal security laboratories

2012

Findings

The regulatory burden on the laboratories is excessive
and should be rationalized

The erosion of trust between laboratories and NNSA
shapes the oversight and operation of the laboratories,
resulting in excessive bureaucracy governing laboratory
activities at a deep level of detail

G-4

There is a perception among the three laboratories that
NNSA has moved from partnering to solve scientific andengineering problems and providing oversight of safety,
business, security and operations, to assigning tasks andspecific solutions with detailed implementation instructions

Often requirements represent the cumulative effects ofmultiple remedial actions for publicized safety and security
incidents
In response to crises at single site, system-level policies
are implemented
No mechanism for laboratory feedback on oversightagencyRecommendations
NNSA should adopt a management approach consistent
with the requirements of the effectiveness of research anddevelopment organizations; a less bureaucratic approach is
required

NNSA and laboratories should rebalance the managerial
and governance relationship to build in a higher level of trust
in program execution and Laboratory operations in general
NNSA should reduce reporting and administrative burdens
on the laboratory directors
NNSA and Laboratory management should explore ways bywhich the administrative, safety, and security costs can be
reduced, so that they not impose an excessive burden on
essential research and development activities

Rationalize the oversight burden on the laboratories
Implement oversight standards that are in line with otherlaboratory systems, such as industry standards
Develop an adaptive oversight mechanism, implement
increased oversight on site-by-site basis as needed, or relax
oversight on historically high performing laboratories
Establish policy review before implementing new oversightpolicies to understand whether system level or site-specificpolicy is required
Develop policy for laboratories to provide regular feedback
to site offices and headquarters level to make those offices
accountable as well

Year

Study

Findings

Recommendations

2013

National Academy of Public
Administration. Positioning
DOE’s Laboratories for the
Future: A Review of DOE’s
Management and Oversightof the National Laboratories.

DOE’s National Laboratories and the benchmarked nonDOE FFRDCs face fairly common risks that require theirsponsoring organizations to have appropriate
management control and oversight to ensure that thoserisks are being minimized

DOE should evaluate the staffing, skill mix, and oversightpractices of its offices and identify the changes required torely primarily on contractor assurance systems and risk
management practices for laboratory operational oversight

The Panel supports DOE’s efforts to move towards thecontractor assurance system to manage operational risks
DOE must “trust but verify” that laboratory systems areable to identify problems before they occur

DOE should revise its order on contractor assurance
system, as necessary, to provide explicit guidance on therequirements needed for a mature system; the types of
information and data sharing expected to ensure sufficienttransparency; the timeframe for contractors to develop andsite offices to review and approve a mature system; andincentives

G-5

National ResearchCouncil. The Quality of
Science and Engineering at
the NNSA
Laboratories (Phase IIreport).

Overlapping safety requirements (DOE, DNFSB, etc.)
escalate costs, slow and/or impede experimental work
associated at the NNSA laboratories, and no cost-benefit
analysis is done regarding the value of mediating the risk

DOE, NNSA and laboratory management should review
overall system for assessing and managing risk and driveout costs associated with unnecessary safety measures;
formulate an approach for weighing costs versus benefit ofexperimentation

Information Technology andInnovation Foundation, theCenter for American
Progress, and the Heritage
Foundation. Turning the
Page: Reimagining the
National Labs in the 21stCentury Innovation
Economy. June.

DOE has replaced contractor accountability with direct
regulation of lab decisions—including hiring, worker
compensation, facility safety, travel, and project
management

The Department of Energy, together with the Office of
Science and Technology Policy, should lead a top-to-bottom
review of the lab-stewardship system with the goal ofidentifying and reducing redundant bureaucratic processes

DOE has added duplicative layers of safety, security,
human-relations and environmental regulations in addition
to those already mandated by federal and state law

DOE should rely on decision-making responsibilities at thelaboratory instead of micromanaging the laboratories

National Research Council.
Managing for High-Quality
Science and Engineering at
the NNSA National Security
Laboratories.

Site Offices are organized and staffed largely formonitoring compliance of the laboratories with DOE andother operational regulations

Laboratories face a dislocation of decision-making
authority
Implement a balanced approach that maximizes scientificflexibility within requirements for Federal regulations andenvironmental, health, safety, and security
Reexamine roles and responsibilities of Federal oversightand resolve differences in execution of laboratory
operations

Year

Study

2014

Congressional Advisory
Panel on the Governance of
the Nuclear Security
Enterprise. A New
Foundation for the Nuclear
Enterprise: Report of theCongressional Advisory
Panel on the Governance of
the Nuclear Security
Enterprise. November.

Findings

Recommendations

Lack of clearly defined roles and responsibilities of the
M&Os and Federal officials has led to friction in
relationships

Adopt market-based fixed fees for new M&O contracts
considering risks, M&O investments in the enterprise, andscale of the work to be managed

Transition of laboratories towards a more diversified
customer base and for-profit parent organizations haseroded trust and perception from Federal personnel that
M&Os are primarily driven by growth and profit

Reinforce the M&O parent organizations’ obligations tocontribute to enterprise management improvement

Trust is further deteriorated by the award fee structure

M&O organizations to identify and assess management
improvement opportunities, both for mission execution andfor mission-support functions

Insufficient influence of the M&O parent organization
cultures

Eliminate transactional oversight in areas in which bettermechanisms for certifying contractor performance exist

Unaligned mission-support staff has created confusing,layered oversight leading to costly and ineffective
transactional oversight
2015

G-6

Secretary of Energy Task
Force on DOE National
Laboratories. Report of theSecretary of Energy Task
Force on DOE National
Laboratories. Draft. March.

Laboratories and M&O contractors face burdensome
operating environment caused by increasing number andcomplexity of oversight from internal and external entities

Roles and responsibilities of DOE headquarters, field
elements, M&O contractors, and laboratories should becontinually clarified and communicatedEvaluate options to change the M&O contracting model
Assess need and options for contract requirements that are
most problematic for M&O contractors
Authorize control authority for certain operational
procedures to laboratories

Appendix H.
Examples of Burdensome Policies and Practices
Identified from Past Reform Efforts
National Laboratory Directors Council (NLDC) Prioritization of
Burdensome Policies and Practices
In response to a request from the Secretary of Energy, the NLDC, which consists of
DOE and NNSA National Laboratory directors, conducted an analysis of the mostburdensome DOE policies. The NLDC identified over 120 burdensome policies andpractices across the laboratories over a three month period in 2011. The NLDC focusedon issues that DOE could address internally without legislative action or coordination
with other agencies. The policies and practices were rated and prioritized by 42 senior
managers across the National Laboratories. The NLDC submitted a white paper in May
2011 to the Secretary of Energy with 18 prioritized policies and practices that weredeemed the most burdensome. 404 The issues are summarized in Table H-1.
Table H-1. Burdensome Issues Identified by NLDC
Issue

Problem

Comments/Suggestions

UnneededApprovals

M&O activities which
require DOE approval
can be at a tedious leveland should be saved forhigh risk, high valuetransactions

DOE approvals are required for all CRADA and
SPPs. Except for high value approvals, M&Os should
be given autonomy and be held accountable.
Some DOE review and approvals related to salary
actions limit the contractors’ flexibility to address
salary needs.
There are consistent delays and risk aversion in DOE
approval of higher value subcontracts/procurements.
The threshold for review should be raised.
Foreign travel approval process is costly/time
consuming. DOE Order 441.1c requirements forofficial foreign travel should be reevaluated for
elimination or revision

Excessive
Oversight

There are excessive
audits and assessments
without clear riskprioritization,

Reduce the scope of audit activities, and rely on
independent audit functions at the laboratories. There
should be improved management of “corrective

404

National Laboratory Directors Council (NLDC). NLDC Prioritization of Burdensome Policies andPractices. (May 31, 2011).

H-1

IssueProblemcoordination, or value.

Comments/Suggestions
action” responses

Unnecessary
Reporting

The Laboratories are
required to submit avariety of reports to
DOE

Many of the reports the laboratories are required tosubmit to DOE are duplicative or provide informationthat does not contribute to better management oroversight. The reporting is often time consuming and
not used in a meaningful way towards the mission of
the laboratories.

Striving
Towards Best
Practices

There are many areas
where DOE does notfollow best/industry
practices

Increase the dollar threshold for the capitalization ofassets to reduce the cost and effort to cap the items
at the lower threshold

OverRegulation

DOE has createdrequirements that are
duplicative and often go
beyond national
standards. They
sometimes are imposedwith little flexibility andcontradict existing
national standards

The DOE Worker Safety and Health Program uses
10 CFR 851 which creates requirements far beyond
OSHA standards and that were not intended for
enforcement as a regulatory rule.
DOE Orders 430.1B and 413.3B impose multilayered
rules and regulations which can lead to inconsistentinterpretation and implementation. This confusion
often leads to delays and increased costs.

Improving
Policy Making

Policy can be created inmany places besides
the directive system
including acquisition
letters, DEAR, FAR, andthrough referencing
external standards

Policies failed to make distinctions between the
M&Os and other types of contractors/Federal
employees.
Acquisition letters bypass normal review andconsiderations other requirements receive.

General Issues
and Quick
Fixes

General problems that
do not fall in to the othercategories

Allow the labs to participate on a nonexclusive basis,
with research teams and institutions responding toresearch request for proposals. The current DOE
interpretation of FFRDC restrictions has not allowed
this.
Quarterly apportionments for funding lead to delays
and increased costs.

Mission First Reform Initiative
In 2012, the National Academies conducted a study that provided a number offindings related to management of the NNSA laboratories. As a result, NNSA establishedthe Mission First Reform Initiative with the laboratories to examine ways to improve
management and requirements. The laboratories formed a working group and created aH-2

list of burdensome requirements, which endorsed changes to 39 requirements with 25 tobe removed from the M&O contracts. 405 (See Table H-2.)
Table H-2. Burdensome Issues Identified by Mission First Initiative
Subject
Human Resources

IssuesLimit of 36-months on relocation of work site (Change of Station (COS))
Report monthly on COS to DOE Contracting Officer is currently not in the contract,
but is required
Contract requires DOE Contracting Officer (CO) approval of benefits plan changes,
including those that have no cost.
Pension plan audit requirements vary between sites.
Contract requires DOE Contracting Officer pre-approval on personnel policies thatare inherent M&O FFRDC responsibilities.
Concerns with general application of the FAR and DEAR to laboratory personnel
and procurement practices (DEAR 970.5232-2, Payments and Advances). A keyelement of the FFRDC model/value is the ability to use best academic and private
practices rather than Federal norms. There is a provision, FAR cost principle
31.205-44(i), that allows “notwithstanding the provisions of the FAR,” which otherlaboratories exercise in order to make payments to educational institutions fortuition and fees, or institutional allowances in connection with fellowship or otherresearch, education, and training.

Finance

DOE Order 413.1B is duplicative with OMB Circular A-123, Management
Accountability and Control.

Personal Property
Program

DOE Order 580.1, Personal Property Management Program defines process thatbroadens scope of controls beyond reasonable costs (e.g., all property is to bemarked, tracked in database, and subject to annual inventory). It is suggested thatproperty management industry standards be used.

Environmental Safety
and Health

Majority of requirements in DOE Order 420.2C, Safety of Accelerator Facilities, areduplicative with 10CFR835 Additionally, Safety Analysis Documents (SADs) are
additional DOE requirements that are very expensive to develop and do not add anincrease in safety.
The Biosafety in Microbiological and Biomedical Laboratories is a guidance
document issued by the Centers for Disease Control (CDC) and National Institutesof Health (NIH), but was added as a requirements document to laboratory
contracts. Not all “should statements” should be implemented based on the risk
analysis completed by the Institutional Biosafety Committees.

Nuclear Operations

Current Authorization Agreements for Lab Hazard Category II Nuclear Facilities are
redundant with authorizations provided in other DOE approved documents.

Quality

DOE Order 414.1D, Quality Assurance Requirements for Nuclear Facility
Applications, requires burdensome documentation that drives costs. It is proposedthat laboratories operate under 10CFR830 and ANSI/ASQZ1.13 (preferable) or
ISO 9001 industry standards.
DOE Order 414.1D, Safety Software Quality Assurance Requirements for Nuclear
Facilities, requires a broad scope across all laboratory software. However, it should

405

Information received from Lawrence Livermore National Laboratory.

H-3

Subject

Issuesapply only to software associated with a safety system or one that performs asafety function.

Conduct ofOperations

Many of the requirements in DOE Order 422.1 are redundant to other contractual
requirements such as DOE Order 414.1C, Quality Assurance. It is proposed that
only requirements that are unique to DOE Order 422.1 be included in laboratory
contracts.
DOE Order 150.1 directs DOE approval of Lab Continuity of Operations Programs
at a very limited set of DOE identified mission essential functions at thelaboratories. It is recommended the broader Business Continuity Program – NFPA
1600 Standard on Disaster/Emergency Management and Business Continuity
Program be used to focus on laboratory identified essential functions.

Historic Preservation

National Historic Preservation Act (NHPA) is burdensome because it requires the
DOE Site Office be the “middleman” between the lab and the State historicPreservation Officer for every modification to a laboratory building consideredhistoric.

Government
Relations

DOE Order 350.2b requires a formal real estate plan for moving remote offices
from one lease to another. It is suggested FFRDC management assumes risk
within assigned budget.
DOE Order 151.K requires DOE Site Office to approve all external communications
during emergency operations. It is suggested an emergency press releases would
be shared with Site Office/NNSA upon release, and FFRDC management would
assume the risk for emergency communications with the public.

External Oversight

Coordinate oversight by all overseers, and examine current level of assessment
which often exceed compliance requirements, and ask lab to be accountable toimpractical risk avoidance. External auditors often dictate over-reactive corrective
action plans. Some of the problem directives included:•

DOE Manual 140.1-1B, CRD, Interface with DNFSB•

DOE Manual 221.2A, CRD, Cooperation with the Office of Inspector General•

DOE Order 226.1A, Implementation of DOE Oversight Policy•

DOE Order 227.1, CRD, Independent Oversight Program

DOE Safety and Security Reforms
In 2009, following the then Secretary’s direction, DOE began self-examining its
approach to safety and security management. One of the main efforts was to eliminate
directives that were considered unclear, duplicative, or too prescriptive. DOE eventually
reduced the number of safety directives from 80 to 42. However, DOE did not examine
the directives changed if they were actually burdensome or costly and did not have any
metrics to measure the outcome of the changes. A reduction in the number of directives
does not necessarily indicate any benefits in terms of cost savings, efficiency, or

H-4

performance. 406 DOE’s reform effort focused on modifying 18 DOE requirements. (SeeTable H-3.)
Table H-3. DOE Safety and Security Reforms
Directive

Title

DOE Order 110.3A

Conference Management

DOE Order 200.1A

Information Technology Management

DOE Order 210.2

Operating Experience

DOE Order 225.1B

Accident Investigations

DOE Policy 226.1B

Department Of Energy Oversight Policy

DOE Order 243.1

Records Management

DOE Order 243.2

Vital Records

DOE Order 252.1A

Technical Standards Program

DOE Order 350.1

Contractor HR Management Programs –Substance Abuse and Employee Assistance

DOE Order 414.1D

Quality Assurance

DOE Order 430.2B

Energy Renewable

DOE Order 436.1

Energy/Environment Sustainability

DOE Order 442.1A

DOE Employee Concerns Program

DOE Manual 450.2

ISM

DOE Manual 482.1

Facilities Technology Partnering

DOE Manual 483.1

Cooperative R&D Agreement

DOE Manual 484.1

Reimbursable Work for DHS

DOE Manual 522.1

Pricing of Departmental Materials and Services

Secretary Energy Advisory Board (SEAB) Management Concerns
The Secretary Energy Advisory Board (SEAB) includes a standing Task Force on
National Laboratories. The Task Forces’ responsibilities include reviewing changes that
could improve laboratory performance in areas where the DOE Secretary has authority.
In 2015, the Task Force requested that SC examine what changes could be made to M&O
contracts to improve laboratory performance. This process included requesting fromlaboratories and consolidating concerns with management and governance of the406

GAO, Nuclear Safety: DOE Needs to Determine the Costs and Benefits of Its Safety Reform Effort.
(GAO12-347, 2015).

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laboratories. The Task Force identified 98 concerns, which SC categorized into 7
themes. 407 (See Table H-4.)
Table H-4. Issues Identified by SEAB Task Force, by Theme
ThemesSummary of Issues

Audits, Oversight,
Data Request

Assessments and data requests are duplicative, time consuming, andrequire extensive resources for response.
There is a lack of clear roles and responsibilities which also leads toofficials deferring to the most risk adverse options.
It is suggested that the Federal oversight on research misconduct should
be decreased if the laboratories are complying with DOE Orders.

Environmental
Safety, and Health

Environmental, Safety, and Health requirements such as 10 CFR 851
adopt safety standards beyond OSHA that were not even meant to berequirements but guidance.
Environmental oversight may be duplicative with state standards andprovides little additional value.
DOE expectations encourage corrective action plans that rely on increased
processes and rules.
A one size fits all approach can be used that does not optimize to eachlaboratory.
Reporting thresholds can be too low so as to be an inefficient use ofresources.

Financial Controls

Reporting and pre-approval of all Laboratory conference expenses
requires extensive effort.
Issues with SPP management including variability of SPP allotments,
ambiguity over decision authority, restrictions on SPP agreements due toinflexibility in the terms and conditions, and extensive time required toprocess foreign SPP contracts.
DOE approval of foreign travel is burdensome.
Funding has transition from block funding with great flexibility to manysmall buckets with more oversight. The funding control points are so low
they restrict the labs ability to effectively manage.
No direct funds for tech maturation to assist in tech transfer.

Human Resources

HR processes are such as compensation management are overly long andthere are too many DOE reviews.
HR restrictions create barriers to hiring and retaining a world-classworkforce.
Interpersonal assignments require extensive paperwork.

Legal

The 2016 Policy on foreign MOUs and its subsequent review and approval
process creates unnecessary oversight and delays on the Lab’s ability todevelop and maintain broad international programs and relationships.
Cost of doing business (both time and resources) is impacted by dealing
with very minor issues and one-time errors of small dollar value. DOE or

407

Information provided by DOE SC.

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Themes

Summary of Issues
Congress should consider establishing a de minimis level at which an error
is considered not worthy of reporting nor recouping the costs.

Procurements andFacility
Management

MIE and IGPP threshold are too low for laboratories to effectively manage
their facilities.
Facility management orders are burdensome and interpreted
inconsistently.
Current property management practices require duplicative reporting andinventorying of obsolete or “low value” equipment.
Large RFQ and contract awards require several reviews.

Public Affairs

Communications reports are duplicative.
Laboratories must get DOE approval for press releases.

H-7

Appendix I.
Apportionment Categories
OMB defines “apportionment categories” in the 2015 version of Circular A-11,
Section 120: 408
An amount is apportioned for obligation in the current fiscal year when it
appears on the Category A, Category B, or Category AB lines. Amounts
apportioned for obligation in future fiscal years appear on the Category C lines.
The Application of Budgetary Resources section also includes lines for amounts
that are exempt from apportionment or not apportioned for either current or
future fiscal years.
An automatic apportionment is approved by the OMB Director in the form of a
Bulletin or provision in Circular A-11, and typically describes a formula thatagencies will use to calculate apportioned amounts. An automatic apportionmentis in contrast to the written apportionments, which typically include specificamounts, and which are approved by an OMB Deputy Associate Director (ordesignee).
Carryover amounts are unobligated balances that are available from the priorfiscal year(s) in multi-year and no-year accounts. See section 120.24 regarding
the submission, for OMB approval, of requests for the apportionment ofcarryover amounts. Pursuant to sections 120.7 and 120.57, carryover amounts areautomatically apportioned at zero until a written apportionment is issued for suchamounts.
Category A, Category B, Category AB or Category C—Apportioned amounts
appear on different groups of lines in the application of budgetary resources
section of an apportionment. Amounts are identified in an apportionment-408•

by time (Category A),•

program, project, or activity (Category B),•

a combination of program, project, or activity and time period (CategoryAB),•for future years (only for multi-year/no-year accounts) (Category C).

OMB, Circular A-11. Preparation, Submission, and Execution of the Budget (Washington, DC, OMB,
June 2015), Section 120, 5,
https://www.whitehouse.gov/sites/default/files/omb/assets/a11_current_year/a11_2015.pdf.

I-1

Appendix J.
User Facilities by Laboratory
The following user facilities have been self-identified by individual laboratories. SC
in DOE provides an official definition of user facilities in an official memorandum, 409 as
well as a list of some user facilities at SC laboratories. 410 DOE’s official list includes
some but not all of the user facilities listed in Table J-1. 411
Table J-1. User Facilities
National Laboratory

User Facility

Global network

Atmospheric Radiation Measurement (ARM) Climate Research
Facility–Argonne, Brookhaven, Lawrence Berkeley, Lawrence
Livermore, Los Alamos, NREL, Oak Ridge, Pacific Northwest,
and Sandia participate—1000 users

ArgonneAdvanced Photon Source (APS)—5,017 users
Argonne Leadership Computing Facility (ALCF)—1,434 users
Argonne Tandem Linac Accelerator System (ATLAS)—400
users
Center for Nanoscale Materials (CNM)—451 users
Electron Microscopy Center for Materials Research
Transportation Research Analysis Computing Center (TRACC)
funded by Department of Transportation

http://science.energy.gov/~/media/_/pdf/
user-facilities/Office_of_Science_User_
Facility_Definition_Memo.pdf

Brookhaven
http:/www.bnl.gov/guv/facilities.asp

Fermi

Accelerator Test Facility (ATF)
Center for Functional Nanomaterials (CFN)—473 users
Computational Science Center (CSC)
NASA Space Radiation Laboratory (NSRL)National Synchrotron Light Source II (NSLS-II)—over 250
users*
Relativistic Heavy Ion Collider (RHIC)—1,200 users
Tandem Van de Graaf Facility (TANDEM)
Fermilab Accelerator Complex—2,097 users

409

P. M. Dehmer, Definition of a User Facility. [Memorandum] (Washington, DC: DOE, January 6,2012).

410

The list, last updated in April 2015, is available at http://science.energy.gov/user-facilities/userfacilities-at-a-glance/all-user-facilities/.

411

This list, last updated in May 2015, is available at
http://energy.gov/sites/prod/files/2015/06/f24/DOE%20Designated%20User%20Facilities%2026MAY
2015.pdf.

J-1

National Laboratory
Idaho
https://inlportal.inl.gov/portal/server.pt/
community/renewable_energy_home/419/user_facility

User Facility
Advanced Test Reactor (ATR)
Biomass Feedstock National User Facility (BFNUF)†
Wireless National User Facility (WNUF)

https://inlportal.inl.gov/portal/server.pt?open=514&objID=1555&mode=2&fe
aturestory=DA_605130

Lawrence Berkeley
http://www2.lbl.gov/LBLPrograms/nuf.html

Advanced Light Source (ALS) —2,443 users
Energy Sciences Network (ESNet)—27,000 users
Joint Genome Institute (JGI) – Production Genomics Facility(PGF)—1,000 users,with Lawrence Livermore, Los Alamos,
Oak Ridge, and Pacific Northwest
The Molecular Foundry—433 users
National Center for Electron Microscopy (NCEM)
National Energy Research Scientific Computing Center(NERSC)—5,608 users
88-inch cyclotron**

Lawrence Livermore‡

Program-focused facilities• Contained Firing Facility (CFF)• High Explosives Applications Facility (HEAF)• High Performance Computing (HPC), including Sequoia• Joint Actinide Shock Physics Experimental Research(JASPER)• National Ignition Facility (NIF)
Accessed by External R&D Community• B194 Accelerator Facility• Center for Accelerator Mass Spectrometry (CAMS)• Jupiter Laser Facility (JLF)• National Atmospheric Release Advisory Center (NARAC)• National Ignition Facility (NIF)

Los AlamosCenter for Integrated Nanotechnologies (CINT)—465 users
with Sandia National Laboratories
Lujan Neutron Scattering Center (LANSCE)—187 users
National High Magnetic Field Laboratory (NHMFL)

http://www.lanl.gov/collaboration/userfacilities/index.php

NREL
http://www.nrel.gov/research_facilities/
user_facilities.html

Energy Systems Integration Facility (ESIF)
Thermochemical Users Facility

J-2

National Laboratory
Oak Ridge
http://www.ornl.gov/user-facilities

Pacific Northwest

User Facility
Building Technologies Research & Integration Center (BTRIC)
Center for Nanophase Materials Sciences (CNMS)—421 users
Center for Structural Molecular Biology (CSMB)
Carbon Fiber Technology Facility (CFTF)
High Flux Isotope Reactor (HFIR)—453 users
Manufacturing Demonstration Facility (MDF)
National Transportation Research Center (NTRC)
Oak Ridge Leadership Computing Facility (OLCF)—1,064
users
Spallation Neutron Source (SNS)—866 users

http://www.pnnl.gov/about/facilities.asp

Environmental Molecular Sciences Laboratory (EMSL)—750
users
Molecular Science Computing at EMSL

Princeton Plasma Physics

National Spherical Torus Experiment (NSTX)—165 users

http://nstx-u.pppl.gov/

Sandiahttp://www.sandia.gov/research/facilities/
technology_deployment_centers/

Center for Integrated Nanotechnologies (CINT)—465 users
with Los Alamos National Laboratory• Technology Deployment Centers• Advanced Power Sources Laboratory• Combustion Research Facility• Design, Evaluation, and Test Technology Facility• Distributed Energy Technology Laboratory• Engineering Sciences Experimental Facilities (ESEF)• Explosive Components Facility• Explosive Technology Group• Geomechanics Laboratory• Ion Beam Laboratory• Materials Science and Engineering Center• Mechanical Test Evaluation Facility• Microsystems and Engineering Sciences Applications• National Solar Thermal Test Facility (NSTTF)• Nuclear Energy Safety Technologies (NEST)• Nuclear Facilities Resource Center (NUFAC)• Photovoltaic Laboratories• Plasma Materials Test Facility• Pulsed-Power and Systems Validation Facility• Primary Standards Laboratory• Radiation Detection Materials Characterization Laboratory• Shock Thermodynamic Applied Research Facility (STAR)• Weapon and Force Protection Center

J-3

National Laboratory
SLAC
https://www6.slac.stanford.edu/facilities
https://news.slac.stanford.edu/tags/
programs-facilities/lightsources/lcls-ii

Thomas Jefferson
http://education.jlab.org/pol/userfacility.html

User Facility
Facility for Advanced Acceleratory Experimental Tests(FACET)—150 users
Linac Coherent Light Source (LCLS) —612 users††
Stanford Synchrotron Radiation Light Source (SSRL)—1,556
users
Continuous Electron Beam Accelerator Facility (CEBAF)—
1,245 users* NSLS served over 2,400 users, and the upgrade is expected to serve a similarly sized user community.
† The BFNUF was designated a user facility in the summer of 2013 for “scientific and technical investigationof biomass feedstock,” http://www.innovation-america.org/you-can-call-it%E2%80%9Cbfnuf%E2%80%9D.
‡ Information was supplied to the Commission by Lawrence Livermore. Not listed are Lawrence Livermore’s
facilities that are “run for the benefit of several Federal agencies.” Facilities like this include the Forensics
Sciences Center, the Biodefense Knowledge Center, and the Counterproliferation Analysis and Planning
System. This is not an exhaustive list of Lawrence Livermore’s capabilities.
§ NREL has 15 testing facilities in addition to ESIF that allow industry and other organizations to collaborate
with the laboratory. The other facilities are not considered “user,” but they have similar properties to user
facility collaborations.
** Pending finalization of Implementation Plan.
†† The upgrade to LCLS, LSLS-II project, is pre-CD-2. As such, its estimated cost and proposed schedule(for completion of CD-3 and CD-4 in FY2016 and FY 2021, respectively) are preliminary.

J-4

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K-11

Abbreviations
ACI
ACT
ACTS
ALS
APL
APM
APS
APS-U
ARRA
ASC
ASCR
ASME
ASO
AU
B&R
B61
BES
BESAC
BNNT
BRC
BSA
BUILDER
CAPE
CAS
CBFI
CBO
CD
CDG
CEBAF
CEPE
CERN
CFN
CFO
CFR
CIAD
CINT

Asset Condition Index
Agreement for Commercializing Technology
Audit Coordination & Tracking System
Advanced Light Source
Advanced Physics Laboratory
Office of Acquisition and Project Management
Advanced Photon Source
Advanced Photon Source (upgrade)
American Recovery and Reinvestment Act
Advanced Simulation and Computing
Advanced Scientific Computing Research
American Society of Mechanical Engineers
Argonne Site Office
Office of Environment, Health, Safety and Security
budget and reporting (code)life extension program
Basic Energy Sciences
Basic Energy Sciences Advisory Committee
Boron Nitride Nanotubes
Bioenergy Research Center
Brookhaven Science Associates
facilities and infrastructure data management system,
used by Army Corps of Engineers
DOD Office of Cost Assessment and Program
Evaluation
Contractor Assurance System
Capabilities Based Facilities and Infrastructure
Congressional Budget Office
Critical Decision
Central Design Group
Continuous Electron Beam Accelerator Facility
Office of Cost Estimating and Program Evaluation
European Organization for Nuclear ResearchCenter for Functional Nanomaterials
Chief Financial Officer
Code of Federal Regulations
Contractors Internal Audit Directors Steering
Committee
Center for Integrated Nanotechnologies

L-1

CMRR
CMRR-NF
CMRR-PF
CMRR-RLUOB
CNM
CNMS
COO
CORAL
COV
CR
CRADA
CRD
CRENEL
D&D
DEAR
DHHS
DHS
DM
DNFSB
DOD
DOE
DPC
DRB
EA
EBI
EE
EERE
EFCOG
EFRC
EIR
EM
ERM
ES&H
ESAAB
ESIF
ESPC
EUL
F&A
F&I
FAR
FBI
FE
FFRDC

Chemistry and Metallurgy Replacement Research
Facility
Nuclear Facility of the CMRR
Plutonium Facility at Technical Area 55 of the CMRR
Radiological Laboratory, Utility, and Office Building of
the CMRR
Center for Nanophase Materials Science
Center for Nanoscale Materials
Chief Operating Officer
Collaboration of Oak Ridge, Argonne, and Livermore
Committee of Visitors
Continuing Resolution
cooperative research and development agreement
contractor requirements document
Commission to Review the Effectiveness of the
National Energy laboratories
deactivation and decommissioning
Department of Energy Acquisitions Regulation
Department of Health and Human Services
Department of Homeland Security
deferred maintenance
Defense Nuclear Facility Safety Board
Department of Defense
Department of Energy
Directives Points of Contacts
Directives Review Board
Office of Enterprise Assessments
Energy Bioscience Institute
Office of Economic Impact and Diversity
Office of Energy Efficiency and Renewable Energy
Working Group of Energy Facility Contractors Group
Energy Frontier Research Centers
Entrepreneur in Residence program
Office of Environmental Management
Enterprise Risk Management
Environmental Safety and Health
Energy Systems Acquisition Advisory Board
Energy Systems Integration Facilityenergy savings performance contracts
Enhanced Use Leasefacilities and administrative ratefacilities and infrastructure
Federal Acquisition Regulation
Federal Bureau of Investigation
Office of Fossil Energy
federally funded research and development center

L-2

FIMS
FIRP
FMC
FMFIA
FTE
FY
GAO
GOGO
GPP
HEP
HEPAP
HERD
HPC
HQ
HSS
HVAC
IBM
IC
ICF
ICR
IG
IGPP
INWAP
IOO
IP
ISC
ISMS
ISO
JASON
JBEI
JPL
KCP
LCLS
LCLS-II
LDRD
LEP
LFO
LLC
LOB
LP
LVOC
M&O
MEC
MIT
MOU
MOX

Facilities Information Management System
Facilities Infrastructure Recapitalization Program
Field Management Council
Federal Managers' Financial Integrity Act
full-time equivalentfiscal year
Government Accountability Office
government-owned, government-operated
general plant project
Office of High Energy Physics
High Energy Physics Advisory Panel
Higher Education Research and Development survey
high performance computing
headquarters
Office of Health, Safety, and Security
heating, ventilating, air conditioning
International Business Machines
Intelligence Community
Inertial Confinement Fusion program
Institutional Cost Report
Office of the Inspector Generalinstitutional general plant project
Independent Weapons Assessment Process
Idaho Operations Office
intellectual property
Integrated Support Center
integrated safety management system
International Organization for Standardization
independent scientific advisory group
Joint Bioenergy InstituteJet Propulsion Laboratory
Kansas City Plant
Linac Coherent Light Source
Linac Coherent Light Source-II (upgrade)
Laboratory Directed Research & Development
life extension program
Livermore Field Officelimited liability company
Laboratory Operations Board
laboratory protection
Livermore Valley Open Campus
managing and operating (contractor)
Mission Executive Council
Massachusetts Institute of Technology
memorandum of understanding
Mixed Oxide Fuel Fabrication Facility

L-3

MTDC
NA-10
NA-20
NA-80
NAP
NAPA
NAS
NASA
NDAA
NE
NEC
NERSC
NETL
NFPA
NGLS
NIF
NIH
NISP
NIST
NLDC
NNI
NNSA
NOAA
NP
NRC
NREL
NSF
NSLS
NSLS-IINSRC
NSTX-U
NUFO
NUREG
OCFO
OCL
ODNI
OECM
OFFM
OIG
OLCF
OMB
OPC
OPI
OSF
OSHA

modified total direct costs
NNSA Defense Programs
NNSA Defense Nuclear Non-Proliferation Office
Office of Counterterrorism and Counterproliferation
NNSA-specific policy
National Academy of Public Administration
National Academy of Sciences
National Aeronautics and Space Administration
National Defense Authorization Act
Office of Nuclear Energy
National Electric CodeNational Energy Research Scientific Computing Center
National Energy Technology Laboratory
National Fire Protection Association
Next Generation Light Source
National Ignition Facility
National Institutes of HealthNational Industrial Security Program
National Institute of Standards and Technology
National Laboratory Director’s Council
National Nanotechnology Initiative
National Nuclear Security Administration
National Oceanic and Atmospheric Administration
Office of Nuclear Physics
National Research Council
National Renewable Energy Laboratory
National Science Foundation
National Synchrotron Light Source
National Synchrotron Light Source (upgrade)
Nanoscale Science Research Center
National Spherical Torus Experiment–Upgrade
National User Facility Organization
regulatory guides released by the Nuclear Regulatory
Commission
Office of the CFO
obligation control level
Office of the Director of National Intelligence
Office of Engineering and Construction Management
Office of Financial and Field Management
Office of the Inspector General
Oak Ridge Leadership Computing Facility
Office of Management and Budget
other project costs
Office of primary interest
other structures and facilities
Occupational Safety and Health Administration

L-4

OSTP
P-5
PARS
PEMP
PF-4
PLA
PNNL
PNSO
PPA
PRA
QA
R&D
R1
R2A2
RAMP
RFI
RPV
RTBF
S&T
SBIR
SC
SC-SLI
SCMS
SD
SEAB
SES
SF
SLAC
SME
SPP
SRS
SSC
ST&E
STARS
STTR
TEC
TPC
UARC
UPF
VCS
VPP
W-80-4
W70-4
W76-1
W80

Office of Science and Technology Policy
Particle Physics Project Prioritization Panel
Project Assessment Rating System
Performance Evaluation and Measurement Plan
Plutonium Facility at Technical Area 55 of the CMRR
project labor agreement
Pacific Northwest National Laboratory
Pacific Northwest Site Office
Program, Project, and Activities legal control level
Probabilistic Risk Assessment
quality assurance
research and development
Research I university, as designated by the Carnegie
Foundation
roles, responsibilities, authorities, and accountabilities
Roof Asset Management Program
request for information
replacement plant value
Readiness in Technical Base and Facilities program
science and technology
Small Business Innovation Research program
Office of Science
Science Laboratory Infrastructure Program
Office of Science Management System
supplemental directives
Secretary of Energy Advisory Board
Senior Executive Service
square feet
SLAC National Accelerator Laboratory
subject matter experts
Strategic Partnership Project
Savannah River Site
Superconducting Super Collider
science, technology, and engineering
DOE-wide cost reporting system
Small Business Technology Transfer program
total estimated costs
total project costs
university affiliated research center
Uranium Processing Facility
voluntary consensus standards
Voluntary Protection Program
life extension program
life extension program
life extension program
life extension program

L-5

W88 ALT 370
WBS
WFO
WMD
WTP

life extension program
work breakdown structure
Work for Others
weapons of mass destruction
Waste Treatment and Immobilization Plant

L-6