United States General Accounting Office

GAO Report to Congressional Committees

August 1996 FEDERALLY FUNDED

R&D CENTERS

Issues Relating to the

Management of

DOD-Sponsored

Centers

G O A

years

1921 - 1996

GAO/NSIAD-96-112

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-259033 

August 6, 1996

The Honorable Curt Weldon

Chairman

The Honorable John M. Spratt, Jr.

Ranking Minority Member

Subcommittee on Military Research

 and Development

Committee on National Security

House of Representatives

This report identifies issues that we believe merit closer attention as

Congress and the Department of Defense (DOD) seek to resolve concerns

relating to the management and use of DOD’s federally funded research and

development centers (FFRDC). We also discuss information from our

March 1996 testimony on recent DOD actions to improve the management

of FFRDCs.1

Background FFRDCs were first established during World War II to meet specialized or

unique research and development needs that could not be readily satisfied

by government personnel (due to limits on federal salaries and hiring) or

commercial contractors. Additional and expanded requirements for

specialized services led to increases not only in the size but also in the

number of FFRDCs, which peaked at 74 in 1969. Today, 8 agencies,

including DOD, fund 39 FFRDCs that are operated by universities, nonprofit

organizations, or industrial firms under long-term contracts. Provisions of

the Competition in Contracting Act2

 authorize agencies to award these

contracts noncompetitively. The Office of Federal Procurement Policy

(OFPP) within the Office of Management and Budget (OMB) establishes

governmentwide policy on the use and management of FFRDCs.

The Director of Defense Research and Engineering is responsible for

developing overall policy for DOD’s 11 FFRDCs. The Director also determines

the funding level for each FFRDC based on the overall congressional ceiling

on FFRDC funding and FFRDC sponsors’ funding requirements. Planned fiscal

year 1996 funding for DOD’s FFRDCs is about $1.2 billion. DOD categorizes

each of its FFRDCs as either a systems engineering and integration center, a

studies and analyses center, or a research and development laboratory.

1

Federally Funded R&D Centers: Observations on DOD Actions to Improve Management

(GAO/T-NSIAD-96-117, Mar. 5, 1996).

2

See 10 U.S.C. 2304 (b)(1)(C) and (c)(3)(B).

Page 1 GAO/NSIAD-96-112 Federally Funded R&D Centers
B-259033 

The military services and defense agencies sponsor individual centers and

award and administer 5-year contracts after reviewing the continued need

for the FFRDCs. Unlike a commercial contractor, an FFRDC accepts

restrictions on its ability to manufacture products and compete for other

government or commercial business. These restrictions are intended to

(1) limit the potential for conflicts of interest when FFRDC staff have access

to sensitive government or contractor data and (2) allow the DOD sponsor

to form and maintain a special or strategic relationship with its FFRDC.

As DOD downsizing continues, attention has turned to the infrastructure

supporting DOD’s research and technology programs. DOD has, for example,

initiated efforts to consolidate and downsize military-operated

laboratories to eliminate redundant facilities. In line with heightened

attention accorded DOD’s technology infrastructure, Congress has renewed

its long-standing concern over DOD’s use of FFRDCs and undertaken several

initiatives to control the centers more tightly. The Department of Defense

Appropriations Act, 1995, Public Law 103-335, prohibited the creation of

new FFRDCs, imposed more specific restrictions on their operations, and

limited the total funding DOD provides such centers. For example, overall

funding for DOD’s FFRDCs, in constant 1995 dollars, increased by about 23

percent, from almost $1.4 billion in fiscal year 1985 to a peak of

approximately $1.7 billion in fiscal year 1990, after which Congress began

reducing DOD’s FFRDC funding. Since fiscal year 1990, funding for DOD’s

FFRDCs has decreased by almost 26 percent to about $1.3 billion in fiscal

year 1995. Figure 1 shows the obligations of DOD’s FFRDCs, in constant 1995

dollars, from fiscal years 1985 to 1995.

Page 2 GAO/NSIAD-96-112 Federally Funded R&D Centers
B-259033 

Figure 1: Obligations for DOD’s FFRDCs From Fiscal Years 1985-95 (in Constant 1995 Dollars)

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

0

500

1,000

1,500

2,000

Fiscal year

Dollars in millions

Systems engineering Studies and analyses Laboratories

Source: DOD.

Results in Brief On the basis of our work on FFRDCs, as well as studies done by others, we

have identified four issues we believe merit attention as Congress and DOD

work to resolve concerns relating to FFRDCs. These issues are whether DOD

(1) limits its FFRDCs to performing appropriate work, (2) adequately

safeguards the objectivity of its FFRDCs, (3) oversees its FFRDCs effectively,

and (4) adequately considers cost-effective alternatives to using FFRDCs.

First, the DOD Inspector General’s office and others have raised concerns

that FFRDC mission statements are too broad and do not clearly identify the

specialized tasks that FFRDCs should perform. An overly broad charter may

allow FFRDCs to diversify into areas outside their proper scope. For

example, an FFRDC might assume work that commercial contractors could

perform as effectively under competitive contracts. On the other hand,

Page 3 GAO/NSIAD-96-112 Federally Funded R&D Centers
B-259033 

there is some debate as to whether FFRDCs may be performing inherently

governmental functions that should be performed by civil servants. DOD

now defines the role of FFRDCs as performing work that is consistent with

the FFRDC’s purpose, mission, capabilities, and core competencies and

requires a special relationship between the FFRDC and its sponsor.

While DOD states that it is important to ensure that tasks assigned to the

FFRDC meet the core work criteria, we believe it will continue to be

difficult to determine whether a task meets these criteria. We found that

FFRDC mission statements remain broad, and FFRDCs’ recently identified

core competencies differ little from the previous scope of work

descriptions. As we stated in our 1988 report, the need for the special

relationship is the key to determining whether a task is appropriate for an

FFRDC.

3

 However, determining whether one or more of the characteristics

of the special relationship is required for a task may be difficult, since

determining the need for an element of the special relationship requires

potentially difficult and subjective judgments.

Second, questions have been raised by Congress and others about whether

DOD efforts to safeguard the objectivity4 of its FFRDCs are adequate.

Specifically, these questions have been raised because DOD (1) has issued

little specific FFRDC-wide guidance on safeguarding objectivity or

regulating the outside interests of Board of Trustee members, relying

instead on FFRDC sponsors to design appropriate internal controls and

(2) has not historically exerted strong control over work FFRDCs’ parent

organizations perform through non-FFRDC divisions. The ability to give

impartial, objective advice is a key characteristic of DOD’s special

relationship with FFRDCs and is fundamental to the value DOD attaches to

their use. DOD believes the risk of abuse is low and generally relies on its

sponsors to design appropriate safeguards. We found that some sponsors

have implemented more rigorous controls than others. Further, we found

that FFRDC trustees had a broad network of affiliations with private

industry, universities, and government. As the Department of Defense

Appropriations Act, 1992, Public Law 102-172, directed, DOD now requires

an approved conflict-of-interest policy for FFRDC trustees, but rather than

establishing departmentwide criteria, DOD relies on sponsors to design

appropriate internal controls.

3

Competition: Issues on Establishing and Using Federally Funded Research and Development Centers

(GAO/NSIAD-88-22, Mar. 7, 1988).

4

Objectivity in this context is generally understood to mean the ability to provide technical and

analytical support that is unbiased, impartial, free from real or perceived conflicts of interest, and

solely in the public interest.

Page 4 GAO/NSIAD-96-112 Federally Funded R&D Centers
B-259033 

Likewise, DOD has not historically exerted strong control over work FFRDCs’

parent organizations perform through non-FFRDC divisions. The question of

whether accepting work from organizations other than its sponsor impairs

an FFRDC’s ability to provide objective advice has long been discussed. DOD

has revised its FFRDC management plan to incorporate criteria to limit

diversification by FFRDC parent corporations and control the non-FFRDC

work they perform. The ultimate effectiveness of the criteria in alleviating

concerns about parent corporations’ diversification will depend largely on

the quality and thoroughness of sponsor reviews of proposed non-FFRDC

work.

Third, Congress and others have repeatedly raised questions about the

adequacy of DOD policy guidance and oversight. Concerns have been raised

regarding whether DOD policy guidance ensures that sponsors

(1) adequately justify awarding noncompetitive contracts for the operation

of the FFRDCs, (2) adequately screen tasks assigned to FFRDCs,

(3) implement adequate audit controls for the FFRDCs, (4) award

reasonable contract fees, and (5) make certain that FFRDC employees’

compensation is reasonable. For example, concerns remain as to whether

DOD sponsors adequately justify the continuing need for the FFRDCs. Under

federal policy, an agency may continue sponsorship of an FFRDC and award

a noncompetitive contract for its operation only after demonstrating a

continuing need for the center. We found that recently completed reviews

to justify the continuing need for FFRDCs generally contained extensive

analyses and discussion and addressed the criteria required by DOD. These

reviews, however, did not include formal market surveys to identify

alternatives to using FFRDCs. Similarly, we and others have raised recurring

questions about how FFRDCs use their contract fees. Our recent work at

The Aerospace Corporation and the MITRE Corporation found that these

two organizations used contract fees to pay costs for items such as

entertainment, personal expenses for company officers, and employee

benefits.

While DOD has taken some steps to address the concerns regarding

oversight, a Defense Science Board (DSB) Task Force recently noted a

significant distrust of DOD’s use and management of its FFRDCs and

recommended the establishment of an independent advisory panel to

address this distrust.5

 This panel was established in late 1995 with the

mission of reviewing and advising DOD on the management of its FFRDCs.

During meetings earlier this year, we observed that the panel members

5

The Role of Federally Funded Research and Development Centers in the Mission of the Department of

Defense, Defense Science Board Task Force, April 25, 1995.

Page 5 GAO/NSIAD-96-112 Federally Funded R&D Centers
B-259033 

appeared to be approaching their task with the utmost seriousness and

asking tough questions of both DOD and FFRDC officials.

Fourth, concerns have long been expressed that DOD does not adequately

consider hiring civil servants or contracting with commercial firms as

alternatives to using FFRDCs. DOD maintains that in-house and commercial

contractor alternatives to the centers are not as effective. While limits on

hiring additional civil servants make in-house alternatives difficult to

pursue, we concluded in 1994 that managers should be required to analyze

the relative cost of performing a function both by contract and in-house

when deciding to contract for services.6

 A 1991 Air Force initiative, known

as Coral Convert, illustrates the potential benefits of such analyses,

projecting $17.9 million in annual savings by using civil servants to replace

FFRDC and service support contractor personnel.7 Similarly, the complexity

of awarding competitive contracts to commercial firms may create

incentives to use FFRDCs without adequately examining competitive

alternatives. We identified two alternatives—using broad agency

announcements8

 to obtain information on the capabilities of non-FFRDCs,

or using procedures for the award of task order contracts for advisory and

assistance services that were authorized under the Federal Acquisition

Streamlining Act of 1994 Public Law 103-355—which could alleviate some

of the administrative burdens of competitive contracting.

In our March 1996 testimony, we reported that DOD had recently provided

an update on initiatives it was taking to (1) define FFRDC core work

appropriate for FFRDCs, (2) establish stringent criteria for the noncore

work FFRDCs’ parent corporations accept, (3) develop guidelines to ensure

that management fees are based on need and detailed justification, and

(4) establish an independent advisory panel as the DSB Task Force

recommended. We generally support the direction DOD has taken with

these initiatives to address long-standing issues related to management of

FFRDCs. Because the initiatives are just now being implemented, it is too

6

Government Contractors: Contracting Out Implications of Streamlining Agency Operations

(GAO/T-GGD-95-4, Oct. 5, 1994).

7

In 1991, the Air Force Materiel Command (AFMC) proposed hiring civil servants to replace certain

contractor personnel at its Electronic Systems Center and Space and Missile Systems Center. In a

limited test of this proposal, AFMC successfully recruited qualified personnel for civil service

positions, and officials reported that cost savings were being achieved. The test was not expanded,

however, due to federal workforce reductions imposed after the National Performance Review report.

8

The Federal Acquisition Regulation 6.102 (d)(2)(i) provides that a broad agency announcement is a

general announcement of an agency’s research interest, including criteria for selecting proposals, and

soliciting the participation of all offerors capable of satisfying the government’s needs.

Page 6 GAO/NSIAD-96-112 Federally Funded R&D Centers
B-259033 

early to tell how effectively they will be implemented or how well they will

address long-standing concerns regarding use of FFRDCs.

Agency Comments DOD generally concurred with this report (see app. V). DOD also provided

some technical comments and suggested clarifications that have been

incorporated into the report as appropriate.

Scope and

Methodology

Our review included the 11 FFRDCs DOD sponsors. We did not include DOD’s

university-affiliated research centers in our review, since DOD’s internal

reviews of FFRDC issues did not include these centers until May 1995, and

the studies on which we relied did not include information on the

university-affiliated centers.9

We based this review on our work related to FFRDCs as well as reports and

studies done by others. We supplemented this information with limited

additional data collection to provide up-to-date information on DOD

activities. We did not attempt to provide definitive answers to policy

questions or recommendations for resolving the issues. We obtained

information from documents, reports, and interviews with officials from

the Office of the Director of Defense Research and Engineering, Defense

Contract Audit Agency, selected FFRDCs and their sponsors, and OMB. We

also interviewed officials from Johns Hopkins University’s Applied Physics

Laboratory—currently a university-affiliated research center that had been

an FFRDC until the mid-1970s—and the Professional Services Council.10 We

reviewed legislation and federal regulations pertaining to FFRDCs and

reviewed prior reports by DOD, the DSB Task Force, Senate Governmental

Affairs Committee, Congressional Research Service, Office of Technology

Assessment, and our office. We conducted our review between October

1994 and May 1996 in accordance with generally accepted government

auditing standards.

Appendix I provides additional details on the issues discussed above

relating to the management of DOD-sponsored FFRDCs, and appendix II lists

the reports issued by us and others relating to DOD’s FFRDCs. Appendix III

includes general information on DOD’s FFRDCs, and appendix IV compares

9

DOD’s internal advisory group decided to include university-affiliated research centers when

reviewing FFRDCs due to the similar manner in which the organizations function.

10The Professional Services Council is a trade association representing commercial professional

services’ firms.

Page 7 GAO/NSIAD-96-112 Federally Funded R&D Centers
B-259033 

the FFRDCs’ former scope of work descriptions and their recently identified

core competencies. Appendix V contains comments from DOD.

We are providing copies of this report to the Secretary of Defense,

Administrator of OFPP, and other interested congressional committees and

subcommittees. Copies will also be made available to others on request.

Please contact me at (202) 512-4587 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix VI.

David E. Cooper

Associate Director,

Defense Acquisitions Issues

Page 8 GAO/NSIAD-96-112 Federally Funded R&D Centers
Page 9 GAO/NSIAD-96-112 Federally Funded R&D Centers
Contents

Letter 1

Appendix I 

Issues Relating to the

Management of

DOD-Sponsored

FFRDCs

12

The Missions and Core Functions of DOD’s FFRDCs 12

Safeguards for FFRDC Objectivity 17

DOD Oversight of Its FFRDCs 21

Alternatives to Using FFRDCs 27

DOD Actions to Improve FFRDC Management 30

Appendix II 

References and

Related FFRDC

Products

33

Appendix III 

Information on DOD’s

FFRDCs

36

Appendix IV 

Comparison of

FFRDCs’ Former

Scope of Work

Descriptions and Core

Competencies

37

Appendix V 

Comments From the

Department of

Defense

40

Page 10 GAO/NSIAD-96-112 Federally Funded R&D Centers
Contents

Appendix VI 

Major Contributors to

This Report

41

Tables Table I.1: Characteristics of the Special Relationship Between an

FFRDC and Its DOD Sponsor

13

Table III.1: Information on DOD’s FFRDCs 36

Figure Figure 1: Obligations for DOD’s FFRDCs From Fiscal Years

1985-95

3

Abbreviations

AFMC Air Force Materiel Command

C3I command, control, communication, and intelligence

DCAA Defense Contract Audit Agency

DOD Department of Defense

DSB Defense Science Board

FFRDC federally funded research and development centers

IDA Institute for Defense Analyses

MTS members of technical staff

NASA National Aeronautics and Space Administration

OFPP Office of Federal Procurement Policy

OMB Office of Management and Budget

OSD Office of the Secretary of Defense

Page 11 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

This appendix discusses issues that we believe merit attention as Congress

and the Department of Defense (DOD) work to resolve concerns relating to

federally funded research and development centers (FFRDC), including the

(1) missions and core functions of FFRDCs, (2) safeguards for FFRDC

objectivity, (3) DOD oversight of the centers, and (4) alternatives to using

the centers. This appendix also discusses information from our

March 1996 testimony on recent DOD actions to improve the management

of FFRDCs.

The Missions and

Core Functions of

DOD’s FFRDCs

The DOD Inspector General’s office, among others, has raised concerns that

FFRDC mission statements are too broad and do not clearly identify

specialized tasks that the FFRDC can perform most effectively. The mission

statement of the Lincoln Laboratory FFRDC, for example, states that the

Laboratory is to “carry out a program of research and development

pertinent to national defense. . . .” There has been some concern within

Congress and among others that FFRDCs may be diversifying into areas

outside their proper scope. DOD, however, now defines the role of FFRDCs

as performing work that is consistent with the FFRDC’s purpose, mission,

capabilities, and core competencies and requires a special relationship to

exist between the FFRDC and its sponsor. Such work need not require

unique capabilities. Using the special relationship to identify work

appropriate for the FFRDCs will require potentially difficult and subjective

judgments to determine whether a task is appropriate for an FFRDC to

perform. Further, there is some debate that the FFRDCs may perform

inherently governmental functions that government employees should

perform.

Role of FFRDCs Is Defined

in Terms of Special

Relationship Rather Than

Unique Capabilities

As a robust private sector professional services industry grew to meet the

demand for technical services, it became apparent that industry had the

capability to perform some tasks assigned to FFRDCs. As early as 1962, the

Bell Report noted criticism that nonprofit systems engineering contractors

had undertaken work traditionally done by private firms.1

 A 1971 DOD

report stated, “It is pointless to say that the [systems engineering FFRDC]

function could not be provided by another instrumentality. . . .” According

to this report, private contractors could also do much the same type of

work as the studies and analyses of FFRDCs. The report pointed to the

flexibility of using the centers and their broad experience with sponsors’

problems as reasons for continuing their use. In 1994, the DOD Inspector

General concluded that FFRDC mission statements did not identify unique

1

Complete citations for all references to specific reports and studies are provided in app. II.

Page 12 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

capabilities or expertise, resulting in FFRDCs being assigned work without

adequate justification.

In a 1988 report, we pointed out that governmentwide policy did not

require that FFRDCs be limited to work that industry could not do; FFRDCs

could also undertake tasks they could perform more effectively than

industry. FFRDCs are effective, we observed, partly because of their special

relationship with their sponsoring agency. This special relationship

embodies elements of access and privilege as well as constraints to limit

their activities to those DOD deems appropriate.

DOD has recently elaborated on and refined the concept of the FFRDC

special relationship. According to DOD, FFRDCs perform tasks that require a

special or strategic relationship to exist between the task sponsor and the

organization performing the task. Table I.1 shows DOD’s description of the

characteristics of this special relationship. According to the Defense

Science Board (DSB) Task Force, these characteristics allow an FFRDC to

perform research, development, and analytical tasks that are integral to

the mission and operation of the sponsor.

Table I.1: Characteristics of the Special

Relationship Between an FFRDC and

Its DOD Sponsor

Characteristic Description

Long-term continuity. Uninterrupted, consistent support based

on a continuing relationship.

Comprehensive knowledge of sponsor

needs and operations.

Expertise on and institutional memory

about issues of enduring concern to the

sponsor.

Adaptability. Ability to respond to emerging needs of

their sponsors.

Objective, high-quality, current research. A highly educated and skilled professional

staff that can produce thorough,

independent analyses to address complex

technical and analytical problems and

maintain currency in their fields of

expertise.

Freedom from real or perceived conflicts of

interest.

Independence of commercial,

shareholder, political, and other

associations and dedication to the public

interest.

Broad access to sensitive government and

commercial proprietary information.

Lack of institutional interests that could

lead to misuse of information or cause

contractor reluctance to provide such

information.

Quick response capability. Short-term assistance to help sponsors

meet urgent and high-priority requirements.

Page 13 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

DOD Seeks to More

Clearly Identify Work to Be

Performed by FFRDCs

In 1995, the DSB Task Force and an internal DOD advisory group concluded

that there is a continuing need for FFRDCs for certain core work that

requires the special relationship previously described. Giving such tasks to

commercial contractors, DOD concluded, would raise numerous concerns,

including questions about potential conflicts of interest. Accordingly, DOD

has defined an FFRDC’s core work effort as tasks that (1) are consistent

with the FFRDC’s purpose, mission, capabilities, and core competencies and

(2) require the FFRDC’s special relationship with its sponsor. The DOD

advisory group estimated that this core work effort represents about

3.4 percent of DOD’s research, development, and analytic effort. The Task

Force and advisory group also found that FFRDCs performed some noncore

work that did not require a special relationship and concluded that this

work should be transitioned out of the FFRDCs and acquired competitively.

On the basis of these conclusions, DOD required each sponsor to review its

FFRDC’s core competencies, identify and prioritize the FFRDC’s core work

effort, and identify the noncore work that should be transitioned out of the

FFRDC. We found, however, that the core competencies the sponsors

identified differed little from the scope of work descriptions that were in

place previously (see app. IV). In several cases, the core competencies

simply restated the functions listed in an FFRDC’s scope of work

description. In others, the core competencies summarized the scope of

work functions into more generic categories. The sponsors we spoke to

told us they identified little, if any, noncore work being performed at their

FFRDCs.

Even though DOD states that it is important to ensure that tasks assigned to

the FFRDC meet the core work criteria, we believe it will continue to be

difficult to determine whether a task meets these criteria. FFRDC mission

statements remain broad, and core competencies differ little from the

previous scope of work descriptions. As we stated in our 1988 report, the

need for the special relationship is the key to determining whether work is

appropriate for an FFRDC. However, determining whether one or more of

the characteristics of the special relationship is required for a task may be

difficult, since the need for an element of the special relationship is

normally relative rather than absolute. For example, we believe DOD would

expect objectivity in any research effort, but it may be difficult to

demonstrate that a particular task requires the special degree of

objectivity an FFRDC is believed to provide.

Uncertainty about whether an FFRDC’s special relationship allows it to

perform a task more effectively than other organizations also accompanies

Page 14 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

decisions to assign work to an FFRDC. In our 1988 report, we stated that full

and open competition between FFRDCs and non-FFRDCs could provide DOD

assurance that it has selected the most effective source for the work.

However, the report also stated that exposing FFRDCs to marketplace

competition would fundamentally alter the character of the special

relationship.

FFRDC’s Role in

Supporting Governmental

Functions Should Be

Closely Monitored

There is some debate that FFRDCs may perform some inherently

governmental functions.2

 We believe this concern arises in part as a result

of the difficulty in clearly distinguishing work that should be performed by

FFRDCs. DOD officials believe that it is clear that the FFRDCs are not

performing inherently governmental functions but are performing work

that supports such functions. Because of both the nature of the functions

FFRDCs perform and the nature of the special relationship between an

FFRDC and its sponsor, we believe that DOD needs to devote continuing

management attention to ensuring that inherently governmental functions

are not tasked to the FFRDCs.

On the basis of a review of agency use of advisory contractors, we

reported in 1991 that defining inherently governmental functions was

difficult and subject to substantial judgment. We concluded that

examining the nature of the relationship between the government and an

advisory contractor was more useful than developing a specific list of

functions that are inherently governmental. Further, we stated that

government officials must retain final authority to decide government

policy as well as maintain an active role in the decision-making process to

allow officials to make independent judgments regarding a contractor’s

policy recommendations. OFPP’s 1992 policy statement on inherently

governmental functions endorses this conclusion, stating that when

service contractors are used, government action must be “taken as the

result of informed, independent judgments made by Government officials

who are ultimately accountable to the President.”

While DOD officials believe that the FFRDCs are not performing inherently

governmental functions, they clearly perform functions that federal

officials should monitor closely. OFPP’s policy statement includes a list of

functions for which agencies must devote additional management

attention regarding the contractor’s manner of performance. OFPP does not

2

According to the Office of Federal Procurement Policy (OFPP), “inherently governmental functions”

are functions so intimately related to the public interest as to mandate performance by government

employees. OFPP cites as examples such functions as commanding military forces, hiring federal

employees, or awarding government contracts.

Page 15 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

classify these functions as inherently governmental but requires additional

management attention for them so as to ensure that appropriate agency

control is maintained. FFRDCs routinely perform several of these functions,

including the following:

• services that relate to analyses, feasibility studies, and strategy options to

be used by agency personnel in developing policy;

• services in support of acquisition planning;

• technical evaluation of contract proposals;

• assistance in developing statements of work; and

• work in situations that permit access to sensitive government or

proprietary information.

We believe that in addition to closely monitoring FFRDCs’ performance of

such functions, DOD should closely monitor the assignment of work to

FFRDCs to ensure that contracting out for such services is appropriate.

Although the special relationship between an FFRDC and its sponsor is an

important criterion for assigning work to the FFRDCs, certain

characteristics of the special relationship can raise questions about

whether functions performed by FFRDCs should be performed in-house.

Our 1991 report on whether service contractors are performing inherently

governmental functions proposed guidelines to help agencies in

determining whether contracting out for consulting services would be

appropriate. The guidelines do not specify which functions are

governmental, but address, among other things, the nature of the

relationship between a government agency and a prospective contractor

as aspects for consideration in contracting out for services. For example,

while these guidelines suggest that government officials must set a definite

time period for the use of a contractor and use government employees if

the need is for a long or indefinite period, an FFRDC is expected to have a

long-term, continuing relationship with its sponsor. Similarly, while the

guidelines suggest that the institutional memory about agency programs

must reside with the agency rather than the contractor, the FFRDC is

expected to maintain program institutional memory for the sponsor. In

this regard, we believe the guidelines are appropriate for use by DOD when

it considers whether to contract out for FFRDCs’ services or perform these

services in-house.

Page 16 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

Safeguards for

FFRDC Objectivity

According to DOD, the ability to give impartial, objective advice is a key

characteristic of the special relationship and is fundamental to the value

DOD attaches to the use of FFRDCs. DOD believes the risk of abuse is low and

generally relies on sponsors to identify and report or avoid potential

conflicts of interest and to design appropriate internal controls. Some

sponsors have seen a need to implement more rigorous controls than

others. Similarly, DOD has not historically exerted strong control over work

FFRDCs’ parent organizations performed through non-FFRDC divisions. The

question of whether accepting work from organizations other than its

sponsor impairs an FFRDC’s ability to provide objective advice has long

been discussed. Finally, as Congress directed (P.L. 102-172), DOD has

implemented controls over FFRDC trustees’ affiliations with defense

contractors. DOD’s approach to implementing these controls is to rely on

sponsors’ action rather than to establish departmentwide criteria.

Controls to Ensure

Objectivity Vary

Since objectivity is a key characteristic of FFRDCs, questions have been

raised about whether DOD efforts to safeguard the objectivity of its FFRDCs

are adequate. According to the DSB Task Force’s 1995 report,

DOD-sponsored FFRDCs are valuable largely because they provide objective,

high-quality work. The Task Force reported that the special relationship

between FFRDCs and their sponsors allows the centers to offer unbiased

advice, analyses, and evaluations that focus on the public interest. DOD

sponsors also identified objectivity as one of the more important aspects

of the special relationship. Objectivity is particularly important because

FFRDCs help DOD develop and analyze policy and strategy options and

assess alternative technology directions. In some cases, FFRDCs also

evaluate contractors’ performance and participate in source selections for

weapon system procurements.

DOD sponsors believe that the potential for bias in FFRDC advice is small.

According to the DSB Task Force, nonprofit corporations or universities

operate DOD’s FFRDCs and therefore are not influenced by corporate or

shareholder interests. Further, DOD asserts that FFRDCs operate under

restrictions more stringent than applied to other government contractors.

For example, to prevent an FFRDC’s judgment from being swayed by

prospective profits, DOD prohibits the centers from undertaking long-term

hardware production. DOD also prohibits the centers from competing with

commercial firms for government service contracts. These restrictions,

DOD maintains, are sufficient to allow FFRDCs to provide impartial advice.

Accordingly, DOD has issued little specific guidance on safeguarding FFRDC

objectivity.

Page 17 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

In the absence of specific DOD guidance, some sponsors have seen the

need to implement more rigorous controls to safeguard objectivity than

have other sponsors. For example, DOD’s sponsoring agreement with the

MITRE Corporation provides that MITRE will avoid any action that will

place its personnel in possible or actual conflict of interest positions. The

Navy’s agreements with The CNA Corporation also refer to ensuring

freedom from conflicts of interest but include additional controls not

present in the agreements between DOD and MITRE. The CNA

Corporation’s charter and bylaws require an annual conflict of interest

statement for each employee and annual statements of outside affiliations

and financial interests for trustees, corporate officers, and senior

managers. Further, in its Code of Ethics and Standards of Conduct, The

CNA Corporation warrants that it should avoid organizational conflicts of

interest and agrees to disclose any conflicts that it discovers to the

contracting officer. Also, the Code states that if The CNA Corporation

employees do not report perceived or actual conflicts to the appropriate

supervisors, they may be subject to disciplinary action, which may include

termination of employment.

DOD Is Seeking Stronger

Oversight as FFRDCs

Diversify

The question of whether accepting work from organizations other than its

sponsor impairs an FFRDC’s ability to provide objective advice has long

been discussed. As early as 1962, the Bell Report raised this question but

noted that no clear consensus had developed as to whether concerns

about diversification were well founded. The report recognized that

studies and analyses FFRDCs could effectively serve multiple clients but

concluded that systems engineering organizations were primarily of value

when they served a single client. During the early 1970s, DOD encouraged

its FFRDCs to diversify into nonsponsor work. According to a 1976 DOD

report on the management of federal contract research centers,3 FFRDCs

that did not diversify suffered efficiency and morale problems as their

organizations shrank in the face of declining DOD research and

development budgets. Nonetheless, this report recommended that the

systems engineering FFRDCs limit themselves to DOD work and adjust their

workforces in line with changes in the DOD budget. Regarding the MITRE

Corporation, the report recommended that MITRE create a separate

organization to carry out its non-DOD work. In 1994, concerns were raised

within Congress that the activities of non-FFRDC organizations resulted in

“an ambiguous legal, regulatory, organizational, and financial situation,”

and DOD was directed to prepare a report on non-FFRDC activities (Senate

Report 103-282). More recently, however, the DSB Task Force concluded in

3

FFRDCs were previously called federal contract research centers.

Page 18 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

its 1995 report that FFRDCs and their parent companies should be allowed

to accept work outside the core domain only when doing so was in the

best interest of the country; the Task Force did not propose criteria for

determining whether accepting nonsponsor work was in the country’s best

interest.

Acceptance of non-FFRDC work is now common at seven of the eight

parent organizations operating DOD’s FFRDCs. Except for the Institute for

Defense Analyses, each parent organization performs some non-FFRDC

work either within the FFRDC or through an affiliated organization created

to pursue non-FFRDC work. Some affiliates are quite small: The CNA

Corporation’s Institute for Public Research accounts for about 3 percent

of the Corporation’s total effort. Other affiliates are more significant: prior

to its division in 1996, the MITRE Corporation’s two non-FFRDC affiliates

accounted for about 11 percent of MITRE’s total effort, and RAND’s five

non-FFRDC divisions account for about 32 percent of RAND’s total effort.

The Massachusetts Institute of Technology and Carnegie-Mellon

University—parent organizations of Lincoln Laboratory and the Software

Engineering Institute, respectively—each pursue a diverse range of

non-FFRDC activities.

DOD has recently become more active in seeking to oversee work the

parent organizations perform through non-FFRDC divisions. Sponsors have

historically had the opportunity to oversee nonsponsor work performed

within the FFRDC because the work is carried out under the FFRDC contracts

that sponsors administer. This contract oversight mechanism is not

available for non-FFRDC divisions. During 1995, for example, the Air Force

expressed great reluctance to support The Aerospace Corporation’s

proposal to establish a non-FFRDC affiliate, indicating its concerns about

the perception of a conflict of interest. Similarly, the MITRE Corporation’s

Board of Trustees decided to create a separate corporate division to

perform non-FFRDC work for government and commercial customers after

DOD rejected a MITRE proposal to establish an affiliated organization to

handle commercial and non-FFRDC work. DOD generally concurred with the

direction of the Board’s plan to divide the corporation and formally

expressed the Department’s position that any cost recovery and

distribution of assets and liabilities be legally appropriate, justified, and

subject to audit by the Defense Contract Audit Agency (DCAA). This new

corporation has a separate Board of Trustees and its own corporate

officers. Further, no work is to be subcontracted between the two entities

in order to preclude the sharing of employees involved in DOD work—and

Page 19 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

knowledge developed in the course of DOD work—with the new

corporation.

FFRDC Sponsors Oversee

Affiliations of Trustees

A long-standing concern has been that the personal financial interests and

affiliations of FFRDC trustees may affect the objectivity of the advice they

provide DOD. In 1962, the Bell Report noted that the boards of

organizations such as FFRDCs were often comprised of representatives of

universities and commercial firms involved in federal research. Although

acknowledging that it was in the public interest to have such organizations

“controlled by the most responsible, mature, and knowledgeable

[individuals] available in the nation,” the report pointed to the clear

possibility that the potential for conflicts of interest inherent in such

interlocking directorships could harm the public interest. The report

concluded that FFRDC trustees should observe the spirit of recently

adopted government policy concerning government consultants and

advisers. This policy required consultants and advisers to fully disclose

their private interests and abstain from rendering advice on matters that

would affect their private interests.

FFRDC trustees have a broad network of affiliations. Our 1995 report on the

affiliations of the 141 trustees who served on FFRDC boards during fiscal

year 1993 showed that these individuals had affiliations with 447 private

sector firms, 126 universities, and 91 federal government or military

organizations. Further, 51 of the private sector firm affiliations and 77 of

the university affiliations were with organizations that were among the top

100 prime contractors to DOD. For example, one individual served as a

trustee of two different DOD FFRDCs and was affiliated with four private

sector firms, including one of the nation’s principal weapons producers.

Another trustee was affiliated with two presidential advisory commissions

addressing military questions and with five private sector firms, including

a major defense aerospace company. Another was a member of the DSB

and was affiliated with two universities that operate FFRDCs for DOD and

receive significant DOD research funding.

This issue of interlocking directorships received little attention in the

studies of FFRDC issues we reviewed that were published during the 1970s

and 1980s. In 1991, Congress (P.L. 102-172) prohibited members of FFRDC

boards of trustees or directors from simultaneously serving on the board

of a for-profit DOD contractor unless the FFRDC had a DOD-approved conflict

of interest policy for board members. DOD assigned responsibility for

reviewing and approving conflict of interest policies for boards of trustees

Page 20 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

to FFRDC sponsors and declined to establish DOD-wide criteria for

approving such policies. In 1992, a congressional committee expressed

doubt about the wisdom of DOD’s heavy reliance on sponsors to exercise

oversight of FFRDCs (House Report 102-627). The DOD Inspector General’s

1994 report stated that each of the organizations that operates an FFRDC for

DOD had conflict of interest policies for board members that had been

approved by primary sponsors and that all board members had disclosed

their affiliations as these policies required. Further, the report found that

contracting officers for 9 of the 10 FFRDCs, however, were personally

unaware of the affiliations of FFRDC trustees.

DOD Oversight of Its

FFRDCs

Questions have repeatedly been raised within Congress and among others

about the adequacy of DOD’s policy guidance and oversight. The

Professional Services Council, for example, has expressed concern that

sponsors do not adequately consider whether their FFRDCs are still needed

or whether work they plan to assign to their FFRDCs is appropriate.

Concerns have also been raised by the DOD Inspector General’s office,

about whether controls over FFRDC costs are adequate, particularly

concerning contract fees paid to FFRDCs and compensation paid to their

employees. In each case, DOD has taken some steps to address the

concerns raised. The DSB Task Force’s 1995 report noted a significant

distrust of DOD’s use and management of FFRDCs and recommended the

establishment of an independent review panel to address this distrust.

DOD Efforts to

Demonstrate Need for

FFRDCs Have Been

Criticized

Concerns have been raised by DOD’s Inspector General’s office, among

others, that DOD does not adequately justify the continuing need for an

FFRDC, which determines whether to continue sponsorship and

subsequently award noncompetitive contracts to the organizations that

operate FFRDCs. The Federal Acquisition Regulation at section 35.017-4 (a),

requires a sponsor to review the continuing need for an FFRDC before

renewing its contract or agreement. This comprehensive review must be

done at least every 5 years. The Professional Services Council asserts that

private firms have a broad range of research and analytical capabilities

that would allow them to undertake many tasks DOD assigns to FFRDCs.

Further, according to the Professional Services Council, industry and DOD

have successfully used contract language to mitigate potential conflicts of

interest. DOD continues to rely on FFRDCs, the Professional Services Council

maintains, because it has not considered the capabilities of industry. In a

1993 report, the DOD Inspector General found that the sponsors did not use

market surveys to identify alternatives to FFRDCs during comprehensive

Page 21 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

reviews. The Inspector General also noted that sponsors did not publicize

planned FFRDC contract renewals to invite industry to express interest in

operating the FFRDCs and explain its capability to do so.

DOD has taken steps to ensure that sponsors provide more thorough

documentation of their comprehensive reviews. In response to

congressional concern, DOD issued a 1992 FFRDC management plan, which

directed sponsors to provide copies of review reports to the Director of

Defense Research and Engineering for evaluation and to update reviews

conducted before 1990. DOD’s 1994 updated FFRDC management plan

outlines the criteria that governmentwide policy requires sponsors to

address in comprehensive reviews. Under this plan, the Director of

Defense Research and Engineering must concur with the sponsor’s

determination to continue an FFRDC before its agreement is renewed.

Sponsors that we spoke with believe that current comprehensive review

guidance is adequate, although it lacks detail on how to assess the criteria

for renewing an FFRDC’s sponsoring agreement. We found that recently

completed comprehensive reviews generally contained extensive analyses

and discussion and addressed the required criteria but did not include

formal market surveys.

Appropriateness of Work

Given to FFRDCs Has

Been Questioned

Concerns have also been expressed about whether sponsors adequately

screen tasks assigned to FFRDCs. The Federal Acquisition Regulation at

section 35.017-3 requires sponsors to assign an FFRDC only tasks that are

consistent with its mission and scope of work.4

 The Professional Services

Council, however, maintains that FFRDCs often receive work for which they

are not uniquely qualified because assigning a task to an FFRDC is more

convenient than awarding a separate competitive contract. On the basis of

a survey of 229 FFRDC projects that are discussed in its 1994 report, the DOD

Inspector General also criticized task sponsors’ justifications for

requesting FFRDC support. Task sponsors cited unique FFRDC expertise to

explain why an FFRDC could perform a task more effectively than

non-FFRDC sources, but they generally did not define the characteristics

that made the FFRDC more effective. Further, task sponsors generally did

not compare FFRDC costs with the cost of other sources. Similarly, the

Inspector General of the Defense Information Systems Agency found that

the agency lacked adequate internal controls over requests for support

from the DOD-sponsored FFRDC operated by the MITRE Corporation.

According to the Inspector General, justifications that task sponsors

4

As previously discussed, DOD also includes consistency with the special relationship as a criterion for

assigning work to the FFRDCs.

Page 22 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

provided included “boilerplate” wording with no analysis to show why

MITRE’s FFRDC was the best alternative.

DOD believes that critics expect unrealistically thorough justification for

assigning tasks to an FFRDC. DOD’s 1994 management plan requires primary

sponsors to review descriptions of work given to FFRDCs to ensure the

work is consistent with FFRDC missions. DOD relies on this review by

primary sponsors to identify any inappropriate requests for work that task

sponsors submit. Commenting on the DOD Inspector General’s report, the

Director of Defense Research and Engineering argued that the auditors

had applied extreme and unreasonable standards to determine whether

FFRDCs had unique qualifications for tasks. Further, the Director noted that

the Inspector General had objected to other reasons for assigning work,

such as an FFRDC’s familiarity with sponsor requirements and quick

response capability. These justifications, the Director observed, are part of

the core rationale for maintaining FFRDCs. The DSB Task Force’s 1995

report agreed that such factors were important reasons for using FFRDCs.

Nonetheless, DOD has concluded that additional management controls over

assignment of work to FFRDCs were needed and recently took steps to

identify the core work of each FFRDC more clearly.

Adequacy of FFRDC Audit

Controls Has Been

Criticized

On the basis of a governmentwide review of FFRDCs, a 1992 report by the

Senate Governmental Affairs Committee stated that required audits of

FFRDC overhead costs were not being completed in a timely manner.

According to the Committee’s report, DCAA performed audits of FFRDCs

sponsored by DOD, the National Aeronautics and Space Administration

(NASA), and the Nuclear Regulatory Commission several years after the

fiscal year had ended. In addition, the Committee found that several audits

contained repetitive or significant audit exceptions to FFRDC cost claims

that apparently were not resolved at the time of the deficiency. DCAA

acknowledged that a substantial backlog of overhead cost audits had

developed during the late 1980s and early 1990s, but stated this problem

was not unique to FFRDCs. According to DCAA officials, increasing demand

for more time-critical price proposal audits and a shortage of audit staff

led to a DOD-wide backlog. By 1995, DCAA had reduced the overhead audit

backlog for FFRDCs.

Contract Fees Have Long

Been Recognized as a

Problem Area

The Senate Governmental Affairs Committee’s report also raised concerns

about the justification for FFRDC contract fees. Contract fees are

discretionary funds provided to FFRDCs in addition to reimbursement for

Page 23 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

incurred costs and are similar to profits commercial contractors earn. In a

1969 report, we concluded that nonprofit organizations such as FFRDCs

incur some necessary costs that may not be reimbursed under the

procurement regulations, and we recommended that the Bureau of the

Budget (now known as the Office of Management and Budget (OMB)),

develop guidance that specifies the costs contracting officers should

provide that fees cover. As the Committee report noted, since

governmentwide guidance on fees had not been prepared, it was difficult

to determine whether FFRDC fees were adequately justified. In response to

the Committee’s report, OFPP, OMB’s procurement policy arm, agreed that

governmentwide guidance on contract fees for nonprofit organizations

was needed. OFPP has deferred action on developing such guidance

pending a review of regulatory changes that DOD and the Department of

Energy are currently developing.

In the absence of governmentwide guidance, recurring questions have

been raised about how FFRDCs use their fees. In its 1994 report, for

example, the DOD Inspector General concluded that FFRDCs used

$43 million of the $46.9 million in fiscal year 1992 DOD fees for items that

should not have been funded from fees. The bulk of this $43 million

funded independent research projects that should have been charged to

overhead rather than paid from fees. The remainder of the $43 million

funded unallowable costs and future requirements that the Inspector

General concluded were not necessary for FFRDC operations. Similarly,

DCAA reviewed fiscal year 1993 fee expenditures at the MITRE Corporation

and concluded that just 11 percent of the expenditures reviewed were

ordinary and necessary to the operation of the FFRDC. DCAA reported that

MITRE used fees to pay for items such as lavish entertainment, personal

expenses for company officers, and generous employee benefits. Our

recent work at The Aerospace Corporation found that the corporation

used about $11.5 million of its $15.5 million management fee in fiscal year

1993 for sponsored research. Aerospace used the remainder of its fee and

other corporate resources for capital equipment purchases; real and

leasehold property improvements; and other unreimbursed expenditures

such as contributions, personal use of company cars, conference meals,

trustee expenses, and new business development expenses.

Federal agencies are attempting to address concerns about FFRDC fees but

are pursuing different approaches. DOD has concluded that contracting

officers should determine an FFRDC’s needs for discretionary funding and

base fee awards on these needs. In particular, DOD believes contracting

officers need clear guidance on what fees may appropriately be provided

Page 24 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

to cover. DOD has revised its FFRDC management plan to clarify procedures

sponsors and contracting officers should follow in determining fees. NASA,

in contrast, has revised its FFRDC contract with the Jet Propulsion

Laboratory to provide a performance-based fee. NASA provides the

Laboratory a base fee of $6 million annually, and the laboratory can earn

up to an additional $12 million in fees by meeting performance criteria in

its contract. The Department of Energy is also revising its FFRDC contracts

to incorporate performance criteria. Fee provisions in the revised

contracts differ somewhat, but some contracts link payment of fees to

meeting contract performance criteria.

Reasonableness of

Compensation Has Been

Questioned

The proper benchmark for assessing FFRDC employees’ compensation,

particularly executives, has long been a problematic issue. The Federal

Acquisition Regulation at section 31.205-6 requires contractors to

demonstrate that employee compensation is reasonable in comparison to

compensation paid by firms in the same industry, among other tests.

FFRDCs generally use compensation at private industry research firms as

the benchmark for their compensation. As early as 1962, however, the Bell

Report asked whether a corporation similar to an FFRDC—created to

provide services to the government and receiving all its financial support

from the government—could be considered a “private” firm. The report

concluded that private industry was generally the proper benchmark for

setting pay at such organizations, but it noted that the salaries of top

management merited special attention. In 1969, Congress imposed a cap

on salaries for FFRDC personnel that lasted for several years.5

 In 1994,

Congress imposed a cap on FFRDC executive compensation, equal to level I

of the federal Executive Schedule, that became effective on July 1, 1995

(P.L. 103-335). Congress has not passed legislation to impose this cap

through fiscal year 1996.

The conclusions that may be drawn from recent FFRDC employee

compensation reviews depend on whether private industry or civil service

pay scales are selected as the benchmark. The DOD Inspector General, for

example, recently reported that salaries for FFRDC chief executives were

generally comparable to private industry chief executive salaries but

uniformly well in excess of the highest civil service salaries. Salaries for

other FFRDC executives were generally somewhat less than salaries for

other private industry executives but generally exceeded civil service

salaries. The Inspector General also reported indications that salaries for

scientists and engineers were higher than salaries in leading research and

5

The Armed Forces Appropriations, authorization Act, 1970, P.L. 91-121.

Page 25 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

development organizations. A DCAA audit of compensation levels at MITRE

found similar conditions. Our recent work on executive compensation at

The Aerospace Corporation found that salary costs for executives

increased by 78 percent over the 3-year period ending September 1994.

This increase resulted from salary increases of up to 29 percent for

individual executives during 1992 and a 45-percent increase in the number

of executives from 22 to 32. During that time, average annual executive

salaries increased by 23 percent from $125,000 to about $153,000. In

addition, we recently issued a report on FFRDC compensation in relation to

federal compensation levels, which found that the average compensation

for all fiscal year 1993 FFRDC employees in the study was $89,000.

DOD believes employee compensation at its FFRDCs is generally reasonable

and accepts private industry pay scales as the relevant benchmark. In its

1995 report, the DSB Task Force noted that flexible policies with respect to

employee pay and benefits is one private sector characteristic that makes

FFRDCs attractive to DOD. The Task Force also warned that mandated salary

limits would lead to a deterioration in the quality of FFRDC employees. DCAA

has identified instances in which it believes pay for certain classes of

FFRDC employees is excessive—compared with pay for comparable private

industry employees—and DOD contracting officers have acted to resolve

these cases. DOD also commissioned a compensation consulting firm to

review compensation for staff that would have been subject to the fiscal

year 1995 salary cap. On the basis of this review, DOD concluded that the

staff’s compensation was reasonable and should not be restricted by

mandatory limits.

Independent Review Panel

Has Been Created to

Advise on FFRDCs

Although it endorsed the need for organizations such as FFRDCs, the DSB

Task Force stated in its report that significant mistrust existed concerning

DOD’s use and oversight of FFRDCs. A principal concern, according to the

Task Force, was that DOD assigned work to FFRDCs that could have been

performed as effectively by private industry sources and acquired using

competitive procurement procedures. Further, the Task Force found that

the lack of opportunities for public review and comment on DOD’s process

for managing and assigning work to FFRDCs—available in the competitive

contracting process—invited mistrust. To address public skepticism about

DOD’s use and management of FFRDCs, the Task Force recommended

creation of an independent review panel of highly respected personnel

from outside DOD. The panel would review the continuing need for FFRDCs,

FFRDC missions, and DOD’s management and oversight mechanisms for

FFRDCs.

Page 26 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

Alternatives to Using

FFRDCs

Concerns have long been expressed by the Professional Services Council,

among others, that DOD does not adequately consider hiring civil servants

or contracting with commercial firms as alternatives to using FFRDCs. Even

though DOD maintains that in-house and contractor alternatives to the

centers are not as effective, limits on hiring additional civil servants make

in-house alternatives difficult to pursue and the complexity of awarding

competitive contracts to commercial firms has been mentioned as an

incentive for using FFRDCs. These factors may hamper DOD’s efforts to

reduce dependance on FFRDCs but need not exclude consideration of

alternatives.

Shrinking Federal

Workforce Complicates

Transferring FFRDC Work

Limits on the size of the federal workforce impede efforts to hire civil

servants to perform work contracted out to FFRDCs. In analyzing the

feasibility of alternatives to FFRDCs, several sponsors have noted that

personnel ceilings would prevent acquiring in-house resources to

accomplish FFRDC functions. Similarly, the DSB Task Force concluded in its

1995 report that it was not feasible to replace FFRDCs with in-house

resources because the DOD workforce was expected to shrink rather than

expand in coming years. Thus, sponsors seeking to replace FFRDC

capabilities must compete for a shrinking pool of authorized civil service

positions.

We have previously expressed concern that personnel ceilings may lead

agencies to contract out work when it is not desirable to do so. For

example, our 1991 report stated a common perception among agency

managers that contract dollars were easier to obtain than authorizations

for additional staff. As a result, we noted instances in which it was unclear

whether agencies had contracted out work that might have involved

inherently governmental functions and that might have been less

expensive if it had been done in-house. In the report, we suggested that

Congress consider exploring with OMB allowing civilian agencies to

manage their activities within an authorized budget without regard to

personnel ceilings. In 1994, we stated that before an agency decides

whether to contract out for a particular service, the agency should be

aware of the comparative cost of contracting out versus using federal

employees. Because DOD foresees no realistic opportunity to hire

additional civil service staff in lieu of contracting with FFRDCs, DOD’s

reviews of the continuing need for FFRDCs do not include such analyses.

An Air Force initiative, known as Coral Convert, illustrates the potential

benefits of performing such analyses. During 1991, the Air Force Materiel

Page 27 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

Command (AFMC) proposed to hire civil servants to replace certain

contractor personnel at its Electronic Systems Center and Space and

Missile Systems Center. AFMC estimated that hiring in-house personnel to

replace 500 FFRDC and support service contractor personnel would save

$17.9 million annually. In addition to savings, the proposal was expected

to improve management control over the acquisition workforce and

provide flexibility to select the best mix of government and contractor

personnel. In a limited test of this proposal, the Electronic Systems Center

successfully recruited qualified personnel for civil service positions. At

one location, for example, 3,300 applicants responded to a newspaper

advertisement for 167 positions. According to Air Force officials, the

personnel hired in this test are performing effectively, and cost savings are

being achieved. The test was not expanded, however, due to federal

workforce reductions imposed after the National Performance Review

report.

The Defense Authorization Act, Fiscal Year 1996, Public Law 104-106,

complicates the picture DOD faces as it assesses the right mix of in-house

and contracted FFRDC resources. One measure requires DOD to consider the

efficiencies gained through acquisition process streamlining in developing

a plan to reduce its acquisition workforce by 25 percent over 5 years.

Another measure requires DOD to develop a plan to consolidate and reduce

the size of its FFRDCs. Certain DOD FFRDCs—most notably the Air Force’s

two systems engineering FFRDCs—provide needed support to DOD’s

acquisition workforce.

Simplified Procedures for

Procuring Services Are

Now Available

Federal procurement procedures are one motivation for using FFRDCs. The

Professional Services Council asserts that DOD program managers

frequently place work with FFRDCs to avoid the administrative burdens of

competitive contracting. DOD maintains that FFRDC staff, due to their

extensive background with sponsors’ programs, have a unique ability to

respond to high-priority, time-sensitive analytical requirements. DOD

acknowledges that procuring services competitively can be burdensome

and time-consuming, but maintains that convenience in obtaining services

is not a motivation for using FFRDCs. In its 1994 survey of 229 FFRDC

projects, however, the DOD Inspector General found that about 30 percent

of task sponsors reported that ease and quickness of obtaining services

influenced their decision to seek FFRDC support.

While some task sponsors may perceive FFRDCs to be attractive because

obtaining services appears quick and easy, two alternatives could alleviate

Page 28 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

administrative burdens. In our 1988 report, we recommended that DOD test

using broad agency announcements to obtain information on the

capabilities of non-FFRDCs—including commercial contractors—to

participate in pursuing DOD’s research goals. We concluded that the

procedures associated with such announcements could be a relatively

informal and expeditious way to solicit industry proposals in support of

agency research plans. More recently, in its 1994 report, the DOD Inspector

General endorsed broad agency announcements as a tool for gathering

information on alternatives to FFRDCs.

The task order contracting procedure for advisory and assistance services

authorized under the Federal Acquisition Streamlining Act of 1994, Public

Law 103-355, which was revised from previous procedures, is another

mechanism that could be useful. Task order contracts provide for the

government to issue orders to perform defined tasks during the contract

term but do not commit the government to purchase more than a

minimum quantity of services; services are purchased by placing task

orders under the contract. Congress was concerned that, under the

previous procedures, such contracts could be abused to avoid competition

(Senate Report 103-258, S.1587, 103 Cong. 2d Sess. 15 (1994)). Under the

new procedures, when an agency plans to award a task order contract for

advisory and assistance services to exceed 3 years and valued at over

$10 million, it must provide for awards to multiple contractors under a

single solicitation. When placing individual task orders under such

contracts, the agency does not need to conduct formal competitions;

however, it must provide all contractors awarded contracts under the

soliticitation a fair opportunity to be considered for the order. Congress

intended to give agencies broad discretion in establishing procedures for

the evaluation and award of orders under such contracts (Senate Report

103-258, id.).

Experience gained through a planned Air Force initiative could shed light

on how well these procedures work and on how effectively private

contractors can perform FFRDC work. The Air Force plans to contract

competitively for certain core functions its systems engineering FFRDCs

currently perform and has ranked these functions to identify those most

suitable for competitive contracting. The Electronic Systems Center, for

example, considers laboratory testing to explore or verify performance

most suitable for competitive contracting with a non-FFRDC because

following an established test protocol and reporting results involve little

exercise of discretion or judgment. In contrast, developing and analyzing

systems architectures requires the exercise of considerable discretion and

Page 29 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

judgment, as well as a broad knowledge of Air Force systems;

consequently, the Electronic Systems Center does not consider this

function suitable for competitive contracting. The Air Force will not start

this test until decisions are made on plans to streamline its acquisition

process; some functions its systems engineering FFRDCs currently perform

may be curtailed or eliminated.

DOD Actions to

Improve FFRDC

Management

Under an action plan submitted to Congress in 1995, DOD has begun steps

to strengthen management of its FFRDCs and address some of the issues we

identified. In February 1996, DOD updated the status of four key action plan

initiatives, including (1) defining core work appropriate for FFRDCs;

(2) establishing criteria for acceptance of work outside the core by FFRDCs’

parent companies; (3) developing guidance to ensure that management

fees provided to FFRDCs are based on need and detailed justification; and

(4) establishing an independent advisory panel to review DOD’s

management, use, and oversight of its FFRDCs. As stated in our March 1996

testimony, we believe these initiatives will move DOD’s management of

FFRDCs in a positive direction. Because the initiatives are just now being

implemented, it is too early to tell how effectively they will be

implemented or how well they will address long-standing concerns

regarding use of FFRDCs.

First, DOD has adopted criteria for identifying an FFRDC’s core work effort,

defined as work that (1) is consistent with the FFRDC’s purpose, mission,

capabilities, and core competencies and (2) requires a special relationship

to exist between the FFRDC and its sponsor. DOD directed sponsors to

review the workload of their FFRDCs and identify work that should be

transitioned out of the FFRDC and acquired competitively. According to the

Under Secretary of Defense (Acquisition and Technology), sponsors had

identified about $43 million in noncore work being performed at the

FFRDCs; this represents about 4 percent of the planned $1.2 billion in fiscal

year 1996 funding. This noncore work is currently being transferred out of

the FFRDCs. While the core work criteria seek to clarify what tasks are

appropriate for an FFRDC, the need for a task to be performed by an

organization having a strategic relationship with the sponsor is a key

element of the criteria. Thus, applying the criteria requires making

judgments about the relative effectiveness of various sources for work in

the absence of full information on capabilities, which open competition

would provide. Sponsors’ implementation of the DOD criteria, therefore,

may eventually prove unsatisfactory to critics who seek a simple and

unambiguous definition of work appropriate for the FFRDCs.

Page 30 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

DOD has revised its FFRDC management plan to incorporate guidelines on

diversification by FFRDC parent corporations into non-FFRDC work. The

guidelines provide that parent corporations may accept non-FFRDC work

subject to sponsor review for compliance with criteria that requires that

the work, among other things, (1) is in the national interest, (2) does not

detract from performance of FFRDC work, and (3) does not give rise to real

or perceived conflicts of interest. The management plan does not provide

for DOD-level officials to review or approve such work, but provides

sponsors the opportunity to exercise greater control over the non-FFRDC

work parent corporations undertake. The plan’s ultimate effectiveness in

alleviating concerns about parent corporations’ diversification will depend

on the quality and thoroughness of sponsor reviews of proposed non-FFRDC

work.

DOD’s revised management plan also clarifies that contracting officers must

consider demonstrated needs in determining management fees and

incorporates guidelines defining legitimate needs. The plan’s guidelines

(1) move allowable costs out of fee and (2) establish consistent policies on

providing fees to cover costs not reimbursable under the contract that the

FFRDC can demonstrate are needed for its successful operation. If

effectively implemented, these actions should help to resolve many of the

long-standing concerns over FFRDC use of management fees. Since much of

fee is used for normally allowable independent research costs, moving

independent research out of fee will substantially reduce fee and subject

these research costs to review and oversight with appropriate principles

for determining costs under contracts with educational institutions or

nonprofit organizations. Defining ordinary and necessary—but

unallowable—business expenses, which may be covered by fee, remains a

more challenging issue. DOD’s management plan does not provide

examples of ordinary and necessary expenses that fee may properly be

provided to cover. Consequently, we believe debate will continue on

whether fee can be used for such items as personal expenses for company

officers, entertainment, and new business development.

Finally, the advisory panel the DSB Task Force recommended has been

established. In late 1995, six individuals—who are either DSB members or

consultants—were appointed to the panel, which has been constituted as a

task force of the DSB. The panel’s charter calls for the members to review

and advise DOD on the management of FFRDCs by

• reviewing guidelines for the appropriate scope of work, customers,

organizational structure, and size of the FFRDCs;

Page 31 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix I 

Issues Relating to the Management of

DOD-Sponsored FFRDCs

• overseeing compliance with DOD’s FFRDC management plan;

• reviewing sponsors’ management of FFRDCs;

• reviewing the level and appropriateness of non-DOD and nonsponsor work

performed by the FFRDCs;

• overseeing the comprehensive review process; and

• performing selected FFRDC program reviews.

In January 1996, the panel began a series of fact-finding meetings at the

FFRDCs, which were attended by DOD sponsor personnel and FFRDC officials.

Representatives of our office attended the panel’s initial fact-finding

meetings and observed that the members appeared to approach their task

with the utmost seriousness and challenged the conventional wisdom by

asking tough questions of both DOD and FFRDC officials. DOD anticipates that

the panel will submit its first report in the summer of 1996.

Page 32 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix II 

References and Related FFRDC Products

Defense Research and Development: Federal Centers’ 1993 Compensation

in Relation to Federal Levels (GAO/NSIAD-96-140, July 10, 1996).

Federally Funded R&D Centers: Information on the Size and Scope of

DOD-Sponsored Centers (GAO/NSIAD-96-54, Apr. 22, 1996).

Federally Funded R&D Centers: Observations on DOD Actions to Improve

Management (GAO/T-NSIAD-96-117, Mar. 5, 1996).

Defense Research and Development: Fiscal Year 1993 Trustee and Advisor

Costs at Federally Funded Centers (GAO/NSIAD-96-27, Dec. 26, 1995).

Federal Research: Information on Fees for Selected Federally Funded

Research and Development Centers (GAO/RCED-96-31FS, Dec. 8, 1995).

Federally Funded R&D Centers: Use of Fee by the MITRE Corporation

(GAO/NSIAD-96-26, Nov. 27, 1995).

Federally Funded R&D Centers: Use of Contract Fee by The Aerospace

Corporation (GAO/NSIAD-95-174, Sept. 28, 1995).

Defense Research and Development: Affiliations of Fiscal Year 1993

Trustees for Federally Funded Centers (GAO/NSIAD-95-135, July 26, 1995).

A History of the Department of Defense Federally Funded Research and

Development Centers, Office of Technology Assessment (OTA-BP-ISS-157,

June 1995).

Report of the DOD Internal Advisory Group on Federally Funded Research

and Development Centers (May 18, 1995).

Compensation to Presidents, Senior Executives, and Technical Staff at

Federally Funded Research and Development Centers, DOD Office of the

Inspector General (95-182, May 1, 1995).

Comprehensive Review of the Department of Defense’s Fee-Granting

Process for Federally Funded Research and Development Centers,

Director of Defense Research and Engineering (May 1, 1995).

The Role of Federally Funded Research and Development Centers in the

Mission of the Department of Defense, DSB Task Force (Apr. 25, 1995).

Page 33 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix II 

References and Related FFRDC Products

Addendum to Final Audit Report on Contracting Practices for the Use and

Operations of DOD-Sponsored Federally Funded Research and

Development Centers, DOD Office of the Inspector General (95-048A,

Apr. 19, 1995).

DOD’s Federally Funded Research and Development Centers,

Congressional Research Service (95-489 SPR, Apr. 13, 1995).

Report on Department of Defense Federally Funded Research and

Development Centers and Affiliated Organizations, Director of Defense

Research and Engineering (Apr. 3, 1995).

Federally Funded R&D Centers: Executive Compensation at The

Aerospace Corporation (GAO/NSIAD-95-75, Feb. 7, 1995).

Contracting Practices for the Use and Operations of DOD-Sponsored

Federally Funded Research and Development Centers, DOD Office of the

Inspector General (95-048, Dec. 2, 1994).

Survey of Management Controls Over the Use of Federally Funded

Research and Development Centers, Defense Information Systems Agency

(95A-04, Nov. 3, 1994).

Government Contractors: Contracting Out Implications of Streamlining

Agency Operations (GAO/T-GGD-95-4, Oct. 5, 1994).

Sole-Source Justifications for DOD-Sponsored Federally Funded Research

and Development Centers, DOD Office of the Inspector General (94-012,

Nov. 4, 1993).

DOD’s Federally Funded Research and Development Centers,

Congressional Research Service (93-549 SPR, June 3, 1993).

Inadequate Federal Oversight of Federally Funded Research and

Development Centers, Subcommittee on Oversight of Government

Management, Senate Governmental Affairs Committee (102-98, July 1992).

Government Contractors: Are Service Contractors Performing Inherently

Governmental Functions? (GAO/GGD-92-11, Nov. 18, 1991).

DOD’s Federally Funded Research and Development Centers,

Congressional Research Service (91-378 SPR, Apr. 29, 1991).

Page 34 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix II 

References and Related FFRDC Products

Competition: Issues on Establishing and Using Federally Funded Research

and Development Centers (GAO/NSIAD-88-22, Mar. 7, 1988).

Fee Guidelines Still Needed for Government-Sponsored Nonprofit

Organizations (PLRD-82-54, July 7, 1982).

Management of the Federal Contract Research Centers, Director of

Defense Research and Engineering, Office of the Secretary of Defense

(June 1976).

Report of the Special Study Group on Federal Contract Research Centers,

Director of Defense Research and Engineering, Office of the Secretary of

Defense (Aug. 30, 1971).

Need for Improved Guidelines in Contracting for Research with

Government-Sponsored Nonprofit Contractors (B-146810, Feb. 10, 1969).

Report to the President on Government Contracting for Research and

Development (U.S. Senate, 87th Congress, 2nd Session, Document No. 94,

May 17, 1962). This report, prepared by a presidentially appointed

committee led by Bureau of the Budget Director David Bell, is commonly

referred to as “The Bell Report.”

Page 35 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix III 

Information on DOD’s FFRDCs

DOD currently sponsors 11 FFRDCs operated by 8 parent organizations.

Table III.1 provides information on each FFRDC, including the parent

organization, primary sponsor, DOD funding, and members of technical

staff (MTS)1

 provided for fiscal year 1995.

Table III.1: Information on DOD’s FFRDCs (fiscal year 1995)

Dollars in millions

FFRDC Parent organization Primary sponsor Obligations MTS

Systems engineering and integration centers

Aerospace The Aerospace Corporation Air Force $335 1,910

MITRE C3I MITRE Corporation Assistant Secretary of Defense (C3I) 374 2,109

Subtotal $709 4,019

Studies and analyses centers

Arroyo Center RAND Army 20 99

Project AIR FORCE RAND Air Force 24 112

National Defense Research

Institute

RAND OSD 19 105

Center for Naval Analyses The CNA Corporation Navy 47 238

IDA—Studies and

Analyses/Operational

Test and Evaluation Center

IDA OSD 68 372

Logistics Management

Institute

Logistics Management

Institute

OSD 29 166

Subtotal $207 1,092

Research and development laboratories

Lincoln Laboratory Massachusetts Institute of

Technology

Air Force 275 1,017

Software Engineering

Institute

Carnegie-Mellon University Defense Advanced Research Projects

Agency

29 170

IDA—Communications and

Computing

IDA National Security Agency 33 142

Subtotal $386 1,329

Total $1,253 6,440

Note: C3I, command, control, communication, and intelligence; OSD, Office of the Secretary of

Defense; and IDA, Institute for Defense Analyses.

Source: OSD.

1

MTS include the direct professional labor of scientists, engineers, researchers, mathematicians,

analysts, economists, and others who perform professional-level technical work. MTS is defined as

1,810 hours of full-time professional effort; MTS does not include subcontracted effort.

Page 36 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix IV 

Comparison of FFRDCs’ Former Scope of

Work Descriptions and Core Competencies

FFRDC Scope of work Core competencies

Aerospace • Advanced systems architecture; concept analysis

and planning; research, development, test, and

evaluation; experimentation; and systems engineering

and integration.

• Mission-oriented investigation and experimentation.

• Multiprogram systems engineering.

• Foreign technology support.

• Technical support, recommendations, and reviews.

• Technical analysis, support, evaluation, and review

in the field of U.S. national security space systems.

• Long-range planning, systems analysis, and

comparison studies, including technical risk

management, cost, and schedule assessments.

• Launch certification.

• Systems of systems engineering.

• Systemt development and acquisition.

• Process implementation.

• Technology application.

MITRE C3I • Systems research and planning.

• System design.

• Technical management.

• Selected fields of research and experimentation,

including navigation, detection, surveillance,

identification, threat evaluations, warning, weather,

and intelligence.

• Systems of systems engineering.

• Systems development and acquisition.

• Process implementation.

• Technology application.

• Architectures and interoperability.

Arroyo Center • Geopolitical environment and its effects on the Army.

• Implications of the external threat environment.

• Research in strategy, military planning, and regional

security.

• Restructuring initiatives designed to make the Army

more efficient.

• Alternative technology applications and technical

strategies.

• Force composition, size, and operational concepts.

• Interactive modeling and simulation capability.

• Initiatives and designs for the Army of the future.

• Logistics, sustainment, and redesign initiatives.

• Force development and technology.

• Personnel and training.

• Military logistics.

• Strategy and doctrine.

Project AIR FORCE • Strategy, doctrine, and force structure.

• Force modernization and employment.

• Resource management and systems acquisition.

• Strategy and doctrine.

• Force development and application.

• Resource management.

National Defense

Research Institute

• Research, studies, and analyses in areas such as

international security and defense strategy,

acquisition and technology policy, and forces and

resources policy.

• International policy and defense strategy.

• Forces and resources policy.

• Technology and acquisition policy.

• Research integration.

(continued)

Page 37 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix IV 

Comparison of FFRDCs’ Former Scope of

Work Descriptions and Core Competencies

FFRDC Scope of work Core competencies

Center for Naval

Analyses

• Geopolitical security environment.

• Roles, missions, and concepts of operations.

• Force planning and evaluation.

• System requirements. 

• Fleet tactics and capabilities.

• Joint space and electronic warfare/command,

control, communication, computers, intelligence, and

information.

• Cost and operational effectiveness analysis.

• Research, development, and acquisition.

• Infrastructure.

• Personnel.

• Medical.

• Training.

• Readiness, maintenance, and logistics.

• Modeling and simulation.

• Operations analysis.

• System requirements and acquisition.

• Resource analysis.

• Program planning.

• Policy, strategy, and doctrine.

IDA-Studies and

Analyses/Operational

Test and Evaluation

Center

• Alternative technology applications and technical

strategies.

• Applications of advanced computing and

information systems.

• Evaluations of systems proposed for prototyping,

development, and procurement.

• Assessment of test and evaluation plans and results.

• Exploitation of distributed, interactive simulation.

• Force composition, size, and operational concepts.

• Costs of defense programs, forces, and supporting

infrastructure as well as analyses of acquisition

procedures and methods.

• Research in strategy—military planning, regional

security, and related defense policy and management.

• Evaluations of the readiness and performance of

systems, forces, and military organizations, including

training and support issues.

• Implications of dual-use and international

technology.

• Joint and allied interoperability standards.

• Systems evaluations.

• Technology assessments.

• Force and strategy assessments.

• Resource and support analyses.

Logistics Management

Institute

• Broad range of policy, managerial, and

technological issues in acquisition, logistics, and

force management.

• Materiel management.

• Acquisition.

• Operational logistics.

• Facilities and environment.

• Force management.

Lincoln Laboratory • Ballistic missile defense.

• Communications.

• Space surveillance.

• Air defense.

• Surface surveillance.

• Advanced electronics technology.

• Ballistic missile defense.

• Communications.

• Space surveillance.

• Air defense.

• Surface surveillance.

• Advanced electronics technology.

Software Engineering

Institute

• Technology transition. • Software engineering and supporting software

technology.

• Technology transition.

(continued)

Page 38 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix IV 

Comparison of FFRDCs’ Former Scope of

Work Descriptions and Core Competencies

FFRDC Scope of work Core competencies

IDA-Communications

and Computing

• Long-term research on mission-critical problems

confronting the sponsor.

• Difficult operational problems of immediate

importance associated with cryptomathematics and

cryptocomputing.

• Cryptologic mathematics.

• Computing sciences.

• Basic communications theory.

Page 39 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix V 

Comments From the Department of Defense

Page 40 GAO/NSIAD-96-112 Federally Funded R&D Centers
Appendix VI 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Charles W. Thompson

Erin Slonaker Noel

Maria Boyreau

Boston Field Office Monty Peters

(705084) Page 41 GAO/NSIAD-96-112 Federally Funded R&D Centers
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 6015

Gaithersburg, MD 20884-6015

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100