SECRETARY OF ENERGY ADVISORY BOARD
MEMORANDUM FOR:

SECRETARY OF ENERGYFROM:Secretary of Energy Advisory Board (SEAB)

DATE:

January 26, 2016

SUBJECT:

Task Force comments on the Final Report of the Commission to
Review the Effectiveness of the National Energy Laboratories

You have charged the SEAB National Laboratory Task Force to review studies of the DOE
National Laboratories as they appear and to give you advice about what your response
should be to their findings and recommendations. This SEAB letter transmits the commentsof its National Laboratories Task Force on the recently released report of the Commission to
Review the Effectiveness of the National Energy Laboratories (CRENEL), entitled Securing
America’s Future: Realizing the Potential of the DOE’s National Laboratories. That
committee, co-chaired by TJ Glauthier and Jared Cohen, was formed pursuant to Section
319 of the Consolidated Appropriations Act, 2014 (Public Law No. 113-76), and wascharged to evaluate the laboratories’“…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 efficiency and effectiveness of
the laboratories, including assessing overhead costs and the impact of
DOE’s oversight and management approach,…the effectiveness of the
Department’s oversight approach and the extent to which LDRD funding
supports recruiting and retention of qualified staff 1.”
The CRENEL report is based on extensive fact finding, including significant testimony fromnumerous stakeholders and visits to all of the labs in the DOE complex. The final report,
issued on October 28, 2015, follows the Commission’s report of February 27, 2015, andcontains a total of 36 recommendations across 6 primary themes: recognizing value,
1

Final Report of the Commission to Review the Effectiveness of the National Energy Laboratories, Volume 1,
October 28, 2015, p 1.

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rebuilding trust, maintaining alignment and quality, maximizing impact, managing
effectiveness and efficiency, and ensuring lasting change. For convenience, Appendix 1 ofthis letter provides a copy of the tabulated recommendations from the Commission’s report,
grouped by theme and identifying a proposed owner for each. 2
Overall, our SEAB Task Force endorses the CRENEL report. We find the analysis andrecommendations from the Commission to be consistent with the numerous priorinvestigations, commissions and studies that have reviewed the Laboratories over the years.
The Commission’s report is well aligned in areas that overlap with previous work andrecommendations from our Task Force. We comment below on several specific items but, ingeneral, we view the Commission’s report as a thorough recitation of a well-told story that
repeats and reinforces important recommendations to improve the efficiency of laboratory
operations, planning and research outcomes, while endorsing the value, the direction andoperations of the current laboratory system. As with the majority of recent reports, theCommission decries the current environment where oversight and regulation are
increasingly imposed on the national laboratories and Congress and the Department havenot followed-up or implemented recommendations to streamline the process and the
management of the labs. Speaking to this issue, the Commission’s final recommendation
states,A standing body should be established to track implementation of therecommendations and actions in this report, and to report regularly to DOE, thelaboratories, the Administration, and the Congress on progress, results, and needed
corrective actions. The standing body could assist Congressional committees indeveloping a rational plan for future evaluations of the DOE laboratories. 3
Later in this letter, you will find SEAB’s recommendation on how the “standing body”
could be created and who should establish and maintain it.

2

The Commission appendix would be even more useful if the Commission suggested which office in DOE
should be the “responsible actor” for each recommendation. Experience shows that absent direct secretarial
intervention, bureaucratic interests greatly delay the implementation of meritorious proposals for change.
3
ibid, p 63.

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We first point out areas of emphasis in the Commission’s report that reinforce points raisedin your SEAB Task Force’s report:
1. The Commission speaks to the need to reestablish the model in which the laboratories
operate as FFRDCs and roles are appropriately established: “…the government is
responsible for setting the “what” of strategic and program direction to meet the Nation’s
needs, while the contracted partners, along with the laboratories they manage andoperate, are responsible for determining precisely “how” to meet the technical andscientific challenges and to carry out programs.” 4 In particular, the Commission
highlights the need to clearly establish where responsibility rests amongst the many
stakeholders involved in the lab management and delivery system (the laboratory
director and the director’s leadership team, DOE Headquarters sponsoring program
offices, DOE Site (or in the case of the NNSA, Field) Offices, DOE Service Centers,
DOE operational oversight offices, the M&O contractor). This finding is directly alignedwith the primary focus in our Task Force’s report (Recommendation 1.1) to use theLaboratory Policy Council to clarify the roles and responsibilities for mission execution
at the laboratories and direct the Under Secretary for Management and Performance tolead the Laboratory Operations Board in implementing these changes.
2. The Commission’s report recommends a number of actions that can be taken to provide
immediate change to the overly burdensome detailed management of the laboratories
that is inconsistent with the philosophy of a Government Owned, Contractor Operated(GOCO) laboratory. The Commission endorses the recommendation of the AugustineMies Panel to eliminate the incentive portion of the M&O contract award, replacing itwith a competitive fixed fee arrangement. We support this recommendation as a way to
reduce complex bureaucracy, which is delivering limited operational performanceleverage.

4

ibid, p iv.

3 of 10Other short term actions recommended in the CRENEL report are consistent with the
SEAB Task Force’s recommendation for laboratory management “experiments.” The
Commission suggests reestablishing local and rapid decision making for conference
participation (which it deems vital to maintaining the intellectual excellence oflaboratory staff), establishing a single point of control within the Department for alllaboratory data requests, and removing approval authority from Support Centers, clearly
articulating their support role.

Finally, it is worth noting that the Commission specifically recommends separating the
National Energy Technology Laboratory (NETL), currently the only Government
Owned, Government Operated (GOGO) laboratory in the system, into two independentparts – a standard GOCO to handle the research and development mission and acontracting office to handle the disbursement of funds to external partners.
We find merit in all these CRENEL suggestions.
3. As noted in numerous reviews and reports over the last decade, the Commission
observes that the laboratories can make a greater contribution to the national economy
and its competitiveness, if the laboratories have effective technology transfer processes
in place. The Commission clearly articulates the larger view of what technology transfer
means, commenting that in addition to traditional Cooperative Research andDevelopment Agreements, Work for Others, or licensing activities, significant
technology transfer occurs through the world class user facilities, through the maturingof early career research talent and through personnel flow and rotation between thelaboratories, academia and industry. SEAB strongly endorses this view. However, we
believe that CRENEL has failed to comment on an important issue on this topic. As theInterim Report by the SEAB National Laboratory Task Force suggests, there is somelevel of confusion and inconsistency about whether economic development and national
competitiveness are part of the mission of National Laboratories. To address thisdirectly, the SEAB report has recommended (#3.1) that you issue a policy statement that

4 of 10creating value for the private sector through the use of technology transfer, researchfacilities and workforce is part of the National Laboratory mission. We continue toadvocate this.
4. The Commission provides a thorough analysis of the rationale and current uses ofLaboratory Directed Research and Development (LDRD) and finds clear benefits fromthe program for supporting high-risk, potentially high reward early-stage research, for
exploring research avenues that may be new to the laboratory or the complex, and as asignificant tool that “.. enables laboratories to develop and invest in its workforce forboth the short and long term.” 5 As with numerous recent reviews, including your Task
Force, 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.” 6
5. The Commission notes positively your strongly articulated commitment and the steps
being taken by the Department to ensure alignment of the laboratories in its strategicplanning processes. The Office of Science (SC) process is described in detail:During this Laboratory Strategic Planning process, SC requires laboratory leaders todefine the long-range visions for their respective laboratories. This information
provides a starting point for discussion about each laboratory’s future directions,
immediate and long-range challenges, and resource needs. DOE and the laboratory
leaders settle on new research directions and the expected development orsustainment of capabilities. In addition, external advisory committees provide advice
on establishing research and facilities priorities; determining proper program balanceamong disciplines; and identifying opportunities for inter-laboratory collaboration,
program integration, and industrial participation. 7
The report further describes the effective processes SC uses to review its alignment to
DOE strategy and connect both its strategic and tactical execution to its annual
5ibid, p 66.
ibid, p 43. SEAB notes with some sadness that use of the word “equivalent” apparently conceals inability toagree on a simple and transparent method to calculate the 6% because some labs are jockeying for more
complex formulae that result in greater LDRD.
7
ibid, p 35.
6

5 of 10Performance and Evaluation and Measurement Plan (PEMP.) The Commission calls forthe adaptation of these core, successful processes to all the DOE laboratories. As you
know, the SEAB Task Force made a similar recommendation and proposed that the
DOE Laboratory Operations Board be charged with the task of implementing a DOEwide effort to identify, manage, and resolve issues affecting the management,
operations, and administration of the National Laboratories.

One additional point that bears mentioning is the Commission’s analysis and endorsementof recommendations made by both the NRC 8 and, more recently SEAB 9, to provide a
modest investment stream for science and technology development for the Environmental
Management program, stating that, “Success of the cleanup effort will require significant
new understanding of the science and with this understanding, development of newtechnology.” 10
As noted above, CRENEL calls for the establishment of a “standing body” to track
implementation of the recommendations made in its report. SEAB recommends that because
most of the National Laboratories are managed by their respective offices of the Under
Secretaries for Science & Energy and Nuclear Security, and many of the recommendations
involve management and performance, the “standing body” should be formed by the three
Under Secretaries – Science & Energy, Nuclear Security and Management & Performance –with the Under Secretary for Management & Performance serving as the Chair of thisstanding body. The purpose of this standing body would be to track and enforce timelines
and priorities to make process changes and report directly to the Secretary.

8

National Research Council, Committee to Evaluate the Science, Engineering, and Health Basis of the DOE’s
Environmental Management Program, Improving the Environment: An Evaluation of DOE’s Environmental
Management Program,” (Washington DC: NRC, 1995), 21.
9SEAB, Report of the Task Force on Technology Development for Environmental Management, (Washington,
DC: DOE, 2014);
10
Final Report of the Commission to Review the Effectiveness of the National Energy Laboratories, Volume 1,
October 28, 2015, p 59.

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We also note a few points where we feel that the CRENEL report could have been a bit
more assertive in its recommendations.
1. The Congressional charge to the Commission implicitly calls for a judgment about
whether the size of the DOE national laboratory network is too big, too small, or justright given the current and future technology needs of the country in DOE’s mission
areas of responsibility: science, energy, national security, and environmental
management. The Commission does not directly address this central question but
their implicit answer is that the DOE national labs are doing their job, theireffectiveness and efficiency is impaired by over regulation, and the amount of publicresources is “just right” although at several points there is a hint that more resources
would be welcome. This central conclusion would be more convincing if theCommission had examined a range of different organizational arrangements, quite
different from the current structure, and compared the pros and cons of each.
2. The CRENEL report also does not offer a timeline for its recommendations to be
implemented. Because many of the recommendations are similar to the ones offeredby the SEAB Task Force, we suggest that you use the timeline offered by the SEAB
Task Force report.
In summary, we find that the CRENEL Commission report provides additional support for
the numerous findings and recommendations that have already been voiced about the value
and performance of the DOE national laboratories. The Commission also repeats andunderscores the many recommendations that have been made to streamline the management
and oversight of the laboratories, thus making them more efficient and of greater value tothe scientific and technological strength of the country. It is up to you and your successors
to see that the meritorious suggestions for change are put into place.

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Appendix 1 Summary of the Commission’s Recommendation11

Section
2
3
4

Theme

SectionRecognizing Value
Rebuilding Trust
Maintaining Alignment and Quality

5
6
7

Theme
Maximizing Impact
Managing Effectiveness and Efficiency
Ensuring Lasting Change

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

11

Volume 1
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2.C

1

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

3.A.1

2

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

DOE andLaboratories

2.C

3.A.1

3

DOE and each laboratory should jointly develop an annual operating plan, with agreements on the natureand scope of the laboratory’s activities, including goals and milestones. DOE should then provide increased
flexibility and authority to the laboratory 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 leadershipand 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 from its 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 andnecessary investment in mind. DOE should also adopt richer set of incentives to motivate soundmanagement.

DOE

2.C

Recommended Action

Responsible
Actor(s)Volume 2
Chapter &SectionReference
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Reproduced directly from Table 4 of the Final Report of the Commission to Review the Effectiveness of the National Energy Laboratories, Volume 1, October 28,
2015.
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3.B.1

7

DOE should give the laboratories the authority to operate with more discretion whenever possible. For nonnuclear, non- high-hazard, unclassified activities, DOE should allow laboratories to use Federal, State, andnational 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 thepotential risk.

DOE

3.G

3.B.2

9

DOE should focus on making the use of Contractor Assurance System (CAS) more uniform across thelaboratories. 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.

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, shouldreport to the site office manager. DOE should devote more effort to professional development of field staff.

DOE

4.D

3.B.2

11

DOE

4.D

3.B.3

12

DOE should clarify the role and authority of the support centers. Wherever approval authority resides with asupport center, DOE should remove it and reinstate it at the site office or DOE headquarters.
All stakeholders should make maximum use of local assessments (performed by site offices andlaboratories), with appropriate verification, to reduce duplicative assessments and burden on thelaboratories.

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 Congress
remedy the transactional burden it creates for the Office of Management and Budget (OMB), DOE
Headquarters, and the laboratories.

4.A

16

Other DOE program offices should adapt the 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.

DOE

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 DOE and OMB
to 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.

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 thelaboratories the flexibility to pursue new lines of inquiry. Once the research has sufficiently mature, DOE
should provide strategic oversight and guidance to coordinate and potentially consolidate their programs.

DOE

7.E

Recommended Action

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7.E

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4.D

21

5.A

22

Congress should recognize that the capabilities currently housed within the NNSA laboratories are essential to Congress
the Nation. Maintaining these capabilities in separate and independent facilities should continue.
DOE
DOE should establish techniques to make the Strategic Partnership Projects process more efficient.

5.A

23

DOE should support efforts to strengthen the Mission Executive Council.

DOE

9.E
10.C

7.E
9.E

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 and effectiveness of collaborations with the private sector. Innovative transfer andcommercialization mechanisms should be pursued and best practices in other sectors should be
examined.
DOE should determine whether the annual operating plans proposed by the Commission could qualify as the“agency- approved strategic plan” under the Stevenson-Wydler Technology Innovation Act of 1980, and theFast-Track Cooperative Research and Development Agreement Program. If not, Congress should amend thelaw accordingly.
Laboratories should pursue innovation-based economic development by partnering with regional universities.

DOE andLaboratories

11.E

DOE and Congress

11.E

Laboratories

11.E
12.C

5.C

26

5.C

27

5.D

28

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

DOE,
Administration, andCongress

6.A

29

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

DOE

13.E

6.A

30

DOE should provide greater transparency into laboratory indirect costs and publish an annual report of theoverhead 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 infrastructurebudgeting and management 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 long- term plan to resolve it through a combinationof 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 for utilizing innovative financing approaches, such as third-party financing, enhanced use
leases, and other methods, including State funding, gifts, and leveraging partnerships with other Federal
agencies.

DOE,
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 reviews and “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 more resources into science and technology development for the EM program given thetechnical complexity of its projects.

DOE,
Administration, andCongress

15.G

7.C

36

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

DOE,
Administration, andCongress

16.D

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