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 1: Executive Report
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

Executive Summary
The Department of Energy (DOE) laboratories are national assets that havecontributed profoundly to the Nation’s security, scientific leadership, and economic
competitiveness. In recognition of the continuing and evolving threats to our security andthe dramatic increase in global economic and scientific competition, the laboratories are
and will continue to be vitally important.
Yet, the contributions of the National Laboratories are not inevitable, nor have theyrealized their full potential. This final report of the Commission to Review the
Effectiveness of the National Energy Laboratories recommends ways the laboratories
could overcome challenges to more efficiently and effectively accomplish the work forwhich they are uniquely suited. The Commission’s unanimous findings andrecommendations are grouped around six themes:•

Recognizing value•

Rebuilding trust•

Maintaining alignment and quality•

Maximizing impact•

Managing effectiveness and efficiency•

Ensuring lasting change

Recognizing Value
The National Laboratories provide critical capabilities and facilities in service of
DOE’s mission, the needs of the broader national science and technology (S&T)
community, and the Nation as a whole. They, for example, offer a unique venue for the
conduct of major, long-term, high-payoff/high-risk research. The funding for thelaboratories has remained flat in constant dollars over the past decade. In addition, theamount of Federal research and development (R&D) support to DOE as a whole has stayed
relatively level for the past 40 years, a period during which many other nations haveincreased their research investments. The Nation should recognize the value of theselaboratories and the Administration and Congress should provide the necessary resources
to maintain their critical capabilities and facilities.

iii

Rebuilding Trust
The intended relationship between DOE and the National Energy Laboratories is astrusted partners, working together to carry out critical missions for the Nation. The Federal
Government develops important R&D programs and turns to the National Laboratories toprovide the expert people, facilities, and management systems to carry them out. Sixteenof the 17 laboratories are run as federally funded research and development centers(FFRDCs), managed through a management and operating (M&O) contract. Under the
FFRDC/M&O model, the government is responsible for setting the “what” of strategic andprogram direction to meet the Nation’s needs, while the contracted partners, along with thelaboratories they manage and operate, are responsible for determining precisely “how” tomeet the technical and scientific challenges and to carry out programs. Over the years, therelationship between DOE and many of the laboratories has eroded. This has resulted in a
less-than-optimal working relationship and reduced efficiency.
DOE and the National Laboratories, with the support of Congress and others, must
work together as partners to restore the FFRDC relationship with a culture of trust andaccountability. As a foundation for this, the partners should jointly establish annual
operating plans that delegate clearly defined authority to the laboratories in exchange fortransparency and successful mission performance. Laboratories that earn DOE’s trust
should enjoy greater freedom to operate, while others will continue to experience
heightened DOE oversight and control. DOE should strengthen leadership andmanagement development for its Federal workforce—including multi-directionalrotational assignments with the laboratories, field elements, and headquarters—to improve
its ability to manage in this mode. DOE should abandon incentive award fees in their M&O
contracts with the National Laboratories in favor of a fixed fee set at competitive rates.
These rates should take into account contractor investments of talent and funds, as well as
financial and reputational risk. DOE should also adopt a broader and richer set of incentives
and consequences to motivate sound laboratory management and enforce accountability.
Enabling the laboratories to take more responsibility for managing their activities
involves rebalancing contract requirements, local oversight, assessments and data calls,
and budgeting. For example, for non-nuclear, non-high-hazard, unclassified activities,
DOE should allow laboratories to use Federal, State, and industry standards in place of
DOE requirements. DOE should also utilize a risk-based model with meaningful
stakeholder engagement when developing new requirements and conducting assessments.
While DOE has attempted to shift from transactional compliance to a performancebased oversight model by implementing a contractor assurance system (CAS) at each of
the laboratories, systematic improvements to the implementation and utilization of the CAS
must be made at many laboratories. All stakeholders responsible for assessments should
reduce duplicative assessments and burden on the laboratories by making maximum use of
these local assessments, and DOE should establish a single point of control over dataiv

requests to the laboratories. Also the roles and responsibilities of site offices and support
centers must be clarified; support centers should not have approval authority.
DOE should give laboratories more flexibility to manage funds with fullaccountability within legal bounds. This translates to larger funding increments, fewer
budgetary buckets, longer timelines with fewer milestones, and in many cases, notification
rather than approval for fund transfers.
Maintaining Alignment and Quality
Despite the lack of a Department-wide, comprehensive, in-depth, long-term, strategicplanning process, the National Laboratories’ research programs and capabilities are generally
well-aligned with DOE’s missions and strategic priorities. There are robust processes in some
program offices (particularly the Office of Science [SC]) that provide strategic oversight,
evaluation, and direction to the laboratories. To improve the consistency of those processes
across the Department, all DOE offices should adapt the processes of SC for laboratory
planning, alignment, and quality to their particular contexts.
To maintain the quality of the technical staff, DOE should proactively encourage
laboratory researchers to attend and participate in conferences—both national andinternational—so they may keep abreast of the latest developments in S&T. The
Commission is encouraged by DOE’s recently revised guidance on conference-related
activities and spending, noting that the laboratories have been given more autonomy onthis issue, while at the same time being held accountable for the appropriate use of taxpayer
funds.
The ability to adapt, retool, invest in staff and capabilities, and enter new researchareas is crucial to laboratory performance and maintenance of high-quality staff andresearch. Laboratories rely in large part on laboratory directed research and development(LDRD) programs to achieve these goals. Congress should support LDRD by restoring the
LDRD cap to an unburdened 6 percent, or its equivalent, of laboratory budget.
To maximize the laboratories combined efforts, DOE should manage them as asystem having 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. Similarand competitive laboratory programs add value in the early, discovery phases of a newresearch initiative, but, once the research has matured to the point that a preferred or mostpromising approach can be identified, the Department should assert its strategic oversightand guidance to coordinate and potentially consolidate programs to achieve the mosteffective and efficient use of resources.
Maximizing Impact
A great deal of money and talent has been invested to create scientific and technicalcapabilities that are crucially important for the Nation’s security and economicv

competitiveness. Realizing the full potential of the laboratories requires a much greater
effort to tap their capabilities, especially in support of regional and national economic
competitiveness. DOE and the laboratories must work to break down barriers to external
collaboration with small and large businesses, academia, and other Federal agencies.
Innovative technology transfer and commercialization mechanisms should continue to be
pursued, and best practices in other sectors, including academia, should be examined.
Congress and DOE should continue to support leading edge S&T user facilities, making
sure to continue using scientific community input and peer review processes to determine
future priorities for new and upgraded facilities.
Managing Effectiveness and Efficiency
The M&O contractors, in conjunction with DOE, must improve several areas oflaboratory management: overhead costs, facilities and infrastructure, and project andprogram management. The Commission found laboratory overhead rates to be comparable
to university-negotiated rates at the science and applied laboratories. The overhead rates at
the National Nuclear Security Administration laboratories are understandably higher, due
to the unique costs of their national security and nuclear weapons-focused mission. DOE
should provide greater transparency into laboratory indirect costs and should publish anannual report of overhead rates for each laboratory.
DOE and the laboratories should continue efforts to improve laboratory facilities andinfrastructure by halting the growth in deferred maintenance and speeding up the deactivationand decommissioning of excess facilities. Given the limited budget, DOE, the laboratories,
Congress, and the Office of Management and Budget (OMB) should actively work together
to agree upon the size and nature of the resources shortfall for facilities and infrastructure, andto develop a long-term plan to resolve it through a combination of increased funding, policychanges, and innovative financing approaches. Such approaches might include third-party
financing, enhanced use leases, State funding, gifts, and leveraging partnerships with other
Federal agencies.
To better its project management record, DOE and the laboratories should maintainfocus on strengthening institutional capability and imposing greater discipline in
implementing DOE project management guidance. The Commission also supports therecent Secretary of Energy Advisory Board Task Force recommendation to put moreresources into S&T development for the Environmental Management program given thetechnical complexity of its projects that seriously challenge project performance.
Ensuring Lasting Change
A review of over 50 past reports shows a strikingly consistent pattern of criticism witha repeating set of recommendations for improvement. Despite the extensive examinationof the issues, none of these reports has led to the comprehensive change necessary toaddress the well-documented, persistent challenges confronting the Department and itsvilaboratories. While the current Secretary of Energy has taken a number of steps to improve
the relationship between DOE and its laboratories, and thereby the efficiency andeffectiveness of the laboratories, these efforts must be institutionalized. A standing review
body should be established to track implementation of the recommendations and actions inthis report. This body should report regularly to DOE, the laboratories, the Administration,
and Congress. Congress should also develop a more orderly and consistent process ofreviewing the National Laboratories, in lieu of the past unrelenting pace of studies.
~
The Commission wishes to acknowledge that the current Secretary of Energy and thecurrent laboratory directors, and the management teams of both, have made much progressin improving the relationship between DOE and the laboratories. Rebuilding trust is a slow
process that requires a sustained culture change that is underway. The Commission
encourages future Secretaries and laboratory directors to continue these efforts andCongress and others to continue supporting them.
Today, DOE laboratories face a more complex set of challenges and have a morediverse array of missions than existed when the first National Laboratories were createdmore than a half-century ago. The recommendations in this report are intended to ensurethat the laboratories are able to operate as efficiently and effectively as possible so that the
Nation realizes the maximum benefit from this national asset in the years ahead.

vii

Contents
Executive Summary ........................................................................................................... iii
1. Introduction .................................................................................................................1
A. Congressional Charge..........................................................................................1
B. Important Questions about the DOE Laboratories ..............................................2
C. Approach, Scope, and Organization of Report....................................................2
2. Recognizing Value ......................................................................................................5
A. DOE Laboratory System .....................................................................................5
B. Purpose and Importance of the DOE Laboratories .............................................7
1. National Security Mission .............................................................................8
2. Science Mission ...........................................................................................10
3. Energy Mission............................................................................................11
4. Environmental Management Mission .........................................................12
C. The Laboratories’ Funding in Perspective ........................................................12
3. Rebuilding Trust ........................................................................................................17
A. Restoring the Partnership between DOE and its Laboratories ..........................17
1. Restoring the FFRDC Model ......................................................................17
2. M&O Contractor Motivations and Performance Incentives .......................24
B. Giving the Laboratories Sufficient Freedom to Operate ...................................25
1. Contract Requirements ................................................................................25
2. Local Oversight: Contractor Assurance, Site Offices, andSupport Centers ...........................................................................................27
3. Assessments and Data Calls ........................................................................29
4. Flexible Budgeting ......................................................................................31
4. Maintaining Alignment and Quality..........................................................................35
A. Alignment with DOE’s Objectives....................................................................35
B. Ensuring High-Quality Research and Research Programs ................................36
C. Laboratory Directed Research and Development .............................................40
D. Appropriate Level of Duplication of Research .................................................43
5. Maximizing Impact ...................................................................................................47
A. Support of Other Agencies ................................................................................47
B. Collaboration with the Academic Community..................................................49
C. Partnering with Industry and Transitioning Technology ..................................50
D. Operating User Facilities ...................................................................................52
6. Managing Effectiveness and Efficiency ....................................................................53
A. Overhead ...........................................................................................................53
B. Facilities and Infrastructure ...............................................................................55

ix

7.

8.

C. Project and Program Management ....................................................................58
Ensuring Lasting Change ..........................................................................................61
A. Lack of Meaningful Change from Past Reports ................................................61
B. Progress Made during Current Administration .................................................61
C. How This Commission Can Be Impactful ........................................................62
Conclusion .................................................................................................................65x

1.

Introduction

A. Congressional Charge
Section 319 of the Consolidated Appropriations Act, 2014 (Public Law No. 113-76)
directed the Secretary of Energy to establish the Commission to Review the Effectivenessof the National Energy Laboratories. The Commission was charged with reviewing the 17
Department of Energy (DOE) National Laboratories. 1 It was established in May 2014 andheld monthly meetings from July 2014 to July 2015. (See Appendix A for the names andbiographies of the Commissioners. 2) Congress directed the Commission to evaluate thelaboratories in terms of their alignment with the Department’s strategic priorities,
duplication, ability to meet current and future energy and national security challenges, size,and support of other Federal agencies. The Commission was also to review the efficiency
and effectiveness of the laboratories, including assessing overhead costs and the impact of
DOE’s oversight and management approach. Lastly, Congress had several specificquestions related to the use of laboratory directed research and development (LDRD) suchas the effectiveness of the Department’s oversight approach and the extent to which LDRD
funding supports recruiting and retention of qualified staff. 3 (Appendix B provides thecomplete text of Section 319.)
Due to the extensive scope of the Commission’s task and the aggressive timeline,
Secretary of Energy Ernest Moniz and Senator Diane Feinstein, then Chair of the Senate
Energy and Water Appropriations Subcommittee, agreed to separate the Commission’s
charge into two phases. (See Appendix C for a copy of the letter documenting theiragreement.) The agreement called for Phase 1 to focus on the mission and strategicplanning of the laboratories and for Phase 2 to target the operation and oversight of thelaboratory system. LDRD as it relates to the issues outlined above was to be considered inboth phases of the Commission’s task. The Commission issued an Interim Report in
February 2015 with its preliminary observations and recommendations.
1

The 17 laboratories are Ames National Laboratory, Argonne National Laboratory, 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, Pacific Northwest National Laboratory, Princeton Plasma Physics Laboratory, Sandia
National Laboratories, Savannah River National Laboratory, SLAC National Accelerator Laboratory,
and Thomas Jefferson National Accelerator Facility.

2

All appendices can be found in Volume 2.

3

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

1

B. Important Questions about the DOE Laboratories
The Commission reframed the congressional charge in the form of seven importantquestions about the DOE laboratories. 4 The Commission felt that these questions underlie
any evaluation of the National Laboratories and that its work would be incomplete if they
were not addressed. The questions are:•Why do we need the DOE laboratories?

•

Does DOE manage its laboratories well?

•

Are the laboratories properly focused to address mission needs now and in the
future?

•Is the research carried out at the laboratories of high quality?

•

Is there too much duplication among the laboratories?

•

Are the laboratories having an impact?

•

Do the laboratories cost too much?

The Commission’s answers to these questions, based on the research and analysis describedin this report, are summarized in Chapter 8 of this volume.

C. Approach, Scope, and Organization of Report
The findings and recommendations in this report are based on an extensive literature
review; visits to all 17 of the National Laboratories; interviews with staff at more than 100
offices across the government and other sectors; and testimony by 85 witnesses at monthly
public Commission meetings. The Commission’s conclusions are unanimous. A list oforganizations represented in interviews and public meetings can be found in Appendix D.
Through its research, the Commission determined that the DOE laboratories are a
critical component of our Nation’s science and technology (S&T) system (as discussed in
Chapter 2). While the DOE laboratories serve our Nation well, they could be even more
effective and efficient if they and DOE improve their relationship. In particular, bothparties should focus on the principles of stewardship, accountability, competition, andpartnership, upon which the federally funded research and development center (FFRDC)
model is based, and DOE should give the laboratories sufficient freedom to operate in linewith these principles (as discussed in Chapter 3).
The Commission found that, for the most part, the National Laboratories conduct
research and have capabilities that are well-aligned to meet current and future mission
4

Unless otherwise stated, the terms DOE laboratories and National Laboratories are usedinterchangeably and are meant to include the National Nuclear Security Administration (NNSA)
laboratories. Similarly, DOE should be read to include NNSA.

2

needs; that they are conducting high-quality research; that LDRD is crucial to maintaining
first-class research and researchers; and that duplication among the laboratories is notexcessive. DOE could better manage the National Laboratories as a system using an
overarching strategic plan that gives the laboratories the flexibility to pursue new lines ofinquiry, so long as their research aligns with mission priorities (as discussed in Chapter 4).
The Commission determined that, in addition to supporting the missions of DOE, thelaboratories serve the Nation’s needs by operating S&T user facilities, and serving andworking with other Federal agencies, the academic community, and industry. While suchsupport is critical to many non-DOE entities, barriers to access need to be minimized.
Realizing the full potential of the laboratories requires a much greater effort to tap theircapabilities, especially in support of regional and national economic competitiveness.
Although the Commission does not judge the laboratories to be inefficient overall, a
concerted effort by DOE and the laboratories can improve efficiency and effectiveness oflaboratory management in particular areas (as discussed in Chapter 5).
This is the Final Report of the Commission and includes its analysis and findings
related to the entire charge; it therefore subsumes the Commission’s Interim Report. This
report consists of two volumes. The first is the executive volume with a high-level
overview of the Commission’s findings and recommendations. The second comprises
technical chapters that provide detailed analyses and supporting evidence for those findings
and recommendations.

3

2.

Recognizing ValueAs the Nation has changed, so too have the National Laboratories. Conceived todesign 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 missionfocused vision that has defined the DOE Laboratories and served the United States timeand again. The laboratories’ role may indeed have changed with time, but their ability torise to meet their charge has remained strong since their founding. From weapons science
to clean energy and from legacy cleanup to basic research, the National Laboratories serve
the Nation in diverse ways, and recognizing the fullness of the role they play is crucial tounderstanding their value.

A. Department of Energy Laboratory System
The 17 National Laboratories are 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), and 4 applied laboratories stewarded by the applicable DOE
program office (one each by the Office of Energy 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 (detailed descriptions of the laboratories can be found in Appendix E).
Overall, the National Laboratories employed over 55,000 people and received $11.7 billionof funding from DOE. When other funding sources are included, their total budget in FY
2014 was $14.3 billion.
The National Energy Technology Laboratory (NETL) is the only government-owned,
government-operated (GOGO) laboratory among the National Laboratories. The other 16
laboratories are run as FFRDCs and managed through a management and operating (M&O)
contract. 5 M&O contractors for the National Laboratories include individual universities,
university consortia, nonprofit corporations, industrial firms, and partnerships involving
the aforementioned types of organizations.

5

The Atomic Energy Act of 1946 (Public Law No. 79-585) formalized the M&O contract andestablished the Atomic Energy Commission, a precursor to DOE.

5

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.

6

B. Purpose and Importance of the DOE 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 a fractionof what they do, perhaps linked to one of the laboratories in their region.
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 applied researchareas. They are also able to perform sensitive, classified research regarding nuclear
weapons and non-proliferation. In addition, they are places where the Federal governmenthas been able to build and operate large-scale user facilities, such as linear accelerators,
synchrotron light sources, and high performance computer systems and networks for use
by thousands of researchers in academia, the business community and the National
Laboratory system.
As illustrated in Figure 1, 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, the DOE
laboratories take on a much bigger role and are an ideal location to host research andresearchers 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 scientificand engineering capabilities including technology transfer…design, build, and operateunique scientific instrumentation and facilities… [and] promote innovation that advances
U.S. economic competitiveness and contributes to our future prosperity.” 6 The National
Laboratories carry this out across the four mission areas of DOE, as described briefly in thesubsections that follow.

6

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

7

Source: DOE National Laboratory Directors Council, “The DOE National Labs: A Vital
Network in the U.S. science and Technology Ecosystem,” November 12, 2014.

Figure 1. 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 to design and build thefirst 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, and countering
weapons of mass destruction. The three NNSA laboratories are primarily devoted to thismission, but several of the other laboratories participate as well.

8To assure the reliability, safety andsecurity of our nation’s nuclear deterrent
without testing, the laboratories are carryingout 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,
are to extend the original warhead service life
from 20 to 60 years, address identified aging
issues,incorporate
nuclearsuretyenhancements 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, thelaboratories have converted over 90 research and test nuclear reactors worldwide from highly
enriched uranium to low-grade uranium and have removed nuclear material from over 230
sites worldwide. DOE laboratory technology that 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, the National
Atmospheric Release Advisory Center at Lawrence Livermore 7 tracked releases from the
Fukushima Daiichi Reactors after the nuclear disaster in 2011. The laboratories also7

“National Atmospheric Release Advisory Center (NARAC),” Lawrence Livermore National
Laboratory, last modified September 14, 2012. https://narac.llnl.gov/.

9

provided critical assistance after the April 2010 Deepwater Horizon oil spill, 8 and during
the 2014–2015 negotiations with Iran on its nuclear program. 92.

Science Mission

The challenges of new energy
sources, energy efficiency, economic
competitiveness, and global security
ultimately
reston
understanding
fundamental science in areas such as
materials, physics, chemistry, biology andnanoscience. The national laboratories
support this science mission through its
staff of outstanding scientists and bycollaborating with over 30,000 academic and industrial scientists who annually utilize DOE’slarge-scale particle accelerators, supercomputers, x-ray light sources, neutron sources andother large user facilities.
DOE’s scientists are among the best in the world in these areas of basic and applied
R&D. Over 60 researchers affiliated with DOE laboratories have been awarded Nobel
Prizes, 10 and DOE laboratories have received over 800 R&D 100 Awards since 1962, when
the annual competition began. 11 They have discovered 17 new elements that have been
added to the periodic table.
A number of important developments have arisen from the laboratories’ cutting-edge
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 3-D 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
8

Hruby, J., D. Manley, R. Stoltz, E. Webb, and J. Woodward. The Evolution of Federally Funded
Research & Development Centers, Public Interest. Washington, D.C.: Federation of American
Scientists (2011).

9D. 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.

10

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

11“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/.

10

made of high strength materials for aircraft engines and other high performance
applications that are important to U.S. industrial competitiveness.
The Human Genome Project, which was begun by the National Laboratories, hastransformed biomedical research, diagnosis and treatment. In addition, protein
crystallography being carried out at the DOE synchrotron light sources has been used totest nearly all new pharmaceutical drugs introduced over the past 20 years. DOE sciencehas also contributed to the development of MRI machines, now in virtually every hospitalin the country, and Los Alamos is developing a portable “battlefield MRI” that can be usedin 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 of this work is centered at the four applied
National Laboratories, but almost all of the other laboratories participate in these 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, such as
high efficiency combined cycle natural gas
turbines, super critical coal boilers, andnuclear generating plants.
They had a major role in the development of 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 3-D seismic imaging, directional drilling
techniques, diamond drill bits, computer simulation of fracking, pore level analysis, andmodeling, 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-state ballast
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, as well as on theefficiency of the equipment inside them.

11

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 from thecold war. In support of that mission, the laboratories provide expertise in areas such asradiology and chemistry, subsurface monitoring, groundwater modeling, and technology
development.
Thelaboratories
have
developed
innovative groundwater remediation methods
and long-term monitoring that are saving
millions of dollars and providing better
information to local communities. In 2014, withthe aid of these techniques, DOE completed thecleanup of 90 percent of Hanford’s River
Corridor, representing 479 square miles.
The technology development process fortreating the legacy wastes in tanks at various
facilities has been extremely challenging. Nevertheless, the laboratories lead the world indeveloping 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.

C. The Laboratories’ Funding in Perspective
Despite these critical and continuing contributions, DOE’s budget for its laboratories hasremained relatively flat in constant dollars over the past decade at approximately $12 billion
per year (Figure 2).
In addition, the constant dollar level of Federal R&D support to DOE as a whole has
stayed relatively level since 1976 (Figure 3). 12 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. This is at a time when some other nations’ have increased their share of GDP going
into R&D, and the U.S. overall rate of R&D spending as a fraction of GDP has declined.
At 8.1 percent of Federal R&D spending and Federal R&D spending at 0.81 percent of the

12

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Nation’s GDP, DOE’s R&D budget is 0.066 percent, or less than one thousandth, of the
Nation’s GDP. 13

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

Considering the positive impact the 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, the case can be madefor budgetary increases in specific areas. The Commission sees sustained federal supportof R&D at the National Laboratories as critical to the future of 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 to enable it to perform the maximum
amount of R&D for the available level of Federal funding, and to ensure that it focuses onimportant endeavors not otherwise being addressed, especially high-payoff (often highrisk) longer-term research.

13

DOE percentage of Federal R&D spending from American Association for Advancement of Science(AAS) website, AAAS Historical Trends in Federal R&D, Total by Agency 1976–2015(http://www.aaas.org/page/historical-trends-federal-rd). Percentage of Federal R&D of U.S. GDP from
AAAS, Intersociety Working Group, AAAS Report XXXIX: Research and Development FY 2015(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% of Federal 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.

13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.

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

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

14

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.

15

3.

Rebuilding Trust

Under the FFRDC/M&O model, government and the contractor should work together
as partners in a relationship with clearly understood roles. The government is responsible
for setting the “what” of strategic and program direction to meet the Nation’s needs, while
contracted university and industry partners are responsible for determining precisely“how” to meet the technical and scientific challenges and to carry out programs. However,
over the years, the relationship between DOE and the laboratories has eroded. There is fault
on both sides. The National Laboratories, for their part, do not fully trust DOE and therefore
maintain secrecy about some of their actions, including contacts with Congress and otheragencies; not informing DOE of emerging problems in a timely manner; and taking someactions below the radar to create new programs and compete for turf in new and emerging
areas. DOE, for its part, does not trust the laboratories to keep them fully informed about
technical and financial progress or safety and security issues. As a result, DOE
micromanages work at the laboratories with excessive milestones and budget limitations
and other requirements about how work should be done. This chapter is focused on steps
that can be taken to rebuild trust in order to recapture the advantages of the FFRDC model.

A. Restoring the Partnership between DOE and its Laboratories
Perhaps the greatest strength of the FFRDC/M&O model, when it is working
properly, is the freedom it grants to both parties. It allows the M&O contractors to innovate
and apply their best practices to meet national needs and it frees DOE to focus ondeveloping programs and policies, without burdening them with excessive implementation
details and responsibilities. This freedom, however, is not granted but rather must be
earned, through proven performance and transparency on both sides that develops into
mutual trust and respect.
1.

Restoring the FFRDC Model

The FFRDC/M&O relationship is designed to get the greatest leverage and resultsfrom the combination of government tasking and expert scientific and technicalorganizations to carry out DOE’s missions. Using M&O contractors enables thegovernment to access an exceptionally skilled workforce, to be agile in shifting resourcesto new R&D areas as needs change over time, and to adopt the best management practices
from these experienced organizations.

17

DOE’s role is to provide direction, oversight and funding to the National Laboratories
to carry out those programs. The laboratories, as experts and trusted partners, play activeroles in supporting DOE in that process. Once programs are defined, DOE is responsible
for providing direction to the laboratories to develop and implement the details of those
programs. The wording is precise: “direction” is not “management.” Similarly, “oversight”
should be risk-based and not excessive and intrusive.
Many of the problems cited in earlier reports stem from “broken trust” between DOE
and its laboratories because these respective roles are frequently not honored. 14 In contrast
with the ideal relationship that is envisioned in the FFRDC model, the laboratories too often
act independently in their own perceived self-interests, as described earlier, without keeping
DOE properly informed. DOE responds to this lack of transparency with an excessive levelof transactional oversight and control over the activities of the laboratories. The Commission
recognizes that the issue of trust (or lack thereof) is not experienced uniformly across thesystem. Some laboratories along with their M&O contractors, especially in SC, have beenable to develop much better trusting relationships with their program offices and site offices
than others. Two examples are Pacific Northwest and Brookhaven, which today have muchstronger and more effective relationships with their site 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 of 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 to ensure great laboratory
management but do little to involve the parent organization(s). Laboratory management,
while extremely important to the day-to-day operation and strategic direction of thelaboratory, should not be solely accountable as the M&O contractor. The parent
14

Secretary of Energy Advisory Board (SEAB), Alternative Futures for the Department of Energy
National Laboratories (Washington, DC: DOE, 1995), 6 (also referred to as the Galvin report); 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,
January 2013), 13, 23, and 75.

18

organization can drive improvement and ensure high performance across the enterprise,but only if this involvement is valued. Both the laboratory management and the respective
M&O parent organization should aid in the improvement of the laboratory system.
One cannot mandate or legislate trust; it must be earned. Transparency and agreementon scope or scale of laboratory activities and a shared safety and security culture are
prerequisites for trust and independent authority. Vital to this is the clear definition of theroles and responsibilities of each partner.
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 is inadequate.
Incentive fees are, at best, a limited instrument, as discussed later. The most effective
incentive can be a greater degree of freedom to operate independently. The corresponding
remedy for negligence may be giving a laboratory a shorter leash by withholding 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 the situation, andonly 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 strategicplanning and overall management. Likewise, reactivating the Laboratory Operations Boardand other forums for collaboration of various groups within DOE and the laboratories ishaving very positive results. It is important that these continue.
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.
The mechanism by which this recommendation might be implemented turns on anagreed-upon long-term strategic plan that describes the vision for the laboratory and anannual operating plan for how the strategy will be executed in the coming year. Such

19

strategic and operational planning for both DOE and the laboratories is best accomplishedjointly, with DOE and its laboratories working together.
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.
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 to carryit out, so long as its activities are consistent with the operating plan and the law. Eachlaboratory, of course, must also maintain an appropriate degree of transparency with DOE
about its activities, and must discuss with the department any new opportunities that areoutside 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’s planned
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 laboratory deem significant. It is very important in the Commission’s view that thisNOT 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 structure of theoperating plan, it envisions such plans would be relatively short documents (less than 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

20•

General nature and scope of collaborations with business and others fortechnology commercialization and regional development, through cooperative
research and development agreements (CRADAs) and other 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 10-year plans developed
annually by the 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 ona single year’s activities and provide a high-level summary, much of which can be drawn
from the more detailed 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 high-levelsummary nature of the annual operating plan.
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.
The report of the Congressional Advisory Panel on the Governance of the Nuclear
Security Enterprise (the Augustine/Mies panel report) and this Commission found that
DOE does not have the career development programs needed to build a DOE workforce

21

with the necessary technical and managerial skills. 15 Too little emphasis is placed ontechnical training, experience, and accomplishments. In addition, too few headquarters
personnel have spent time in the field and, as a result, do not have an in-depth
understanding of the issues between the field and headquarters. To rectify this, theDepartment has recently instituted an executive rotator program designed to encouragerotation of DOE staff from headquarters into the field.
After a series of negative reports from DOE’s Office of the Inspector General (IG), 16
particularly related to the high cost, personnel rotations in the other direction—laboratory
personnel into the Department—have been discouraged. While such programs are
expensive, the Commission’s view is that the long term benefits are far greater than thecosts. The Commission feels while waste and fraud should certainly not be allowed,
laboratory rotational programs are important to the Department’s effective management of
its laboratories and research programs, and the exchange program must be reinvigorated
across the Department.
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.
NETL is unique among the 17 National Laboratories in two respects. First, and mostobvious, it is the only one that is not contractor-operated; it is both government-owned (asare all of the laboratories) and government-operated (unlike the others). Thus, NETL has
not enjoyed the flexibility and other benefits that come with management by an M&O
contractor.
In addition, NETL also differs from the other laboratories in terms of its structure andmissions. In addition to its on-site R&D related to fossil fuels, NETL manages a large
contracting operation for FE. In fact, only about 10 percent of NETL’s funding goes tosupport 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 otherlocations, this contracting and service support activity might be categorized as a “support

15

Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise, A New
Foundation for the Nuclear Security Enterprise (also referred to as “the Augustine/Mies panel”),
November 2014, 12–14.

16

DOE IG, Audit Report: The Department of Energy’s Management of Contractor Intergovernmental
Personnel and Change of Station Assignments (DOE/IG-0761, March 2007); DOE IG, Management ofFacility Contractors Assigned to the Washington, D.C. Area (DOE/IG-0710, November 2005); DOE
IG, Summary Audit Report on Contractor Employee Relocation and Temporary Living Costs (DOE/IG0400, January 1997).

22

center,” which provides administrative services for the host DOE program office and forother offices as well.
There is nothing inherently wrong with locating service and program office functionsin the field, which is done in other locations within DOE. However, placing the programand service functions within the “laboratory” itself and having its director 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, thelaboratory has not consistently produced research results or had an impact concomitantwith 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 and accomplishments
at the laboratory. The Commission takes those concerns very seriously and is making a
two-part recommendation that it believes will strengthen NETL and the region in the longrun.
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 focusedon the R&D work, and the other on the federal program management, contracting and othersupport functions. The R&D unit, with approximately 10 percent of the annual funding,would be the “national laboratory” and be called “NETL”. The other unit, 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 in support 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 whowork with them. The Commission believes those changes would enhance the standing of
the R&D programs at NETL and lead to a more consistent level of high quality research.
That should also result in even better opportunities for collaboration with researchers inacademia and industry, and strengthen the lab’s ability to attract and retain 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 that23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’s viewthat a careful assessment of the pros and cons of such a possible change should be madeby DOE working with NETL and the local and regional governments, academic
institutions, and other stakeholders.
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.
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.
2.

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, 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 thebest mechanism for research programs. Fees must be adequate to cover unallowable costs,
such as gaps in salary, community and educational contributions, employee scholarships,
and potential risks, but they do not need to be as high as some of the recent NNSA
laboratory contracts. 17 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 andaward fee has led to excessive box checking and transactional compliance for thelaboratories. Both of these have contributed to the breakdown in trust between some of thelaboratories and DOE. The Commission agrees with the Augustine/Mies panel finding thatthe relationship between the NNSA laboratories and the government has been eroded by

17

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’s(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 F for complete award fee
information.

24the fee structure and contract approach that invites detailed, tactical, and transactionaloversight rather than a strategic, performance-based management approach. 18
The Commission also notes that approximately 6 years ago, the National Aeronautics
and Space Administration (NASA) changed its contract for the Jet Propulsion Laboratory(JPL), also an FFRDC, from an incentive fee to a fixed fee. JPL personnel have found thechange to be positive in that it has decreased bureaucracy associated with the annual fee
awarding process. The primary incentive for the laboratory to perform well is that it will
receive more research funding from NASA; the punishment is that it will receive less.
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.

B. Giving the Laboratories Sufficient Freedom to Operate
The Secretary of Energy Advisory Board (SEAB) Task Force on the DOE National
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 (field offices in
NNSA), DOE Service Centers, DOE operational oversight offices (e.g., the Office ofIndependent Enterprise Assessment), [and] the M&O Contractor.” 19 The multitude ofoversight entities has led “to a highly burdensome operating environment that severely
diminishes the effectiveness of this arrangement.” 20
1.

Contract Requirements

Previous commissions and studies have highlighted the duplicative and unnecessarily
burdensome requirements that govern DOE laboratories. Under the FFRDC model, DOE
should provide broad direction for the work performed at the laboratories and hold thelaboratories accountable for mission execution and compliance with relevant operational
standards. As a result of internal and external criticism of the poor management practicesof a few M&O contractors, DOE has become increasingly prescriptive in its oversight of
all the laboratories. This completely undermines the model since the whole point ofengaging M&O contractors is for them to bring their best scientific research and business18

See Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise, A New
Foundation for the Nuclear Security Enterprise, November 2014, 12–14.

19

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

20

Ibid.

25

practices to laboratory operation. While it is appropriate for DOE to develop its own uniquerequirements to cover nuclear, high hazard, and/or classified activities, DOE has often
established its own requirements across a wide variety of low-risk areas, such as humanresources, business services, and other administrative functions. These requirements add
little value to laboratory operation and performance, waste time and resources on
unnecessary transactional details, and lead to redundant layers of bureaucracy, adding tolaboratory overhead as well. This focus on such requirements has skewed DOE’s
relationship with its laboratories toward compliance and away from mission.
Another area in which DOE requirements can be overly prescriptive is in construction
and related activities on laboratory sites. There are situations in which the Federal, state,
local and industry standards are more appropriate than DOE requirements. For instance,
the Commission found that some industry standards are more up-to-date than the analogous
DOE standards. This situation creates confusion when, for example, sub-contractors thatare brought on-site from off-site locations have been trained to follow the more updated
industry standards. In fact, when this occurs, the laboratory technically may not be incompliance with their M&O contract.
DOE’s requirements often also involve multiple levels of approvals rather thanallowing decisions to be made at the lowest possible level. It is sometimes said that virtuallyanyone in the chain can say “no,” but only the highest level has the authority to say “yes.”
The Commission also notes that the multi-layered approval process at DOE builds a cultureof excessive conservatism because a margin of safety is added at every step.
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.
DOE’s processes for developing directives, orders and other requirements provide
some opportunities for involvement and input from the functional offices, field elements
and laboratories. However, engagement could be improved by increasing participationfrom subject matter experts, particularly from the field, to maximize input on the relative
benefits of the proposed requirements and on their true impact on laboratory operations. In
addition, when developing new requirements, DOE does not effectively consider risk.

26

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.
Recently DOE has established an “Evolutionary Working Group” and a“Revolutionary Working Group” to evaluate potential changes to the contractual
relationship between DOE and its laboratories. The Evolutionary Working Group reviewed
the M&O contracts for single-program laboratories to identify and potentially eliminate
relatively low-risk requirements, including human resources, foreign travel approvals, anddata requests.21 The Revolutionary Working Group is evaluating more drastic changes suchas either using a cooperative agreement or a more aggressive paring down of an M&O
contract.22 The Commission endorses these efforts.
2.

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

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 is a system of metrics produced by the laboratories to assure
DOE that they are meeting requirements, mitigating risk, and effectively managing thelaboratory. CAS also 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 assessments of high-risk operations,rather than continuous Federal inspection of all operations. One critical aspect of this modelis transparency 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 of external
assessments. As a result, site office leadership has been able to reduce the staff size of somesite offices by a factor of two to reflect the reduced workload. The status and maturity of
CAS vary across laboratories; so too does the extent to which site offices rely on CAS foroversight. Trust between the laboratory and site office staff is important to the site office’s
willingness to depend on CAS to manage operational risk effectively.23

21

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

22

There is precedence for DOE 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 has solicited 387 cooperative agreements since 2009 according to www.grants.gov, of
which most are for research rather than for facility construction and management.

23

NAPA, Positioning DOE’s Laboratories for the Future.

27

SC has completed a peer review of the CAS across its 10 laboratories that documented
the varying degree of adequacy of systems and allowed for dissemination of best practices.
The Government Accountability Office (GAO) found that NNSA has not fully establishedpolicies or guidance for using information from the CAS, which has led to inconsistency
in their field office procedures. 24 NNSA itself has been concerned that the laboratory
systems are not sufficiently mature to act as a reliable replacement for site office on-site
inspections and transactional reviews. 25 NNSA has a current opportunity to improveoversight at the laboratories by amending its new CAS policy to ensure effective
implementation by both its laboratories and field office personnel.
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.
The laboratories execute their missions in the midst of a complicated oversightenvironment, including significant local or on-site oversight. Particularly important to local
oversight is the relationship between the laboratory and its site office. 26 If the relationshipis adversarial, then it can seriously impede mission execution. These site offices serve as
the local DOE oversight for the laboratory and management of the contract, and a site office(or two) co-locates and oversees each of the 16 FFRDC laboratories. 27 The number ofFederal oversight personnel in many site offices is substantially higher than at other Federal
agency FFRDCs. Given the importance of trust in the relationship between the site offices
and the laboratories, the site offices impact the laboratories, both positively and negatively,
and the character of this impact can affect mission execution.

24

GAO, National Nuclear Security Administration: Actions Needed to Clarify Use of Contractor
Assurance Systems for Oversight and Performance Evaluation, GAO-15-216 (Washington, DC: GAO,
May 2015).

25

NAPA, Positioning DOE’s Laboratories for the Future.

26

The importance of the site office/laboratory relationship is discussed in previous reports on the National
Laboratories, such as NAPA’s Positioning DOE Labs for the Future report, SEAB Task Force report,
Galvin Report, and Augustine/Mies panel report.

27

The term “site offices” is used to describe the 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, go to
http://nnsa.energy.gov/aboutus/ourlocations. For information on SC’s 10 site offices, go to
http://science.energy.gov/about/field-offices/.

28

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.
The roles, responsibilities, and authority of the support centers are unclear to many inthe laboratory network. In certain cases, support centers have approval authority, which
confuses and complicates matters. The main rationale for support centers is to provide
specialized expertise, such as real estate lawyers, who are not needed full-time at each site
office. The Commission accepts that justification. The responsibility for drawing on thatexpertise and for making decisions ultimately rests in the program, which is responsible
for mission execution. The Commission heard complaints from both the field andheadquarters that support centers sometimes inappropriately claim approval authority forvarious decisions and can be unresponsive to mission priorities and schedules.
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.
3.

Assessments and Data Calls

Previous reports found that the National Laboratories are subject to too manyassessments and data requests, which are time consuming and a distraction from themission. To develop a greater understanding of the underlying causes and complexities of
the issue, the Commission collected data on assessments and data requests from all 17 of
the National Laboratories. Though the Commission did find examples of burdensome andduplicative assessments at almost all the laboratories, the problem is more prevalent at the
NNSA laboratories (Figure 4).

29

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

Other than the site offices and support centers, the primary conductors of assessments
at the laboratories within DOE are the Office of Enterprise Assessments (EA) and IG. EA
is the independent assessment office for the Secretary within the Department and conducts
assessments in safety and security. 28 IG is the auditing organization charged with

28

The former Office of Health, Safety and Security was divided into two separate organizations on May
4, 2014: EA and the Office of Environment, Health, Safety and Security. According to EA’s webpage(“About Us,” http://energy.gov/ea/about-us), the office is DOE’s “autonomous organization responsible
for performance of assessments on behalf of the Secretary and Deputy Secretary, in the areas of nuclear
and industrial safety, cyber and physical security, and other critical functions as directed by the
Secretary and his Leadership team.”30

discovering “waste, fraud, and abuse” across the Department, not just at the laboratories. 29
The effective implementation of the CAS has reduced much of the separate oversight andassessment activity at many of the laboratories. Site offices at laboratories with a mature
CAS have been more successful acting as gatekeepers by aiding non-DOE external
assessors in leveraging assessments conducted by the laboratory or the site office.
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.
The Commission found that onerous and lengthy data requests can often arrive at thelaboratories without being sufficiently vetted or filtered. Many of the data calls are sent toall of the laboratories and could be answered by one call to a single laboratory, rather than
5 or 17. SC has successfully reduced the number of unfiltered data requests at thelaboratories by establishing a single point of contact for data requests for all of its 10
laboratories. This filtering process does not occur at other program offices, andburdensome data requests still arrive at all laboratories. In a previous Administration, alldata requests were screened and approved by the Deputy Secretary in order to assure a
consistent application across all offices and 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.
4.

Flexible Budgeting

Several past reports have emphasized the laboratories’ concern regarding “budget
atomization,” which refers to ever smaller increments of funds under the laboratory’s
control for a particular project or program. The result of budget atomization is increased
reporting requirements and decreased flexibility, which may reduce the laboratories’
effectiveness and efficiency.
Budget flexibility depends on both the legal restrictions imposed by Congress in their
allocation of funding and the granularity of management by each DOE program office (Table2). The pyramid graphic (Figure 5) shows the view from the laboratory’s perspective. It
demonstrates the different levels of controls placed on the NNSA laboratories’ budgets andindicates what legal or institutional requirements pertain at each level.

29

More information is available at the DOE Office of Inspector General’s webpage, “About Us,”
http://energy.gov/ig/about-us.

31

Table 2. 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).

Note: The figure does not include the PPA level.

Figure 5. One NNSA Contractor Controls Example

Congress is responsible for the first three layers: the Appropriation, the Obligational
Control Levels (OCL), and the program, project, and activity (PPA) levels which are32

established by statute. 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, theceiling for movement of funds for NNSA is $5 million or less than 10 percent of the funding
amount, whichever is lower. This permits some movement of funding between OCLs without
congressional approval. However, when a movement of funds between OCLs that exceeds
the statutorily defined thresholds occurs, NNSA reported that the time required for eachcongressional approval is between 3 and 6 months.
DOE, in turn, divides each PPA into multiple budget and reporting (B&R) codes. The
degree of programmatic control is set forth in the work breakdown structure that
corresponds to each B&R code. Table 2 shows the obligations for five appropriations as
examples of how these buckets proliferate as funding moves out to the field—fromcongressional PPAs to individual program offices to individual laboratories. The first fourcolumns show the number of buckets for FY 2014 funding only. The last shows how many
buckets each office manages when all years of funding are considered.
The budget atomization problem is not uniform across program offices orlaboratories. The 2014 Augustine/Mies panel report called for the Congress, DOE
Secretary, and the NNSA Administrator to “adopt a simplified budget and accounting
structure” through a reduction of the Obligational Control Levels and to “better alignresources” for efficient mission execution. 30 The report went on to say that NNSA should
reduce the internal budget control lines to the “minimum number needed to assign funding
for major programs and mission-support activities across the sites.” The Commission
endorses these recommendations and believes they should be extended to other parts of
DOE’s laboratory system.
The Commission also supports the Office of Energy Efficiency and Renewable
Energy’s recent move towards larger grants with longer periods of performance and fewer
milestones and reporting requirements. In 2014, EERE leadership established a policy for
its program managers to assign fewer, larger projects to the laboratories. 31 The guidance
was to double the size and halve the number of funding buckets. In addition, the new EERE
policy decreased the number of milestones per project to one per quarter. These milestones
are to be well-defined, quantitative and rigorous. Accountability is still key; every 12 to 18
months, the office makes a go/no-go decision based on the work accomplished to date.

30

Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise, A New
Foundation for the Nuclear Security Enterprise, November 2014.

31

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

33

Recommendation 14: To reduce the number of funding buckets and minimize theaccompanying transactional burden, DOE and its program offices should adopt
and adhere 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 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 to control
funds at the OCL when operating under a continuing resolution. However, Section 301(c)in the FY 2012 appropriations bill, which was reinstated as Section 301(d) in FY 2014 andFY 2015, changed the legal level of control to the program, project, and activity (PPA)
level. 32 In one example cited by DOE personnel, this change expanded the number ofcontrol categories from 30 to over 300. This, in combination with other Office ofManagement and Budget (OMB) apportionment requirements—including quarterly
apportionment for SC and other program areas—creates constant turmoil and delay ingetting money to the laboratories. Repealing Section 301(d) would allow the laboratories
to manage more effectively, while still complying with all new start and other legal
restrictions when operating under a continuing resolution.
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.

32

Section 301(d) reads “Except as provided in subsections (e), (f), and (g), the amounts made available bythis title shall be expended as authorized by law for the programs, projects, and activities specified inthe ‘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).”

34

4.

Maintaining Alignment and Quality

DOE is responsible for aligning the research performed at its laboratories with the
Department’s mission priorities, ensuring the quality of the research and research
programs, monitoring for duplication, and providing sufficient resources to allow thelaboratories to execute effectively. As steward of the 17 National Laboratories, DOE has
the important role of providing strategic direction to the laboratory system. Strategic
review, planning, and implementation are essential for alignment among the laboratories,
the laboratories’ sponsors, and the Department’s priorities. Currently there are no processes
to provide this type of comprehensive strategic direction to the laboratory system as awhole. Recent initiatives, such as the Crosscuts and the Science and Energy Plan, address
this objective in part by creating strategic links across DOE programs and between
programs and laboratories. They have either focused on a single, albeit broad, topic (in thecase of the Crosscuts) or have focused only on pieces of the mission (in the case of the
Science and Energy Plan, which excludes the nuclear and environmental management
missions).

A. Alignment with DOE’s Objectives
Despite the lack of a Department-wide, comprehensive strategic planning process, theNational Laboratories’ research programs and capabilities are generally well-aligned with
DOE’s missions and strategic priorities. There are robust processes in some program
offices to provide strategic oversight, evaluation and direction to the laboratories.
However, those processes are not consistently utilized throughout the Department.
SC has established effective formal processes to ensure proper alignment between its
laboratories’ research programs, and the Department’s missions and strategic priorities.
Alignment is assessed annually during the Laboratory Strategic Planning process. During
this process, SC requires laboratory leaders to define the long-range visions for theirrespective laboratories. This information provides a starting point for discussion about eachlaboratory’s future directions, immediate and long-range challenges, and resource needs.
DOE and the laboratory leaders settle on new research directions and the expecteddevelopment or sustainment of capabilities. In addition, external advisory committees
provide advice on establishing research and facilities priorities; determining proper programbalance among disciplines; and identifying opportunities for inter-laboratory collaboration,
program integration, and industrial participation.

35

By contrast, within the NNSA, each program office reviews its strategic plans withthe laboratories separately. For example, Defense Programs coordinates the Stockpile
Stewardship and Management Plan, a congressionally mandated 25-year program planningdocument that is a collaborative effort of all the sites and stakeholders. 33 Semiannually, theDefense Nuclear Non-Proliferation Office (NA-20) uses an Assistant Laboratory Director“science council” with all the laboratories to discuss strategic direction and corecapabilities that are critical to the NA-20 mission. Since these reviews are program based
and not integrated, their effectiveness in providing strategic direction to the three weapons
laboratories remains unclear.
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 other program offices. In
some cases, it depends completely upon the orientation of the political leadership of the
program office at the time, and has varied from indifference to a solid commitment.
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.

B. Ensuring High-Quality Research and Research Programs
Relative to other offices within DOE, SC has mature processes in place for assessing
the quality of the research being done by the 10 laboratories under its stewardship. The
office also has numerous processes to assess the quality of the research portfolio in each ofits major program areas. The processes in place at the other DOE program offices are notas mature.
SC conducts an annual evaluation of the scientific, technical, managerial, andoperational performance of its 10 laboratories. This process is coordinated by the Office ofLaboratory Policy on behalf of the SC Director. These evaluations provide the basis fordetermining annual performance fees and the possibility of winning additional years on thecontract through an extension. They also serve to inform DOE decisions regarding whether
to extend or to re-compete the M&O contracts when they expire.

33

The Stockpile Stewardship and Management Plan’s (SSMP) validity as an executable plan remains an
issue of debate between the Department of Defense and NNSA. See Congressional Advisory Panel on
the Governance of the Nuclear Security Enterprise, A New Foundation for the Nuclear Security
Enterprise, November 2014, 12–14.

36

The current laboratory appraisal process began in 2006 and was designed to improvetransparency, 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.
SC’s laboratory appraisal process uses a common structure and scoring system acrossall laboratories and is structured around eight performance goals, each of which comprises
several objectives. Within each objective, the program offices and site offices further identify
notable outcomes that illustrate important features of the laboratory’s performance. The
performance goals, objectives, and notable outcomes are documented at the beginning of eachyear in the PEMP, which is appended to the laboratory’s M&O contract.
At the conclusion of each fiscal year, the organizations that fund work at a given
laboratory evaluate its S&T performance. In addition to managing its 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 thelaboratory’s performance against the M&O objectives. The program offices and the site
office consider 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, IG, and other parts of
DOE; and results of SC’s own oversight activities. The evaluation process concludes witha series of meetings, one for each performance goal, during which the various organizations
involved report their proposed scores and work to ensure a consistent and fair approachacross all 10 SC laboratories.
Other significant assessment activities also occur within SC program offices. These
assessments include division-led laboratory management reviews of the research programs
and status of each project; discussion of topics for current and proposed white papers andrelated LDRD activities; and 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 theperformance assessment of these facilities.
Each of the programs within SC has established an external Advisory Committee toprovide independent advice to the SC Director regarding the scientific and technical issues
that arise in the planning, management, and implementation of the program. The
recommendations from the Advisory Committees include research and facilities priorities;
proper program balance among disciplines; and opportunities for inter-laboratory
collaboration, program integration, academic collaboration and industrial participation.
The Advisory Committees include representatives of universities, research laboratories,
and industries involved in energy-related scientific research.

37

The SC Director 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 theresulting portfolio.” 34 The national and international standing of the research are part ofthe evaluation. Every program must be reviewed by a COV at least once every 3 years.
Each review panel is made up of scientists and research managers known to havesignificant expertise in the appropriate field. The COV prepares a report that is reviewed
by the Advisory Committee, which may make modifications prior to acceptance. Following
acceptance, the report is transmitted to the SC Director and released publicly.
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 of ensuring the quality and impactof the science that SC supports. By providing a critical assessment of all grants
simultaneously, the program offices are able to identify those efforts that should be phasedout so that funding can be re-competed. In FY 2013, for example, the Comparative
Research Review carried out by the SC’s Office of Nuclear Physics (NP) resulted inapproximately 25 percent of the least competitive grants being phased out. Not only did
the review provide important input to NP regarding the quality and balance of its research
portfolio, it also helped establish a strategic vision for U.S. nuclear science developed inpartnership with the broader research community.
SC’s processes for assessing the quality of both the research conducted by their 10
laboratories and of the research portfolio in each SC program have begun to influence otherprograms. For example, NE adopted a PEMP-like process, but with greater emphasis on
safety. NNSA also recently instituted a process similar to the PEMP, but the NNSA process
focuses more on operations than on strategic direction. Although some factors necessarily
limit the applicability of SC’s processes to other programs (e.g., the classified nature of thework at the NNSA laboratories, which affects their use of Advisory Panels and Committees
of Visitors), the Commission is encouraged to see other program offices developing similar
processes.
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.
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 reduce34

DOE website, “Committees of Visitors,” http://science.energy.gov/sc-2/committees-of-visitors/.

38

spending in areas such as travel and conference attendance. 35 Subsequently, the DOE
Deputy Secretary released guidance on the implementation of the new OMB
requirements. 36 During every laboratory visit, laboratory staff told the Commission that theresulting conference management rules and their implementation have discouraged
scientists and engineers from attending technical conferences, thereby hindering thelaboratory’s ability to maintain contact with researchers at the leading edge. A lengthierapproval process for conference 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. 37
The Commission strongly believes that attendance at professional conferences is essential
to maintain the highest quality research at the National Laboratories, and to attract andretain the highest quality scientific and technical staff. Very recently DOE, working closelywith the laboratories, updated its guidance on conference-related activities and spending.
The new guidance “refines the Department’s conference management policies andprocedures using a risk-based approach.” 38 The changes are expected to streamline
approval processes and reduce transactional oversight of the laboratories thereby better
enabling participation in scientific/technical conferences. Essentially, the revised
conference policy provides the laboratories with more autonomy in managing conferences,
but makes them responsible for ensuring that tax payer funds are used appropriately. The
Commission is encouraged by both DOE’s updated guidance and the laboratories’
involvement in the revision process.
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,and notes that the laboratories have been given more autonomy on this issue, whileat the same time being held accountable for the appropriate use of taxpayer funds.

35

J. Zients, Promoting Efficient Spending to Support Agency Operations [Memorandum], Office ofManagement and Budget.

36

D. Poneman, Promoting Efficient Spending to Support Agency Operations [Memorandum], Departmentof Energy.

37

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

38

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

39

C. Laboratory Directed Research and Development
The ability to adapt, retool, invest in staff and capabilities, and to enter new researchareas is crucial to laboratory performance and the maintenance of high-quality staff andresearch. Laboratories rely in large part on LDRD programs to achieve these goals. LDRD
is the sole source of discretionary research funding under the control of the laboratory
director. First authorized in the Atomic Energy Act of 1954, LDRD supports researcherinitiated work of a creative and strategic nature. These projects might serve as proofs ofconcept in emerging fields, address significant technical challenges facing laboratory
programs, or explore innovative concepts to address DOE missions.
LDRD’s accomplishments are noteworthy. Multiple programs across the system haveoften begun through initial LDRD investments in capabilities and expertise, and theinvestments have often produced significant returns—both scientific and financial. At
Lawrence Berkeley, for instance, LDRD-funded projects totaling $484,000 helped
establish the technical foundations that allowed the laboratory and its partners to secureboth the $250 million DOE Joint Bioenergy Institute program and a $500 million contract
for the Energy Bioscience Institute from British Petroleum. Other major programs, such as
the Joint Center for Energy Storage Research at Argonne, the Energy Frontier ResearchCenter led by NREL, and early-stage work on the Human Genome Project at the NNSA
laboratories, rose out of LDRD investments. In the field of stockpile stewardship, findingsof LDRD projects have had a significant impact on stewardship strategy, resulting indramatic savings to the Nation through a more informed understanding of life extension
science. Lastly, a large volume of the scientific output from the laboratories (measured bypeer-reviewed publications, patents, and invention disclosures) result from LDRD-funded
projects.
Many laboratories also depend on LDRD to support the recruitment and retention ofqualified staff. The importance of LDRD for the purpose of workforce development at
NNSA laboratories is demonstrated by Table 3, which shows the significant degree towhich LDRD is used to support post-doctoral researchers, a crucial source of the NNSA
laboratories’ scientific workforce. NNSA laboratories must often hire people who have notyet 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.
Table 3. 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 tofull-time staff

77%

74%

49%

* Data for Lawrence Livermore provided by NNSA for FY 2010–FY 2013.

40

All of the laboratories employ competitive, merit-based processes to solicit, review,and select LDRD projects for funding. DOE has interpreted LDRD authorizing legislation
to require site office and headquarters staff to separately review and approve each LDRD
project for mission alignment and compliance with the Department’s statutory
requirements. 39 The Commission finds the requirement for individual LDRD review andapproval by the Federal Government counter to the tenets of trusted partnership, but bothlaboratories and DOE HQ report that the process of review and approval are notburdensome. Regardless, Congress should consider amending LDRD authorizing
legislation such that the Department conducts periodic audits or reviews a sampling of eachyear’s project pool after a one-time certification that the laboratory’s LDRD proposal
selection process is rigorous, based on peer review, and includes all necessary criteria.
Laboratories acquire funding for LDRD as part of the overhead on R&D performedat the laboratory. As illustrated in Figure 6, funding levels for LDRD vary widely acrossthe system, reflecting the diversity of the laboratories in size and mission needs. LDRD isespecially important at NNSA laboratories, which spend more on LDRD in both percentage
and absolute terms.
In FY 2006, Congress required the laboratories to burden LDRD, changing the cap
from an unburdened 6 percent to a burdened 8 percent. 40 Then in FY 2014, Congress
reduced the LDRD cap from 8 percent to 6 percent, still burdened. 41 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. Somelaboratories reported that the burdening and reduced cap on LDRD significantly reduced
the amount of LDRD work that could be done, while others reported minimal impact. For
laboratories with programs closer to the cap—primarily the NNSA laboratories—thedecrease from 8 percent to 6 percent resulted in substantial cuts to the size of recruitment
and retention programs, number and size of projects, and funding for specific types ofprojects, such as exploratory research. Non-NNSA laboratories typically elect lower
LDRD rates for a variety of reasons—including concern about overhead rates and their
reduced reliance on LDRD to attract top talent or maintain scientific creativity due to theirmore research-focused missions—and the change in cap had less of an effect.

39

DOE, Order 413.2B, Laboratory Directed Research and Development (January 2011). These
requirements prohibit the use of LDRD funds for projects that would require non-LDRD funds toaccomplish technical goals, provide for general purpose capital expenditures, and substitute forprogrammatic projects where funding has been limited by Congress or DOE/NNSA.

40

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

41

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

41

7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%

NNSA

SC
FY04

FY09

Idaho

NREL

Savannah River

Fermi

Thomas Jefferson

SLAC

BrookhavenAmes

Princeton Plasma Physics

Oak Ridge

Lawrence Berkeley

ArgonnePacific Northwest

Lawrence Livermore

Sandia0.00%
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 percent during the same year, to be reduced
to 6 percent while maintaining the burden in FY 2014. In terms of FTE hours of work, an 8 percent
burdened cap enables considerably less research to be conducted than with a 6 percent 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 not have an LDRD program.

Figure 6. Reported LDRD Spending as a Percentage of Total Laboratory Expenditures,
FY 2004, FY 2009, and FY 2014

The quantitative difference between burdening and unburdening LDRD withoverhead is significant. To return to the level of real funding provided by a 6 percent
unburdened LDRD program under burdening, a laboratory with an 80 percent overheadrate would require a cap of roughly 10 percent burdened. 42 Given the mission importance42

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 in LDRD funds under an 8%
burdened cap and only ~$33K under a 6% burdened cap. To reach levels comparable to the historical
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 R&D while the remainder ~$44K would be collected as
overhead).

42

of LDRD, the Commission strongly endorses a reconsideration of LDRD policy to enablea return to the previous levels of R&D effort.
Recommendation 19: 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.

D. Appropriate Level of Duplication of ResearchCompetition among similar groups—and thus some degree of duplication across thelaboratories—is integral to scientific advancement. Scientific progress is made throughexploring many avenues of inquiry at the same 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 andinnovation to blossom and appropriately managing resources to maximize productivity.
Resources should allow several laboratories to participate in a healthy competition, so thatdifferent ideas can thrive during the genesis of a new field or technology. Once a specificscheme has proved superior to others, resources should be focused there.
Most “duplication” that occurs within the R&D programs of the laboratories isintentional, managed, and beneficial to the Nation. For example, it may occur during theearly stages of new research, when it is appropriate to encourage multiple researchers tocarry out small-scale projects and explore different potential avenues. In mature program
areas, the Department has processes to provide strategic oversight and guidance. This ishealthy and should be supported.
There is, however, some period of time between the early and more mature stages ofa research field during which the laboratories do compete with one another to achieve
prominence in new research areas. The Galvin report characterized this in the 1990s, forinstance, as “excessive scrambling by the laboratories to establish programmatic activities
in new mission areas.” 43 If this entrepreneurial stage is allowed to extend for too long, it
can seriously inhibit inter-laboratory collaboration and transparency, as the laboratories
maintain secrecy and compete aggressively for funding support. DOE has attempted
various solutions to this, including the research Hubs that were designed to foster teams oflaboratories and other organizations working together. A promising current effort is the

43

SEAB, Alternative Futures for the Department of Energy National Laboratories (Washington, DC:
DOE, 1995); also referred to as the Galvin report.

43

Grid Modernization Initiative, in which the 10 laboratories that are currently working on
modernization of the electricity grid are forming a collaborative program withdifferentiated roles for each of them. That is a good step, but should have been initiated by
DOE perhaps as much as a decade earlier while the 10 laboratories were working
independently.
Because of the significant resources involved, the Department has developed
processes for prioritizing user facilities and avoiding duplicative facilities. These
processes are often led by external topic-based advisory panels and often involve multiple
Federal agencies—for example, the Basic Energy Sciences Advisory Committee(BESAC) 44 and the High Energy Physics Advisory Panel, 45 which report to DOE and the
National Science Foundation (NSF) jointly. The success of these processes in planninglarge user facilities may be best illustrated by recent changes to DOE’s thinking about newlight sources, which are essential for basic research in many scientific fields, from physics
to life sciences, chemistry and materials science. SC significantly amended its strategy forsynchrotron 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 to integrate new functionality; Argonne to incorporate diffraction limited storage
ring technology into its Advanced Photon Source Upgrade; and terminated Lawrence
Berkeley’s proposed Next Generation Light Source. This strategic restructuring of facility
upgrades and termination of a proposed facility has been claimed to have saved between$250 million and $850 million, while simultaneously ensuring the U.S. remains at theforefront of light source and storage ring science. 46 It also ensures that the broader S&T
community will have the facilities it needs.
Recommendation 20: 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.
An area in which the question of competition and duplication is more subtle involves thetwo nuclear weapons physics design laboratories, Los Alamos and Lawrence Livermore. The
44

For more information, see “Basic Energy Sciences Advisory Committee (BESAC),”
http://science.energy.gov/bes/besac/.

45

For more information, see “High Energy Physics Advisory Panel (HEPAP),”
http://science.energy.gov/hep/hepap.

46

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

44

U.S. has relied on design competition and inter-laboratory peer-reviewed competitive
processes to develop and maintain its nuclear deterrent successfully for over 50 years. Los
Alamos and Lawrence Livermore have participated in vigorous design competitions for thedesign of all nuclear explosive packages currently in the stockpile. Sandia has been andcontinues 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.
Now the principal challenge of the three NNSA laboratories is to maintain confidence
in the Nation’s smaller nuclear weapons stockpile, while continuing to improve its safety
and security, all without nuclear explosive testing. This is an enormous scientific andtechnical challenge and it is essential that the government continue to have the benefit of
two strong, independent physics laboratories responsible for the nuclear explosive package,
which use different computational codes and experimental techniques short of nuclear
explosive tests.
In the absence of nuclear explosive testing, the Nation's confidence in the stockpile
ultimately rests on the technical and scientific judgments of Los Alamos and Lawrence
Livermore for the nuclear explosive package and on Sandia for the testable remainder ofthe weapons systems.
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 are designing no
new nuclear weapons, we no longer need two design laboratories. The basic premise of thisargument is flawed. We are still involved in nuclear weapons science and design. Since thestart of the Stockpile Stewardship Program, Los Alamos and Lawrence Livermore havecontinued to discover problems not revealed by the earlier nuclear tests and have occasionallyeven solved problems that nuclear explosive testing did not. For example, starting withdifferent hypotheses about the aging behavior of plutonium, Los Alamos and Lawrence
Livermore, after an intense scientific competition, both eventually came to the conclusion thatthe plutonium pits in nuclear weapons were much more stable than originally thought,
providing greater confidence in the reliability of the pits and the stockpile.
In addition, the current annual assessment process, which is a central element ofstockpile 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 that are
the responsibility of the other physics laboratory. The technical experts on these teams are
uniquely qualified to conduct these assessments because they draw from the only
organizations that have the computational and experimental capabilities necessary to
conduct such technical evaluations as well as the personnel who possess the required45

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
assessment process to evaluate the certification basis of the weapons types for which thelaboratory is responsible.
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. This process
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 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.
Since nuclear weapons research is classified, and explores ranges of temperatures,pressures and other physical regimes not usually accessed by the general scientificcommunity, the knowledge, expertise, and experimental capabilities exist only at thenuclear weapon design laboratories. The Commission strongly believes that thesecapabilities must be maintained. 47
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 andindependent facilities has proven effective and should continue, thereby providing
senior decision makers the highest possible level of confidence in the country’s
nuclear weapons stockpile.

47

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.

46

5.

Maximizing Impact

The National Laboratories represent a national asset of inestimable value. A great dealof money has been invested to create scientific and technical capabilities that are crucially
important for the Nation’s security and economic competitiveness. Realizing the fullpotential of the laboratories requires a much greater effort to tap their capabilities,
especially in support of economic competitiveness.
Today, the National Laboratories interact with many stakeholders beyond DOE, fromother Federal agencies and universities to businesses and industrial partners small andlarge. Strategic Partnership Projects (SPP)48 is the performance of work for non-DOE
entities, such as other Federal agencies, state or local governments, academia, andindustry. 49 Working to encourage these mission-aligned collaborations both invigorates thelaboratories with fresh ideas and allows their housed knowledge and expertise to reachbeyond the site fence, in service of the public good and national prosperity.
At the same time, more can be done to broaden collaboration and to make thelaboratories run efficiently and effectively. By addressing inefficiencies in management
and burdensome practices, effectiveness can be improved, and the impact of thelaboratories maximized.

A. Support of Other Agencies
Supporting other Federal agencies offers opportunities for the cross-pollination ofideas among the broad scientific and engineering community. It also helps to ensure greateruse of existing facilities; enables some Federal agencies to perform work they would nototherwise be able to since they do not possess the capabilities and assets themselves; andsustains 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.
Of the total $17.2 billion funding for the laboratories in FY 2013, SPP for other Federal
agencies accounted for 14 percent ($2.43 billion). The Department of Defense was by far thelargest other Federal agency customer, contributing $1.49 billion (61 percent) of the SPP for

48

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.”

49

Section A of this chapter focuses on the Commission’s specific mandate: SPP for other Federal
agencies. Sections B, C, and D offer examples of other types of SPP: academic collaboration, industry
partnerships and technology transition, and operation of user facilities.

47

other Federal agencies total. 50 The percentage of laboratory work devoted to other agencies
varies widely across the laboratories (Figure 7).

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

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

Figure 7. SPP for other Federal Agencies as a Percentage of Average Total Budgets,
FY 2009–FY 2013, by Laboratory

The Commission observes that DOE has policies in place to ensure that work
supporting other agencies meets necessary criteria and aligns with the Department’s
missions. Multiple Federal agencies have identified a range of core DOE mission areas andcapabilities that are also part of their mission sets, which the National Laboratories help
them address through SPP for other Federal agencies; 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.
On the whole, other Federal agency customers are very satisfied with the quality andvalue of the work performed by the laboratories. However, many find laboratory costs arehigh relative to other research performers. Satisfaction is much lower with the role that
DOE headquarters plays in SPP for other Federal agencies. One source of frustration is thelengthy process required to obtain approvals for SPP, especially within the NNSA
laboratories, and the fact that this process is usually the same for a small level of effort as
it is for a multi-million dollar initiative. While there has been some progress in using
standardized umbrella agreements, which identify acceptable areas of work, this has yet to50

This figure does not include funding for the existing nuclear weapons and naval reactors programs, nor
is Intelligence Community funding fully reported.

48

be applied consistently across the system. 51 An additional improvement has been NNSA’s
creation of the position of Director of Interagency Work, one of the aims of which is toshorten the timeline of the SPP for other Federal agencies approval process. However,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.
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.
Just as there is a lack of strategic planning across the entire National Laboratory
system, so too is there a lack of strategic planning involving other Federal agencies withrespect to S&T requirements for the DOE laboratories. The Mission Executive Council(MEC) was established in July 2010 and, consists of DOE, Department of Defense,
Department of Homeland Security, and the Intelligence Community. Its purpose is tomatch the laboratories’ technical capabilities with technical needs of the other agencies,
thereby providing long-term strategic planning for capabilities that are unique to the DOE
laboratories. However, the MEC has not been as effective a coordination resource as it was
intended to be. 52
Recommendation 23: DOE should support efforts to strengthen the Mission
Executive Council.

B. Collaboration with the Academic Community
It is mutually beneficial for the academic and DOE laboratory communities 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 opportunities for enhanced
external assessment through the academic peer review process. Academics, for their part,
51

This issue and recommendations to improve the process have been identified most recently in two otherstudies: Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise, A New
Foundation for the Nuclear Enterprise, and NRC, Aligning the Governance Structure of the NNSA
Laboratories to Meet 21st Century National Security Challenges (Washington, DC: National
Academies Press, 2015).

52

NRC, Aligning the Governance Structure of the NNSA Laboratories.

49benefit from access to DOE’s user facilities and involvement in the large, long-term,
multidisciplinary projects that are common at the DOE laboratories.
The level of collaboration between the laboratories and universities is high. Based on
an analysis of over 300,000 laboratory publications in archival journals over the last
decade, the Commission found that roughly 75 percent of them included co-authors fromoutside the laboratory system. And about 70 percent of these collaborators were atacademic institutions.
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.

C. Partnering with Industry and Transitioning Technology
Partnering with industry and contributing to the economic development of the Nation
is an important part of the mission of the National Laboratories. While every year there are
hundreds of patents, invention disclosures, CRADAs and other forms of collaboration withthe private sector throughout the laboratory network, support for technology transition isinconsistent across the laboratories and across the DOE program offices. According tointerviewees, this is at least partially due to oscillating political pressure that swings fromcriticisms for favoring industry too much to condemnation for not doing enough to boost
the economy.
The barriers to partnership can be significant for many companies, particularly small
businesses. These barriers include the early stage of development of many technologies;
the financial cost of collaboration with the National Laboratories, including the advancefunding requirement; the complexity of many contract terms; the length of negotiation andapproval times; and the inability or difficulty of researchers to serve as consultants.
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 centers and institutions, such as the Illinois Accelerator Research Center at
Fermi and the High Performance Computing Innovation Center at Lawrence Livermore;legal mechanisms, such as Lawrence Berkeley’s umbrella CRADA, CalCharge, and theAgreements to Commercialize Technology pilot; targeted funding, such as Argonne’s
technology maturation program; and programs to encourage laboratory researchers toengage in technology transfer, such as Sandia’s Entrepreneurial Separation to Transfer
Technology program. DOE has also focused specifically on addressing barriers to50

partnership for small businesses through such initiatives as the Small Business Vouchers
Pilot.53
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 recently established the Fast-Track CRADA Program to streamline theexecution of CRADAs by forgoing individual agency approval for each agreement so longas the agency has approved an annual strategic plan. 54 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 with CRADAs or other agreements that deviate from standard
terms and conditions. It would be helpful if DOE could specifically describe the range ofacceptable terms and conditions to decrease negotiation and review time.
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.
Universities are natural partners for the laboratories in the pursuit of 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.
In addition, laboratories have partnered with States and universities to create centers of
economic activity.
Recommendation 27: Laboratories should pursue innovation-based economic
development by partnering with regional universities.

53

For more information, see “New National Labs Pilot Opens Doors to Small Businesses,”
http://breakingenergy.com/2015/07/09/new-national-labs-pilot-opens-doors-to-small-businesses/.

54

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 of Governmentowned, contractor-operated laboratories may enter into CRADAs to the extent provided in an agencyapproved joint work statement, or if permitted by the agency, in an agency-approved annual strategic
plan.

51

D. Operating User Facilities
The user facilities at the National Laboratories are a unique and enormously valuable
national resource to researchers at other Federal agencies, academic institutions, and theprivate sector here and abroad. These users are often funded through NSF, National
Institutes of Health, NASA, Department of Defense, private industry, and other sources. 55
Many of the scientific user facilities run competitive, peer-reviewed processes to allocate
time among potential researchers, and all of the SC user facilities designate time in thisway. Many key user facilities are oversubscribed, some by as much as a factor of 3.
The strategic planning process for user facilities is strong in some parts of DOE. The
best-run processes, such as those of SC, involve extensive work by peer review panels thatuse experts from the DOE National Laboratories, other Federal agencies, universities, andthe private sector. These processes aim to develop long-term technical and funding plansfor new and existing user facilities that meet national R&D needs and avoid inappropriate
duplication.
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.

55

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, and Technology, United States Houseof Representatives. 112th Cong. 21–61 (2012).

52

6.

Managing Effectiveness and Efficiency

A. Overhead
When the National Laboratories are criticized for being too expensive, overhead isoften identified as the major source of excessive laboratory costs. All of the National
Laboratories are concerned and proactive about managing their overhead costs. During its
visits to laboratories, the Commission found how variable factors such as mission scope,
age of facilities, and location impacted laboratory costs. These considerations are important
context for an analysis of laboratory cost-efficiency.
Figure 8 compares the overhead rates at the National Laboratories with the official
overhead, or facilities and administrative rates at twenty of the top major research US
universities. Laboratory rates were composed from DOE’s Institutional Cost Report (ICR)
and adjusted to reflect the direct funding of construction and maintenance and repair at thelaboratories. While the NNSA laboratories stand out with higher rates than universities andnon-NNSA laboratories, this difference is understandable when the unique costs associatedwith their national security and nuclear weapons-focused mission are considered. The
Commission found rates at non-NNSA laboratories to be slightly higher, but comparable
to university negotiated rates.
Two primary factors impact a comparison of laboratory and university rates. First,
universities include depreciation and interest expenses associated with facilities in theiroverhead, while DOE’s laboratories do not. The Commission estimates these costs torepresent approximately 14.5 percentage points of the mean university rate based on public
information available at six major research universities. Second, university administrative
costs are capped by OMB policy at 26 percent, whereas actual administrative costs are
typically higher by roughly 5 percentage points. 56
Combining these two sources of error, overhead rates at both NNSA laboratories andnon-NNSA laboratories are higher than the values identified in Figure 8, by approximately
10 points. Nevertheless, the Commission finds the rates between non-NNSA laboratories
and universities to be comparable, especially when one considers that there are many
university indirect costs of research that are lowered by the university’s ability to spreadthose costs over non-research functions. In contrast, laboratories are required by law to56

OMB policy limits the government to reimbursing universities for no more than 26% of costs. GAO,
University Research: Policies for the Reimbursement of Indirect Costs Need to Be Updated, GAO-10937 (Washington, DC: GAO, 2010).

53

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. That differenceis understandable given the special nuclear and classified nature of the missions of the
NNSA laboratories. Recall that for purposes of this analysis, the Commission allocated the
NNSA costs for safeguards and security to the indirect, rather than the direct, cost
categories.
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.

Figure 8. Adjusted Indirect Costs as a Percentage of Direct Costs at
National Laboratories (Grouped by Class) and Top-Funded Research I Universities,
Adjusted for Direct Laboratory Construction

54

Laboratory accounting practices are federally regulated and consistent with therequirements of Federal cost accounting standards, which allow them to conduct businessin a way that best matches work at their laboratory. Laboratories report all their costs
biweekly into STARS, the DOE-wide cost reporting system. When laboratory financials
are audited, auditors use data from STARS and disclosure statements as baselines forassessment.
In partnership with financial leadership from the National Laboratories, DOE
established the ICR in 2010 to supply high-level data to the Department and other stakeholders
regarding cost drivers at the laboratories. Although the ICR must continue to develop, it
promises to be a mechanism by which DOE and other stakeholders can better understandlaboratory costs. The ICR will become more useful as data consistency improves withsubsequent years, made possible through peer reviews between different laboratories.
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.
Today, most of the work at the 17 laboratories is publicly funded. As recipients ofFederal funds, it is reasonable to ask, for the purpose of greater accountability andtransparency, that laboratory financial data be made available to the public. Public
disclosure also provides an additional incentive for laboratories to be mindful of theiroverhead rates.
Recommendation 30: DOE should provide greater transparency into laboratory
indirect costs and publish an annual report of the overhead rates at each
National Laboratory.

B. Facilities and Infrastructure
DOE laboratory facilities and infrastructure include a wide range of R&D buildings
and fixed capital equipment, such as research centers, laboratories, reactors, and particle
accelerators; major equipment and instrumentation for R&D, such as supercomputers,
workstations for beamlines, industrial 3-D printing machines, and detectors; andinfrastructure associated with the laboratory, such as utility plants and roadways. The scopeof laboratory facilities and infrastructure is significant; as a whole it consists of over
800,000 acres, which house over 5,000 buildings and trailers. 57

57

Data provided by DOE from the Facilities Information Management System (FIMS) database, FY 2014
Snapshot. Numbers do not include Other Structures and Facilities, which account for non-buildings,
such as roads, fencing, storage reservoirs, and stacks (when not a part of a building).

55

Facilities and infrastructure can have a substantial impact on laboratory research andoperations in a variety of ways. Laboratory facilities and infrastructure in poor condition
can have inadequate functionality for mission performance; negative effects on theenvironment, safety, and health of the site; higher maintenance costs; and problems withrecruiting and retaining high-quality scientists and engineers. There is also a significant
cost associated with the upkeep of excess facilities that are no longer used or needed bylaboratory staff but that remain at the laboratory due to a lack of funding for disposal.
DOE laboratory facilities and infrastructure construction and renovation are primarily
funded through centrally controlled line items or locally controlled General Plant Projects
and Institutional General Plant Projects. Unlike universities, industry, and many State andlocal 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. While facilities and infrastructure planning occurs at multiple levels—at eachindividual laboratory, within each stewarding office, and across the Department as awhole—the available budget is simply not sufficient to meet the needs of the laboratories
to maintain and revitalize the system.
Recommendation 31: DOE should consider whether a capital budget will better
serve its internal facilities and infrastructure budgeting and management needs.
The condition of laboratory facilities and infrastructure across the network ishampered by high levels of deferred maintenance and excess facilities. Deferred
maintenance refers to facility and infrastructure repairs that were postponed in order tolower costs, meet budget levels, or liberate funding for research. While all laboratories
have deferred maintenance, 3 laboratories hold approximately 64 percent ($1.4 billion) of
the total deferred maintenance backlog of $2.2 billion. 58
Excess facilities have no future mission and the natural conclusion to the facilities
lifecycle is deactivation and decommissioning (D&D). Excess facilities that have not yet
been deactivated and decommissioned must be stabilized and then surveilled andmaintained until their D&D. Laboratories have contaminated and non-contaminated excess
facilities that they cannot afford to D&D. The estimated cost for D&D of excess facilities
at the SC laboratories is $2 billion.59 DOE established EM in 1989 to oversee cleanup of
its weapons research and production legacy. The total cost of cleanup at all DOE sites wasestimated to be $280 billion in 2013. 60 As of 2015, EM has determined that 234 additional

58

Laboratory portion estimate from FIMS database, FY 2014 Snapshot.

59

J. Smith, The Importance of Core Infrastructure, presentation to the Commission to Review the
Effectiveness of the National Energy Laboratories, February 24, 2015.

60

DOE IG, Audit Report: The Department of Energy’s Management of High-Risk Excess Facilities(DOE/IG-0931, January 2015).

56

facilities meet its criteria for transfer to EM, but it does not have the funding to accept themfor remediation. In addition to the issue of cost of surveillance and maintenance for the
program offices, contaminated excess facilities continue to pose a risk to mission, workers,
the public, and the environment.
Recently, the Department and the laboratories have been working together to address
the facilities and infrastructure issues, at least initially by accurately assessing the scope of
the problems in condition and budget shortfall.
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.
Despite the magnitude of need to maintain and revitalize the system, not to mention
the cost to build the next generation of scientific facilities, innovative financing
mechanisms have been largely unavailable to the DOE laboratories. Non-contaminatedexcess facilities could be leased to interested third parties if DOE were granted Enhanced
Use Lease (EUL) authority, which it does not currently possess. EULs are long-term leases
on agency-owned property in exchange for cash or in-kind consideration. DOD, which
does have that authority, has used it to lease excess land at military bases for renewableenergy systems, such as solar arrays. If DOE were granted EUL authority, it could generate
funds that could be used to address its facilities resource needs, while offloading some ofits excess square footage.
Alternative financing through an operating lease is another approach in which theFederal Government contributes the real property or land and a private entity provides theinitial capital to develop or renovate it. A lease agreement allows non-Federal entities orcontractors to occupy the real property for a defined time period while the agency repays
the financed amount through lease payments.
OMB is responsible for approving these projects, but no DOE R&D facilities projects
using alternative financing have moved forward since 2007. Proponents of alternative
financing argue that it allows laboratories to pursue construction projects in times of budget
austerity. Critics of alternative financing do not approve of DOE committing to a long-term“mortgage” when there is no guarantee the Nation will continue to see a mission need formaintaining a laboratory. However, the Commission is disappointed by the lack of
independent analysis of alternative financing, particularly cost benefit analyses.

57

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.

C. Project and Program Management
DOE has a decades-old history of project performance problems. 61 While recent DOE
efforts to improve project management are enjoying some success, more work must be
done. The Department needs to build more project management and cost-estimating
capacity. It also needs a more homogenous and disciplined project/program management
culture. DOE is moving in this direction with organizational changes and more frequent
high-level involvement. DOE has also strengthened its project management guidance andprocesses by making them binding on all program offices.
SC, in particular, has a good project performance record. NNSA and EM have
improved their management of small projects (less than $750 million), a fact which GAO
recognized in a 2009 report. 62 Their large projects ($750 million or more), however, haveexperienced issues. These projects are managed primarily by commercial contractors rather
than National Laboratories.
Ironically, DOE actually has very good policies on its books for project management.
Its Directive 413.3 has been in place for over 15 years and is now in its third version. This
guidance emphasizes the need for clear project accountability, independent analysis ofalternatives, better cost estimating practices, more design and technical readiness prior to

61

NAPA, Positioning DOE’s Laboratories for the Future; DOE, Improving Project Management: Reportof the Contract and Project Management Working Group (November 2014); GAO, Department ofEnergy: DOE Lacks an Effective Strategy for Addressing Recommendations from Past Laboratory
Advisory Groups, GAO/T-RCED-98-274 (Washington, DC: GAO, September 1998); GAO, Status ofContract and Project Management Reforms, GAO-03-570T (Washington, DC: GAO, March 20, 2003);
GAO, Actions Needed to Develop High-Quality Cost Estimates for Construction and Environmental
Cleanup Projects, GAO-10-199 (Washington, DC: GAO, January 14, 2010); NRC, Progress in
Improving Project Management at the Department of Energy (Washington, DC: National Academies
Press, 2001); DOE IG, Management Challenges at the Department of Energy, DOE-IG-0858(Washington, DC: DOE, November 2011); GAO, Department of Energy: Office of Science Has Kept
Majority of Projects within Budget and on Schedule, but Funding and Other Challenges may Grow,
GAO-08-641 (Washington, DC: GAO, June 2008); GAO, Department of Energy: Contract and ProjectManagement Concerns at the National Nuclear Security and Office of Environmental Management(Washington, DC: GAO, March 2009); DOE, Department of Energy Contract and Project Management
Root Cause Analysis Corrective Action Plan (Washington, DC: DOE, 2008); DOE IG, The Departmentof Energy’s Management of High-Risk Excess Facilities, DOE-IG-0931 (Washington, DC: DOE,
January 2015).

62

GAO, Department of Energy: Contract and Project Management Concerns at the National Nuclear
Security and Office of Environmental Management.

58

moving ahead officially on a project, and better project management controls. The problem
is that the procedures are too often followed in form but not in substance. Or, where thepolicy recommends, but does not require, steps such as independent cost analyses, they are
too often omitted in the interests of time. The result is that some major projects experience
serious cost overruns and delays that could have been avoided by applying the existing
policies with greater discipline.
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.
In the area of environmental remediation, a recent SEAB Task Force report stated that
DOE has spent over $150 billion on environmental management and cleanup and iscurrently spending roughly $5–6 billion per year in this area. 63 At the same time, the current
EM budget for technology development is only $13 million per year, despite the manytechnical obstacles which remain. The Commission agrees with SEAB that the success ofthe cleanup effort will require significant new understanding of the science and with thisunderstanding, development of new technology.
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.

63

SEAB, Report of the Task Force on Technology Development for Environmental Management,
December 2014; also, Presentation to the Task Force by the Office of Environmental Management (July15, 2014).

59

7.

Ensuring Lasting Change

Lasting change takes time and work. In the past four decades, over 50 commissions,panels, reviews and studies of the National Laboratories have been conducted. Yet, the true
power to implement and realize change rests with the Department, the laboratories, andCongress —those for whom the National Laboratories are more than the object of a yearlong study. Where past assessments have sometimes failed to produce meaningful change,
this Commission strives to go beyond identifying findings and recommendations bycharging the implementation of recommendations to those with the ability to realize them.
Table 4 identifies the responsible actors for all of the Commissions’ recommendations andprovides a cross-reference to where additional information can be found in Volume 2. In
doing so, the Commission hopes to assist the key stakeholders—laboratory leadership,
DOE, and Congress—in their efforts to improve the impact, effectiveness, and efficiencyof the National Laboratories.

A. Lack of Meaningful Change from Past Reports
A review of many past reports shows a strikingly consistent pattern of criticism and asimilar set of recommendations for improvement. Despite the extensive examination of theissues, none of these reports has led to the comprehensive change necessary to address thewell-documented, persistent challenges confronting the Department and its laboratories.

B. Progress Made during Current Administration
Under the current administration, many steps have been made towards improving theeffectiveness and the efficiency of the National Laboratories. Department-led Crosscuts,formation of the Laboratory Operations Board within DOE, and efforts to more actively
involve the National Laboratories—primarily through the National Laboratory Directors’Council—with DOE strategic planning are a few noteworthy examples of the progress
realized under a thoughtful and proactive administration.
These administration-led changes are significant because they address the relationshipbetween DOE and the National Laboratories which lies at the root of many of the issues
raised in this report. With the upcoming change in administration, however, a real fear
exists that much of the progress made under the leadership of the current Secretary may belost due to lack of institutionalization. Lasting, meaningful change is an ongoing processrarely accomplished within a single administration, and recommendations made by pastreports have not always led to implementation. To address this concern, the Commission

61has focused on identifying ways to not only institutionalize the positive changes maderecently, but also to assess how recommendations made in this report and numerous others
can be carried into the future, for the betterment of DOE and its National Laboratories.

C. 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 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,
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 perspective on
the broad issues regarding the relationship of DOE and the laboratories over time, such aswhether 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 is to ask the National Academies to host it.
Another possibility is to have the group report to the President’s Council of Advisors on
Science and Technology (PCAST). Yet another option is to have the Secretary 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 createdby Congress as an independent agency of the Federal government to provide independentscientific peer review and recommendations to the Secretary and the Congress regarding
DOE’s programs for high-level radioactive waste and spent nuclear fuel. That groupconsists of eleven members who serve on a part-time basis, nominated by the National
Academy of Sciences and named by the President. Wherever a new body is located, itwould seem appropriate to establish it under a sunset provision, so that the entity’seffectiveness would be reviewed and reconsidered at appropriate intervals.

62

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.

63

8.

Conclusion

In summation, the Commission has the following answers to the important questions
posed in Chapter 1 about the DOE laboratories:
Why do we need DOE laboratories?
The National Laboratories are a unique scientific resource and national security asset,
providing a vital experimental infrastructure to the Nation’s research community andsustaining the nuclear weapons expertise critical to modern American security. In addition,
the laboratories maintain a scientific and technical workforce, as well as a way of working,that fills a key need in the research and development process. Whether through stewardshipof open-access scientific user facilities, assessment of the nuclear arsenal, or fostering
environments for cutting-edge research in energy, environmental management, andweapons science, the National Laboratories are an important component of the national
S&T enterprise. Furthermore, the Nation often calls upon the scientific and technicalexpertise of the National Laboratories in times of emergent need, as has been done recently
in response to the Fukushima Daiichi nuclear reactor accident and during the Iran nuclear
negotiations, among others.
Does DOE manage its laboratories well?
While the DOE laboratories are a critical resource that serves the Nation well, they
could be better. The relationship between DOE and the laboratories has eroded, leading toever-increasing levels of micromanagement and transactional oversight, which, in turn,have reduced the efficiency and effectiveness of laboratory operations. DOE and thelaboratories must return to the spirit of the FFRDC model, focused on stewardship,
accountability, competition, and partnership.
Instead, the National Laboratories are managed at multiple levels: day-to-day
operations are overseen by the laboratory director and team in conversation with DOE
through either DOE headquarters or site offices, which supply compliance guidance andstrategic direction. Elements of departmental management can adversely impact theeffectiveness and efficiency of the laboratories. For instance, mounting contract
requirements, large numbers of assessments and data calls, and a lack of budgetary
flexibility add undue administrative burdens on parts of the laboratory system. Addressingthese concerns should be a priority for making the laboratories function better as a whole.

65

Are the laboratories properly focused to address mission needs now and in the future?
For the most part, the National Laboratories are properly focused to address their
mission needs in science, energy, weapons, and environmental management. In some areas,
however, shifting the focus should be a priority: managing emerging fields to control for
duplication while still allowing the best ideas to compete and flourish is an important
strategic planning function that the Department should embrace. There are robust processes
in some program offices to provide strategic oversight, evaluation, and direction to thelaboratories. However, those processes are not consistently used throughout the
Department. With the proper balance of freedom for innovation as new areas emerge, andstrategic direction as they mature, the laboratories will be able to continue to evolve to meet
the Nation’s needs in coming decades.
Is the research carried out at the laboratories of high quality?
During its 17 laboratory visits, the Commission observed that the quality of the R&D
at the laboratories is indeed high. For SC and its laboratories, extensive use of external
advisory panels, composed of leading subject-matter experts, is a powerful mechanism for
maintaining quality, and for assessing the quality of the research portfolio andperformance. Partnerships with universities and industry through collaborative work or
joint faculty appointments—in the case of universities—further contribute to research
quality. The National Research Council (NRC) emphasized in its 2013 report that thequality of science and engineering at the NNSA laboratories was healthy and vibrant. 64
The Commission concurs with this finding. The quality of R&D at all laboratories can beenhanced by further engagement with external peer review groups.
LDRD also plays a critical role in maintaining high-quality talent and research,especially at the NNSA laboratories where fewer opportunities exist for researchers to pursue
ideas outside of specific project scope. LDRD helps to generate new ideas and empower
research staff to think critically and broadly about the challenges faced. The true value of any
institution is its people, and LDRD enables laboratories to develop and invest in its workforce
for both the short and long term. In the absence of other discretionary funding for exploratory
research, LDRD is vital in providing the freedom laboratories need to innovate and ensure
their sustained performance in service of the Nation.
Is there too much duplication among the laboratories?
The Commission does not believe there are too many laboratories, nor is there an
undesirable degree of duplication. During its visits to all 17 laboratories, the Commission
found each to be unique, conducting work of merit, and becoming of the title “National

64

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

66

Laboratory.” While work might appear duplicative at a high level, the Commission’s closer
look revealed that their capabilities and focus areas are diverse, complementary, and wellhoned to meeting the missions of the Department. Every laboratory plays a key role: for
instance, different synchrotrons address different types of scientific questions, while theexistence of two NNSA physics laboratories promotes both competition and a second
opinion on high-stakes nuclear weapons work. Having grown out of historic mission
decisions, the laboratories of today have evolved to serve not just the Nation but also theirhome regions and States through the fostering of a scientific community. Many also serve
their regional economies.
That said, DOE could do a better job of managing the National Laboratories as asystem with 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 theresearch has matured beyond a certain threshold, the Department should provide strategic
oversight and guidance for the laboratory system to coordinate and potentially consolidate
their programs to achieve the most efficient use of resources.
Are the laboratories having an impact?
The National Laboratories interact with many stakeholders beyond DOE, from other
Federal agencies and universities to businesses and industrial partners, small and large.
These mission-aligned collaborations both invigorate the laboratories with fresh ideas andallow their knowledge and expertise to reach beyond the site, in service of the public goodand national prosperity.
Though much has been achieved by supporting other Federal agencies, collaboratingwith the academic community, partnering with industry, and operating user facilities,
barriers to engagement remain. While there are hundreds of CRADAs and other forms ofcollaboration with the private sector throughout the laboratory system, support fortechnology transfer is inconsistent across the laboratories and across the DOE program
offices. More can be done to increase the effectiveness of the National Laboratories bystreamlining their interactions with all external parties.
At the same time, the value of the laboratories has sometimes been poorly
communicated or quantified. For example, the Human Genome Project was begun at thelaboratories and revolutionized the life sciences, and laboratory accelerator R&D
eventually helped to develop MRI technology that is available today in every major
hospital. The role of the DOE laboratory system in these advances is not widely recognized.
In the interest of greater understanding, both the Department and the laboratories should
do more to highlight their achievements.

67

Do the laboratories cost too much?
Laboratories are indeed costly, but whether they are too expensive is a more nuanced
question. The primary business of the National Laboratories—including the operation oflarge-scale scientific facilities, multidisciplinary research, and weapons science—is costly
by nature. How do we determine the appropriate price for these services, a large portion ofwhich cannot or is not conducted elsewhere? This makes the laboratory business model
especially difficult to benchmark against other R&D institutions. The Commission focusedon overhead as a measure of organizational efficiency. Overhead is a component of cost,
but it does not represent an institution’s entire cost profile.
When benchmarked to official overhead rates at the 20 research universities with thelargest sponsored research expenditures, the cost of doing research at non-NNSA laboratories
was found to be comparable. NNSA laboratory rates were higher, but this is understandable
due to the additional requirements of their national security mission (heightened safeguards
and security, health, and cleanup of legacy facilities). Overall, the Commission believes thatlaboratory costs are not unreasonable in light of the services they provide.
There is a significant opportunity for increased efficiency in the system if the roles
and responsibilities of DOE and the laboratories are returned to the intended FFRDC
model. The current degree of micromanagement and oversight impose a “stealth overhead”
cost at DOE headquarters, the site offices, and the laboratories by virtue of the extra
professional time that those activities require, without yielding corresponding benefits. The
Commission believes that there will be significant cost and time savings at each of theselevels if its recommendations are implemented.
In addition, there are specific areas of concern, particularly major capital construction
projects and facilities and infrastructure. While problematic projects are not always
laboratory-related and SC and its laboratories are notable for their strong record of project
performance, the Department and all program offices must strengthen their project
management capabilities and enforce the processes that are on the books. All laboratories
and DOE must also find ways to improve the condition of the facilities and infrastructure.
In this time of budget austerity, DOE must work with OMB and the Congress to develop a
long-term strategy for dealing with these resource needs, including the appropriate use ofinnovative financing techniques. The recent joint laboratory-DOE efforts to address the
project management and facilities and infrastructure shortcomings have resulted in some
improvements.
The National Laboratories are a national treasure with the potential to serve the Nation
now and well into the future. This report offers recommendations to make the laboratories
more efficient and effective in accomplishing the work for which they are uniquely suited.

68

Table 4. Responsible Actors for Each Recommendation and Cross-References to Volume 2

Rec.
No.

2.C

1

The Administration and Congress should recognize the value of the National Laboratories and provide the necessary
resources to maintain their capabilities and facilities. Congress should also develop a more orderly process of reviewing thelaboratories.

Administration andCongress

1.E

3.A.1

2

Department of Energy (DOE) and the laboratories must work together to restore the ideal Federally Funded Research andDevelopment Center (FFRDC) relationship as one of trust and accountability. DOE should delegate more authority andflexibility to the laboratories and hold them accountable. The laboratories must be more transparent with DOE about theiractivities.

DOE andLaboratories

2.C

3.A.1

3

DOE and each laboratory should jointly develop an annual operating plan, with agreements on the nature and scope of thelaboratory’s activities, including goals and milestones. DOE should then provide increased flexibility and authority to thelaboratory to implement that plan.

DOE andLaboratories

2.C

3.A.1

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.

DOE

2.C

3.A.1

5

DOE should separate the National Energy Technology Laboratory’s (NETL) research and development (R&D) function fromits program responsibilities. Consideration should be given to converting the new, research NETL into an FFRDC. NETL
should increase its interactions with universities.

DOE and Congress

2.C

3.A.2

6

DOE should abandon incentive award fees in favor of a fixed fee set at competitive rates with risk and necessary investment DOE
in mind. DOE should also adopt richer set of incentives to motivate sound management.

2.C

3.B.1

7

DOE should give the laboratories the authority 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.

DOE

3.G

3.B.1

8

DOE should modify its processes for developing directives, orders and other requirements to get more 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.

DOE

3.G

3.B.2

9

DOE should focus on making the use of Contractor Assurance System (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 theirlocal oversight. The quality of CAS can be increased through peer reviews for implementation and effectiveness.

DOE

4.D

3.B.2

10

The role of the site office should be emphasized as one of “mission support.” The site office manager should be responsible
for the performance of the site office; all staff, including the Contracting Officers, should report to the site office manager.
DOE should devote more effort to professional development of field staff.

DOE

4.D

3.B.2

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 the site office or DOE headquarters.

DOE

4.D

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Recommended Action

Responsible
Actor(s)Volume 2
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Rec.
No.

3.B.3

12

All stakeholders should make maximum use of local assessments (performed by site offices and laboratories), withappropriate verification, to reduce duplicative assessments and burden on the laboratories.

DOE and External
Auditors

5.C

3.B.3

13

DOE should establish a single point of control within the Department for all laboratory-directed data requests.

DOE

5.C

3.B.4

14

DOE should increase the size of funding increments by consolidating budget and reporting (B&R) codes, extending
timelines and minimizing milestones for each funding increment and institutionalizing mechanisms to move money between
B&R codes for related research areas.

DOE

6.D

3.B.4

15

Congress should repeal Section 301(d) of the FY 2014 Consolidated Appropriations Act as soon as feasible to remedy thetransactional burden it creates for the Office of Management and Budget (OMB), DOE Headquarters, and the laboratories.

Congress

6.D

4.A

16

Other DOE program offices should adapt the processes that DOE’s Office of Science has in place for guiding and assessing DOE
the alignment of the laboratories under its stewardship with DOE’s missions and priorities.

7.E

4.B

17

The processes that Office of Science has in place for assessing the quality of the research being done by its laboratories
and for assessing the quality of its research portfolio should be adapted by the other program offices.

DOE

7.E

4.B

18

There must be reconsideration of the travel restrictions to enable conference participation at levels appropriate to theprofessional 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.

DOE and OMB

7.E

4.C

19

The Commission strongly endorses Laboratory Directed Research and Development (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 National Nuclear
Security Administration laboratories.

Congress

8.D

4.D

20

DOE should manage its laboratories as a system having an overarching strategic plan that gives the laboratories theflexibility to pursue new lines of inquiry. Once the research has sufficiently mature, DOE should provide strategic oversightand guidance to coordinate and potentially consolidate their programs.

DOE

7.E

4.D

21

Congress should recognize that the capabilities currently housed within the NNSA laboratories are essential to the Nation.
Maintaining these capabilities in separate and independent facilities should continue.

Congress

7.E

5.A

22

DOE should establish techniques to make the Strategic Partnership Projects process more efficient.

DOE

9.E

5.A

23

DOE should support efforts to strengthen the Mission Executive Council.

DOE

9.E
10.C
11.E

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Chapter &SectionReference

Recommended Action

Responsible
Actor(s)5.B

24

DOE and its laboratories should continue to facilitate and encourage engagement with universities through collaborative
research and vehicles such as joint faculty appointments and peer review.

DOE andLaboratories

5.C

25

DOE and the laboratories should fully embrace the technology transition mission and continue improving the speed andeffectiveness of collaborations with the private sector. Innovative transfer and commercialization mechanisms should be
pursued and best practices in other sectors should be examined.

DOE andLaboratories

Volume 2
Chapter &SectionReferenceVolume 1
Chapter &SectionReference

Rec.
No.

5.C

26

5.C

27

Responsible
Actor(s)Volume 2
Chapter &SectionReference

DOE should determine whether the annual operating plans proposed by the Commission could qualify as the “agencyapproved strategic plan” under the Stevenson-Wydler Technology Innovation Act of 1980, and the Fast-Track Cooperative
Research and Development Agreement Program. If not, Congress should amend the law accordingly.

DOE and Congress

11.E

Laboratories should pursue innovation-based economic development by partnering with regional universities.

Laboratories

11.E
12.C

Recommended Action

28

DOE and Congress should continue to support user facilities at the DOE laboratories. External advisory groups should
continue to be used to decide which facilities to build and how to upgrade existing facilities.

6.A

29

DOE should continue implementing the Institutional Cost Report (ICR) as a method for tracking indirect costs across thelaboratories, and encourage peer reviews to help mature the ICR as a tool for DOE, the laboratories, and otherstakeholders.

DOE

13.E

6.A

30

DOE should provide greater transparency into laboratory indirect costs and publish an annual report of the overhead rates
at each individual National Laboratory.

DOE

13.E

6.B

31

DOE should consider whether a capital budget will better serve its internal facilities and infrastructure budgeting andmanagement needs.

DOE

14.D

6.B

32

DOE and the laboratories should continue efforts to improve 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 and nature of the resources shortfall for facilities and infrastructure, and to develop a longterm plan to resolve it through a combination of increased funding, policy changes, and innovative financing.

DOE, Laboratories,
Congress, and OMB

14.D

6.B

33

DOE, the laboratories, Congress, and OMB should actively work together to identify appropriate situations and methods forutilizing 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, Laboratories,
Congress, and OMB

14.D

6.C

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. There should be more peer reviewsand “red teams” within DOE.

DOE

15.G

6.C

35

The Commission supports the recent Secretary of Energy Advisory Board Task Force recommendation to put moreresources into science and technology development for the EM program given the technical complexity of its projects.

DOE, Administration,
and Congress

15.G

7.C

36

A standing body should be established to track implementation of the recommendations and actions in this report, and toreport regularly to DOE, the laboratories, the Administration, and the Congress. This body could assist Congress indeveloping a rational plan for future evaluations of the DOE laboratories.

DOE, Administration,
and Congress

16.D

71

5.D

DOE, Administration,
and Congress