J. Eric Hazell

A joint publication of the

National Defense University

and the

Naval Historical Center

Washington, DC

2008

From Reform to Reduction:

Reports on the Management of Navy

and

Department of Defense Laboratories

in the Post-Cold War Era 

Co n t e n t s

The Author.....................................................................................................v

Acknowledgments .........................................................................................v

Foreword .....................................................................................................vii

Preface .........................................................................................................ix

List of Reports ..............................................................................................xi

List of Tables .............................................................................................xvii

Introduction ..................................................................................................1

Purpose and Scope........................................................................................1

Using this Book .............................................................................................3

Overview of the Navy Laboratory System ........................................................3

Themes and Conclusions................................................................................6

Chapter One — Navy Laboratories at the End of the Cold War ...................11

Starting Points — The Packard Commissions and

the Defense Science Board on Technology Base Management......................... 12

 The Second Packard Commission............................................................ 15

 The Defense Science Board on the Technology Base

 and Laboratory Demonstration Program .................................................. 17

General Overviews of the Technology Base.................................................... 19

 Inherently Governmental Functions......................................................... 22

 Smart Buyer.......................................................................................... 23

Goldwater-Nichols and the Defense Management Review (DMR)..................... 24

DMR Implementation................................................................................... 26

Laboratory Consolidation Studies.................................................................. 32

Laboratory Demonstration Program (LDP)..................................................... 35

Pre-BRAC Inter-Service Reorganization ......................................................... 36

BRAC 91..................................................................................................... 37

The Adolph Commission............................................................................... 41

Chronology of Navy Warfare Centers/Corporate Lab Standup.......................... 46

Chapter Two — BRAC 1993 and 1995 .........................................................49

Background ................................................................................................ 50

BRAC 93..................................................................................................... 51

BRAC 95..................................................................................................... 55

Chapter Three — The Triumph of Efficiency ................................................65

Background ................................................................................................ 65

 Overview of the Studies ......................................................................... 66

The DSB on Laboratory Management............................................................ 67

National Science and Technology Council Interagency Review

of Federal Laboratories ................................................................................ 70

 The Laboratory Infrastructure Capabilities Study...................................... 70

 The Interim Response............................................................................ 74

 The DOD Response ............................................................................... 77

 The BRAC 95 Addendum........................................................................ 80
	 	 The Office of Science and Technology Policy (OSTP) Final Report.............. 81

 Defense Conversion............................................................................... 81

The Commission on Roles and Missions of the Armed Forces (CORM).............. 82

 CORM and Outsourcing Commercial Activities.......................................... 83

The Center for Naval Analyses on Outsourcing .............................................. 85

	 The DSB’s Unqualified Advocacy of Outsourcing............................................. 88

Re-Investment and Infrastructure................................................................. 93

Infrastructure Reduction .............................................................................. 96

Chapter Four — Outsourcing and its Discontents .....................................101

Introduction.............................................................................................. 101

Smaller Equals Better?............................................................................... 102

	 Contracts Equal Efficiency?......................................................................... 103

Defense Department Equals Obsolescent?................................................... 107

The S&T Investment Process...................................................................... 109

	 Efficiency and Competition......................................................................... 110

Conclusion................................................................................................ 114

Chapter Five — Effectiveness Defeated.....................................................117

Introduction.............................................................................................. 117

The Laboratory Community on Barriers to Effectiveness ............................... 118

The Naval Research Advisory Committee..................................................... 121

Leveling the Playing Field — A Common Financial System ............................ 126

 The Laboratory Quality Improvement Program (LQIP)............................ 127

 The LQIP Financial Subpanel Report ..................................................... 127

 The Cost-Based Management Tool (CBMT)............................................ 130

 Migrating DOD Labs to a Working Capital Fund...................................... 132

LDP and LQIP Successes and Failures ......................................................... 134

Other Congressional Attempts at Laboratory Reform .................................... 135

 Section 912(c) Technology Leaders Workshop ....................................... 135

 Section 246 Pilot Program .................................................................... 135

 Other Legislation ................................................................................. 137

Bibliographic Note — Other Studies on Lab/Center Effectiveness................... 137

Cost Visibility/Comparability Chronology...................................................... 139

Conclusion.................................................................................................141

Bibliography ..............................................................................................147

Appendix A — Sources on the Management of Navy/DOD RDT&E ...........157

Overview of NRL Archive............................................................................ 157

 Box Index (September 2007) ............................................................... 159

Overview of Cold War-Era RDT&E Management Archive,

Naval Historical Center (NHC)..................................................................... 162

 Box Index ........................................................................................... 163

Appendix B — A Brief Overview of the Navy’s Industrial Funding............169

Acronyms...................................................................................................171

Index ......................................................................................................175
The Author

J. Eric Hazell has been an archivist and historian for the Navy’s laboratory 

community for 14 years. He has published or co-published articles in the Naval 

Institute Proceedings, International Journal of Naval History, and Acquisition 

Review Quarterly (now Defense AR Journal), and written for other publications 

such as the Philadelphia Inquirer and Landscape Architecture. He received his 

Ph.D. in history from the University of Maryland, where he also teaches in the 

Professional Writing Program. He resides in Bowie, Maryland, with his wife and 

three children.

Acknowledgments

I wish to thank Dr. Hans Binnendijk, Director of the National Defense University’s Center for Technology and National Security Policy, for supporting this 

project. Rear Admiral Paul E. Tobin, Director of the Naval Historical Center, and 

Dr. Edward Marolda, the Center’s Senior Historian, both reviewed the manuscript. Lea Chartock, Director of the Professional Writing Program at the University of Maryland, offered many helpful editorial suggestions. Kathy Parrish and 

Donna Gloystein at the Naval Research Laboratory (NRL) expertly guided me 

through the publication process. Don DeYoung, Kenneth “Skip” Lackie, Mike 

Marshall, and Gary Hess corrected mistakes of both substance and style and 

helped reconstruct many of the events. Skip gave comments substantive enough 

and material original enough that he could probably push for co-authorship if 

he had a mind to. Mike also offered expert review and has taught me much of 

what I know about Navy R&D. A glance at the footnotes and Bibliography will 

show that his extensive writing on a variety of topics has provided much of the 

relevant material. Gary conceived the project and recommended me for doing it. 

All three, along with Howard Law, have been mentors as decent and capable as 

anyone could ask for. Thanks also to my wife Terry for listening and for, remarkably, ensuring I had the time I needed to write and that our children received the 

attention they needed – all while running her own business.

Foreword

In September 2004, the Naval Research Laboratory (NRL) established an 

unclassified archive of materials on the post-Cold War management of the Department of the Navy scientific and engineering activities. The records complement the Research, Development, Testing, and Evaluation (RDT&E) Management Archive housed at the Naval Historical Center, Washington Navy Yard. 

These two collections are the sole, formal repositories for the Navy’s materiel 

establishment.

The reports in the NRL collection – some published by high-level study 

groups, others circulated only within the Navy RDT&E community – form the 

basis for this book, which succeeds Rodney Carlisle’s Management of the U.S. 

Navy Research and Development Centers During the Cold War. Carlisle’s book 

is based on the laboratory reports collection at the Naval Historical Center.

As did the Department of Defense (DOD) in general, the Navy’s technical 

centers faced tremendous pressure to downsize after the Cold War. However, 

concurrent organizational changes removed a number of high-level advocates 

for those centers. Reports on technology management reveal how such changes, 

along with institutional obstructions, meant that cost reduction plans almost 

always prevailed over those initiatives aimed at reform and effectiveness. For 

years, studies and reports offered remarkably similar proposals to achieve 

laboratory reform, the Navy and DOD established numerous demonstration 

programs, and Congress authorized various pilot programs. However, few of the 

efforts bore fruit, because outsourcing, staffing reductions, and other efficiency 

measures superseded them. While improved performance continued to receive 

cursory attention, the downsizing plans were followed through: between 1991 

and 2005 the labs’ workforces (including military) were reduced by 45 percent, 

even though their collective business base had increased. At the same time, they 

faced more than a dozen separate actions that restricted hiring.

Dr. Hazell’s work is a clear, concise, and especially well-written history 

of the impact of the post-Cold War downturn in DOD’s support of the Navy’s 

in-house laboratories. The book presents vital information on some five dozen 

key reports issued during this period and includes descriptions of unique source 

material. As a superlative reference tool and candid appraisal, Dr. Hazell’s work 

will serve the Navy’s RDT&E community, similar government organizations, 

scholars, and the public as a basic source for years to come.

The views expressed here are Dr. Hazell’s alone and do not necessarily 

reflect those of the Department of the Navy or any other agency of the U.S. 

Government.

Dr. Hans Binnendijk

Director of the National Defense University’s

 Center for Technology and National Security Policy

Rear Admiral Paul E. Tobin, USN

Director, Naval Historical Center

Preface

The Navy laboratory system has played a significant role in the technological superiority of the Navy and Marine Corps in peace and war in every era from 

today’s Global War on Terrorism, back through the Cold War, Vietnam, Korea, 

WWII, and even to its very beginnings in the Civil War. This system has created 

Nobel laureates, fostered the creation of operational radar, sonar, and most of the 

fundamental capabilities found in space today. It has helped unlock some of the 

basic secrets of our natural environment, particularly in the oceans, atmosphere, 

and space. It has routinely been ranked in the very top tier in intellectual property productivity in the United States. The lab system has been involved from the 

conceptual development all the way to operational testing and fielding of every 

major weapons system our Marines and Sailors have used for generations. Often 

that delivery of practical technology has involved substantial partnerships with 

or transfers-for-production to the U.S. technical defense industry.

Certainly, what we call today a “Navy Corporate Laboratory and a set of 

RDT&E Warfare Centers” have created new knowledge, devices, techniques, 

and talent. They also collectively guarantee for the Department of the Navy and 

the Nation a smart buyer capability. They pursue technological advance when 

it has the potential to help the warfighter, even when such pursuit would not be 

interesting to profit-motivated industry. And they continue to deliver improved 

capabilities directly to the national security organizations that depend on them.

In the purported interest of good stewardship and self-scrutiny, various 

Navy and DOD managers have caused there to be many reviews of the Navy 

(and other DOD) laboratories and centers. Dr. Hazell, has done us a great service in this book by chronicling those many reviews and the resultant managerial 

evolution of the Navy laboratory system. He points out rather clearly an accelerating migration of RDT&E investment away from the in-house laboratories to 

private sector industry, especially since the 1990’s.

The private sector has always been a critical component of the defense industrial base, as only industry can manufacture the products that DOD needs on 

a large scale. And no matter how critical the role of the in-house labs and centers 

may have been, most defense R&D has always been contracted out to academia 

and private-sector companies. However, the decisive change in the balance of 

work has led to its own set of problems, many of which stem from conflicts 

that in part necessitated in-house technical competence in the first place. These 

developments indicate that as we adapt to an ever-changing threat environment, 

Service technical organizations – which can identify what must be done, the best 

people to do it, and whether it has been done right – remain critical to national 

security.

Vice Admiral Paul G. Gaffney II, USN (Ret.)

List of Reports

*Not available online

**Online availability limited

Page numbers in parentheses at the end of each entry indicate

where in the text each report is discussed

*Assistant Secretary of the Navy for Research, Development and Acquisition, 

“DOD Test and Evaluation, Research and Development Facilities Paper.” Correspondence to Under Secretary of Defense (Acquisition), April 12, 1990 (included as Tab F to Director of Navy Laboratories, “A Review of Studies Conducted 

from November 1989 to April 1990 on the Restructuring of the Navy’s RDT&E 

Community”). (22-24)

**Center for Naval Analyses (CNA) (Samuel Kleinman, Derek Trunkey), 

“CNA’s Examination of Tech Centers.” October 1994. (85-86, 107)

____, (Carla Tighe et al.), “Outsourcing Opportunities for the Navy.” April 1996. 

(86-87, 108-109)

http://www.aflma.hz.af.mil/lgi/cov.pdf

____, (Carla Tighe et al.), “Implementing A-76 Competitions.” May 1996. (113)

https://competitivesourcing.navy.mil/reference_documents/other/cab96-24.pdf

____, (Darlene Stafford, James Jonrow), “A Survey of Privatization and Outsourcing Initiatives.” December 1996. (112-113)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA362409&Location=U2&doc=

GetTRDoc.pdf

____, (Carla Tighe et al.), “A Privatization Primer: Issues and Evidence.” January 1997. (113-114)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA362360&Location=U2&doc=

GetTRDoc.pdf

____, (Anthony DiTripani), “Rightsourcing Lessons Learned.” May 1997. (112)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA362356&Location=U2&doc=

GetTRDoc.pdf

Cheney, Dick, “Defense Management: Report to the President.” July 1989. (24-

26)

http://www.army.mil/cmh-pg/acquisition/research/pdf_materials/report_cheny.

pdf
xii List of Reports

*Clare, Thomas. “The Navy’s Technical Institutions: Under Siege.” August 1996 

draft. (120-121)

Coffey, Timothy, Kenneth Lackie, and Michael Marshall, “Alternative Governance: A Tool for Military Laboratory Reform.” Defense Horizons 34 (November 2003): 1-8. (138)

http://www.ndu.edu/inss/press/DefHor.html

Cohen, William S., “Defense Reform Initiative Report.” November 1997. (97-

98)

http://www.fas.org/man/docs/dri/toc.html

*Colvard, James, “Some Thoughts on the Navy’s Organization Under the 

DMR.” Unpublished paper, February 20, 1990. (31-32)

Commission on Roles and Missions of the Armed Forces, “Directions for Defense.” May 24, 1995. (82-85)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA295228&Location=U2&doc=

GetTRDoc.pdf

**Congressional Research Service (CRS), (Michael Davey), “Defense Laboratories: Proposals for Closure and Consolidation.” January 24, 1991. (37-38)

Defense Base Closure and Realignment Commission, “Report to the President.” 

July 1, 1991. (40-41)

http://www.defenselink.mil/brac/priorbracs.html

____, “Report to the President.” July 1, 1993. (54-55)

http://www.defenselink.mil/brac/priorbracs.html

____, “Report to the President.” July 1, 1995. (61-62)

http://www.defenselink.mil/brac/priorbracs.html

**Defense Science Board (DSB), “Technology Base Management.” December 

1987. (17-19)

**____, “The Defense Industrial and Technology Base.” October 1988. (20-21)

____, “Defense Laboratory Management.” April 1994. (67-70)

http://www.acq.osd.mil/dsb/reports.htm#1994

____, “Outsourcing and Privatization.” August 1996. (88-90)

http://www.acq.osd.mil/dsb/reports.htm#1996

____, “Achieving an Innovative Support Structure for 21st Century Military 

Superiority: Higher Performance at Lower Costs.” November 1996. (90)

http://www.acq.osd.mil/dsb/reports.htm#1996
List of Reports xiii

____, “Defense Science and Technology Base for the 21st Century.” June 30, 

1998. (90-91)

http://www.acq.osd.mil/dsb/reports.htm#1998

____, “Technology Capabilities of Non-DOD Providers.” June 2000. (92-93)

http://www.acq.osd.mil/dsb/reports.htm#2000

*Department of Defense (DOD) Management Review Task Force, “DOD Management of Technology Development: Implementation of Recommendations of 

the DMR.” February 1990. (28-29)

____, “DOD Base Closure and Realignment Report.” April 1991. (38-39)

http://www.defenselink.mil/brac/priorbracs.html

____, “Department of Defense Base Closure and Realignment Report.” March 

1993. (53-54)

http://www.defenselink.mil/brac/priorbracs.html

____, “Department of Defense Base Closure and Realignment Report.” March 

1995. (57-58)

http://www.defenselink.mil/brac/priorbracs.html

____, “Vision 21: The Plan for 21st Century Laboratories and Test and Evaluation Centers of the Department of Defense.” April 30, 1996. (96-97)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA323400&Location=U2&doc=

GetTRDoc.pdf

____, “The Report of the Department of Defense on Base Realignment and Closure.” April 1998. (98-99)

http://www.defenselink.mil/brac/priorbracs.html

____, “A Plan to Streamline DOD’s Science and Technology, Engineering, and 

Test and Evaluation Infrastructure: Report of the Section 907 and 912(c) Senior 

Steering Group for Review of the RDT&E Infrastructure.” July 1999. (131-132)

http://stinet.dtic.mil/oai/oai?&verb=getRecord&metadataPrefix=html&identifier

=ADA395934

*____, “Pilot Program for Revitalizing the Laboratories and Test and Evaluation Centers of the Department of Defense: A Report in Response to Section 246 

of the Strom Thurmond National Defense Authorization Act of FY 1999.” July 

1999. (135-136)

*Department of the Navy (DON) Management Review Task Force, “Program 

Executive Officer and Systems Command Reorganization Plan.” September 

1989. (26-28)
xiv List of Reports

*____, “Plans for Initial Implementation of the Defense Management Report.” 

October 1, 1989. (26-28)

*____, “Base Closure and Realignment Recommendations, Detailed Analysis.” 

April 1991. (38-39)

____, “DOD Base Closure and Realignment Report to the Commission, Department of the Navy Analyses and Recommendations (Volume IV).” March 1993. 

(Incorporated into DOD report). (51-53)

____, “DOD Base Closure and Realignment Report to the Commission, Department of the Navy Analyses and Recommendations (Volume IV).” March 1995. 

(Incorporated into DOD report). (55-57)

*Director of Defense Research and Engineering, Memorandum for Assistant 

to the President for Science and Technology, “Department of Defense Interim 

Response to NSTC/PRD #1, Presidential Review Directive on an Interagency 

Review of Federal Laboratories.” September 12, 1994. (74-77)

*____, “DOD Response to NSTC/PRD #1, Presidential Review Directive on an 

Interagency Review of Federal Laboratories.” February 1995. (77-80)

*____, “BRAC 95 Addendum to Department of Defense Response to NSTC/

PRD #1.” April 3, 1995. (80)

*Director of Navy Laboratories, “A Review of Studies Conducted from November 1989 to April 1990 on Restructuring the Navy RDT&E Community.” July 

1990. (This review contains the most complete record of the key events, decisions, memoranda, and efforts of the study teams involved in the Navy’s implementation of the DMR.) (32-35)

*____, “Impediments to Cost Reductions at the Warfare Centers and Corporate 

Lab.” May 20, 1991. (118-120)

Federal Advisory Commission, “Federal Advisory Commission on Consolidation and Conversion of Defense Research and Development Laboratories.” 

September 1991. (41-44)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA323887&Location=U2&doc=

GetTRDoc.pdf

General Accounting Office/Government Accountability Office (GAO), “Military 

Bases: Observations on the Analyses Supporting Proposed Closures and Realignments.” May 1991. (39-40)

http://www.defenselink.mil/brac/priorbracs.html
List of Reports xv

____, “Military Bases: Analysis of DOD’s Recommendations and Selection 

Process for Closures and Realignments.” April 1993. (54)

http://www.defenselink.mil/brac/priorbracs.html

____, “Military Bases: Analysis of DOD’s 1995 Process and Recommendations 

for Closure and Realignment.” April 1995. (58-60)

http://www.defenselink.mil/brac/priorbracs.html

____, “Defense Acquisition Infrastructure: Changes in RDT&E Laboratories and 

Centers.” September 1996. (Appendix B)

http://www.gao.gov/archive/1996/ns96221b.pdf

**Institute for Defense Analyses (IDA), “Report of the Task Force for Improved 

Coordination of the DOD Science and Technology Programs. Volume I, Summary Report and Recommendations.” July 1988. (19-20)

____, (David R. Graham et al.), “Laboratory Infrastructure Capabilities Study: 

Phase I Report. November 1994. (70-74)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA292706&Location=U2&doc=

GetTRDoc.pdf

*Joint Directors of Laboratories (JDL), “White Paper on Tri-Service Reliance 

in Science and Technology.” January 1992. (The NHC archive houses almost 50 

cubic feet of JDL material.) (26-27)

*Laboratory Quality Improvement Program Financial Subpanel, “Recommendations for a Common Financial Management Approach at the DOD Laboratories.” 

April 1996. (127-130)

*Marshall, Michael, “Outsourcing Commercial Activities as a Source of Infrastructure Savings: Are the Savings Claims Justified?” January 1996. (110-112)

*Marshall, Michael, “Another Perspective on Outsourcing: Beyond the SoundBites.” May 1997. (104-105)

Marshall, Michael, and Eric Hazell, “Private Sector Downsizing: Implications 

for DOD.” Acquisition Review Quarterly (now Defense AR Journal), Vol. 7 No. 

2, Spring 2000: 143-159. (102-103)

http://www.dau.mil/pubs/arq/arq2000.asp

**____, “Panacea or Pipe Dream? Outsourcing R&D.” Naval Institute Proceedings, October 2000: 86-89. (105-106)

**Naval Research Advisory Committee, “Naval Research and Development.” 

October 1994. (121-124)
xvi List of Reports

**____, “Visiting Panel Report on the Department of the Navy Science and 

Technology Base” (Galvin Report). August 1996. (124-126)

____, “Science and Technology Community in Crisis.” May 2002. (126-127, 

134-135)

http://www.onr.navy.mil/nrac/reports_chronological.asp

*Office of Science and Technology Policy (OSTP), Executive Office of the 

President, “Report of the White House Science Council Federal Laboratory 

Review Panel.” May 1983. Also “Progress Report on Implementing the Recommendations of the White House Science Council’s Federal Laboratory Review 

Panel,” Vol. I, Summary Report, and Vol. II, Status Reports by Agencies. July 

1984. (12-17)

____, “Interagency Federal Laboratory Review Final Report.” May 15, 1995. 

(81)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA387642&Location=U2&doc=

GetTRDoc.pdf

*Office of the Undersecretary of Defense (Comptroller), “Report on the Evaluation of the Potential for Financing DOD Research Development Test and Evaluation Facilities Through a Working Capital Fund Financial System.” August 2000. 

(132-133)

President’s Blue Ribbon Commission on Defense Management, A Quest for 

Excellence (Packard Report). Washington, D.C., June 1986. (15-16)

www.ndu.edu/library/pbrc/36ex2.pdf

Secretary of Defense, “Actions to Accelerate the Movement to a New Workforce 

Vision.” April 1998. (131)

http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=ADA387557&Location=U2&doc=

GetTRDoc.pdf

**U.S. Congress, House Armed Services Committee Subcommittee on Research 

and Development (Michael Davey), “Challenges Confronting the DOD Laboratories.” February 22, 1990. (29-30)

U.S. Congress, Office of Technology Assessment, Holding the Edge: Maintaining the Defense Technology Base. April 1989. (The NRL archive houses a CDROM collection of all OTA reports.) (21-24)

http://www.wws.princeton.edu/ota/disk1/1989/8920/8920.PDF
List of Tables

Table 1: DOD BRAC 95 Estimated 20-year Savings from Selected Closures... 59

Table 2: BRAC Estimated Costs and Savings .................................................... 59

Table 3: Summary of BRAC Reductions, Major Domestic Closures................. 59

Table 4: Major Base Closures and Realignments, BRAC 88-95 ........................ 63

Table 5: Roles of DOD Laboratories.................................................................. 72

Introduction

Purpose and Scope

This book reviews approximately 65 of the significant reports issued on 

Department of Defense (DOD) and Department of the Navy (DON) management of research, development, test, and evaluation (RDT&E) from the end of 

the Cold War through the late 1990s. It is designed for two primary audiences: 

(1) DOD, congressional, and other government staff who need an accessible 

overview and quick reference and bibliographic guide to issues during that 

period; and (2) researchers and historians, especially those interested in available 

sources. These sources include not only major reports, but also a wealth of other, 

unpublished, often unique material housed in both the post-Cold War management archive at the Naval Research Laboratory (NRL) and the Navy laboratories 

collection at the Operational Archives of the Naval Historical Center (NHC), 

Washington Navy Yard.1

The book is organized both chronologically and thematically, and engages 

some of the principal arguments regarding management of defense research and 

development (R&D) in the 1990s. However, anyone interested only in which 

studies said what about which topics can simply search for key terms (http://

www.nrl.navy.mil/content.php?P=LIBRARY).

As a work that condenses a large amount of material on major subjects, this 

survey presents a kind of index to the RDT&E management community’s corporate memory. Users with considerable background and expertise and those with 

very little can both utilize the information. The book provides a user-friendly 

tool that facilitates research, planning, and response time. It also can help readers 

build on previous analyses and avoid “reinventing the wheel” each time recurring management issues arise. Study groups, commissions, or panels can use it 

as a reference guide to assist literature searches that give historical context, and 

any planner or staff member can use it to become familiar with reports on issues 

of perennial interest. Readers new to the subject will find many elements of a 

basic overview, including definitions of key terms and concepts.

Although the reports discussed here addressed most of the major concerns 

of the Navy and DOD RDT&E laboratory/center community from the late 1980s 

to the late 1990s, they did not address them all (a description of that community, 

including the question of what exactly constitutes a “laboratory” and a “center,” 

is below). What has been discussed and what has been left out – the scope and 

focus – have been determined chiefly by the material in the NRL archive, which 

___________________

1

See Appendix A for a description of those collections. The footnotes also provide many 

details about the source material.
2 Introduction

generally reflects the Navy’s efforts to facilitate coordination of science and 

technology (S&T) programs across the Services, and sometimes across DOD.2

This focus entails some significant omissions. For one, the archive does 

not contain every important report published during the decade (though many 

of those are abstracted here). More important is that some initiatives generated 

work eventually reflected in briefings, emails, and memos (often in the archive), 

but not formally documented in a report. An example is the Navy Re-Investment 

and Infrastructure (RII) effort, discussed in Chapter Three. Typically, efforts 

driven by budget decisions, Navy policy makers, or local management did not 

contain reporting requirements. Initiatives not discussed or only tangentially 

addressed here include the Competency Aligned Organization (CAO), ActivityBased Costing (ABC), Regionalization Initiatives, Navy-Marine Corps Intranet 

(NMCI), Customer Service Centers, Labor-Management Partnership Councils, 

Work Breakdown Databases, Quality Management Boards, Alternative Dispute 

Resolution, and Cost as Independent Variable, to name just a few.

On the other hand, the archive and other sources have allowed for an 

analysis that extends beyond a straightforward abstracting of major reports. 

For example, some studies discussed here, well researched and based on expert 

knowledge, did not circulate widely beyond the Navy technical community, and 

were not even officially published. Often the only copies are in the NRL or NHC 

archives. Further, this book adds considerable narrative thread to provide some 

context – in many cases extremely difficult to recreate – for the reports. Subject 

matter experts, who usually participated in groups responsible for either writing or responding to the reports, have reviewed the material for accuracy. They 

have combined collaborative memory with a review of unpublished personal and 

official records to provide information on developments that simply could not be 

reconstructed otherwise. Also, working papers, oral history interviews, and other 

material in the archives have provided insight and commentary not obtainable 

through published sources.

In sum, this survey provides much more information than can be gleaned 

from formal reports alone. The text sometimes reads like a story and offers a 

basic, broad overview of Navy laboratory management, but it is not a history of 

Navy RDT&E in the 1990s.

A final note on the reports: while many focused on the Navy’s technical activities, many also dealt with Army and Air Force labs, other federal government 

labs, the Navy and DOD acquisition process as a whole, and/or national security 

strategy. The widest-ranging reports typically contained a section on DOD S&T 

or acquisition, and in such cases the discussion in this book deals largely with 

that section alone. Further, for those publications that discussed the laboratory 

systems of the three Services, the description here deals primarily with Navy 

___________________

2

While it is often technically correct to write “the” before various acronyms – DOD, DON, 

etc. – the text here omits the article whenever possible. Likewise, DOD is sometimes written 

as DoD. The former is used here except in instances of quotation.
Introduction 3

labs. Likewise, this presentation often gauges a report’s assertions about the 

Service labs or DOD support infrastructure overall against evidence about the 

Navy RDT&E centers in particular.

Using this Book

In addition to the link to the PDF and Word files that enables electronic 

searches for key terms, the text itself is organized to facilitate skimming for desired information. Titles are listed in bold to signal the paragraph where discussion of a study begins. Studies discussed at length are summarized in that same 

opening paragraph – an abstract within an abstract. Also, the first sentence of 

each paragraph overviews the material therein to facilitate use as a desk reference. 

Note on references: in addition to footnotes, page numbers are provided in 

parentheses after direct quotations. All numbers refer to the report being discussed.

Overview of the Navy “Laboratory” System3

The somewhat misleading term “Navy laboratories” encompasses a vast array of activities that together constitute something little resembling a traditional 

research facility. Each military Service owns and operates technical activities 

that support the acquisition, operation, and upgrade of weapons and weapons 

systems. Most of these facilities have evolved from their origins in WWII or 

WWI (or in some cases the 19th century) as small, specialized installations focused on a component or weapon, to warfare-oriented centers that perform work 

from RDT&E to in-service engineering to retirement of fielded systems – from 

concept to retirement, or, as some say, from “lust to rust.”

Often generically called laboratories, or labs and centers, they have many 

different titles that more accurately reflect their work: warfare center, systems 

center, test and evaluation (T&E) center, engineering center, experiment station, 

research laboratory, research center, or research, development, and engineering center. They all employ scientists and engineers (S&Es), hence the general 

term laboratory. But as the names suggest, they all focus on different parts of the 

concept-to-retirement R&D or acquisition spectrum. They all receive RDT&E 

___________________

3

For overviews, see Rodney Carlisle, Management of the U.S. Navy Research and Development Centers During the Cold War: A Survey Guide to Reports (1996) and “Navy RDT&E 

Planning in an Age of Transition: A Survey Guide to Contemporary Literature” (1997), 

Michael Marshall, “The Key to a ‘World-Class’ Science and Technology Enterprise: Hiring 

and Retaining the Best and Brightest Scientists and Engineers” (March 2001), Naval Research 

Advisory Committee (NRAC), “Science and Technology Community in Crisis” (May 2002), 

and Robert Kavetsky, Michael Marshall, and Davinder Anand, From Science to Seapower: 

A Roadmap for S&T Revitalization (2006). Also helpful are David K. Allison’s “The Role of 

Navy Laboratories: A Historical Review” (December 1984), and “U.S. Navy Research and 

Development since World War II,” in Military Enterprise and Technological Change, Merritt 

Roe Smith, ed. (1984), 290-328.
4 Introduction

___________________

4

Congressional Research Service (John Moteff), “Defense Research: A Primer on the Department of Defense’s Research, Development, Test and Evaluation (RDT&E) Program” (May 5, 

1998), available online, provides a good, brief overview. Some commentators considered 6.1-

6.3 as the technology base, especially when 6.3 was divided into 6.3A (Advanced Technology 

Development – Feasibility) and 6.3B (Advanced Development – System Application). 6.3A 

was the cutoff for the tech base.

funding, designated as Defense Category 6. Category 6 funding is further broken 

down into various stages, the numbers and titles of which have changed over 

time. The first two stages – Basic Research and Applied Research (the latter formerly called Exploratory Development) – are generally considered the defense 

“technology base,” which along with the third stage – Advanced Technology 

Development (formerly called Advanced Development) – constitute the defense 

S&T program.4

DOD considers all of these facilities RDT&E activities, often defining 

the term as any Service organization that devotes a minimum of 25 percent of 

the “in-house” manpower and/or 25 percent of its funding to work conducted 

in-house anywhere along the acquisition-support spectrum. More general definitions state that RDT&E activities are those that perform S&T, engineering development, systems engineering, and/or support of deployed material and modernization. In addition to the term laboratories, or technical centers, commentators 

also often use R&D generically to encompass all of these activities. This survey 

likewise refers to “the labs and centers,” “technical centers,” “technical activities,” or sometimes “R&D centers.” Distinctions are addressed when appropriate. For example, Chapter Two notes that in the Base Realignment and Closure 

(BRAC) rounds for 1993 and 1995, DOD cross-Service groups distinguished 

between labs and T&E centers, a division many people believed limited the effectiveness of those groups.

Variations among the technical centers have complicated cross-Service 

comparisons and congressional or DOD attempts to engage in reform efforts that 

would help the labs equally – a point many of the reports discussed here returned 

to regularly. In fact, defense labs resemble snowflakes in that no two are alike, 

even within Services. In addition to focusing on different subject areas, they 

devote different percentages of work to those areas, they contract out to private 

industry different percentages of that work, and they categorize activities as 

either RDT&E or “commercial” differently, to name just a few examples.

Significant differences also exist among each of the Services’ funding 

processes. These too have caused many difficulties when, for example, Congress 

and DOD have attempted to compare costs across Services. One crucial difference, discussed in Chapter Five and Appendix B, is the Navy’s industrial-type 

funding, called the Navy Working Capital Fund (WCF). Under the WCF, Navy 

labs recover most of their overhead costs by charging customers, just as industry 

does. Such “cost visibility” does not always exist with the Air Force technical 

centers – which are largely institutionally funded through congressional appropriations – or Army centers – which are funded through both direct appropria-
Introduction 5

The main site of the Naval Research Laboratory is located in Washington, D.C., on the East 

bank of the Potomac River. It was established in 1923 and serves as the Navy’s Corporate 

Laboratory.

tions and customer funding with partial overhead reimbursement. This situation 

creates an “un-level” playing field, in that a subsidized bidder, such as an Air 

Force lab, can often underbid a WCF activity. Overall then, while a customer 

may get a better deal by working with the Army or Air Force, the taxpayer may 

not.

The Navy RDT&E community consists primarily of geographically dispersed warfare and systems centers, plus NRL, the Navy’s corporate laboratory. 

The Naval Surface Warfare Center (NSWC), Naval Undersea Warfare Center 

(NUWC), Naval Air Warfare Center (NAWC) Aircraft and Weapons Divisions, 

and the Space and Naval Warfare Systems Command (SPAWAR) Systems Centers (SSCs) ultimately arose from the 1991 BRAC (discussed in Chapter One), 

which closed or realigned 36 RDT&E and In-Service Engineering (ISE) activities. The Navy envisioned that each of these new “full-spectrum” centers would 

maintain the in-house capability to support war-fighting systems throughout their 

life cycle. The Navy Laboratory/Center Coordinating Group (NLCCG), consisting of the military commanders and civilian directors of these activities, routinely met as a Navy Secretariat chartered forum to address issues and coordinate 

efforts affecting the Navy’s largest technical community.

Several differences exist between the NRL and the warfare centers. One 

is size. Even the smallest warfare center has considerably more personnel and a 

much larger business base than NRL. Both the centers and NRL perform technical work across the spectrum. However, more than 80 percent of NRL’s business 
6 Introduction

base is derived from RDT&E funding, and more than 50 percent from S&T, 

while in the centers, RDT&E funding accounts for less than 30 percent of the 

business base, and S&T funding accounts for less than 10 percent. Most of the 

funding for a warfare center, then, is directed from accounts such as procurement 

and operations and maintenance, or the latter stages of the acquisition process.

The overall defense technology base consists not only of in-house technical 

centers but also of industry and academic or not-for-profit organizations. DOD 

relies primarily on academia for basic research. It has agreements with several 

University Affiliated Research Centers (UARCs) and Federally Funded Research 

and Development Centers (FFRDCs). Also, DOD contracts with many private 

sector companies to manufacture, field, and develop the products it acquires. As 

mentioned, the percentages of work outsourced vary significantly across installations and even within each installation according to activity. Interestingly, most 

studies – and policy – aimed at improving the return on investment in Navy 

RDT&E have been directed at in-house organizations, but the majority of the 

work has always been contracted to others.

Many of the reports discussed in this book addressed the roles and missions 

of the Navy and DOD R&D centers. The basic reason for their existence is the 

need to bring technical understanding to military problems, to identify the best 

candidate for solving those problems, and to verify whether a problem has been 

solved technically. Stated another way, the centers are uniquely positioned to 

integrate work – done both in-house and in private industry – across the RDT&E 

spectrum to maximize military capability. Most analysts agree that this corporate 

technical continuity is the “inherently governmental function” of the centers. 

Widespread agreement has existed that those centers:

• Provide direct, rapid technical support to the warfighter

• Ensure that warfighter needs determine technology investment

• Maintain vital, unique capabilities and facilities not existing in the private sector

• Perform a “smart buyer” role (discussed in Chapter One)

• Maintain corporate memory

Themes and Conclusions

Since WWII, well over a hundred major reports and hundreds of smaller 

studies on the in-house laboratories have struggled with a number of recurring 

issues. Most prominent among these include:

1. Hiring and retaining highly capable scientists and engineers, and 

modifying the civil service system

2. Advocating for S&T at the highest levels of government 

3. Maintaining state of the art facilities and equipment

4. Relying on “alternative” forms of management, such as governmentowned, contractor-operated (GOCO) labs, which provide flexibilities 

(for instance in personnel management) unavailable in governmentoperated labs

5. Providing lab directors with sufficient authority and accountability
Introduction 7

6. Relieving labs and centers of burdensome regulatory and bureaucratic 

encumbrances and contracting/procurement procedures

7. Supporting long-term research within a short-term budget system

8. Coordinating, consolidating, and/or closing RDT&E activities within 

the Services and across DOD to minimize duplication of effort and 

maximize efficiency and critical mass

9. Streamlining management

10. Finding the best ratio of contracting out work to performing it inhouse

11. Measuring RDT&E return on investment

Of these eleven issues, the first seven deal primarily with improving lab 

effectiveness. The next two, although also concerned with effectiveness, deal 

primarily with efficiency. Also, in the period under consideration, study groups 

almost always discussed the tenth and eleventh issues in terms of efficiency. A 

dictionary definition of efficiency combines getting the job done (effectiveness) 

and doing so at a minimum cost. But in the 1990s, most reports on defense labs 

and centers clearly favored the latter at the expense of the former.

In fact, a review of the reports written between the mid-1980s and late 

1990s, examining which recommendations were implemented, shows that 

downsizing and efficiency initiatives triumphed over reform and effectiveness 

programs. While report after report identified the same barriers to laboratory effectiveness and offered remarkably similar proposals to remove them, and while 

the Navy and DOD established numerous demonstration, pilot, and improvement 

programs, few of the measures envisioned came to fruition. Instead, outsourcing, staffing reductions, and other efficiency measures superseded those efforts. 

Study groups usually asserted that cutbacks carried out correctly would simultaneously improve performance. But they devoted many more pages to cost reduction and did not address the fact that effectiveness sometimes simply costs more.

Chapter One shows how the reports issued between the mid-1980s and the 

immediate post-Cold War era began to reflect the change in emphasis from reform to reduction and consolidation. From the 1983 White House Science Council’s report on federal laboratories through the end of the decade, studies focused 

on the importance of the labs and ways to improve them. Such studies typically 

listed numerous crucial missions and roles, discussed the need for steady investment in and continuous, high-level support for long-term S&T, lamented hiring 

and retention problems, and noted the dilemma of local lab managers bereft of 

the authority to execute their missions. Recommendations also dealt primarily 

with effectiveness, advocating, for example, extension of demo or pilot projects 

that provided needed flexibilities.

By the end of the decade however, budget pressures led DOD to shift its 

attention toward savings, a development that gained relentless momentum when 

the Cold War ended. In early 1989 President George H.W. Bush urged full implementation of the recommendations from the 1986 Packard Report on Defense 

Management and the Goldwater-Nichols Defense Reorganization Act. This led 
8 Introduction

to Secretary of Defense Dick Cheney’s Defense Management Review (DMR), 

which called for streamlining acquisition management. That report in turn led 

to a series of DMR Decisions (DMRDs). DMRD 922, forwarded in November 

of 1989, directed consolidation to reduce overlap in the RDT&E centers. A year 

and a half later, by which time the Cold War had officially ended, the first of 

three major rounds of BRAC subsumed the DMR efforts. For the Navy, BRAC 

91 officially provided the means to establish the four warfare centers and corporate laboratory structure originally developed during the DMRD 922 process.

Even though post-Cold War reductions had begun to dominate DOD, many 

reports continued to focus on effectiveness. Concurrent with the BRAC process, 

Congress had established a Federal Advisory Commission to evaluate the entire 

defense laboratory system. The Commission’s report, which described the virtues of consolidation, also discussed ways to improve the in-house labs. Meanwhile, as part of the FY 1990 National Defense Authorization Act (NDAA), 

Congress had established a Laboratory Demonstration Program (LDP) designed 

to alleviate some long-standing problems. Nonetheless, the tide had shifted 

toward anticipation of a post-Cold War peace dividend – in various conflicts between LDP-based effectiveness plans and DMR-based efficiency plans, the latter 

always triumphed.

Chapter Two summarizes the highest-level reports issued during BRAC 

93 and BRAC 95. Because the two rounds consumed so much of DOD’s effort 

in mid-decade, a survey of this scope cannot approach a comprehensive review 

of all significant reports (a search on the Government Accountability Office’s 

(GAO) website alone for studies on “base closure” yields over 400 hits). Instead, 

this chapter synopsizes the 2,000-odd pages of the highest-level reports – the 

DON/DOD, GAO assessment, and BRAC Commission – for each of the two 

rounds. Primarily those publications explained the lengthy, complicated process 

of data collection and analysis and provided the justification for each closure or 

realignment.

Chapter Two also briefly discusses some of the unpublished sources at the 

NRL archive that deal with these events. A number of oral history interviews, for 

example, describe how the BRAC rounds affected personnel and capabilities at 

Navy R&D facilities. Unsurprisingly, many of those at disestablished activities 

considered the BRAC process faulty.

Chapter Three examines reports that advocated increased outsourcing (or 

contracting) of RDT&E and of the support infrastructure generally. Numerous 

studies picked examples from the private sector and within DOD to recommend 

outsourcing as a way not only to improve service but also to save money the Department could apply to lagging procurement and modernization budgets. Most 

reports emphasized outsourcing of “commercial activities,” or those functions 

entrepreneurial in nature rather than “inherently governmental.” Many suggested redefining those key terms to the point that only policy formulation and 

preservation of unique, indispensable facilities and capabilities would constitute 

inherently governmental activities. Influential, well-publicized, and often-quoted 

studies promised 20-30 percent savings for each job outsourced. Except for 

a few reports responding to President Clinton’s directive to review the DOD, 
Introduction 9

Department of Energy (DOE), and NASA laboratories, these publications virtually ignored questions about the need for in-house RDT&E. They either skipped 

the matter of effectiveness or dispensed with it briefly. Instead, they scolded 

the community for its supposed outdated management style and lectured on the 

virtues of applying innovative private sector practices.

Chapter Four briefly discusses reports, most of them much less influential 

than those described in Chapter Three, which challenged the claims of outsourcing advocates. These reports argued that much of the private sector had already 

abandoned personnel downsizing by the mid-1990s because it hurt productivity and frequently cost more than it saved. They discussed DOD’s own history 

to argue that widespread, increased contracting could not save as much as its 

advocates estimated and could often cost money and threaten capabilities. Other 

reports challenged the notion that DOD suffered from outdated management 

styles. And finally, a host of studies showed that public/private competitions, 

rather than outsourcing itself, created the best conditions for efficiency. Such 

competitions almost always generated real savings, regardless of whether the 

private or public sector performed the work.

Chapter Five discusses reports and plans that continued to focus on laboratory effectiveness. The LDP morphed into the Laboratory Quality Improvement 

Program (LQIP), soon subsumed under the Clinton Administration’s National 

Performance Review and government “reinvention” efforts. An LQIP financial subpanel expended considerable effort trying to level the playing field for 

comparing the costs of doing business at the RDT&E centers across the Services. Legislation aimed at reform included Section 246 of the National Defense 

Authorization Act (NDAA) for FY 1999, which established a pilot program to 

provide laboratory and T&E center directors with more flexibility and authority to revitalize their organizations. Congress passed other similar legislation in 

subsequent years. While such efforts enabled moderate progress in a few areas, 

institutional and organizational barriers prevented all of them from reaching 

anywhere near their potential.

Meanwhile, downsizing and consolidation efforts continued apace. Between 1991 and 2005, while the centers and NRL workforces (including military) had been reduced by 45 percent, their collective business base, adjusted 

for inflation, had increased nine percent over the 1991 level. Part of that disparity arose from increased outsourcing and part of it from the conviction that the 

centers could do the same work with fewer people. At the same time, as a result 

of budget cuts or efforts to save money, the NLCCG community faced more than 

a dozen separate actions that restricted hiring. And in 2005, DOD carried out 

another BRAC round.

Predictably – even inevitably – the DOD today faces a recoil from this decade-plus era of extreme reliance on outsourcing. A spate of recent books, many 

focusing on the war in Iraq, discuss with growing alarm the problems that arise 

from contracting out more and more defense functions. These problems include 

conflicts of interest and scandals, the scale of which has led to concern about the 

potential damage to national security and even American democracy.
10 Introduction

What makes this reaction so predictable is that something very similar has 

happened before. Anyone familiar with the history of the defense contracting 

could have seen it coming, and in fact many did (as discussed in Chapter Four). 

While this book is a work of history, with the period of analysis ending at the 

turn of the century, the Conclusion discusses how these difficulties with outsourcing may very well necessitate a revitalization of the Defense Department’s 

in-house RDT&E activities.
Chapter One

Navy Laboratories at the

End of the Cold War

On Christmas Day 1991, Boris Yeltsin dialed up President George H.W. 

Bush to say the Soviet Union had dissolved. The call not only officially ended 

the Cold War but also, at least somewhat coincidentally, punctuated the end of 

a DOD laboratory reform effort begun in earnest three years earlier. Studies 

of the laboratories and centers during the 1980s had addressed long-standing 

issues in the community. These included the ability to hire quality scientists 

and engineers, bureaucratic encumbrances, conversion to alternative forms of 

governance, aging facilities and equipment, lab director authority, independent 

or discretionary research, proper missions and functions, strategic coordination of and commitment to technology development, and stability for long-term 

programs. Reform received renewed emphasis in February 1989 when President 

Bush, before a Joint Session of Congress, urged improving DOD procurement 

through implementing the recommendations of the 1986 “Packard Report” and 

Goldwater-Nichols Defense Reorganization Act.

Responding to the President, Secretary of Defense Dick Cheney published 

the Defense Management Review (DMR), which in large part outlined plans for 

streamlining acquisition management. Soon after, DOD issued a series of DMR 

Decisions, of which one, DMRD 922, directed the consolidation of technical 

centers. The expansion, extension, and reorientation of the LDP, designed to improve both the efficiency and effectiveness of DOD labs, and the establishment 

of Project Reliance, a tri-Service effort to coordinate investments in S&T, were 

among the initiatives that grew from DMRD 922.

These efforts both responded to and anticipated severe budget pressures 

and then collided with the end of the Cold War, causing a fundamental shift 

in the focus of reports on laboratories. Whereas those written in the 1980s 

urged improvement to maintain U.S. technological superiority over the Soviet 

Union, those in the early 1990s focused on mandated personnel reductions and 

improved efficiency, the latter of which came to mean cutting costs. Although 

predictable and reasonable, this attention to a postwar “peace dividend” rather 

quickly overwhelmed all plans to improve the technical centers.

The first round of BRAC reinforced the shift from reform to reduction. The 

Navy used BRAC both to meet the cutback targets and to implement the options 

generated through DMRD 922, consolidating all of its RDT&E activities except 
12 Reports on the Management of Navy and DOD Laboratories

NRL into four warfare centers. These new commands officially opened for business eight days after Yeltsin’s phone call.5

Starting Points – The Packard Commissions and the Defense Science Board 

on Technology Base Management

Somewhat ironically, the post-Cold War era of laboratory transformation 

began right about the time President Ronald Reagan designated the Soviet Union 

an empire of evil. In May 1983 the Federal Laboratory Review Panel’s Report 

of the White House Science Council discussed a number of themes echoed in 

most reports on DOD labs issued over the next decade.6

 Led by David Packard, 

Chairman of the Board of Hewlett-Packard and former Deputy Secretary of 

Defense (DEPSECDEF), the panel reaffirmed, as did dozens of reports before 

and after, that the labs “are an essential part of the American institutions where 

R&D is performed and scientists and engineers receive training.”(vii) However, 

“several serious deficiencies” limited their quality and cost effectiveness; although not new, the effects of these deficiencies “have increased to serious levels 

over the past decade.”(1) The panel focused on five areas: mission, personnel, 

funding, management, and interaction with universities, industry, and users of 

research results.

First, the panel connected missions and outcomes: “the clearer a laboratory’s missions are, the better its performances will be.” Typically, when “a 

national need that justified the original mission...becomes of lower priority,” a 

lab will diversify its work to maintain staff, the mission will thereby fragment, 

performance suffers, and money is wasted.(4) The panel recommended that labs 

redefine their missions specifically enough to measure accomplishments and 

determine proper size.

The Packard panel also discussed problems with resources. Both repeating and anticipating one of the most commonly uttered assertions in the history 

of such reports, it wrote that “The inability of many Federal laboratories...to 

attract, retain, and motivate qualified scientists and engineers is alarming.”(6) It 

identified non-competitive pay and “recent personnel ceilings imposed strictly 

on a numerical basis without distinguishing among types of staff”(6) as the main 

causes of the problem. As with hiring and retention, the issue of arbitrary, nonstrategic personnel ceilings remained critical in the DOD technical centers.

A third topic Packard discussed, and another that remained important for 

well over a decade, was the joint personnel demonstration project, begun in 1980 

___________________

5

For other works that cover this period, see Director of Navy Laboratories, “A Review of 

Studies Conducted From November 1989 to April 1990 on Restructuring the Navy RDT&E 

Community” (July 1990), Carlisle, Management of the U.S. Navy Research and Development 

Centers and Navy RDT&E Planning in an Age of Transition, and NRAC, “Science and Technology Community in Crisis.”

6

White House Science Council, Office of Science and Technology Policy (OSTP), “Report of 

the White House Science Council, Federal Laboratory Review Panel” (Packard Report) (May 

1983).
Chapter 1 — Navy Laboratories at the End of the Cold War 13

at the Naval Weapons Center (NWC) at China Lake, California and the Naval 

Ocean Systems Center (NOSC) in San Diego. The 1978 Civil Service Reform 

Act had authorized establishing a limited number of demonstration projects to 

improve personnel management in the Federal Government. Among other things, 

such demos sought to streamline practices and increase the authority of agency 

directors to hire and reward well-qualified people, thereby boosting performance. 

The project’s features included: 1) simplifying the classification system into 

broad pay bands, to overcome delays in recruitment and promotion and rigidity 

in administering resources; 2) linking pay and promotion to performance, and allowing flexibility in providing incentives to attract personnel; and 3) basing staff 

retention/reductions on performance. Most major reports issued during the next 

decade recommended extending the “China Lake demo” to additional laboratories or even across the DOD.7

The panel’s recommendations on budgets involved yet another, related 

issue still central to management of laboratories: the authority of their technical 

directors. Packard argued that funding processes “impede rational planning and 

effective conduct of R&D activities.”(8) Noting that directors had too little flexibility in planning projects and allocating their own funds, the panel urged that 

the Office of Management and Budget (OMB) fund “on a predictable multiyear 

basis,”(8) and that labs be able to carry leftover funding into the next fiscal year. 

It further suggested that between five and 10 percent of annual funding should 

support independent research and development at the directors’ discretion. Again 

Packard mentioned performance measurement, suggesting development of a system for determining appropriate funding levels for this type of research at each 

lab. Later studies would connect the ability to hire and retain quality scientists 

and engineers (S&Es) to the opportunity for them to pursue such challenging 

___________________

7

See NRAC, “Science and Technology Community in Crisis,” 20-21.

Dr. David Packard was co-founder 

of Hewlett-Packard Company and 

served as Deputy Secretary of Defense 

from 1969 to 1971. In the 1980s he 

led a number of high-level studies 

on DOD’s technical and acquisition 

communities. He was a member of the 

National Academy of Engineering and 

the President’s Council of Advisors on 

Science and Technology.
14 Reports on the Management of Navy and DOD Laboratories

work (most commonly known as In-House Laboratory Independent Research, or 

ILIR).8

Packard also addressed management issues. “It is clear that excessively detailed direction of laboratory R&D activities from agency headquarters, known 

as micromanagement, has seriously impaired R&D performance....”(9) At the 

same time, however, agencies do not “hold the laboratories sufficiently accountable for output in terms of quality and productivity.”(ix) The report advocated 

creating an external oversight committee for each lab, with university and industry representation, to advise the appropriate agency on budgeting and reducing 

micromanagement.

Finally, the panel encouraged interaction among DOD labs, universities, 

industry, and users of research results. A cumbersome procurement system discouraged government-owned, government-operated (GOGO) labs from contracting with universities and industry, which in turn meant labs sometimes did work 

better performed elsewhere. GOGO labs, according to the panel, should encourage access to their facilities, engage in more collaborative projects, establish 

some oversight mechanism to insure fair competition, and simplify procurement 

procedures.

The panel’s conclusions received renewed emphasis in August 1983 when 

President Reagan directed OMB and his Office of Science and Technology Policy, or OSTP (which issued the original report), to respond. The Federal Coordinating Council for Science, Engineering, and Technology (FCCSET) monitored 

implementation of the recommendations, and the Laboratory Review Panel issued a Progress Report in July 1984.9

 This study observed that multiyear funding and separate S&T personnel systems constituted the most difficult proposals 

to implement. It also found that DOD labs unconstrained by personnel ceilings 

did not engage in unwarranted hiring. Regarding the Navy technical centers, it 

focused on the sharp decline in discretionary funding and commended efforts by 

the Director of Navy Laboratories (DNL) to reverse the trend. Meanwhile, the 

Office of Naval Research (ONR) planned “to maintain discretionary funds as 

a constant percentage of basic research funds (about 7%)...[and] the Office of 

Naval Technology [ONT] has agreed to increase the percentage of discretionary 

funds as part of applied research funds (from 2% to about 5%).”(13, Vol. 1) Finally, the report commented that two-year budgets proposed in the earlier OSTP 

report would ultimately provide little stability for RDT&E programs.

The significance of the Progress Report was not so much that it specified 

improvements or shortfalls in the time elapsed since the original report, but 

instead that it simply existed. The FCCSET wanted its charter extended “to allow continuation of periodic meetings” and to “continue the momentum estab-

___________________

8

Although the report used the term independent research and development while discussing 

in-house labs, typically IR&D or IRAD refers to independent research DOD contractors perform. In-House Laboratory Independent Research, or ILIR, typically refers to DOD labs.

9

OSTP, “Progress Report on Implementing the Recommendations of the White House Science 

Council’s Federal Laboratory Review Panel.” Vol. 1, Summary Report. Vol. 2, Status Report 

by Agencies (July 1984).
Chapter 1 — Navy Laboratories at the End of the Cold War 15

lished....”(2, Vol. 2) In other words, it proposed setting up a stable, continuous, 

adequately resourced process for people in senior leadership positions to monitor 

and persistently support federal R&D in order to ensure that compelling recommendations advocated by capable study groups were acted upon. However, DOD 

did not adopt this recommendation.

The Second Packard Commission

Various steps the Laboratory Review Panel advocated became incorporated 

into a major and ultimately very influential report issued two years later – A 

Quest for Excellence, produced by the President’s Blue Ribbon Commission 

on Defense Management, also chaired by David Packard.10 The Commission 

examined national security planning and budgeting, military organization and 

command, acquisition organization and procedures, and government-industry 

accountability. It framed the overriding issue as one of balancing centralized 

management with the “free expression of people’s energy, enthusiasm, and 

creativity....”(xi) Stated another way, it advocated “strong centralized policies 

implemented through highly decentralized management structures....”(xii) The 

Commission called for creating “centers of management excellence,” based on 

this idea that Congress should focus only on “overall defense posture and military performance.” Likewise, management “responsibility and authority [should 

be] placed firmly in the hands of those at the working level, who have knowledge and enthusiasm for the tasks at hand.”(xii) And perhaps most significantly, 

Packard proposed creating a streamlined chain of command extending from a 

Defense Acquisition Executive (DAE) to Service Acquisition Executives (SAEs) 

to Program Executive Officers (PEOs) to Program Managers (PMs).

Many findings sounded themes similar to Packard’s earlier report on 

laboratory reform. The Commission argued that successful acquisition originated 

from a “stable environment” and discussed the “impressive” savings available 

“from eliminating the hidden costs” caused by the “chronic instability in top-line 

funding.” It bemoaned labyrinthine procurement laws, fragmented, uncoordinated acquisition policies, and the “never-ending bureaucratic obligations for making reports and gaining approvals” – unnecessary obligations that wrest control 

of programs from the mangers responsible for them.(xxi-xxii)

Overall, the Packard Commission sought to purge bureaucratic nuisances 

by establishing acquisition executives that could simplify the chain of command. 

In theory, these top-level decision makers would provide overall direction and 

then remove every unnecessary position, office, or even agency between them 

and the people doing the actual work. To that end, the authors called for: 

• creating an Undersecretary of Defense for Acquisition (USD(A)) as the 

DAE responsible for overall procurement and R&D policy

• managing the process through a Joint Requirements Management Board 

(JRMB), which would define overall requirements and select programs 

to develop

___________________ 

10President’s Blue Ribbon Commission on Defense Management, A Quest for Excellence: 

Final Report to the President (Packard Report) (June 1986).
16 Reports on the Management of Navy and DOD Laboratories

• establishing for each Service a position comparable to the USD(A), or 

in other words an SAE. The SAEs, then, would appoint PEOs responsible for major, multi-component platform/weapons systems development. Individual PMs, in turn, would be responsible solely to the PEOs. 

The resulting personnel reductions and unambiguous, short, chains of 

authority would dramatically simplify acquisition, increasing accountability throughout the system while allowing people the freedom to 

apply their talents toward producing rather than complying.

The USD(A)-JRMB-SAE-PEO chain constituted the core of the Commission’s recommendations, but it also offered various others. These included 

formulating a single, government-wide procurement statute, allowing for flexible 

personnel management policies such as those in the China Lake demo, expanding professional development opportunities for acquisition personnel, and 

increasing use of “off-the-shelf” materials and services (those available from 

commercial companies). It also recommended expanded prototyping.

The Navy laboratory system had undergone a significant reorganization 

just before the publication of the second Packard Report. In 1985 Secretary of 

the Navy John Lehman disestablished the Naval Material Command (NAVMAT), to which all the Navy RDT&E activities except NRL and the Naval 

Ocean Research and Development Activity (NORDA) had reported (the latter 

two activities reported to the Chief of Naval Research (CNR)). Both the DNL 

– who helped reduce duplication of effort and coordinate the activities among the 

RDT&E centers – and the laboratories themselves were eventually placed under 

the newly created Space and Naval Warfare Systems Command (SPAWAR), 

formerly the Naval Electronics Systems Command (NAVELEX). Part of the justification for this organizational placement was that SPAWAR’s mission included 

the new function of Warfare Systems Architecture and Engineering (WSA&E), 

i.e., the integration of the various disparate sensor and weapons systems in each 

Navy ship, aircraft, and submarine. Occurring before the second Packard Report, 

Lehman’s actions nonetheless corresponded with the report’s emphasis on 

reducing bureaucratic management, although some argued that SPAWAR simply 

became another layer of management between the labs and the principal sponsors of their programs.11

The disestablishment of NAVMAT and new organizational placement of 

the DNL ultimately had major consequences for the Navy’s technical centers. 

The Chief of Naval Material (CNM) had been a four-star admiral; the Commander of SPAWAR was a three-star admiral, as were the other Systems Command (SYSCOM) commanders. The Office of the DNL, by virtue of its orga-

___________________ 

11For a fuller discussion of these events see Carlisle, Management of the U.S. Navy Research 

and Development Centers and Navy RDT&E Planning in an Age of Transition. Also, the 

RDT&E Management Archives at the Washington Navy Yard has 45 oral history interviews 

on the establishment of SPAWAR. These are part of a larger collection, abstracted in Joseph 

Marchese, ed., Index of Oral Histories Relating to Navy Research, Development, Test, Evaluation, and Acquisition (1992), available upon request.
Chapter 1 — Navy Laboratories at the End of the Cold War 17

nizational relationship with CNM, had in effect operated as a Deputy Assistant 

Secretary of the Navy (DASN). Now, it too was subsumed under a two-star command. In short, one principal, high-level advocate for the labs no longer existed, 

and another had been effectively “demoted.”

The Defense Science Board on the Technology Base and

Laboratory Demonstration Program

Like the two Packard Commission reports, the Defense Science Board’s 

(DSB) 1987 publication on Technology Base Management affected the technical centers for over a decade.12 (This report defined the technology base as budget categories 6.1 – Basic Research, 6.2 – Exploratory Development or Applied 

Research, and 6.3A – Advanced Technology Development.) As in other reports 

written during this time, the DSB noted the widespread concern about a shrinking gap between U.S. and Soviet military/technological capabilities, and the 

widespread perception that DOD received inadequate return on its R&D investment. The Board focused on what it considered OSD’s overemphasis on systems 

development at the expense of S&T and also on the importance of Advanced 

Technology Transition Demonstrations (ATTDs). One of the more significant 

recommendations was the Board’s advocacy of a laboratory demonstration program, including an expansion of the China Lake personnel demo.

The Board offered three principal findings.

1. OSD, which once “exerted a centralized point of unified leadership and 

budgetary authority and control” over 6.1 research, had become preoccupied with large development programs and left basic research to the 

Services. As a result, S&T had “been relegated to a position of second 

order of importance and lacks top management attention.”

2. As the defense laboratories “are of supreme importance to DOD,” any 

problems with technical competence must be addressed before they 

worsened.

3. Both DOD and industry “are seriously deficient in rapid technology 

transition from R&D to systems and products.”(E-1, 2)

Much like the first Packard Commission, DSB emphasized the need for 

continuous, high-level attention to lab reform. It urged USD(A) to “delegate his 

Acquisition Executive leadership” to a staff member “vested with full authority 

and responsibility for the integration and execution of [the] 6.1 program as a corporate asset.”(iii) Similarly, the Undersecretary should “explicitly reaffirm” the 

significance of basic research, accentuate its long-term nature, and “re-assert the 

corporate budget and managerial authority already resident within OSD.”(E-3)

The extensive changes proposed in the Board’s second set of recommendations similarly reflected what many analysts had long considered necessary for 

___________________ 

12Defense Science Board, “Report of the Defense Science Board 1987 Summer Study on 

Technology Base Management” (December 1987). The DSB is an Undersecretary for Defense-appointed committee that creates task forces consisting of Board members and other 

civilian consultants to study scientific and technical matters of interest to DOD. 
18 Reports on the Management of Navy and DOD Laboratories

improving the lab/center system. The Board advocated five-year appointments 

for technical directors and clear lines of authority and accountability from them 

to their senior superiors. It also called for an “experimental Senior Scientific 

Technical Acquisition Executive Program,” consisting of up to 100 appointments, all aimed at “significantly strengthening critical technology skills, Technology Base management, and Defense Acquisition management.”(E-4)

Most significantly, the report recommended expanding the NOSC/NWC 

China Lake personnel demonstration to all S&Es in all DOD labs and establishing a multi-faceted laboratory demonstration program in each Service. DSB 

believed the China Lake demo had simplified and improved the personnel classification and performance evaluation systems, allowed for performance-based 

awards and retention efforts, rewarded technical (as opposed to management) 

contributions, and offered to new S&Es salaries competitive with the private 

sector. The report recommended that each Service grant one laboratory the 

authority to test a variety of plans to attract and retain top-quality staff, improve 

contracting effectiveness and personnel management, and provide local laboratory management authority and accountability. Implementing such a proposal 

would require granting much greater authorities than those the China Lake demo 

conferred on NOSC and NWC.

The Board’s final set of recommendations focused on launching ATTDs. 

Calling this idea a “logical extension” of the prototyping the second Packard 

Commission suggested, the Board reasoned that ATTDs could sharpen decisions about committing to full-scale engineering development of experimental 

systems.(25) To that end, it advocated directing half or more of 6.3A funding to 

ATTD projects.

At just 25 inches long and 5.3 pounds, Spike, developed at Naval Air Warfare 

Center Weapons Division China Lake, Calif., is the smallest guided missile in 

the world and the only missile using an electro-optical imaging strapped-down 

seeker. China Lake’s Personnel Demonstration Project received high praise from 

both DOD and Congress in the late 1980s. U.S. Navy Photo (RELEASED) 
Chapter 1 — Navy Laboratories at the End of the Cold War 19

Certain factors differentiated the impact of the DSB and two Packard 

reports from the “duly noted” responses to other similar missives. The DSB’s 

recommendation for extending the China Lake demo was heeded, though not 

until 1995. Also, the proposal to create lab demo programs that addressed such 

issues as contracting effectiveness, technical director authority, and infrastructure 

renewal was also adopted, and later morphed into several time-consuming and 

expensive variants during the 1990s. As for the Packard reports, two Presidents 

specially sanctioned their proposals. Subsequent panels and commissions most 

often cited those studies’ conclusions, which became explicitly designated as the 

standard against which reform should be measured. Between President Reagan’s 

endorsement of the Packard Report on federal laboratories and President George 

H. W. Bush’s endorsement of the second, broader Packard Report, a number of 

other reviews addressed management of the Technology Base and of R&D and 

acquisition in general. These also helped add momentum to laboratory reform 

efforts.

General Overviews of the Technology Base

One of those studies, the Institute for Defense Analyses’ (IDA) report on 

Improved Coordination of the DoD Science and Technology Programs, 

reached essentially the same conclusions as the 1987 and 1988 DSB reports (the 

latter is discussed below).13 This is unsurprising in that IDA prepared the report 

at the request of the Director, Defense Research and Engineering (DDR&E), 

chair of the DSB. IDA focused on three issues: the perceived decline in productivity among technical centers, an especially serious problem considering 

“the erosion of the formerly dominant position of technological superiority in 

war-fighting capabilities enjoyed by the United States”(ES-1); the need for a 

cross-Service S&T strategy; and the necessity of high-level, continuous support 

for long-term S&T.

Largely, IDA simply reaffirmed the importance of investing in longterm Science and Technology. “It is conventional wisdom that too much emphasis on near-term goals is dangerous in a rapidly changing technological 

environment.”(ES-3) IDA emphasized that S&T investments supported high-risk 

projects and also helped DOD meet unique military requirements, exploit emerging technologies, and demonstrate military applications of technologies. The 

report cited success stories – including “stealth platforms, cruise missiles, lasers, 

microelectronics, and submarine and space advances”(II-4) – resulting from 

S&T investments focused on long-term payoff. Despite these successes however, 

“there is a widespread belief at the higher management levels that the productivity of the DoD laboratories needs improvement.”(I-3)

___________________ 

13Institute for Defense Analysis, “Report of the Task Force for Improved Coordination of the 

DoD Science and Technology Programs: Volume 1, Summary Report and Recommendations” 

(July 1988).
20 Reports on the Management of Navy and DOD Laboratories

The study group recommended several measures designed to ensure support for S&T.

1. USD(A) should aggressively promote S&T through press releases and 

posture statements and among the Fleet, Congress, OSD, and appropriate agencies.

2. The “long term downward trend in S&T program investment...[should] 

be arrested and replaced by rational goals for future growth.”

3. S&T should be treated as a necessary corporate investment rather than a 

luxury.

4. OSD should establish a set percentage of Total Obligation Authority 

(TOA) for S&T, protecting it “against disproportionate cuts during budget exercises” and ensuring it is not “subjected to trade-offs with other 

parts of the budget.”(ES-7, 8, III-23)

As the title suggests, IDA’s other recommendations centered on coordination and strategy for “the overall technical program of activities undertaken by 

the laboratory community.”(I-5) The study defined strategic planning as a fourpart system: guidance, which sets near- and long-term operational objectives; 

investment strategy, which establishes the technology goals and identifies the resources necessary to meet those goals; programming; and implementation, which 

allocates resources. Rather than advocating a particular approach, IDA argued 

for setting up a “permanent process” for developing and executing strategy.(I-6)

More specifically, the report recommended creating both a DOD-wide 

investment strategy and a DOD-wide coordination group. Noting that each 

Service prepared long-range S&T plans but that little coordination existed 

among Services, IDA suggested that USD(A), through the DDR&E, generate an 

“S&T Investment Strategy” document to guide the Services and DOD agencies. 

Second, because technical interchange occurred at working levels but was not 

coordinated at higher levels, the report proposed that a Department-wide coordination group set up panels for various technology “clusters.”

DSB continued to sound the alarm about America’s technological decline 

relative to the Soviet Union in its two-volume 1988 Summer Study on The Defense Industrial and Technology Base.

14 Defining the “principal problem [as] 

a significant difference between industry’s capabilities and the tasks which na-

___________________ 

14DSB, “Report of the Defense Science Board 1988 Summer Study on The Defense Industrial 

and Technology Base.” Volume 1, October 1988. (Volume II, not discussed here, appeared in 

December). The DSB defined the technology base as “programs whose primary purpose is to 

improve scientific knowledge which can be adapted to military purposes. The ‘research’ and 

‘exploratory development’ research categories are included in technology base budget activity.” (E-4) The defense industrial base generally means those industries and companies that 

rely on DOD for most of their business. Examples might include the shipbuilding industry and 

a firm like General Dynamics. The term also sometimes includes companies that are a critical 

supplier of defense products but also do substantial business in the commercial sector (e.g. 

Boeing).
Chapter 1 — Navy Laboratories at the End of the Cold War 21

tional security plans assume it can perform,” the study asserted that “America’s 

technological superiority has diminished.”(Cover memo, 1) The Board identified 

inadequate long-term investment as the cause of this decline; in turn, pressure on 

defense industries to produce quickly had caused the low investment. It claimed 

globalization15 had rendered acquisition policy obsolete, yet that policy remained 

unresponsive to this growing “world-wide interdependence on resources”(2) 

and dependence on foreign technology. Also, specific policies led subcontractors and suppliers to segregate their dated technology into defense-based work 

or avoid such work altogether. DSB also found little Executive, Congressional, 

or any other high-level coordination of defense industrial and technology base 

programs.

Many of the Board’s 10 principal recommendations involved high-level 

coordination. For example, it recommended either an Executive Order or a 

National Security Decision Directive for creating an Industrial Policy Committee to assess defense needs and industry capabilities. It recommended that the 

Secretary of Defense actively influence economic policies that affected national 

security and integration of industrial base efforts, and that the USD(A), through 

policy and incentives, encourage long-term investment.

Another significant proposal, and one still periodically considered in 

DOD, was converting many labs to Federally Funded Research and Development Centers (FFRDCs) or GOCO labs. Usually, FFRDCs (such as the RAND 

Corporation) are owned by universities or not-for-profit organizations and 

operated through long-term contracts with the Federal Government. GOCO labs 

(such as the Los Alamos National Laboratory) are owned by the government, but 

a contractor employs the staff. The basic idea is that these “alternative” forms 

of laboratory governance can utilize advantages enjoyed in the private sector, 

such as competitive pay offerings and simplified hiring/firing procedures. The 

DSB advocated conversion as a method of attracting and retaining high-quality 

S&Es.16

Two other recommendations, involving independent research and development (IR&D) and effectiveness versus efficiency, merit attention here. First, 

calling it the most effective mechanism “in developing and inserting technology 

into defense systems,”(40) DSB urged considering IR&D cost recovery in the 

long term, rather than basing it on specific budgets. And finally, it advised that 

procurement policies promote quality as well as cost, or in other words, not just 

efficiency but also effectiveness.

One of the most thorough and authoritative reports of the period and one 

many subsequent studies referenced was the congressional Office of Technol-

___________________ 

15Most simply, globalization is the integration or exchange of economic, cultural, social, and 

political systems across geographic boundaries. In the DOD S&T community, it refers primarily to the development and availability of technology worldwide.

16See Bibliographic Note, Chapter 5, and also Timothy Coffey, Kenneth Lackie, and Michael 

Marshall, “Alternative Governance: A Tool for Military Laboratory Reform.” Defense Horizons 34 (November 2003), 1-8.
22 Reports on the Management of Navy and DOD Laboratories

ogy Assessment’s (OTA) Holding the Edge.

17 Noting the portentous (if not yet 

life-threatening) decline of U.S. technological superiority, the study concentrated 

on three areas: strategic management of Technology Base and R&D programs, 

particularly the lack of coordination across DOD; technology transition (fielding new technology), particularly the numerous and conflicting acquisition laws 

preventing exploitation of civilian-developed technology; and dual-use technologies, particularly the challenges of globalization and industry resistance to 

defense work. Another major section of the report, and the one receiving most 

attention here, examined the necessity for and reforming of the DOD laboratory 

system.

Because OTA synthesized many previous studies, and because so many 

later reports cited OTA’s arguments, it is worth discussing at some length its 

overview of the DOD technical centers. Commenting on three decades worth of 

lamentations, OTA suggested that “The mind-numbing array of specific issues 

that these earlier reports have raised” comes down to two issues: Does DOD 

have the type and quality of labs it needs? and Do management arrangements 

inhibit productivity?(22)

The study cogently summarized major problem areas. These included attracting, paying, and promoting personnel, administering contracts rather than 

tackling challenging work, and rewarding managerial rather than technical excellence. OTA agreed that technical directors had too little control over work done 

at their sites. Further, “delays in new construction are one of the major obstacles 

to lab performance,”(73) as facility modernization applications go into a single 

“pot” for consideration with all other military construction (MILCON) projects, 

and scientific requests receive low priority. Obsolete facilities, in turn, thwarted 

recruitment. Yet another problem was that, in the end, Congress funded GOCOs, 

Government-Owned, Contractor-Assisted (GOCA), or Contractor-Owned, Contractor-Operated (COCO) labs too. This meant that over time they became more 

like GOGOs, their personnel bemoaning endless navigation through a sea of red 

tape. OTA also challenged DSB’s recommendations for changing legislation and 

regulations; instead, “a congressional decision to treat the laboratories differently 

from other government offices” might “facilitate the [required] changes.”(25)

Inherently Governmental Functions

Such a wearisome assortment of seemingly intractable problems might 

suggest abolishing the system were it not for one issue: virtually every analysis 

ever done on the technical centers accepted their absolute necessity. The most 

fundamental reason for this conclusion, OTA noted, was that some functions are 

inherently governmental, meaning they should not be contracted out to the private sector. Quoting the seminal “Bell Report” of 1962, a comprehensive evalua-

___________________ 

17U.S. Congress, Office of Technology Assessment, “Holding the Edge: Maintaining the 

Defense Technology Base” (April 1989). This was a follow-up report to OTA’s “ The Defense 

Technology Base: Introduction and Overview” (March 1988). OTA, established in 1972 to 

provide Congress information about technological developments, was abolished in 1995.
Chapter 1 — Navy Laboratories at the End of the Cold War 23

tion generally considered the most authoritative on contracting out federal R&D, 

OTA defined decisions that exemplified inherently governmental functions: what 

work to do, what objectives to set, what time and costs to expect, what measures to establish for “knowing whether the work has gone as it was supposed to 

go,”(64) and what steps to take for correcting mistakes.18 These functions also 

included developing technical specifications for and supervising contractors, and 

sometimes insuring reliability regardless of cost.

In sum, “the decision-making process leading to materiel acquisition is 

inherently a governmental function.” Selecting the best of various technical 

alternatives required an internal capability “of sufficient breadth, depth, and 

continuity to assure that the public interest is served.”19 According to OTA, the 

inherently governmental argument inevitably led to the conclusion that defense S&Es are a national asset whose importance extends beyond particular 

programs, that laboratories are continuing concerns rather than job shops, and 

that their staff must perform some hands-on work, even if only to maintain the 

expertise to supervise contractors.

Smart Buyer

OTA argued that a second crucial and related role for the tech centers was 

that of being a smart buyer. Briefly, smart buying is the ability to collaborate 

with contractors and assess the defense value of private sector technological developments. The inherently governmental function and smart buyer role 

intersect – assessing technology requires technical know-how. Smart buying 

includes working hands-on with technologies the private sector can also produce 

and advising program directors on the technical merits of proposals. It includes 

proving a concept that could generate a new technology. One particularly important smart-buyer role includes “deciding when work in a certain area has gone 

as far as it should,”(65) or in other words, ending an infeasible project before 

costs skyrocket. In numerous instances, losing the technical expertise needed to 

perform the smart buyer role has cost DOD dearly.20

The report listed other critical responsibilities of DOD labs and centers. 

They can respond immediately to problems in the field, and their missions, unlike those of contractors, align with their DOD agency. Further, basic research, 

supported through ILIR funding, can acquire unforeseen military applications, 

and the opportunity to do basic research that is not always directly tied to de-

___________________ 

18Bureau of the Budget, “Report to the President on Government Contracting for Research and 

Development” (April 1962). For a discussion of this report, see Carlisle, Management of the 

U.S. Navy Research and Development Centers, 19-22.

19Office of the USDRE, Research Office, “Required In-House Capabilities for Department of 

Defense Research, Development, Test and Evaluation” (Perry Report) (October 1980), quoted 

in Federal Advisory Commission, “Federal Advisory Commission on Consolidation and 

Conversion of Defense Research and Development Laboratories (Adolph Report) (September 

1991), 2-3. The Perry Report (discussed in Carlisle, Management of the U.S. Navy Research 

and Development Centers, 67-68) strongly advocated in-house laboratory capabilities.

20See Kavetsky et al., From Science to Seapower, esp. 37-42.
24 Reports on the Management of Navy and DOD Laboratories

velopment can lure capable S&Es. In addition, labs can work in areas of little 

interest to industry – an aspect particularly important for the Navy, as there is 

much less industry interest in ship building than in, say, aircraft development. 

Such work can have a continuing, reciprocal impact, because it often leads to 

developments that eventually do interest industry. Technical centers can also 

readily perform classified work. Finally, they can provide user support, which 

often includes inserting new technologies into existing systems (again, this role 

especially affects the Navy, as its “full-spectrum” centers work across the entire 

acquisition cycle).

The OTA study also discussed personnel issues. It too praised the China 

Lake demo but noted continuing problems. For one, the increased pay flexibilities still trailed those in the private sector. Further, fixing personnel issues would 

not repair a total work environment that included mountainous paperwork, 

uncertain budgets, and ridiculously long lead times in obtaining equipment. 

Perhaps most inexplicably, the China Lake venture, operating for a decade to 

glowing reviews, had yet to be duplicated – apparently “a successful experiment 

that will have no ramifications.”(70)

Finally, OTA identified other basic issues “that profoundly affect the welfare of the defense technology base.”(9) The plethora of often conflicting laws 

governing acquisition delayed technology transition and prevented exploitation 

of civilian- developed technologies. Uncoordinated planning occurred across 

OSD and between the civilian and defense R&D sectors. The report claimed that 

such fragmentation within DOD derived either from lack of power or lack of will 

to control the Services, and from the fact that no office served as a focal point. 

Finally, although the Goldwater-Nichols Defense Reorganization Act of 1986 

changed titles and players, it did not correct these underlying problems.

Goldwater-Nichols and the Defense Management Review (DMR)

The apprehension that America’s technological advantage over its adversaries had declined, along with the parallel conviction that DOD R&D centers 

had reached a near-crisis point, created a powerful momentum for lab/center 

reform. Events throughout 1989 intensified this momentum. In his February 

address to Congress, President George H.W. Bush tasked DOD to apply fully 

the changes articulated in the second Packard Report and the Goldwater-Nichols 

Act.21 In July, SECDEF Dick Cheney’s Defense Management review responded 

to the President and called for reassessing defense acquisition entirely.22 The 

DMR focused on three additional areas: personnel and organization, planning, 

___________________ 

21Public Law 99-433. To a large extent, the act shifted supervision of DOD field activities 

from military to civilian control. It also sought to eliminate unwarranted S&T program duplication among the Services through “Tri-Service Reliance.” It abolished the position of the 

Undersecretary of Defense for Research and Engineering, replacing it with the Undersecretary 

of Defense for Acquisition. President Bush’s direction to DOD was National Security Review 

11.

22Dick Cheney, “Defense Management: Report to the President” (July 1989).
Chapter 1 — Navy Laboratories at the End of the Cold War 25

and government-industry accountability. It provided broad outlines of responsibilities for key officials and organizations and of methods for restructuring the 

lines of authority in the acquisition process. The report directed that the Services 

convey their plans for implementation by October.

The theme of streamlining dominated the DMR. While the second Packard 

Commission had advocated an acquisition system in which top-level officials 

provided overall direction and then excised as many links as possible between 

them and the people doing the actual work, the DMR explained how to accomplish this. Authority would flow from the USD(A) to an SAE in each Service, 

through middle managers (PEOs) to individual PMs. PEOs would manage only 

their assigned programs, and program managers would report only to the PEO or 

SAE. This arrangement “was intended to capture all cost, schedule and performance features of all major programs.”(9, emphasis in original) Materiel and 

Systems Commands would have three main roles: logistical support, management of programs not under the PEO structure, and support services to PEOs and 

PMs without duplicating any management functions.

The DMR envisioned other sweeping changes. It promised better program 

stability through increased USD(A) and SAE involvement in budget initiatives. 

It called for a joint OSD/Services zero-based review of acquisition, procurement, 

and logistics regulations. It blessed the China Lake demo program but urged an 

even broader authority for changing personnel policies. It planned to increase the 

professionalism of the civilian workforce and to establish “a dedicated corps of 

officers in each Service who will make a full-time career as acquisition specialists.”(14)

Cheney’s report also emphasized cost reductions. He discussed methods 

such as improved prototyping and testing and increased buying of commercially 

available products. The “broader effort” included consolidating or eliminating “research, development and procurement-related functions that do not add 

clear value,” and, even more vaguely, achieving “an overall improvement in the 

efficiency of DoD’s acquisition management, logistics, distribution, and related 

maintenance activities.” In all, Cheney targeted an annual savings of 15 percent, 

or $30 billion, by FY 1995.

Unlike most other reports’ obligatory wave to thrift and efficiencies, this 

report’s recommendations were heeded. Budget consequences from the Reaganera military buildup had created pressure for reductions. And just as cost cutting 

began in earnest, the Cold War entered its final act – the Berlin Wall was razed 

in October 1989, only three months after the DMR appeared. The widespread 

impression that the time had arrived to solve problems long discussed in the 

RDT&E community merged with these changes to instigate a major restructuring among the Navy laboratories, not completed until the end of the first large 

round of base realignments and closures.

SECNAV set up a Management Review Task Force (MRTF) composed of 

six working groups, and the DOD Comptroller began issuing a series of Program 

Budget Decisions (PBDs) and DMRDs designed to reduce costs during the next 

five fiscal years. In November, the Department issued DMRD 922, “Consolidation of R&D Laboratories and Test Facilities.” DEPSECDEF Donald Atwood 
26 Reports on the Management of Navy and DOD Laboratories

directed studies, due by May 1990, on how best to implement appropriate directives.23

What followed during the period from late 1989 to mid-1991 was the most 

intensive series of lab-related studies, programs, proposals, and general flailing 

about that anyone involved had ever witnessed. It quickly resolved itself into 

three parallel but partially related endeavors:

1. Navy reorganizations the DMR necessitated

2. Tri-Service lab/center consolidation studies that DMRD 922 triggered

3. Efforts to implement the lab-related reform recommendations of the 

Packard and the 1987 DSB studies

Although these three efforts occurred essentially simultaneously (and with 

many of the same players), they will be addressed separately here to the degree 

possible.

DMR Implementation

As Secretary Cheney instructed, the Navy (through the MRTF) responded 

to the DMR with Plans for Initial Implementation of the Defense Management Report and the Program Executive Officer and Systems Command 

Reorganization Plan.

24 The former delineated the streamlining of acquisition 

oversight at the Secretariat level. Both reports outlined the methods whereby: 

• technology would be managed

• full-time PEOs would manage major acquisition programs and report 

directly to a Navy Acquisition Executive (NAE)

• a short span of control for assigned programs would be established for 

NAEs and PEOs

• authority for personnel, technical, and budget matters would increase at 

the levels where programs were executed

• only one review would exist between a PM and the approving official

• programs would receive focused management attention and would 

transition in or out of the PEO/SYSCOM organization according to the 

principles discussed in the DMR

• contract administrative services (CAS) would be consolidated under the 

new Defense Contract Management Agency

• and a 15 percent reduction in annual costs would by achieved by FY 

1993

Conceptually, the plan followed Packard’s recommendation for setting 

policy at the top and executing it at the bottom.

___________________ 

23See DNL, “A Review of Studies,” 1-5.

24Department of the Navy Management Review Task Force, “Program Executive Officer and 

Systems Command Reorganization Plan” (September 1989). Department of the Navy Management Review Task Force, “Plans for Initial Implementation of the Defense Management 

Report” (October 1, 1989). SECDEF approved the Navy plan in January 1990.
Chapter 1 — Navy Laboratories at the End of the Cold War 27

The plan called for consolidating corporate investment in budget categories 

6.1, 6.2, and 6.3A within the Office of the Chief of Naval Research (OCNR). 

This meant joining 6.3A management with the other two S&T categories, “resulting in an office more closely aligned with OSD S&T management structure.” 

Because 6.3A work is corporate – it “covers a continuum of scientific disciplines 

and supports a continuum of DON needs” – management must act as an “honest 

broker,” allocating resources where needed. The new arrangement would end 

the “artificial partitioning of 6.3A funding along set product lines,” provide “a 

clearer transition path for Technology Base efforts,” and promote stauncher support from DON and DOD.(25-26)

As mentioned, the “Plans for Initial Implementation” presented the streamlining of the Secretariat. To comply with the DMR instruction that a single 

Assistant Secretary be designated NAE, two ASN positions were disestablished 

– Research, Engineering and Systems (RE&S) and Shipbuilding and Logistics 

(S&L). The plan designated a new ASN for Research, Development and Acquisition (RDA) as the acquisition executive, and also established the ASN for 

Installations and Environment (I&E). The streamlined chain of command, then, 

went from ASN(RDA) to PEOs to PMs (in some instances SYSCOMs directly 

reported to ASN(RDA), as mentioned below). The plan also clarified the CNR 

responsibilities for 6.1 – 6.3A policy and oversight. Overall, these changes 

proposed reducing the Secretariat-level acquisition staff from 270 to 208 and 

eliminating 52 additional positions.

Both reports articulated the nature of the PEO. They defined the position as 

“an amalgam of selected duties previously held by members of the Secretariat, 

the SYSCOM Commanders and their functional staffs, and some duties previously held by PMs.” They recommended that PEOs be assigned “all authorities 

which affect management of assigned programs.”(“Program Executive Officer,” 

4-5) As the link between Program Manager and NAE, the PEO would execute 

the latter’s oversight authority while granting the former the flexibility to meet 

specific objectives. It would also help stabilize programs by protecting PMs 

against outside forces with different priorities.

Establishing the PEO position required significant reorganization in the 

Navy SYSCOMs.25 Before the DMR, the SYSCOM commanders’ “double-hatted” responsibilities included reporting to the Chief of Naval Operations (CNO) 

and also serving as PEOs who reported to the NAE. The Navy considered this 

arrangement congruent with the Packard recommendations in that before Pack-

___________________ 

25All three military Services had systems commands responsible for developing, producing, 

upgrading, and supporting major platform/weapons systems. In the Navy at this time they 

were the Naval Sea Systems Command (ships, submarines, and associated sensor systems and 

weapons); Naval Air Systems Command (aircraft, airborne systems, air-launched weaponry, 

and aircraft-related carrier-based equipment); Space and Naval Warfare Systems Command 

(space-borne and undersea surveillance systems, command, control and communications systems, electronic and sensor system architecture, engineering, and integration); Naval Supply 

Systems Command (logistical support and supply services); and Naval Facilities Engineering 

Command (shore-based facility design, construction, and support).
28 Reports on the Management of Navy and DOD Laboratories

ard, the SYSCOMs had reported to the NAE through the Naval Material Command (NAVMAT). The DMR, however, required that PEOs be separate from 

SYSCOMs and also report directly to the NAE. As a result, the SYSCOMs lost 

their most important acquisition responsibilities and therefore, most of the basis 

for their double-hatted relationship with the ASN(RDA). In the future, the PEOs 

would also resolve any PM/SYSCOM disagreements.

The plan also proffered specific program recommendations. It proposed 

that 21 Acquisition Category (ACAT) 1 programs “in mature, stable production,” 

in other words those that had shifted “from acquisition to life cycle management 

and logistics support,” (“Initial Implementation,” 5, 11) stay in their respective 

SYSCOM, which would retain PEO responsibility and report directly to the 

NAE. 30 would transfer to a PEO. Further, interdependent programs would all be 

under one PEO, and PEOs would be aligned with their supporting SYSCOMs.

Both reports included other information and recommendations. They laid 

out guidelines for the PEO management structure, targeting 10-16 staff members 

as an ideal. They included the historical evolution of each SYSCOM and explained the MRTF’s process for charting the reorganization. They also presented 

plans to increase the acquisition expertise of military officers and strengthen the 

Civilian Material Professional (CMP) program.

At the same time the Navy released these reorganization proposals, it 

responded to drafts of what eventually became DOD Management of Technology Development.

26 Limiting its scope to R&D categories 6.1 through 6.3A, 

the report focused on four areas: DOD-wide coordination, technology transition, 

long-term investment strategy, and productivity.

Much of the report discussed problems implementing the DMR in each 

of those areas. First, various factors impeded DOD-wide coordination of S&T. 

For example, all Services worked on certain technology areas, but each Service 

developed a different aspect of, say, gas-turbine blades. In addition, various elements of the overall S&T program reported to different levels in OSD. Further, 

the major consequences of even the smallest funding adjustments could impede 

program integration. In the second area, technology transition, risk-averse acquisition planning devalued S&T by funneling its dollars into prototyping and other 

areas beyond its scope. Similarly, technology transition demos were supposed 

to simply provide options, but users who paid for them needed solutions and 

therefore balked at committing to such demonstrations. In the third area, longterm S&T investment strategy, DOD’s insufficient commitment rippled out to 

create a host of problems – piecemeal rationales for resource allocation, neglect 

of dual-use technologies, and indifference to the global changes in technology 

development.

In discussing laboratories, the report relied on previous studies. It mentioned the redundant management layers, funding uncertainties, and numerous 

administrative procedures that delayed equipment purchases, facility upgrades, 

___________________ 

26DOD, “DoD Management of Technology Development: Implementation of Recommendations of the Defense Management Review” (February 1990).
Chapter 1 — Navy Laboratories at the End of the Cold War 29

and contracting. It discussed the difficulties in hiring and retention and bemoaned a deteriorating infrastructure. And reflecting its partiality toward centralized coordination, it also argued that each Service’s independent development of 

similar research led to overlap and also dispersed scarce people and facilities.

The task force maintained that as the first step in acquisition, S&T required 

more integration and coordination than later phases. Listing advantages and 

disadvantages of various options, it recommended the following: First, that the 

DDR&E (Research and Advanced Technology) develop a long-term S&T investment strategy; second, that an S&T executive in each Service have authority for 

programs and resources – to optimize DOD-wide integration and maintain only 

one reporting level between the lab directors and the S&T executive; third, that 

the Defense Acquisition Board (DAB) S&T committee review resource allocation. A fourth recommendation discussed the role of the OSD S&T executive at 

various milestones. Following the proposals of previous DSB studies, the task 

force also recommended establishing guidelines for ATTD management.

Asserting that the “climate is now right to begin a process of change,” 

the report also discussed the “productivity of DOD laboratories.” For years, 

“literally dozens of studies have resulted in many recommendations but little 

action,” and in fact many “believe that the practical complications of achieving 

any significant improvement within today’s government operating environment 

are insurmountable.” The task force therefore urged more serious consideration of conversion to GOCO labs. For the moment however, it recommended 

consolidating and, vaguely, implementing “throughout the laboratory system 

personnel[,] administrative, and procurement procedural changes to enhance 

the research process.” It also proposed that the new Laboratory Demonstration 

Program (LDP) “embrace bolder or more controversial changes.”(17, 22)

Among the archived files related to this report are commentaries on draft 

versions – material typically discarded. Critiques from CNR, ASN(RE&S), 

SPAWAR, and the Joint Directors of Laboratories (JDL) pointed out exceptions, of which there were plenty, to the report’s general statements. To give just 

two examples: SPAWAR noted that S&T was only one mission element of the 

Navy’s full-spectrum centers. It also illustrated briefly how the Navy Industrial 

Fund (NIF) created issues unique to that Service.27

In February 1990 the Congressional Research Service (CRS) and the 

House Armed Services Committee Subcommittee on Research and Development 

published the results of their October workshop on Challenges Confronting the 

DOD Laboratories.

28 More than 30 representatives from OSD, the Service and 

DOE labs, and the private sector met to contend with problems they believed had 

to be solved soon, or “some of the laboratories may not be capable of assisting 

the Services in meeting their national security responsibilities.”(19) Much of this 

___________________ 

27For an overview of the Navy’s “industrial” funding, see Appendix B and Chapter 5.

28House Armed Services Committee, Subcommittee on Research and Development, “Challenges Confronting the DOD Laboratories” (February 22, 1990). The workshop was held in 

October of 1989.
30 Reports on the Management of Navy and DOD Laboratories

publication summarized the panel’s discussions covering three broad options: 

incremental changes to the system, conversion to GOCOs or FFRDCs, and closures/consolidations. Each of those options, in turn, was considered against six 

issues raised in the Packard, DSB, OTA, and other reports: laboratory missions, 

hiring/retention, obsolete facilities, unpredictable funding, onerous procurement 

regulations, and lab manager authority.

The group presumed a correlation between a strong federal laboratory system and national security as it dealt with the connections among those six issues. 

Unclear missions and the teeming multitude of budget, oversight, procurement, 

and management constraints caused “fragmented” and ineffective work. Indeed, 

the report noted that in 1970, Congress required 31 reports from DOD; in 1985 

that number had leapt to 458. Legal provisions increased from 64 to 213, and 

congressional mandates requiring specific DOD obedience rose from 18 to 202. 

Rather than overseeing research, managers and branch heads plodded through 

these rules. Likewise, responsibility for many support elements resided not with 

the technical director but with others who reported elsewhere.29 This disadvantage along with imbalanced MILCON competitions (as OTA had mentioned) 

obstructed facility modernization. Also, annual budgeting forced a short-term 

focus onto long-term S&T. All these problems in turn hampered hiring and retention, as did “revolving door” pre- and post-employment restrictions and conflict 

of interest legislation. Similarly, the “salary structure is a clear prescription for 

mediocrity....”(31)

The panel concurred on five proposals.

• Implement the China Lake personnel demo across DOD. 

• Provide separate pay rates for top level managers and other S&Es.

• Grant center directors more authority to consolidate or reduce staff and 

to link pay with performance.

• Amend procurement regulations. The panel noted, for example, the 

absurdity of applying the same rules both to carrying out S&T and to 

buying F-14s.

• Have Congress appoint a commission for restructuring the labs – but 

only if it failed to implement the other four recommendations.

Three other features of this report should be mentioned. First, the group believed that GOCOs or FFRDCs provided a clear advantage over GOGOs only in 

terms of personnel, and not in any of the other six problem areas. Second, it emphasized that an overall RDT&E strategy must guide any closures and consolidations. A third note here is on the sources. Again, Navy RDT&E archives contain 

background papers, commentary, and correspondence generated in preparation 

for the workshop. This material includes several substantive critiques, by some 

of the most knowledgeable people in the Navy laboratory system, of various 

arguments circulating about DOD labs and centers (similar commentaries exist 

for many such Navy/DOD lab studies).

___________________ 

29The phenomenon, commonly known as “stove piping,” is discussed later.
Chapter 1 — Navy Laboratories at the End of the Cold War 31

In a brief but authoritative discussion, James Colvard argued that for the 

Navy, the most important management issues the DMR raised involved the R&D 

centers and technology base funding. In Some Thoughts on the Navy’s Organization Under the DMR, Colvard, a former Navy laboratory Technical Director, 

Deputy Chief of Naval Material, and Deputy Director of the Office of Personnel 

Management, noted that the DMR created “fundamental and historical shifts in 

power and institutional roles.” The most important of these was the change from 

a military to a civilian chain of command headed by a political appointee.30 His 

paper traced the evolution of managing technology development to show how 

the DMR raised as many questions as it answered.

Colvard recommended that the Navy create a “technology PEO.” With the 

ASN(RDA) performing the old NAVMAT “superordinate” oversight role and 

assuming the cradle-to-grave accountability previously held by the SYSCOMs, 

new questions arose: How would new programs be generated? When would they 

transition from the PEO to the SYSCOM? What shore establishments would 

the SYSCOMs require? Where would R&D centers be placed and how would 

their funds be managed? How would PEO/SYSCOM disputes be arbitrated? 

How would the ASN(RDA) insure technological integration? Because the R&D 

centers and university laboratories31 housed the Navy’s internal technical capabilities, answers to the first three questions all depended on the fourth question 

– situating the centers and managing their funds. Colvard discussed five alterna-

___________________ 

30James Colvard, “Some Thoughts on the Navy’s Organization Under the DMR” (February 20, 

1990).

31Johns Hopkins University Applied Physics Laboratory; Applied Research Laboratory, Pennsylvania State University; Applied Research Laboratory, University of Texas; Applied Physics 

Laboratory, University of Washington.

Dr. James Colvard with Admiral Steven White, Chief of Naval Material, at left, and 

Secretary of the Navy John Lehman, center.
32 Reports on the Management of Navy and DOD Laboratories

tives, then proposed that the Office of Naval Technology (ONT) join the DNL to 

form a technology PEO.

One of the most informative and distinctive reports issued during this 

period – and also one of the least circulated – came from the Office of the 

DNL in July 1990. Rather than offering recommendations, Restructuring the 

RDT&E Community provided a narrative of the Navy’s attempt to eliminate 

underutilized capacity, unnecessary overlap, and redundant effort as directed in 

the DMR.32 Because study groups infrequently retain working material, their 

product is preserved but the process is generally lost. This review however, 

provided pertinent memos, a chronology of key events, bibliographies, Terms of 

Reference for smaller-scale studies, panel memberships, meeting agendas, internal commentaries, materials and formulae participants used, meeting notes, and 

records of debates. Overall, the report traced how three phases of study solidified 

the eventual restructuring of the Navy RDT&E community into four warfare 

centers and a corporate lab. The information in the following section is drawn 

from the DNL report.

Laboratory Consolidation Studies

DMRD 922 triggered the second significant effort of the 1989-91 period, and as noted, it directed studying laboratory consolidation on a very tight 

schedule. The directive focused on efficiency: saving money by both reducing 

infrastructure (people and facilities) and eliminating duplicative capability and 

unnecessary work. It outlined two alternatives: OSD takeover of some or all of 

the Service S&T funding and labs, or greatly increased inter-Service integration 

and consolidation of S&T programs, planning, and labs.

Instructed to report on relevant initiatives by March 1, 1990, acting 

ASN(RE&S) Richard Rumpf established an RDT&E Facilities Panel to examine 

the Navy’s technical centers. This became known as the Phase I study. The nature of consolidation raised two particularly important issues: OSD had directed 

separate studies of R&D and T&E activities, a division seldom applicable to 

the Navy’s existing, integrated RDT&E Centers. Second, OSD wanted inter-, as 

opposed to the intra-Service consolidation the Services had already begun. The 

Phase I study reported out in February 1990. Although it found some opportunities that merited further study, it basically concluded that little duplication or 

overlap existed in RDT&E activities.

In this first phase, the RDT&E group began using the term “megacenter,” 

which soon evolved to warfare center. This denoted consolidation based on 

grouping activities according to warfare area, such as air, surface, undersea, hull 

___________________ 

32DNL, “A Review of Studies.” The Navy carried out these consolidation studies at the same 

time as the OSD-level study responses to DMRD 922. In addition to the DNL report, see 

NLCCG, “A Historical Perspective on the Creation of the Navy Laboratory/Center Oversight 

Council and the Navy Laboratory/Center Coordinating Group” (September 1995). This pamphlet discusses key events in the oversight and coordination of Navy labs in the post-WWII 

era. 
Chapter 1 — Navy Laboratories at the End of the Cold War 33

shapes (ships and subs), and Command, Control, Communications and Intelligence (C3I)/surveillance. The concept provided a broad schematic for organization based on function, which in turn would help delineate accountability, 

facilitate technology transition, foster cross-Service cooperation, reduce overhead, focus investments, develop core technologies, improve interactions with 

industry, and adopt “best practices” such as the China Lake demo. The group 

drew from a 1977 Navy report that had proposed a similar arrangement.33

Because Phase I identified few savings, Mr. Rumpf expanded the analysis to consider all research, development, acquisition, and Fleet support shore 

activities. With a deadline less than a month away, he set up a “tiger team” to 

perform an intensive, two-week Phase II study under the direction of DNL Gerald Schiefer. The team began with the list of essential megacenters, each with a 

core activity (for example, Naval Surface Warfare Center as the core activity for 

surface warfare), plus the expanded corporate research lab (NRL). It continued 

to focus on function, asking: What are the minimum number of necessary functions, given that the warfare, technical, economic, and acquisition environments 

have all changed? The group believed this functional aggregation would reduce 

duplication by minimizing detachments, purifying missions, and consolidating 

and closing a number of activities. It created a “consolidation reality test”(19) to 

guide recommendations and a “rough order of magnitude”(24) scale for the costs 

and savings of implementation.

Concerned that the Phase II report also identified insufficient reductions, 

and that the tiger team’s members came primarily from the SYSCOMs, the 

Office of Naval Research (ONR), and their field activities, ASN(RDA) Gerald 

Cann – who succeeded Rumpf, the last ASN (RE&S) – directed a Phase III 

study, under the Center for Naval Analyses (CNA). CNA – an FFRDC that carries out research for the Navy and other government agencies – essentially confirmed the Phase II study’s findings, which the Navy forwarded to the USD(A) in 

April.

The DNL report includes DOD Test and Evaluation, Research and 

Development Facilities Paper, the results of the Phase II and CNA studies. 

Dated April 12, 1990, the report constituted the Navy’s response to DMRD 922, 

although Mr. Cann’s cover letter emphasized that any implementation would 

wait until the conclusion of OSD studies. The paper described industrial funding, budget outlays, ratios of out-of-house to in-house work, the Service-unique 

aspects of many Navy facilities and Fleet support and engineering functions, and 

the megacenter or warfare center concept.

The study sketched Navy RDT&E and offered potential actions under 

the DMR. It illustrated types of activities, including corporate research labs, 

and RDT&E, engineering, and T&E centers – in other words, the full-spectrum 

___________________ 

33Office of the Chief of Naval Material, Ad Hoc Group on Functional Realignment, “A Functional Analysis of the Research and Development Process in the U.S. Navy” (December 15, 

1977). For a discussion of this report, see Carlisle, Management of U.S. Navy Research and 

Development Centers, 64.
34 Reports on the Management of Navy and DOD Laboratories

work ranging from threat analysis and basic research to systems development 

to test and evaluation to post-production Fleet support. It defined in-house labs 

as facilities that turned military requirement into products and as “interpreters” 

of Fleet needs to the private sector, and of technological potentials to the Fleet. 

The paper also listed recent instances in which the centers performed those roles, 

including “smart buying,” technology base “push,”34 quick reaction capabilities, 

systems design, and program trouble shooting. Finally, the paper listed recommended near-term and possible long-term consolidations and various tri-Service 

activities.

Oral history interviews offer additional insight into these developments. 

Gerald Schiefer discussed the people he chose to work with him on the Phase 

I study and how the group categorized the 70-some technical organizations 

according to warfare area. Schiefer said he advocated placing the labs within 

the SYSCOMs because of SYSCOM pressure and also because the mandate to 

downsize predestined this change anyway. The labs had always tended to resist 

placement under the SYSCOMs because of two related fears: becoming engineering “job shops” rather than research-based centers and losing independence 

as arbiters of development programs under their parent SYSCOM. Schiefer also 

asserted that the Navy’s failure to consolidate to the extent envisioned at this 

time led to additional rounds of forced consolidations and closures in the mid 

1990s.35

In a 1995 oral history interview, Gerald Cann similarly asserted that had 

Navy officials not instigated substantive consolidations and closures, then OSD 

would have done it for them. Discussing the first two study phases, Cann stated, 

“I had to sort of tell everybody they’d better get to it or they’d get their heads 

lopped off, literally....We had a tremendous amount of pressure from the OSD 

staff at the time to do something....”(23) With the warfare center plan, “We were 

able to prevent this wholesale dismemberment of the Navy laboratory system.”(4)36 Mr. Cann did not mention, but Navy personnel working on these plans 

clearly understood, that consolidating the S&T-oriented “lab” functions with the 

T&E- and acquisition support-oriented “center” functions made it virtually impossible to transfer control from the Navy into a “purple” laboratory owned by 

OSD. DDR&E was proposing this purple lab as an alternative method to achieve 

the savings identified in DMRD 922.

Having approved the warfare center/corporate lab system, Cann directed 

the Navy to engage with the Army and Air Force on a tri-Service approach to 

DMRD 922. Captain Paul Gaffney, then the Assistant CNR, led the Navy effort. The Services developed and briefed up through their chains of command 

a tri-Service response. DDR&E developed its alternate approach, and the issue 

___________________ 

34Technology push means expanding technology that offers new possibilities to the Fleet, as 

opposed to “pull,” or responding to a requirement the Fleet generates. 

35Gerald R. Schiefer, interview by Rodney Carlisle, March 23, 1995.

36Gerald A. Cann, interview by Rodney Carlisle, February 9, 1995.
Chapter 1 — Navy Laboratories at the End of the Cold War 35

became known as the Alt[ernative] 1/Alt[ernative] 2 decision. On August 22 

both sides presented their proposals to DEPSECDEF Atwood, who endorsed 

the tri-Service arrangement. DMRD 922 was approved for implementation on 

November 18. It formed the basis for Navy actions during BRAC 91.

After receiving a tasker from SECNAV Lawrence Garrett on December 

12 (“RDT&E Engineering and Fleet Support Activities Consolidation Plan”), 

the Navy began planning how exactly to carry out its consolidations. In April 

1991 Garrett approved the proposals forwarded to him. However, by then BRAC 

had taken over all such planning, and Garrett’s implementation memo became 

included in the Navy’s response to the BRAC Commission.37

Laboratory Demonstration Program (LDP)

The third undertaking that affected the technical centers during this period 

focused on effectiveness more so than efficiency. It derived primarily from the 

1987 DSB recommendation to expand the China Lake personnel demonstration 

project. The idea was to increase lab productivity by streamlining processes and 

eliminating bureaucratic impediments.

After the DSB study proposed that each Service establish a demo lab, OSD 

set up an LDP Working Group to study the four areas targeted for improvement 

– personnel management, laboratory management, contracting/procurement, and 

facilities modernization. The Services were tasked to estimate the cost of various 

options. They grouped recommendations according to whether OSD, executive, 

or congressional authority was required for implementation. In May of 1989 the 

working group sent a report to SECDEF. But just two months later Secretary 

Cheney published the DMR report. Then on November 20, DEPSECDEF Atwood issued three separate, complementary memos, one of which cited the 1987 

DSB study and directed that each Service choose at least one lab for participation in an LDP (eventually however, the Navy approved the inclusion of NRL 

and all seven of the existing R&D Centers). DDR&E established an oversight 

working group and several subsidiary subpanels, and they spent the next three 

years attempting to implement various plans.

The problem was that many DMRD plans contradicted LDP plans. For 

example, one DMRD directed consolidation (at the DOD or Service level) or 

relocation of support functions such as finance and accounting, an action that 

opposed LDP initiatives to provide local managers the authority to run their own 

labs. In the end, the DMRDs prevailed.38 After three years of drafting lengthy 

plans and proposals, the labs and centers providing most of the LDP manpower 

finally gave up and the program disappeared. It would reappear again under a 

new name in 1993.

___________________ 

37See NLCCG, “A Historical Perspective,” 14-15.

38Information is from Michael Marshall, “Discussion Paper: Management of Service Science 

and Technology (S&T)” (October 5, 1989). Also, NRAC, “Science and Technology Community in Crisis,” 20-24.
36 Reports on the Management of Navy and DOD Laboratories

Pre-BRAC Inter-Service Reorganization

As mentioned, DEPSECDEF Atwood had also called for inter-Service 

consolidation and coordination, and the S&T-based response was a major effort 

called “Tri-Service Reliance.” The three Services developed Reliance as a part 

of their Alt 1 proposal to Mr. Atwood in August 1990. It expanded the role of the 

JDL, chartered in 1983 and including representatives from all three Services, to 

optimize the use of defense technology base resources. In an overview White 

Paper, the JDL explained its efforts to collocate, consolidate, and coordinate 

technology development. This endeavor involved grouping major technologies 

together under coordinating “Reliance panels.”39

In October 1990, having received approval for the approach from Atwood, 

study groups considered three different strategy options for reaching the goals 

of a Tri-Service S&T program. Those goals included enhancing S&T, ensuring 

the availability of necessary resources, reducing redundancy and duplication, 

and preserving “mission-essential capabilities”(3) in each Service. Participants 

addressed basic research, 28 technology areas, and numerous sub-areas – 223 

technologies in all. The Services agreed to expand the coordination that had 

always existed to include three types of arrangements: joint efforts, in which programs would be planned together but executed separately; collocation, in which 

in-house execution of an activity would be collocated in a single Service, with 

each Service funding its part separately; or consolidation, in which all funding to 

manage an activity would be transferred to a lead Service. Under this taxonomy, 

the activities planned jointly would increase from six to 71, those collocated 

from 13 to 105, and those consolidated from nine to 10. Proposals were presented to the SAEs in March 1991.

The Implementation Phase began in November. JDL set up 11 technology 

panels, in addition to Basic Research and Management Panels, to oversee the 

coordinated programs in 25 major technology areas. In accordance with DMRD 

922, Reliance sought to “provide the foundation for OSD review of those activities, thereby streamlining...a formerly cumbersome S&T review process.”(13) 

The White Paper also argued that budget planning, technology investment plans, 

and the Defense Critical Technologies Plan “are more effectively accounted for” 

in the Reliance process.(14) JDL listed recent accomplishments, such as creating 

a Software Technology Plan and Centers of Excellence for Artificial Intelligence, 

and stated that Reliance will “remain a cornerstone of the DOD S&T community’s response to DMRD 922.”(18)

Many agree Reliance was intended to ensure that consolidation remained 

the initiative of the Services rather than OSD (recall that IDA proposed a 

Department-wide coordination group to set up technology “cluster” panels). 

The language of the White Paper certainly suggests the JDL wanted to exhibit 

inter-Service transformation. The Reliance process, “one of the most comprehensive restructuring efforts involving the technology base in over forty 

___________________ 

39Joint Directors of Laboratories, “White Paper on Tri-Service Reliance in Science and Technology” (January 1992).
Chapter 1 — Navy Laboratories at the End of the Cold War 37

years,”(2) already had “a profound influence on...science and technology 

development....”(1) The paper claimed Reliance “has made enormous strides 

in a short time. It has fundamentally reshaped the management” of S&T and 

is “profoundly influencing specific programs, organizations, and management 

decisions....”(18) OSD did not find these arguments fully convincing, because 

in late 1992 the DDR&E recommended creating a single Defense S&T Program 

Objectives Memorandum (POM) to replace separate Service POMs.40

BRAC 91

In January 1991, a CRS report on Defense Laboratories discussed the 

numerous intertwined and overlapping restructuring and consolidation proposals 

emanating from various sources.41 The FY 1990 National Defense Authorization 

Act (NDAA) had added a critical new element to the entire affair by mandating a 20 percent reduction in acquisition personnel (the act had also officially 

established the LDP). Earlier, in December 1988, a report of the SECDEF-established BRAC Commission (P.L. 100-526) recommended a study for improving 

and consolidating the labs and eliminating functions the private sector could do 

better. In part as a follow-up, the FY 1991 NDAA included the Base Closure and 

Realignment Act (P.L. 101-510), created to propose closures (including labs) for 

1991, 1993, and 1995. The Army and Navy planned to use BRAC to endorse 

their recommendations formulated through the DMR process. The same act created, separately from the Base Closure program, a cross-Service, independent 

Federal Advisory Commission (FAC) on Consolidation and Closure of Defense 

Research Laboratories, also called the Adolph Commission after its Chairman 

Charles “Pete” Adolph, acting DDR&E. Congress could modify the Advisory 

Commission’s recommendations but had to either accept or reject BRAC proposals as a whole. In addition, the FAC would evaluate DMR-based proposals, and 

also consider conversion to GOCOs and modification of missions and functions. 

Overlaid with these efforts were the DMR/LDP actions authorized for FY 1990. 

One wonders if when CRS set out to overview the Services’ consolidation proposals and the convergence of all of these plans, it knew what it was getting into.

First, CRS expressed concern about the Services’ planning methods. 

One concern involved scale – DOD had estimated one billion dollars in savings through FY 1997 and intended to close almost one third of the 76 labs and 

terminate thousands of jobs. Had the USD(A) and Services “worked together to 

develop a coherent strategy outlining the role of military R&D...in the acquisition process?”(Summary) Had they considered future S&T needs? Had they 

considered alternatives, such as OSD management of a few mega-centers? Could 

the Services use BRAC to elude the FAC’s forthcoming independent, cross-Service analysis?

___________________ 

40Michael Marshall, “Tri-Service Reliance: Just a Stop on the Road to a Purple POM?” Presentation to NSWC Board of Directors (October 6, 1993).

41CRS, “Defense Laboratories: Proposals for Closure and Consolidation” (January 24, 1991).
38 Reports on the Management of Navy and DOD Laboratories

CRS discussed more specifically how the LDP, DMR, and BRAC were 

linked but separate. Restructuring and consolidation, for example, would not 

solve the management, procurement, facilities, and personnel problems the LDP 

sought to improve. Therefore, the efforts should be coordinated. The report did 

not point out, however, the conflicts between the LDP and DMR (discussed 

above) and the difficulty – perhaps impossibility – of coordinating conflicting 

initiatives.

In discussing the BRAC and Service proposals, the report focused on 

overall strategy. It explained the criteria for closures and the process by which 

SECDEF, the Services, Congress, the BRAC Commission, the President, and 

the public influenced the plan. CRS urged that DOD integrate all the concurrent 

lab-related efforts by pinpointing the proper role of tech centers and developing an overall acquisition strategy to guide consolidation and closure. Otherwise, economy (and not defense) would become the sole criterion for change. 

Further, if the Services worked independently, through BRAC, and ignored the 

FAC’s analysis, changes would be “piecemeal” rather than coordinated across 

DOD.(34)

The overview of the labs repeated much of the material from the CRS 

report of a year earlier, which reveals something about the dialogue during the 

period. In both reports, CRS mentioned more than a dozen roles of the technical 

centers that DOD considered critical. Most reports provided similar lists, which 

after a while can appear to the reader as rote, obligatory recitations of the obvious. However, within just a few years, many if not most major studies dispensed 

with these lists and offered in their place rote recitations of private sector technological capabilities. The change reflected a larger transformation in the way the 

labs and centers were viewed throughout DOD.

Three months later, in April 1991, the DON released its BRAC Report.

42

It recommended 24 installation closures and 18 realignments, based on the 

Navy’s Force Structure Plan and DOD’s stated selection criteria. The report contains detailed justifications of the Navy’s recommendations, impact estimates, 

and implementation plans and milestones. At this point, “excess capacity” began 

its ascendancy as the dominant theme regarding DOD technical centers, and one 

key element of assessing excess capacity involved personnel. In sum, the mandated 20 percent personnel reductions along with declining budgets and workloads shifted the discussion of laboratories from reform to reduction and began a 

process of downsizing that continued and accelerated through the decade.43

The Navy completed two phases of review. Much of the RDT&E work 

drew from the concurrent DMR-driven analyses. Briefly, the approach categorized shore activities, analyzed capacity to determine potential for realignment 

or closure, and then applied the DOD selection criteria. The Navy developed 

28 categories based on function, mission, facility requirements, and geographic 

___________________ 

42Department of the Navy, “Base Closure and Realignment Recommendations, Detailed 

Analysis” (April 1991).

43See also Carlisle, Management of the U.S. Navy Research and Development Centers, 89-91.
Chapter 1 — Navy Laboratories at the End of the Cold War 39

factors. Next, it used capacity analysis within those categories to translate “projected force structure requirements into facility requirements....”(6) Third, it 

compared facility requirements to an inventory, and found excesses or deficiencies. Phase II then examined all facilities identified as potential closure/realignment candidates.

Finally, the Navy applied DOD’s selection criteria to the closure/realignment scenarios and then projected implementation costs and savings. The first 

criterion, military value, included four elements (such as mission requirements 

and manpower implications). Other criteria were return on investment and 

impact (including economic, environmental, and community). The report also 

discussed the Cost of Base Realignment Actions (COBRA) computer model 

used for cost analysis. Overall, the Navy estimated implementation costs at $2.7 

billion and environmental cleanup costs at $0.5 billion, and recurring savings of 

$568 million per year.

The report appendices consisted of meticulous descriptions of the steps involved for all decisions; Tab F (at 194 pages) discussed RDT&E and articulated 

the warfare center plan. The Navy would restructure the seven R&D centers and 

29 engineering support and T&E activities into four megacenters with ten divisions, plus a corporate lab. Functional consolidation and “mission purification” 

within the centers would dictate doing all similar work at one place. The technical centers would maintain critical mass (the capability to perform an essential 

role independently) yet reduce overhead, duplication, and total modernization 

and maintenance requirements.

Tab F demonstrated a fundamental departure from the thrust of a decade’s 

endeavors to improve the laboratory system. The overall effort originally sought 

to streamline operations. After the 1990 NDAA, it aimed at reaching imposed 

cutbacks. “In short,” the report commented, “consolidation shifted from being 

the goal of the effort to being the means of preserving the Navy’s core mission 

capability in spite of the mandated personnel reductions.”(Tab F, 4)

In May the General Accounting Office (GAO) released Military Bases, its 

analysis of the DON and DOD recommendations.44 It found that while the Air 

Force and Army “adequately supported”(3) their proposals, the Navy did not, 

nor did it develop any internal control plan to insure the accuracy of its data. The 

report gave a chronology of the BRAC process and details of pertinent memos 

and directives. It discussed each Service’s analysis, including its use of the COBRA model, and provided cost and savings estimates for every recommendation. 

GAO believed the DOD plans would result in savings, but urged than in future 

BRACs, study groups have more time to collect and examine data, and more 

“adequate management controls over those tasks.”(Cover letter).

GAO especially objected to the Navy’s approach, arguing it was undocumented and the accuracy of its data unverified. The Navy Committee did not 

fully explain its process until May 7, one week before GAO’s report deadline. 

___________________ 

44General Accounting Office, “Military Bases: Observations on the Analyses Supporting 

Proposed Closures and Realignments” (May 1991) On July 7, 2004, the GAO became the 

Government Accountability Office.
40 Reports on the Management of Navy and DOD Laboratories

Even then, some members commented that numerous decisions transpired in 

closed executive sessions. Further, the Committee provided many briefings but 

still no explanation of supporting data and no minutes of deliberations (again, 

the Office of the DNL’s “Restructuring the RDT&E Community” does contain 

notes, not released at the time, of the deliberations about the technical centers).

Much of the report discussed the Services’ misuse of COBRA, the model 

used to estimate both one-time and annual costs/savings of recommended actions. Sometimes the Services used inaccurate data, sometimes they disregarded 

certain costs, and sometimes they flouted DOD’s directive to use FY 1991 dollars for a baseline. Further, according to GAO, the Navy and Air Force computed 

the scale of overhead reduction based on the smaller, post-BRAC force structures, thereby exaggerating cost reductions. In general, DOD did not “oversee 

the process by which the military services chose their proposals...and we found 

that policy guidance published by DOD was applied inconsistently among the 

services.”(66)

Another problem with COBRA involved payback projections. Because the 

1988 BRAC had severely underestimated implementation costs, GAO performed 

a sensitivity analysis on the Services’ 1991 COBRA calculations based on the 

possibility of similarly optimistic estimates. By positing 50 and 100 percent increases to one-time costs, it found little change to the estimated payback periods 

in many instances, not so little in others. With a 50 percent increase, the payback 

for closing the Naval Air Development Center (NADC) in Warminster, Pa. and 

the Naval Coastal Systems Center in Panama City, Fla. both went from nine 

to 100 years; NSWC in White Oak, Md. went from 12 to 100. These numbers 

show the strong degree to which estimates of BRAC savings are dependent on 

planning assumptions. Nonetheless, GAO concluded that generally, the Navy’s 

BRAC proposals “offer an opportunity for substantial savings.”(60)45

On July 1, the Defense Base Closure and Realignment Commission 

submitted its Report to the President.

46 As it would in BRAC 1993 and 1995, 

the process followed these steps: Each Service offered recommendations to 

SECDEF, who in turn offered recommendations to the Commission,47 who reviewed them according to the force structure plan and the eight selection criteria 

for closure. Overall, the Commission proposed 36 closures and 43 realignments 

and estimated a yearly savings of $1.5 billion. As had the DON/DOD reports, 

this one explained the selection process and discussed in detail each affected 

facility.

Much of that process involved trying to improve the methods for and 

preclude partisan manipulation of closure decisions. A 1988 internal DOD 

___________________ 

45A good overview of the Navy BRAC 91 process and recommendations, especially in terms 

of personnel implications, is GAO’s “Navy Laboratories: Plans for Consolidation and Progress 

Towards Implementation” (June 1993).

46Defense Base Closure and Realignment Commission, “Report to the President” (July 1, 

1991).

47DOD, “DOD Base Closure and Realignment Report” (April 1991).
Chapter 1 — Navy Laboratories at the End of the Cold War 41

BRAC Commission had closed 86 and realigned 59 facilities. In 1990 however, 

responding to continued budget cuts, SECDEF Cheney proposed 35 additional 

closures and 20 additional realignments. Critics argued that a remarkable correlation between suggested closures and Democratic districts seemed beyond 

the realm of coincidence. To prevent similar charges of unfairness, the 1991 

Commission – in addition to assessing rather than generating proposals and having GAO review the data – carried out its study publicly. It held 15 hearings in 

Washington, D.C. and 14 regional and site hearings, visited the facilities recommended for closure, examined the Services’ processes for generating recommendations, fielded 143,000 letters, and answered more than 100 phone calls per 

day.48

The overlap between BRAC and the congressionally-mandated FAC inadvertently underscored the difficulties of integrating DOD laboratory programs 

– not even the studies themselves could be coordinated. The BRAC Commission 

noted the FAC study, but “determined that its [BRAC] jurisdiction did include 

authority to recommend realignment and closure” on its own. It did however 

suggest delaying implementation until after publication of the FAC report.(5-19, 

20) In the Navy RDT&E community, BRAC recommended closing 10 activities, 

realigning 16, and inaugurating the four warfare centers. It also suggested the 

FAC report help curtail the turbulence. “Clearly, the challenge of undertaking 

such a comprehensive reorganization will require the careful development and 

execution of personnel management plans to minimize the disruption of critical 

research and development activities in the Navy laboratory system.”(5--44)

The Adolph Commission

Finally, on September 30, 1991 the FAC submitted its report on Consolidation and Conversion of Defense Research and Development Laboratories, 

also known as the Adolph Report.49 The Commission consisted of six representatives from the Federal Government – including a lab director from each Service 

– and six from the private sector. It heard more than 60 briefings or testimonies, 

visited one lab from each Service, and examined three primary options: conversion to GOCOs, mission or function modification, and consolidation or closure. 

Defining a laboratory as an activity that performed at least 10 percent of its 

work in S&T and at least 50 percent in all RDT&E, the report offered 15 major 

findings, primarily about the purpose and attributes of an effective lab system. It 

urged a continuous, vigorous, high-level, DOD-wide commitment to the centers and that each Service appoint an S&T advocate. FAC argued that Project 

Reliance “offers considerable potential for strengthening the effectiveness, 

productivity, and cohesiveness” of DOD S&T.(ES-3) It asserted that the technical centers produced quality work, that some mission overlap existed, that aging 

facilities, low pay, and hiring policies hampered recruitment, and that the LDP 

___________________ 

48These issues are all discussed in Chapter 2.

49Federal Advisory Commission, “Commission on Consolidation and Conversion.” See also 

Charles “Pete” Adolph, interview by Rodney Carlisle, January 26, 1995.
42 Reports on the Management of Navy and DOD Laboratories

should be extended to all labs.50 For the Navy, the Commission recommended 

segregating the R&D function within each warfare center.

As had other analysts, FAC noted that past studies “have been remarkably 

uniform in their findings” concerning the DOD laboratories. The report cited 

former SECDEF William Perry’s assertion that certain key acquisition decisions 

are government functions that require in-house technical expertise. Similarly, 

the labs “are necessary to ensure the technical integrity of the DOD acquisition 

process.” More specifically, FAC listed ten primary functions of the centers:

1. To “Infuse the art of the possible into military planning.”

2. To maintain the defense technology base.

3. To prevent technology surprise and insure innovation.

4. To support acquisition.

5. To maintain facilities not available in the private sector.

6. To respond rapidly in a crisis.

7. To sustain sufficient expertise to advise DOD.

8. To support users in applying technology.

9. To “translate” user needs to industry.

10. To provide S&T training for both civilian and military acquisition 

personnel.(2, 3)

FAC stated that none of those ten roles necessitated a DOD lab system. 

Instead, such a system must be able to perform them if it was to execute the essential, overall mission of facilitating the Services’ ability to be smart buyers and 

users of weapons systems. In short, “dedicated organizations free from commercial pressures are required to provide these functions.”(4)

In addition to this chief conclusion, the FAC offered others. For example, 

it stated that because work ranged from S&T to engineering, a single lab model 

was neither necessary nor possible. Also, although conversion to GOCO might 

sometimes be best, “organic” solutions were preferable, or in other words, solving problems within the GOGO context.

Appendix D’s fine overview of the attributes of an effective laboratory 

expressed puzzlement over the continued existence of difficulties identified long 

ago. Borrowing from the first Packard Report and others, the study commented 

that the centers “must be allowed to operate as unfettered entities, in a similar 

fashion to the successful contractor-operated laboratories.” The fact that so many 

problems had continued unsolved reflected a “widespread lack of appreciation 

for the special nature of DOD laboratories.”(D-1)

The appendix listed nine characteristics of a successful lab, noting 

“None...would be viewed as exotic criteria...in private industry.”(D-1,2) 

These included a “critical mass of assigned work,” defined as exceeding “some 

threshold of size to be a viable, separate entity that is able to support the 

full range of support functions and command widespread recognition for its 

contributions.”(D-2) Other characteristics included a clear mission, a “strong 

___________________ 

50For a contemporary report on facilities modernization, see IDA, “Long-Term Modernization 

of Research, Development, Test and Evaluation (RDT&E) Facilities” (1991).
Chapter 1 — Navy Laboratories at the End of the Cold War 43

foundation in research with a balance of effort in development and engineering,” managerial authority to direct programs and support functions, and links 

to university, industry, and government technology organizations. The list of 

other characteristics – such as a competent and dedicated work force, an inspired 

and qualified leadership, a good relationship with customers, and state of the art 

facilities – seemed to dwell on the obvious, but the report aimed to provide a 

stand-alone overview for an audience that consisted of many people unfamiliar 

with the terrain. The Commission asserted that technical centers required budget 

stability and that directors should be able to pursue risky but potentially high 

payoff ventures, free from budget concerns, through ILIR.

The report also recommended improving personnel management and 

expanding technical director responsibilities by extending the LDP to all labs. 

It proposed that directors’ terms be extended to at least four years and that they 

have the authorities provided in the Federal Employees Pay Comparability Act 

(FEPCA)51 and authority over basic resources and management functions. It 

recommended that discretionary funding be set at 10 percent of total R&D funding (the first Packard Report had recommended five to 10 percent), that labs be 

allowed “liberal allocations” of senior-level technologist and Senior Executive 

Service (SES) positions, that small purchase limitations be raised “substantially,” 

that thresholds for construction approval be increased to “realistic levels,” and 

that DOD-wide coordination of external reviews replace “time-consuming, overlapping reviews and audits by multiple agencies.”(24-25)

The Commission generally supported the Navy’s functional consolidation 

plan. Dismissing concerns in the RDT&E community about improving while 

simultaneously cutting back, it argued that the very definition of restructuring 

meant saving money by reducing duplication and overhead while improving 

critical mass and value. The study acknowledged the turbulence certain to result 

from relocating some 4,800 positions (about 2,800 S&Es), and recommended 

using “all possible incentives,” such as retention bonuses and relocation services, 

to minimize the disruption to “critical” programs.(16)

However, the Navy leadership and FAC disagreed in one significant aspect. 

The latter believed “There is the risk that the research and development elements 

of the warfare centers will lose their identity as laboratories....” Therefore, the 

Navy should “modify the plan to identify...[those] elements within each warfare 

center as Navy Research, Development, and Engineering Laboratories. These 

activities will be DOD laboratories...[and] led by a scientist or engineer with 

stature as a...technical manager.” They should also receive “their own organic 

support.”(15-16)

In his rebuttal, ASN(RDA) Cann argued that a singular strength of the 

Navy’s plan was “the integration of all aspects of research and development in 

full spectrum warfare centers.” This delivered the customer relations, connectivity between labs and the rest of acquisition, and research/development/engineering balance of work the Commission advocated. Supporting laboratory elements 

___________________ 

51The FEPCA provided for annual raises, locality-based pay, and pay-based recruitment and 

retention measures.
44 Reports on the Management of Navy and DOD Laboratories

separately “will prevent us from implementing a fully integrated system [and] 

result in significant decreases to the cost savings forecast for RDT&E consolidation under DMRD 922.”(Accompanying memo)

The FAC concern that the S&T activities in the warfare centers would “lose 

their identity” turned out prophetic. In answer to the Commission’s proposal that 

each Service designate an official accountable for lab effectiveness, the Navy 

stated that the ASN(RDA) would chair a new group, the Navy Laboratory/Center 

Oversight Council (NLCOC), committed to S&T effectiveness. The NLCOC 

would also include the Vice Chief of Naval Operations, Assistant Commandant 

of the Marine Corps, SYSCOM commanders, and others. Further, the new Navy 

Laboratory/Center Coordinating Group (NLCCG), composed of the civilian 

directors and military commanders of the warfare centers and NRL, would help 

coordinate RDT&E, a function the now disestablished Office of the DNL had 

performed. However, the NLCOC met only a few times. Cann, who had assured 

the labs he would act as their DNL-type advocate, left office after the next presidential election. Now without a DNL or four-star CNM, the labs had only the 

CNR to act directly on their behalf.52

In November 1991, DEPSECDEF Atwood requested that DDR&E coordinate development of a cross-Service plan, due in a month and a half, for implementing the FAC recommendations. Yet again, the Services scrambled to respond. However, unable to devise a plan acceptable to all the Services, DDR&E 

never formally answered the Atwood tasker. The Services did separately address 

some of the FAC proposals, with the Navy, for example, designating CNR as its 

S&T executive.53

On January 2, 1992 the Navy officially established the Naval Surface 

Warfare Center (NSWC), Naval Undersea Warfare Center (NUWC), Naval Air 

Warfare Center (NAWC), and Naval Command, Control, and Ocean Surveillance Center (NCCOSC). A streamlined NRL was to serve as the Navy’s corporate research laboratory. In concept, each center’s mission would encompass 

all technical capabilities needed to support systems throughout their life cycle. 

Each aligned organizationally with a systems command: NAWC with the Naval 

Air Systems Command (NAVAIR); NSWC and NUWC with Naval Sea Systems 

Command (NAVSEA); and NCCOSC in San Diego with SPAWAR. NRL would 

continue to report through the CNR to SECNAV. As mentioned, the NLCOC met 

only a few times, but the NLCCG continued through 2003, meeting quarterly for 

a number of years and then less frequently afterwards.54

The NLCCG community was designed for streamlined execution of the 

functions long deemed essential to DOD technical centers. They could respond 

rapidly and exclusively to warfighter needs. They could maintain unique facilities and corporate memory and, immune from pressures for profit, perform their 

smart buyer role.55 In sum, the warfare center concept represented a creative and 

___________________ 

52See Conclusion and Cann interview, 11.

53See NLCCG, “A Historical Perspective,” 16-20.

54See Kavetsky et al., From Science to Seapower, 10-13.

55Ibid.
Chapter 1 — Navy Laboratories at the End of the Cold War 45

The Naval Surface Warfare Center was one of the four major warfare centers 

that emerged from BRAC 91. Here, naval reservists, scientists and engineers 

work in the Dahlgren Division’s Integrated Command Environment (ICE) Human Performance laboratory. The ICE lab focuses on human systems integration (HSI) and features common consoles, displays, and knowledge management features that Fleet Sailors helped design. U.S. Navy photo (RELEASED) 

Dr. William C. Miller (retired Rear Admiral) 

was NRL’s Commanding Officer from 1986 

to 1987 and served as the Chief of Naval 

Research from 1990 to 1993. Dr. Miller is 

currently Academic Dean and Provost of the 

U.S. Naval Academy.
46 Reports on the Management of Navy and DOD Laboratories

resourceful culmination to the Packard-Goldwater/Nichols-DMR-BRAC efforts 

to increase both efficiency and effectiveness while cutting costs. A long-standing drive for reform, mandates for major reductions in personnel, budget, and 

installations, and numerous yet often conflicting directives converged to apply 

tremendous pressure on the laboratory community not only to help operational 

forces fight better but to do so while sustaining injury and, simultaneously, 

while responding to a technological globalization and superpower collapse that 

together necessitated the most momentous changes to defense strategy in almost 

50 years. In the Navy, realignment along functional lines sought to reduce duplication of effort and overhead costs, streamline management, and directly connect 

each step of the acquisition process, all within a unified command structure 

coordinated across the Service and with its partners in private industry.

Chronology of Navy Warfare Centers/Corporate Lab Standup

February 1989 President George H.W. Bush addresses Joint Session of 

Congress, urges improved procurement process for DOD 

and full implementation of Packard Report/GoldwaterNichols Defense Reorganization Act.

July 13, 1989 SECDEF releases DMR, which requires Services to submit plans to implement Packard/Goldwater by October 1. 

SECNAV sets up DON MRTF, consisting of six working 

groups.

October 1, 1989 MRTF forwards “Plans for Initial Implementation of the 

Defense Management Report.”

November 9, 1989 DEPSECDEF Atwood issues DMRD 922, calling for new 

management approach to increase efficiency and reduce 

overlap in RDT&E.

November 20, 1989 Atwood memo on implementation plan for LDP, each 

Service to select at least one demo lab.

November 1989 Berlin Wall comes down.

December 22, 1989 USD(A) memo “Strengthening and Improving Technology Management” tasks Services to recommend consolidations/restructuring options.

December 1989 OSD R&D and T&E consolidation studies.

January 11, 1990 SECDEF approves Navy MRTF “Plans for Initial Implementation of the Defense Management Review.”

April 12, 1990 Navy forwards to Atwood its response to DMRD 922, 

“RDT&E Facilities Paper.”
Chapter 1 — Navy Laboratories at the End of the Cold War 47

June 1990 One OSD R&D/T&E option includes managing Service 

S&T efforts through an OSD-level “purple” agency.

August 22, 1990 Atwood selects tri-Service approach to DMRD 922, 

rejecting DDR&E-proposed “purple” option. Approved 

alternative also includes establishment of Tri-Service 

Reliance approach to S&T management.

August 1990 SECNAV forms RDT&E Facilities Consolidation Working Group.

October 12, 1990 Tri-Service S&T Reliance study begins.

November 5, 1990 P.L. 101-510, “Defense Base Closure and Realignment 

Act of 1990,” approved.

November 18, 1990 Atwood approves the Tri-Service response to DMRD 922. 

Among other provisions, it adopts Reliance.

December 12, 1990 SECNAV Garrett tasker, “RDT&E Engineering and Fleet 

Support Activities Consolidation Plan,” gives 120 days 

for prospective warfare center Commanders to submit 

plan.

December 1990 Joint Logistics Commanders (JLC) approve expansion of 

JDL role to support Reliance.

FY 1990 NDAA establishes LDP, also mandates 20 percent reduction in civilian acquisition workforce.

FY 1991 NDAA creates Advisory Commission on Consolidation 

and Conversion of Defense Research and Development 

Laboratories. Separate from 1991 BRAC law.

April 1991 SECNAV Garrett approves Warfare Center/BRAC plan 

resulting from December 12, 1990 tasker. DDR&E approves Reliance, DON forwards BRAC recommendations.

July 1, 1991 BRAC Commission Report to the President.

October 11, 1991 SAEs approve Reliance process with JDL management.

November 9, 1991 Atwood directs Services to forward plans for implementing Adolph Commission recommendations within 45 days 

(action not completed).

December 25, 1991 Gorbachev resigns, Yeltsin calls President Bush to announce the end of Cold War.

January 2, 1992 Navy officially establishes four Warfare Centers, with 

NRL as the Corporate Laboratory.

The remarkable collapse of the Soviet Union meant that closure, realignment, and consolidation continued to dominate the Navy’s laboratory community 

for years after the creation of the warfare centers. As mentioned, P.L. 101-510, 

enacted November 5, 1990, included BRAC rounds for 1991, 1993, and 1995 

(the 1993 round had the smallest impact on the technical centers). The law 

required SECDEF to submit a Force Structure Plan for FY 1994-1999. This plan 

would drive reductions and also establish the criteria for determining excess 

capacity.56 Because of concerns arising from BRAC 91, Congress amended the 

law to say DOD had to certify its data. The Navy complied with a vengeance, 

creating hundreds of cubic feet of documentation. By the end of 1995, DOD had 

slated 98 major military bases for closure and 63 for realignment, and estimated 

eventual savings of over six billion dollars annually.

This chapter synopsizes the six major reports relevant to BRAC 93 and 95 

and briefly discusses the closing of the Naval Surface Warfare Center in White 

Oak, Maryland.57 The reporting process stayed the same in both rounds: the 

Navy generated its recommendations, which became incorporated, sometimes 

with a few changes, into the DOD report published in March. A month later 

GAO published its critique, and then the BRAC Commission forwarded its final 

recommendations to the President in July. The DON, DOD, and Commission reports primarily explained the decision processes and justified each verdict. Each 

analysis estimated costs and savings, both overall and for every proposal. Each 

Chapter Two

BRAC 1993 and 1995

___________________

56The three categories of selection criteria (eight criteria in all) were as follows: 1. Military 

Value (given priority consideration), consisting of readiness, facilities, mobilization capabilities, and manpower implications. 2. Return on investment. 3. Impacts, consisting of environmental, infrastructure, and economic effect on communities. 

57The literature generated on base closures and realignments is vast. Provided here is only 

the broadest overview of the main themes developed at length (some 2,000 pages) in the final 

reports issued by the DON, DOD, GAO, and BRAC Commission. All these are available 

online. In addition to the overall analysis of DOD’s recommendations for each BRAC, GAO 

has also published many other reports gauging the progress of BRAC implementations. These 

too are available online. Other relevant sources not readily available elsewhere include 18 oral 

histories (many of which discuss the DON’s successes and shortcomings in relocating personnel) and 5 cubic feet of material (meetings, briefings, correspondence, organizational charts, 

alternative scenarios). The White Oak closure is discussed here more so than the equally 

significant NADC closure solely because of the sources.
50 Reports on the Management of Navy and DOD Laboratories

also discussed the selection criteria, the COBRA model, environmental cleanup, 

economic impact, amendments to P.L. 101-510, and previous BRACs. The Commission reports also provided relevant memoranda.

Many believe factors other than data often drove closure decisions, and 

the reports, at least in the case of White Oak, certainly would not have convinced them otherwise. NSWC White Oak, originally called the Naval Ordnance 

Laboratory and located at the Washington Navy Yard as a mine research facility, 

moved to suburban Maryland in 1946. It evolved into a full-spectrum center responsible for mines, explosives, underwater warheads, strategic reentry systems, 

nuclear weapons effects, and directed energy systems. It had been one of the 

Navy’s principal R&D centers throughout the Cold War era. BRAC 91 realigned 

the facility, transferring about half of its functions to NSWC Dahlgren; BRAC 

95 disestablished it. Oral histories indicate that many believed BRAC was inevitable and the Navy managed the process effectively to maintain many key core 

competencies. They objected not to the closure of White Oak per se but to the 

insistence that it occurred based on impartial analysis of hard data.

Background

From the early 1960s to the end of the Vietnam War, DOD closed hundreds of military bases, including about 60 major installations. Gradually, and 

to protect constituencies, Congress inserted itself more aggressively into the 

process. In 1977 it passed a law (Title 10, United States Code, Section 2687) that 

essentially prevented base closures by mandating time-consuming environmental 

impact studies. By the late 1980s, the base structure had remained the same size 

despite the decline in the force structure. Ever scarcer defense dollars continued 

to support these bases at the expense of ensuring operational readiness.

The Naval Surface Warfare Center (formerly Naval Ordnance Laboratory), 

White Oak, Maryland.
Chapter 2 — BRAC 1993 and 1995 51

In October 1988, under increasing pressure from the rising national debt 

and from the public to end the stalemate with the Executive Branch over reducing defense spending, Congress passed P.L. 100-526, which established a 

SECDEF BRAC Commission. The group recommended 86 closures and 59 

realignments (mostly smaller bases), all of which Congress accepted. As mentioned, in 1990, after that Commission’s charter expired, SECDEF Cheney 

recommended additional closures. Many in Congress considered these politically 

motivated.

Congress therefore passed P.L. 101-510, establishing a five-year independent BRAC Commission and ending any actions based on the 1990 list. While 

the 1988 OSD Commission provided no guidance to the Services, P.L. 101-510 

established specific procedures and timetables for the President, DOD, GAO, 

and the independent Commission. The law also required the Services to compare bases equally according to specific criteria and the Force Structure Plan. 

It mandated public hearings on any planned changes and open access to the 

Commission’s records. And this time, rather than SECDEF offering proposals to 

the President, the Commission would review both DOD’s recommendations and 

GAO’s analysis of those recommendations before submitting its own proposals 

to the President. The three rounds of closures – 1991, 1993, and 1995 – were 

timed purposely for non-election years. The entire process had two primary purposes: to close obsolete or duplicative installations and to do it fairly.

BRAC 93

The Navy offered its 1993 Base Closure and Realignment Report recommendations in March.58 Directed to eliminate “as much excess capacity as 

possible in the infrastructure,”59 it proposed more than 100 closures and realignments (some 25 percent were Naval Reserve Centers), with estimated costs of $1 

billion and savings of $3 billion between FY 1997-1999 plus an additional $1.6 

billion afterwards. Conceding that targeted installations possessed military value, 

the report asserted that budget cuts left “no other choice....We have proposed 

seemingly dramatic steps today to preclude even more draconian actions several 

years hence....”(1-3) The most striking element of the report is its response to 

criticisms received after BRAC 91. The entire 46-page overview is a meticulous, 

almost impenetrable explanation of the process by which the Navy’s Base Structure Evaluation Committee (BSEC) collected and evaluated data.

The text focused on how the Navy “sought to insure that the...procedures 

for this examination avoid the criticisms leveled at the Department’s BRAC 

91 process, relating to real or perceived shortcomings in several areas.”(2) 

The BSEC, assisted by the Base Structure Analysis Team (BSAT), “deployed 

throughout the naval establishment” 200 people from the Naval Audit Service to 

___________________

58Department of the Navy, “DOD Base Closure and Realignment Report to the Commission, 

Department of the Navy Analyses and Recommendations (Volume IV) (March 1993).

59SECNAV Note 11000, February 12, 1992.
52 Reports on the Management of Navy and DOD Laboratories

verify both the data and the process by which it was evaluated.(2) Both groups 

received continual input from experts involved in each step, were granted ready 

access to information, and presented results to senior leadership in both the 

operational and shore establishments for review. They preserved 90 cubic feet of 

records for anyone in the BRAC Commission, GAO, Congress, or public who 

cared to wade through it. They sent out 10,000 requests for data and “methodically analyzed” the responses “in approximately fifty deliberative sessions,”(2) 

all recorded. In short, the BSEC endeavored at every step “to frustrate imposition of preconceived ideas.”(2)

The two major phases included generating/validating data and then evaluating it.60 The BSAT developed the data calls and an Internal Control Plan (ICP) 

to corroborate methodologies, ensure they were used, and to confirm the accuracy of both data collection and analysis. The DOD Inspector General, Comptroller, and Assistant Secretaries all reviewed the ICP. The ICP even established 

a process for documenting the process, the most significant aspect of which was 

a written record for every BSEC meeting. The BSAT also created a “bottom to 

top” data certification method, whereby the first person responsible for generating data would “execute the statutory certification”(8) of it, a procedure repeated 

at each step up the chain of command.

The report scrupulously detailed each element of the analysis, which mirrored that done in 1991. The BSEC designated personnel, materials, and forces 

as the three main categories of activities and further divided these into subcategories. To determine excess capacity for each subcategory, it sent data calls to 

1,027 installations. Then, using a matrix with points assigned to various priorities, it scored infrastructure according to military value (readiness, facilities, mobilization capabilities, and cost and manpower implications). Next, in configuration analysis, “Closure/realignment scenarios were developed with...a computer 

model utilizing mixed integer linear programming,”(13) explained in some 

1,500 words. COBRA analysis was then applied. Finally, various other formulae 

estimated economic and environmental impacts. The appendices and attachments 

gave similar or sometimes verbatim justification, return on investment, and impact summaries (including job losses) for each of the resulting recommendations.

To show exactly how it carried out evaluations, the BSEC gave the example of the subcategory of naval bases. The section runs 28 pages and has 

some 7,000 pieces of data. “What is undeniable,” the report stated with justified 

assurance, “is that the Department of the Navy has completed a comprehensive 

review of the more than 1000 Navy and Marine Corps installations not closed 

in either the 1988 or 1991 rounds.”(45) Overall, the recommendations mean 

“the remaining infrastructure is free of excess capacity to the maximum extent 

practicable with due regard given to military operational requirements.”(46) The 

report’s overriding emphasis on data certification and formula application was 

almost certain to preempt any qualms at GAO and keep the accountants there 

gleefully occupied for the duration.

___________________ 

60The process is set out step by step in the discussion of BRAC 95.
Chapter 2 — BRAC 1993 and 1995 53

The Navy recommended 11 technical centers for closure or realignment. 

These included consolidating the Naval Electronics Systems Engineering Centers (NESEC) in St. Inigoes, Maryland, Charleston, S.C., and Washington, D.C. 

into NESEC Portsmouth, Virginia, and relocating the Annapolis Detachment of 

NSWC to Carderock, Maryland. The BRAC Commission changed both of these 

recommendations.

SECNAV also slated NSWC White Oak for closure. In the previous 

BRAC round, the lab had been realigned as part of the creation of the warfare centers – “The necessary capabilities resident in the unique facilities that 

remain at NAVSWC White Oak will be preserved and personnel necessary to 

conduct RDT&E in these areas and to utilize these facilities will remain at the 

location.”(F-75)61 About 49 percent of both personnel (some 900) and functions would relocate to Dahlgren, Virginia, 31 percent (550 personnel) would 

stay, and 20 percent of jobs would be eliminated. Altogether, 1,255 jobs would 

be transferred or eliminated. Six major unique facilities would be retained – the 

hypervelocity wind tunnel, hydroballistics tank, nuclear weapons effects and 

simulation lab, undersea weapons tank, long-pulse accelerator, and magnetic 

silencing complex. Other “non-duplicative” mission areas, such as advanced 

explosives, underwater warheads, and strategic systems re-entry RDT&E, would 

be relocated to Dahlgren. The idea was to enhance full spectrum capabilities: 

the changes would improve systems engineering, because RDT&E “will proceed from a more highly integrated and collocated workforce of scientists and 

engineers.”(F-80)

The 1993 report proposed that all remaining personnel, functions, and 

equipment transfer to Dahlgren but that certain facilities remain to house NAVSEA headquarters. The stated justification for this decision was the same as for 

every technical center – essentially, a declining budgeted workload had created 

significant excess capacity. “As the work declines, the excess capacity increases 

thereby requiring a reduction in facilities and personnel.”(K-23)

The Navy analysis was abridged and incorporated in DOD’s Base Closure and Realignment Report to the BRAC Commission.62 As with all BRAC 

reports, this one clarified the roles of the Commission, Congress, GAO, and the 

President, provided the selection criteria and an unclassified Force Structure 

Plan, and explained the variety of efforts designed to ensure fairness. It also 

described the readjustment plans for communities and employees. The bulk of 

the report listed the Services’ justification for and economic and environmental 

impact of each recommendation. Comparing BRAC to corporate downsizing, 

DOD recommended 31 major bases for closure and 12 for realignment, plus 122 

smaller base reductions, and estimated a net savings of $4 billion by FY 1999 

and of $3 billion per year afterwards. Two appendices summarized the three 

BRAC rounds to that point and showed impacts by state.

___________________ 

61DON, “Base Closure and Realignment Recommendations,” 1991.

62DOD, “Base Closure and Realignment Report” (March 1993).
54 Reports on the Management of Navy and DOD Laboratories

The introductory remarks explained efforts to ease the pain of closures 

and consolidations. DOD focused reductions on overseas bases, for example. In 

his accompanying cover letter, SECDEF Les Aspin emphasized the “taxpayer 

dollars” saved from BRAC rounds, and declared that as in the past, the private 

sector would develop the assets – people, real estate, and facilities – freed up 

from closures. In fact, the report noted, studies demonstrated that communities 

typically expanded economically after a short recovery time. One chapter discussed the special BRAC account to pay for upfront costs (such as environmental restoration) and the homeowner assistance programs, incentives for private 

sector expansion, and other efforts to help communities and outgoing employees.

As the next step in the process, on April 15 GAO published Military Bases, finding DOD’s recommendations “generally sound.”(3)63 It projected that the 

20-year savings, although substantial, would be about $948 million less than the 

$12.8 billion DOD had estimated. GAO criticized OSD for not exercising sufficient oversight of the Services, especially regarding the potential for cross-Service depot maintenance, and took issue with the Department’s economic impact 

analysis and its unwillingness to include other affected government agencies in 

cost estimates. Further, GAO believed the Navy had in some instances unduly 

emphasized capacity over military value and acted based on unproven assumptions. Overall however, problems with the Navy’s proposals or DOD’s in general 

“were not severe enough to question the recommendations.”(54)

Although much more positive about the Navy’s process for 1993 than for 

1991, GAO still found problems. It deemed the recommendations generally 

sound and the data validated, “with the exception of the information gathered in 

the final phases of the selection process.” However, the Navy “also relied heavily 

on the acceptance of certain assumptions and military judgments.”(4, 20) Each 

time GAO mentioned the term military judgment it did so with a cautionary connotation, but it also pointed out the necessity of using it in such a complex task. 

Most important, GAO believed, the Navy had focused too narrowly on excess 

capacity – in some instances bases slated for closure possessed more military 

value than those that would remain open.

As the final step in the report process, the BRAC Commission submitted 

its Report to the President on July 1.64 Humbly labeling its efforts “a model 

of open government...absent political or partisan influence,”(vii) the Commission visited 125 sites, held 17 regional public hearings and seven investigative 

hearings in Washington, D.C., heard testimony from hundreds of members of 

Congress, and fielded hundreds of thousands of letters. It proposed 45 realignments and 130 closures, and estimated a net savings of $3.8 billion by FY 1999 

and $2.3 billion annually afterwards. It acknowledged the difficulties in affected 

communities but cited an Office of Economic Adjustment study calculating that 

___________________ 

63GAO, “Military Bases: Analysis of DOD’s Recommendations and Selection Process for 

Closures and Realignments” (April 1993).

64Defense Base Closure and Realignment Commission, “Report to the President” (July 1, 

1993). 
Chapter 2 — BRAC 1993 and 1995 55

closures between 1961 and 1992 had ended 93,000 jobs while creating 158,000. 

It also assured communities that applying the same energy toward the future as 

had been applied to saving bases would expedite recovery. Most of the report explained the Commission’s agreements or disagreements with each DOD recommendation (all amendments were justified on the basis of the selection criteria) 

and summarized each affected community’s concerns.

Following GAO’s suggestions, the Commission altered a few Navy proposals, some of them important for the lab community. Agreeing that the Navy had 

in some instances overemphasized excess capacity at the expense of military 

value, the Commission proposed that the Annapolis Detachment of the NSWC 

Carderock Division remain open. It also recommended that NESEC Charleston 

remain open and become the East Coast lead facility, which meant most other 

NESEC facilities would close and move there rather than to Portsmouth, Virginia 

as SECDEF had proposed.

Although NSWC White Oak lab was further realigned (rather than closed), 

it is not possible to determine that fact based solely on the information in the 

major reports. As mentioned, SECNAV selected the facility for closure, and the 

main section of the DOD report – the “statutory recommendations...transmitted 

to the Commission”(i) – reprinted that recommendation. However, the introduction in the DOD report listed White Oak under a section titled “Major Base 

Realignments.”(27) GAO also noted that White Oak would realign.

Likewise, the list of actions in the introduction of the Commission report 

designated White Oak for realignment, but again, the body of the report recommended disestablishment. It said SECDEF “suggested a revision”(1-50) whereby 

disestablishment would occur, but some functions would be transferred to 

NSWC facilities in Panama City, Florida, Indian Head, Maryland, and Dahlgren. 

The report further asserted that the original plan deviated from the first selection 

criterion (military value), and the Commission would therefore adopt SECDEF’s 

revision and recommend retaining the property and facilities for NAVSEA headquarters. Not until the BRAC 95 recommendations two years later is it clear that 

in 1993, realignment rather than disestablishment did indeed occur, leaving only 

the Hypervelocity Wind Tunnel, Nuclear Weapons Effects Facility, Ship Magnetic Signature Control R&D Complex, and reentry body dynamics R&D at the lab.

BRAC 95

In February 1995, during the final round of base closures, consolidations, and realignments under the existing BRAC enabling legislation, the DON 

submitted its Base Closure and Realignment Report for OSD review.65 In this 

round the labs and centers took their hardest hit, ultimately constituting a third of 

the 62 activities recommended for closure or realignment. Calling the lab-based 

recommendations a culmination of the process begun in 1991, the Navy sought 

“to ensure that the Department can fully sustain uniquely naval technological 

___________________ 

65Department of the Navy, “DOD Base Closure and Realignment Report to the Commission, 

Department of the Navy Analysis and Recommendations” (Volume IV) (March 1995).
56 Reports on the Management of Navy and DOD Laboratories

efforts without unnecessarily burdening itself with infrastructure.... [W]e have 

thus eliminated as much redundancy as we safely can.”(i) As in 1993, the text 

described the steps in the Navy’s analysis and provided justifications for the 

proposals.

Responding to reactions from the previous round, SECDEF had directed 

the Services to seek cross-Service consolidation, which included three particular 

efforts: retaining in only one Service a unique military capability that two or 

more Services used; consolidating workloads to reduce capacity; and assigning 

operational units from different Services to only one base.

The Navy followed the same method of analysis as two years earlier, 

admitting the difficulties in applying it to technology efforts. “These are very 

complex activities whose direct link to the force structure is often difficult to 

quantify, and ‘right-sizing’ them has been a task....”(2) The BSEC, BSAT, and 

Naval Audit Service again followed an ICP, maintained a comprehensive Base 

Structure Data Base, followed “bottom to top” data certification, and recorded 

key meetings. Responding to GAO’s report from two years earlier, the BSEC 

deliberated more openly and frequently with senior-level Navy officials and participated in eight Joint Cross-Service Groups (JCSGs), including one for both lab 

and T&E activities. This time the BSEC allowed every installation under review 

to submit information about the military principles underlying their activities, 

or in other words to provide context for their data. The BSEC grouped these 

statements into seven major themes, one of which was “the ability to pursue and 

sustain essential technological effort....”(12)

With a couple changes, the Navy’s procedure remained the same nine-step 

process, based on the same DOD selection criteria, as in BRAC 93.66 The BSEC:

1. Developed categories of activities, this time using five rather than three 

– operational support, industrial support, technical centers/labs, education/training, and personnel support/other. It subdivided these into 27 

subcategories (labs and centers remained undivided) and within those 

reviewed 83 installations or activities.

2. Sent out data calls tailored to each subcategory and entered the responses into a Base Structure Data Base, the “sole basis for BSEC 

determination.”(DON, 5-42)

3. Used capacity analysis to compare, for each subcategory, the existing 

base structure figures to the future force structure needs. Any subcategory with identified excess (19 in this round) proceeded to the next stage.

4. Carried out a quantitative military value analysis, entering information 

from military value data calls onto a matrix and scoring each installation 

against others in the same subcategory. As mentioned, GAO had criticized the Navy in 1993 for acting on “certain assumptions and military 

judgments” here, but the Service replied: “The military value analysis, 

then, is a process which translated mature, military judgment into a 

military value score which was a useful ‘quantifier.’”(DON, 25) In other 

___________________ 

66Quotations are from both the Navy and DOD reports.
Chapter 2 — BRAC 1993 and 1995 57

words, the Navy remained unapologetic about applying the judgment of 

its leadership.

5. Combined both capacity and military value analyses into a configuration 

analysis (the “mixed-integer linear programming solver”(DON, 25)). 

“The purpose of configuration analysis was to identify, for each subcategory of installations, sets of installations that best meet the needs of the 

Navy and Marine Corps, in light of future requirements, while eliminating the most excess capacity.”(DOD, 5-43). Various combinations 

of closures and realignments were sampled within each subcategory to 

determine the optimum arrangement.

6. Applied military judgment – again unapologetically – to those various 

configurations, developing potential scenarios for investment analysis. 

This step included iterative input from Fleet and SYSCOM commanders 

and the civilian leadership.

7. Conducted COBRA analyses on all 174 potential scenarios. Installations 

had at least twice as long to respond to these as they had in BRAC 93.

8. Calculated the impact for local economies.

9. Performed environmental analyses.

The Navy report claimed that significant excess capacity in the labs and 

centers – 27 percent and 19,000 work years – indicated they had not endured 

closings commensurate with other activities. It therefore expanded the COBRA 

model, which “provided a more detailed and precise view of the Navy’s Technical Centers’ and Laboratories’ workload and capacity...[and] provided a more 

accurate description of the military worth of the site.”(X-4) Measuring capacity 

in budgeted work years rather than other possible methods (such as square feet), 

the BSEC developed a Technical Workload Matrix to improve (from BRAC 93) 

methods for determining exactly what type of and how much work the technical 

centers performed. In the military value analysis the BSEC scored the centers’ 

answers to 195 questions and then used configuration analysis to prepare a “footprint” of technical capabilities performed across the Navy. In all, the scenarios 

developed showed that while a number of activities would be reduced, no function would be eliminated.

Again, the recommendation to close NSWC White Oak contained an apparent idiosyncrasy. The BSEC chose to apply the particular configuration analysis that eliminated the most excess capacity and accordingly issued closure data 

calls to a number of installations. However, five additional data calls were also 

issued. The report provides the reason for each of those – except White Oak.

A complete list of the recommendations concerning the labs and centers, 

along with justifications and saving estimates, are in Appendix X (the justifications are very general and essentially the same for each recommendation).

As in 1993, the Navy’s recommendations became part of the larger DOD 

Base Closure and Realignment report submitted to the BRAC Commission.67

___________________ 

67DOD, “Department of Defense Base Closure and Realignment Report” (March 1995).
58 Reports on the Management of Navy and DOD Laboratories

With defense spending down 40 percent between 1985 and 1997, the Department recommended closing or realigning 146 installations and estimated savings 

of $18.4 billion over 20 years (see Tables). It asserted this process contained the 

lowest upfront costs of any BRAC round. Again, the bulk of the report explained 

each recommendation, and again, the justifications concerning the technical 

centers are practically the same for each one. The appendices include P. L. 101-

510 as amended, the relevant policy memoranda, a brief history of base closures, 

and impacts by state. In the Navy, half of the 10 major bases recommended for 

closure (NAWC Indianapolis, Lakehurst, NJ, and Warminster, Pa., and NSWC 

Louisville and White Oak) were in the laboratory community.

DOD also responded to GAO’s and others’ comments about BRAC 93. 

First, the Department declined to include other federal agencies in its cost 

estimates, as GAO had suggested, because the calculations were too difficult to 

specify and the costs too insignificant to include. And second, the report stated 

that the BRAC Review Group, BRAC Steering Group, and six JCSGs clearly 

revealed OSD’s oversight and coordination efforts. The JCSGs considered five 

functional areas, including both T&E centers and laboratories, and the Services 

incorporated these groups’ conclusions into the report forwarded to SECDEF.

Tables 1-3 provide various Navy/DOD BRAC savings estimates and closure summaries.

In April GAO’s Military Bases called DOD’s process “generally sound 

and well documented and [one that] should result in substantial savings.”(4)68

However, it disagreed with DOD’s assertions about cross-Service coordination, 

arguing that many opportunities had been missed, especially for depot maintenance and laboratories. GAO also criticized the Air Force for being overly 

subjective and providing insufficient documentation. In addition, it noted that 

OSD, the Services, and the JCSGs all acknowledged that the four BRAC rounds 

would reduce infrastructure by only 21 percent (seven of a targeted 15 percent 

for 1995), while the overall budget had declined by 40 percent and military and 

civilian personnel by about 32 percent. Nonetheless, GAO’s assessment found 

that DOD could count on a 20-year cost reduction of $17.3 billion.69

GAO labeled the Navy’s recommendations “generally sound and well 

documented,”(87) but focused much of its critique on the technical centers. It 

observed that SECNAV changed the BSEC’s suggestions in California based 

on the overall economic impact on the state but retained proposals that would 

have three times the effect on Mississippi. It also noted the Navy’s difficulties 

___________________ 

68GAO, “Military Bases: Analysis of DOD’s 1995 Process and Recommendations for Closure 

and Realignment” (April 1995). This report contains a succinct summary of the four BRAC 

rounds, including each Service’s process for generating recommendations, the COBRA model, 

the key changes from one round to the next, and the overall picture regarding closure, realignment, costs, and savings.

69The report includes a detailed section on how DOD calculated its estimates and discusses the 

comparability of COBRA data, Implementing Budget Estimates, discount rates, and environmental cleanup.
Chapter 2 — BRAC 1993 and 1995 59

NSWC Carderock Division Detachment, Annapolis $175M

NAWC Aircraft Division, Indianapolis* $640M

NAWC Aircraft Division, Lakehurst, NJ** $359M

NSWC Crane Division Detachment, Louisville* $640M

NUWC Newport Division Detachment New London, CT $91M

NCCOSC In-Service Engineering West Coast Division, San Diego $60M

NRL Underwater Sound Reference Detachment, Orlando, FL $30M

NAWC Aircraft Division, Warminster, PA $105M

*Facility closed but workload, facilities, equipment transferred to private sector

**Ultimately not closed as proposed

Table 1: DOD BRAC 95 Estimated 20-year Savings from Selected Closures 

(Rounded to Nearest Million Dollars)

BRAC

Actions

Closure

Costs

Six-Year Net

Savings

Recurring

Annual Savings

Total

Savings

BRAC 88 145 $2.2 $0.3 $0.7 $6.8

BRAC 91 82 $4.0 $2.4 $1.6 $15.8

BRAC 93 175 $6.9 $0.4 $1.9 $15.7

BRAC 95* 146 $3.8 $4.0 $1.8 $18.4

Total 548 $16.9 $7.1 $6.0 $56.7

Table 2: BRAC Estimated Costs and Savings

(Billions of FY96 Dollars)

From DOD BRAC 95 Report

*Prior to BRAC Commission modifications

Major

U.S.

Bases

BRAC

88

BRAC

91

BRAC

93

BRAC

95*

Major

Bases

Remaining

Reduction

in Facility

Capacity

Army 109 -7 -4 -1 -12 (10) 85 22%

Navy/

Marine

Corps

168 -4 -9 -20 -10 (8) 125 26%

Air Force 206 -5 -13 -6 -9 (6) 173 16%

Defense 

Agencies

 12 0 0 -1 -2 (4) 9 25%

Total 495 -16 -26 -28 -33 (28) 392 21%

*Parentheses denote post-BRAC Commission recommendations

Table 3: Summary of BRAC Reductions

Major Domestic Closures

From DOD BRAC 95 Report
60 Reports on the Management of Navy and DOD Laboratories

in consolidating the technical community proportionately to other subcategories 

while enhancing full-spectrum capabilities. For example, the Service not only 

examined 29 functional categories but had to do so across four phases of work 

– general, R&D, acquisition, and lifetime support.

Other complications involved the COBRA data calls in general and again, 

the White Oak lab in particular. The BSEC had questioned the accuracy of some 

of the (certified) COBRA data because the labs generated it after they knew they 

had been slated for possible closure. In some instances then, the group made 

“substantial changes to original estimates.”(100) GAO said that those changes 

it had time to double check did appear reasonable. Regarding White Oak, the 

Chairman of the Joint Chiefs of Staff (JCS) had testified before the BRAC Commission that DOD (and other organizations such as NASA) still needed the Hypervelocity Wind Tunnel. Nevertheless, the Navy continued to consider it excess.

GAO claimed that most cross-Service efforts had failed, especially for the 

technical centers: “The cross-service groups for test and evaluation and laboratories had little impact on the services’ recommendations.”(45) And overall, 

OSD’s proposals “would move very little work from one service’s facilities to 

another.”(40)

The failure occurred for a number of reasons. Part of the problem was 

timing. The JCSGs sent out data calls later than the Services and forwarded 

their proposals to OSD later as well. Better timing “would have avoided needless work on the part of the responding activities.”(41) Also, the split into two 

groups – one for T&E and one for labs – erected an artificial barrier between the 

functions each could consider. Further, the Services agreed only to consider the 

cross-Service groups’ proposals. In addition, the JCSGs broke down work into 

very small units or specific functions, often suggesting transfers the Services 

considered infeasible or sub-optimal, especially for the Navy’s full-spectrum 

centers. Sometimes the JCSGs suggested much larger realignments, including 

consolidation of Command, Control, Communications, Computing and Intelligence (C4I) at Ft. Monmouth, N.J., and of air launched weapons RDT&E and 

air propellants at NAWC China Lake. Instead, the DOD plan contained only 

intra-Service consolidations in these subcategories. In sum, “reliance on service 

decision-making and consensus; insufficient time; and in some cases a narrow 

analytical approach”(40) left just the labs themselves with some 4,300 work 

years of excess capacity.70

Finally, GAO changed positions somewhat regarding military judgment. 

The organization had not criticized military judgment per se in its 1993 report, 

but did use the term disapprovingly, commenting, for example, that where it was 

cited the most, documentation was provided the least. The 1995 report grudgingly devoted a short section to the matter, giving a few examples and noting 

that the Services sometimes had to apply it and that operational requirements and 

policy imperatives helped drive it.

___________________ 

70Chapter 3 also briefly discusses the JCSG efforts.
Chapter 2 — BRAC 1993 and 1995 61

After inspecting the DOD and GAO reports, the BRAC Commission 

submitted its Report to the President on July 1.71 Again commending itself for 

being a “model of open government”(x) absent of political or partisan influence, 

the Commission recommended 132 installations for closure or realignment and 

estimated savings of $19.3 billion over 20 years. The major section consists of 

verbatim recommendations and justifications from the DOD report, summaries 

of community concerns, and explanations of the Commission’s changes. Other 

sections commended privatization initiatives, described how federal, state, and 

local governments and the private sector might speed economic recovery in 

affected communities, and discussed the Services’ varying use of the COBRA 

model. Appendices included actions by state and Service, hearings held, and 

bases visited for each BRAC round.

Most but not all affected laboratory communities failed to convince the 

Commission their facilities should remain open. The New London detachment of 

NUWC argued that faulty cost/savings estimations from 1991 realignment had 

set the payback date to 100 years. The Commission disagreed, saying closure 

would complete the consolidation of undersea warfare begun in 1991. The NRL 

Underwater Sound Reference Detachment in Orlando argued that moving the facility to Newport, R.I. (as SECNAV had recommended) would be too costly and 

that a nearby test lake contained unique properties not easily duplicated. Again, 

the Commission agreed with SECNAV, stating that new technology precluded 

the need for that particular lake.

Testimony of the Chairman of the JCS and other factors notwithstanding, 

NSWC White Oak also failed to keep its doors open. In addition to the Hypervelocity Wind Tunnel, many considered the Nuclear Weapons Effects Test Facility 

– which organizations outside of NSWC used – a unique national asset. They 

argued that the costs of moving or continuing to operate the two facilities would 

negate any savings gained through closure. Further, while SECDEF claimed the 

facilities were not critical, the Commission found “ample data that pointed to 

a continuing need.” However, the Commission could not “identify a potential 

DOD user willing to take over the facilities.” The wording – “identify a potential 

DOD user” – at least implies no organizations were actually asked. Although apparently some were, the point here is the vagueness in the report’s phrasing.

Finally, the closure decision – “The Commission found the facilities were 

excess to the Department’s needs” – was not stated as a logical conclusion 

deriving from the failed attempt to “identify a potential user” or from any other 

premise. Indeed, the conclusion seems to contradict the data that suggested a 

continuing need. White Oak closed anyway.(all quotations from 1-64)72

___________________ 

71Defense Base Closure and Realignment Commission, “Report to the President” (July 1, 

1995).

72See also William B. Anspacher et al., The Legacy of the White Oak Laboratory (2000), esp. 

365-367.
62 Reports on the Management of Navy and DOD Laboratories

Other communities fared better, some of them because of innovative privatization initiatives. Asserting that OSD had underestimated military value by 

proposing to relocate interdependent functions, the Commission recommended 

that NAWC Lakehurst remain open. Both NAWC Indianapolis and NSWC 

Louisville challenged the assessment of their military value and also proposed 

public-private partnerships that allowed the bases to close but then be bought by 

redevelopment groups who could offer the facilities and employees to private 

companies for use in bid proposals. Under such arrangements the Navy would 

reduce infrastructure and the closure would only minimally affect the local 

economy. Downright effusive about such efforts, the Commission argued that 

privatizing commercial and industrial activities in general would reduce operating costs and strengthen the Services by freeing personnel to perform exclusively 

defense-related tasks.

Table 4 summarizes the major base closures and realignments from BRACs 

1988, 1991, 1993, and 1995.

Many in the laboratory community remain convinced that, regardless of 

whether certain closures helped the Navy, neither the COBRA model estimates 

nor any other data drove the decisions. Guy Dilworth, a former NADC Technical 

Director and Deputy Commander of NAWC’s Weapons Division, believed the 

decision to close NADC occurred well before any data calls were received and 

was based on considerations the COBRA model could not address. James Proctor, Deputy Technical Director of NSWC Dahlgren from 1988-91 and then head 

of the Research Department at White Oak, held similar views. Like Dilworth, 

Proctor believed BRAC allowed the Navy to maintain some key core competencies but that certain closure decisions were unrelated to savings.73

In fact, some believe plans to disestablish the labs at White Oak, Warminster, and New London had been set since well before BRAC 91.74 White Oak 

and Warminster did in fact show up, at least as early as the February 1990 Phase 

II Study, on a list of three possible closures.75 Bernard DeSavage, former Deputy 

Research Department Head and then Acting Department Head at White Oak during the early 1990s, asserts that the three facilities were slated for closure from 

the moment the Navy began discussing significant restructuring. In the BRAC 

process, when costs/savings data from White Oak did not support disestablishment, two things happened: one, the data were reexamined; two, the decision 

___________________ 

73Guy Dilworth, interview by Howard Law, November 12, 1997. James F. Proctor, interview 

by Howard Law, September 24, 1997.

74The Naval Air Development Center at Warminster. Pa. and the Naval Underwater Sound 

Laboratory (later the Naval Underwater Systems Center, or NUSC) at New London, Connecticut. In terms of downsizing, the four largest realignments from BRAC 91 were those at 

Warminster, White Oak, New London, and Annapolis. NADC had become part of the Naval 

Air Warfare Center, Aircraft Division, and NUSC had become the New London detachment of 

the Newport Division of the Naval Undersea Warfare Center. NADC was closed and NUSC 

disestablished after BRAC 95. Some functions, personnel, and facilities relocated to Patuxent 

River, Maryland and Newport R.I., respectively.

75See DNL, “A Review of Studies,” 23.
Chapter 2 — BRAC 1993 and 1995 63

Closures Realignments

BRAC 88 16 11

BRAC 91 26 19

BRAC 93 28 13

BRAC 95 28 20

Total 98 63

Table 4 — Major Base Closures and Realignments, BRAC 88-95

(From 1995 BRAC Commission Report)

___________________ 

76Bernard DeSavage, interview by Howard Law, November 4, 1997. DeSavage phone conversation with author, January 17, 2007.

77Two examples of the types of sources mentioned in Fn. 57 are Dr. Craig Dorman’s paper 

“BRAC 95 Lessons Learned: A Laboratory Perspective,” and his speech “Parting Shots,” 

presented at a DOD laboratory workshop in June 1995. Dorman was Deputy DDR&E (Lab 

Management) at the time. 

was made to close the lab in stages, transferring only those functions that could 

be moved within the parameters of the payback requirements.76

This background is not intended to imply deceit on the part of the Navy, 

DOD, or BRAC Commission but instead to demonstrate that sources exist for 

examining issues at which the major reports only hint. Again, while these reports 

offer cogent explanations of the final product, material in the Navy RDT&E 

management archives offers insight into processes. And while the Base Structure 

Data Base – even the name strongly suggests impenetrability – with its hundreds of cubic feet of data bits, formula integers, and matrix redactions, allows 

thorough perusal from anyone like the GAO with a legion of accountants at its 

disposal, oral history interviews, briefings, and correspondence provide a more 

manageable and sometimes personal set of documents.77

In addition, the reports do not convincingly demonstrate their claims 

(which is not to argue the claims were false). It may have been impossible to 

convince affected communities and facilities that objective analysis of the data 

showed them to be excess. However, the Navy reports called the Base Structure 

Data Base “the sole basis for BSEC determination.” The BRAC Commission 

claimed total objectivity, citing its own “model of open government...absent political or partisan influence.” The GAO’s and Services’ half a dozen paragraphs 

on military judgment might have been used to moderate that claim even slightly 

– as absent as possible of partisan influence. But the thousands of pages on 

COBRA analyses and discount rates and computer models and audit trails were 

taken to justify a declaration of an utterly impartial analysis. As a result, a lack 

of rhetorical clarity about a specific closure such as the White Oak lab ironically 

only helped open the door to charges of arbitrariness the Commission sought so 

assiduously to avoid.

Chapter Three

The Triumph of Efficiency

Background

Throughout the rest of the 1990s, studies continued to address infrastructure reduction in the technical centers and in the “support” (as opposed to operational) structure in general. Many believed the BRACs had not gone far enough, 

and a variety of mandates were passed that directed significant additional personnel reductions. For example, the FY 1992 Defense Planning Guidance mandated 

a 35 percent reduction of the RDT&E workforce by 2001. The FY 1996 NDAA 

directed DOD to cut its acquisition workforce (a term undefined until late in the 

decade) by 15,000 that year and by a total of 25 percent by 2000. Section 912 of 

the FY 1998 NDAA similarly mandated reductions of 10,000 to 25,000 personnel. Both Congress and the Administration imposed additional reductions on the 

acquisition workforce, headquarters personnel, overhead costs (including overhead personnel), and all Navy and Marine Corps civilian personnel. Although it 

remained unclear which directives overlapped and to what extent, the net effect 

reduced the Navy RDT&E establishment by at least four percent per year over 

the entire FY 1991-2002 decade. Some recommended much greater reductions.78

Studies discussed these measures as part of a larger “revolution in business 

affairs” (RBA) designed to accommodate the “revolution in military affairs.” 

Briefly, four developments compelled the revolution in military affairs:

1. The collapse of the Soviet Union reduced overall security threats.

2. Smaller threats from “rogue” nations had increased.

3. The military more often engaged in small deterrence/policing actions

4. DOD now led technological developments in only a few areas.

The poet Robert Browning famously exclaimed that “a man’s reach should 

exceed his grasp,” but even his optimism might have been curbed by the stated 

goals of the RBA. The revolution sought to reform the acquisition process to 

accommodate fundamentally altered yet still evolving military modernization 

requirements. In fact, budget cuts had already forced postponement of modernization for too long. At the same time, DOD would need to stay abreast of global 

shifts in technology development while significantly curtailing its new hires. 

___________________ 

78See Michael Marshall, “Reducing Defense Infrastructure: Workforce vs. Workload Trends” 

(unfinished paper, April 1997).
66 Reports on the Management of Navy and DOD Laboratories

And, unlike every other revolution in history, the Department was supposed to 

accomplish this one at greatly reduced cost.

The interrelationships among these national security, economic, and 

technological changes shaped the RBA. Economic globalization centered on 

technology development – especially in such areas as information technology 

(IT) – which in turn diminished the significance of national borders and affected 

national security considerations. As a technology “follower,” especially in IT,79

DOD had to depend on the private sector more than in the past to gain access to 

current technology. Meanwhile, the private sector changed. Companies partnered 

more frequently, often with foreign entities. Many increased outsourcing, both to 

reduce costs and to focus on core competencies. Many also cut back on longterm research and restricted the focus of near-term development.

Because of these developments, and perhaps because of frustration with 

the failure of previous reform efforts to solve long-standing problems, the 

technical centers faced increasing pressure to outsource much of their work. It 

sounded perfect: by shifting work to the private sector and reducing personnel 

levels, DOD could divest itself of costly and obsolete infrastructure and exploit 

the “best practices” of cutting edge commercial companies. The support structure would not just get smaller – a change that in itself could threaten national 

security – it would “reengineer” to get better, providing improved products and 

services at lower costs. Thus the concept of efficiency supplied DOD with the 

necessary justification for repeated reductions.

Ultimately, a revival of outsourcing enthusiasm swept through DOD in the 

1990s, promising salvation for lapsed modernization efforts by funding them 

through the savings that the resulting efficiency seemed certain to produce. A 

host of high-level study groups saw the light and joined the chorus. However, the 

message got somewhat distorted, at least as it became translated for the technical 

centers. The term efficiency contains two key elements – producing the desired 

effect and doing so with minimum waste. While publications about the labs and 

centers all mentioned the former, they clearly emphasized the latter, in effect 

equating efficiency with less work.

Overview of the Studies

The reports discussed in this chapter all examined, to varying degrees, 

ways to increase outsourcing and continue reducing infrastructure. Typically, 

outsourcing in DOD means the work shifts to the private sector but facilities 

remain in the public sector. While outsourcing generally means the same as contracting, in the 1990s it typically meant increased contracting. Many studies also 

advocated privatization, or the transfer of government facilities to the private 

sector. “Privatization-in-place” transfers facilities, equipment, and people, which 

means former government employees become contractors. Other similar initiatives include public/private ventures or partnerships (PPVs, sometimes called 

___________________ 

79See Fn. 103 for a discussion of whether DOD really lagged behind the private sector in IT.
Chapter 3 — The Triumph of Efficiency 67

partial privatizations), employee stock ownership plans (ESOPs), and even 

GOCOs.

The Defense Science Board’s (DSB) 1994 “Laboratory Management” was 

one of the first major studies of the labs in the post-Cold War period to advocate 

avidly for outsourcing. The Institute for Defense Analyses (IDA) used that report 

in its Laboratory Infrastructure Capabilities (LIC) Study, which in turn formed 

the basis for the Clinton Administration’s broad interagency review of the DOD, 

DOE, and NASA laboratory systems. Meanwhile, a commission established by 

Congress did a sweeping assessment of the missions and functions of the Armed 

Forces and enthusiastically advocated outsourcing, especially of “commercial 

activities.” All these activities occurred while the Services were engaged in 

BRAC 95.

Then in the latter half of the decade, the Center for Naval Analyses (CNA) 

promoted outsourcing in a number of studies. DSB issued study after study, 

carried out almost exclusively by representatives from the private sector, which 

offered increasingly unqualified praise of any outsourcing initiative. The Naval Outsourcing and Privatization Programs Division of the Office of the CNO 

(responding to OSD savings initiatives) even attempted to categorize virtually all 

technical center programs and personnel as eligible for outsourcing. And finally, 

SECDEF Cohen requested (unsuccessfully) an additional BRAC round as the 

means for carrying out reductions outlined in his Defense Reform Initiative 

(DRI).

In essence, outsourcing advocates went postmodern. For example, the 

Office of Management and Budget (OMB) Circular A-76 dictated that “inherently governmental functions” could not be contracted out but RDT&E “support” could. Certain groups therefore concluded that such terms represented no 

concrete reality but instead existed solely as managerial constructs, which meant 

managers could construct them however they chose. And those who promoted 

outsourcing as a solution for modernization problems inclined toward defining 

nothing as inherently governmental and almost anything as support.

The DSB on Laboratory Management

Calling Defense Laboratory Management “an obsolescent artifact from 

the Cold War,”(Cover Letter) the DSB issued its report on the subject in April 

1994.80 John Deutch, USD for Acquisition and Technology (A&T), tasked the 

Board to recommend ways for improving quality, modernizing, and assisting in 

BRAC 95. Rather than an extended analysis based on documented research or 

the work of panels, the report is simply a small task force’s litany of assertions 

and recommendations, some breathtaking in their banality, some more substantive. DSB offered five general proposals:

• Resize and restructure, including a 24 percent reduction in personnel.

• “[P]ursue a vigorous program of outsourcing of defense laboratory 

activities”(Cover Letter), and require that lab directors justify all 

___________________ 

80DSB, “Defense Laboratory Management” (April 1994).
68 Reports on the Management of Navy and DOD Laboratories

decisions to work in-house. Shifting work to the private sector would 

provide DOD with the best technology available and save money with 

which to fund modernization.

• Extend DDR&E oversight, including external reviews from the private 

sector, customer reviews from DDR&E surveys, and an OSD management review.

• Begin the modernizing plans described in the report.

• Issue the report’s criteria for judging modernization.

The first modernization section focused on management, suggesting that 

DDR&E could not insure that the labs facilitated force readiness or supported 

Reliance, could not adequately assess the Service Program Objective Memorandums (POMs) or Military Construction (MILCON) requests, and could not 

evaluate outsourcing efforts. Therefore, the 1993 Government Performance 

and Results Act (GPRA) provisions should be extended to all labs, and all labs 

should maintain an open Management Information System (MIS) on personnel, capabilities, facilities, funding, and projects. The report stated that this MIS 

would obviate the need for the annual DOD In-House RDT&E Activities Report, 

although it did not distinguish between the two.

The second modernization section focused on quality, particularly review 

mechanisms and S&E/lab outreach and interaction. The Board’s recommendations included: 

• establishing a Defense Senior Scientists Council to help formulate 

policy, encourage interaction among S&Es, and facilitate cross-Service 

exchanges

• an external performance audit, in addition to the GPRA assessment, to 

evaluate outsourcing initiatives and personnel

• regular meetings to increase DOD/lab/industry interactions and sharing of facilities – especially targeted to industries not already in defense 

work – and that each Service review for DDR&E all MILCON projects, 

maintenance and repair schedules, and equipment

• DDR&E participation in interagency initiatives that would increase 

outsourcing

Importantly, the Board also proposed that Reliance expand and DDR&E 

assume responsibility for it and that the Laboratory Demonstration Program 

(LDP) be re-chartered as the Laboratory Quality Improvement Program, or 

LQIP.81

The report suggested various criteria for evaluating modernization within 

the categories of quality, outreach, and size. In relation to quality, DSB discussed 

the GPRA’s requirement for strategic plans. S&T plans were to include specifics 

for work with others (such as industry and other agencies), clear missions, technology insertion, and a “focus on a limited number of closely related key disci-

___________________ 

81LQIP is discussed in Chapter 5.
Chapter 3 — The Triumph of Efficiency 69

plines, for each of which it has a specified critical mass of funds and people.”(2-

1) Conversely, Acquisition and Modernization (A&M) strategic plans were to 

emphasize technologies and concepts outside of principal competencies.

Regarding leadership quality, the report perhaps perfected the banal claim. 

Managers were to improve their facilities, understand modern equipment, and 

possess a knack for quality, skills suited to the job, and the ability to direct 

researchers and recruit talent. They were supposed to exploit every flexibility to 

pay and promote based on merit, especially technical rather than administrative. 

They were expected to have “reasonable control”(2-3) over support functions. 

Finally, DSB argued that the labs would not likely ever be able to allot five to 

10 percent of their funding to ILIR, as was ideal. Therefore, they “must urge 

customers to support ILIR projects, or contract for such research.”(3)

Regarding “outreach,” DSB strongly recommended outsourcing or similar 

methods. The Board stated that DOD should maintain capabilities only in areas 

in which industry did not meet a need; where DOD “followed,” it needed only 

to remain informed and maintain access to critical technologies. To some extent 

analysts had always agreed with this view, if for no other reason than the labs 

had always contracted out most of their work. The question was how much inhouse, hands-on work S&Es needed to remain informed. In other words, despite 

its claim, the Board really offered no criteria here but instead reasserted a longstanding premise.82

DSB eagerly embraced outsourcing as the most important form of outreach. With force reductions, procurement constraints, and readiness and modernization needs “better served by a basically commercial infrastructure,”(3-3) 

outsourcing appeared an attractive option. Further, the Cold War past still 

saddled labs with “dysfunctional undertakings” such as administering detailed 

specifications, supporting obsolete materiel, and using outdated technology. The 

report set targets of in-house/contracting ratios at 20/80 percent for S&T and 

30/70 percent for A&M. “In-house expenditures should be restricted to work that 

is inherently governmental, that compensates for industrial under-investment, 

that provides non-procurable support to approved facilities, and that provides 

performance, cost and schedule assessments....” Similarly, lab directors “must 

justify all decisions to conduct work in-house...and demonstrate an aggressive 

program for seeking defense-relevant technology support from the civil sector.”(3-4)

The report briefly addressed other outreach topics. These included professional interactions, “intellectual openness” (for example interaction between 

S&Es and the Fleet), and cooperative agreements among the Services. The 

Board also commented on technology transfer – enabled through such initiatives 

as Cooperative Research and Development Agreements (CRADAs) – and on facilitating cooperation rather than competition with academia and industry. Along 

these lines, DSB asserted that a lab director should be required to explicitly justify the need for resources not shared with industry, academia, and other agency 

___________________ 

82See for example James Colvard, interview by Rodney Carlisle, May 13, 1994.
70 Reports on the Management of Navy and DOD Laboratories

labs. It also extolled “federated” labs and model contracts, or cooperative efforts 

to integrate the defense and industrial technology bases. In such arrangements, a 

DOD employee would work at a contractor site for an extended period, and this 

“federated” team would “spin up” rather than transfer new technology.

National Science and Technology Council Interagency Review of Federal 

Laboratories

The Laboratory Infrastructure Capabilities Study

IDA often referenced the DSB study while writing a major report on DOD 

Laboratory Infrastructure Capabilities, or LIC.83 The report responded to 

the National Science and Technology Council Presidential Review Directive 

(NSTC/PRD) #1 of May 5, 1994, which called for an interagency review of the 

three largest federal laboratory systems – the DOE weapons, NASA, and DOD 

labs. Each agency carried out its own study and integrated their responses into 

a final report issued the following year. The DOD’s response itself consisted of 

three parts: an interim report, main report, and BRAC 95 addendum. The Department completed the LIC study, directed by Dr. Craig Dorman, Deputy DDR&E 

for Laboratory Management and a former admiral, to provide a basis for its final 

conclusions.84

The LIC study brought together more than 300 representatives from both 

government and private industry to examine the roles and missions of the DOD 

labs, the extent of their collaboration with industry and academia, and the potential for increased outsourcing. Panels outlined 12 product/technology areas 

and some two dozen roles to provide an agenda for addressing key structural, 

management, and policy issues. Although the study addressed key roles the labs 

performed, it focused not on improving execution of those roles but rather on 

how many DOD could outsource.

IDA noted the difficulties in generating findings applicable to all the 

extremely diverse activities in the labs and centers. For example, the technology/product areas did not correlate with labs, and neither lab nor area worked as 

a discrete unit of analysis. Focusing on a lab prevented assessing the numerous 

technology areas it supported. On the other hand, focusing on a technology area 

prevented assessing various cost issues associated with a lab, such as the interactions among its functions. Further, accounting and management information 

systems varied across labs, between labs and other government agencies, and 

between government and industry labs (a problem discussed in Chapter Five). 

These differences foiled attempts to determine even how much work labs out-

___________________ 

83Institute for Defense Analyses, “Laboratory Infrastructure Capabilities Study: Phase I Report” (November 1994).

84The NSTC, a cabinet-level council and “virtual” agency to coordinate science, space, and 

technology policies, was established on November 23, 1993 by executive order. It was part 

of the Office of Science and Technology Policy (OSTP), which advises the President on S&T 

policy/budget issues and articulates the President’s S&T principles.
Chapter 3 — The Triumph of Efficiency 71

sourced in the first place. The full-spectrum range of functions presented another 

issue. Organization, roles, relationships with industry and academia, and justifications for keeping work in-house varied among the Services and within each 

Service among different functions.

As Table 5 shows, study participants identified 23 roles the labs performed 

and grouped those into four categories. Categories included advisor/corporate 

memory (including for example smart buying and technology integration); 

unique capabilities (including quick response); acquisition and policy agent 

(“a legal representative in...weapons acquisition”); and institutional liaison (“a 

technology nexus for the modernization ideas coming from military leaders, the 

intelligence community, industry, and academia”[ES-1]). Overall, no other kind 

of organization provided the “breadth of perspective and continuity of involvement” across these categories.(12)

Following the DOD’s Science and Technology Plan, panels also grouped 

activities into 12 technology or product areas. These included: Human Systems; Environment and Civil Engineering; Nuclear-Biological-Chemical (NBC) 

Counterproliferation; Materials and Processes, Structures, and Manufacturing; 

Electronics and Sensors; Computers, Software, Modeling, and Simulation; C3I 

and Electronic Warfare; Weapons; Space; Air Vehicles; Ground Vehicles; Ships 

and Watercraft.

All participants agreed the labs performed crucial roles – but questioned 

whether the labs must perform them. In other words, how much of a product area 

could be outsourced? (The panelists acknowledged but did not address the inverse issue of the required “critical mass” of in-house capabilities.) For example, 

neither the C3I panel nor the Clothing, Textiles, and Food subpanel believed labs 

acted as smart buyers in those areas. Accordingly, participants gauged technical and non-technical restraints on outsourcing, the percentage of total S&T and 

engineering work that was inherently governmental, what work DOD might 

outsource easily, and what it might outsource with some difficulty.

This thrust further signified the shift in emphasis from effectiveness to 

cost-cutting. Recall that in 1989 the Office of Technology Assessment’s (OTA) 

Dr. Craig Dorman (retired Rear Admiral), Chair 

of the Laboratory Infrastructure Capabilities 

Study and former Deputy DDR&E for Laboratory Management. Dr. Dorman later served as 

the Director of the Woods Hole Oceanographic 

Institution and is currently Vice President for 

Academic Affairs and Research at the University 

of Alaska.
72 Reports on the Management of Navy and DOD Laboratories

Advisor and 

Repository of 

Corporate Memory

Source of Unique 

Capabilities

Acquisition and 

Policy Agent

Institutional 

Liaison

Source of 

corporate memory 

and stability 

– nurturer of 

technology

Expert on defenseunique research

Smart buyer 

– non-proprietary 

advisor or broker

Technology 

integrator

Requirements 

translator – link 

user to technology

Smart user support 

for fielded systems

Repository of 

knowledge of 

legacy systems

Low-cost owner of 

unique facilities

Provider of 

guaranteed access 

to unique facilities

Repository of 

unique military 

expertise

Ready supporter of 

deployed combat 

troops

Trusted 

repository for 

export-sensitive 

& proprietary 

information

Source selection 

agent

Acquisition agent 

for contractual 

oversight and 

budgeting

Legally 

responsible agent 

for regulatory 

responsibilities & 

safety

Legally 

responsible agent 

for physical 

security

Legal 

representative in 

standards groups

Legal 

representative 

in international 

governmentto-government 

dealings

Liaison between 

technology 

community and 

fielded forces 

– mission over 

profits

Link between 

engineering 

and testing 

communities

Liaison between 

technology and 

intelligence 

communities

Broker for Service 

interoperability 

concerns

Technology 

training ground for 

military leaders

Table 5: Roles of DOD Laboratories

(From IDA Infrastructure Capabilities Study)
Chapter 3 — The Triumph of Efficiency 73

“Holding the Edge” attempted a similarly comprehensive overview of the labs. 

This report had commented that “The mind-numbing array” of issues could be 

grouped under two questions: whether DOD had the type and quality of labs it 

needed, and whether management arrangements inhibited productivity. For the 

DDR&E/IDA report, that question had become, how can DOD outsource the 

highest possible percentage of work not within its required in-house capabilities?

Panelists then identified areas for potential structural (consolidation) or 

outsourcing changes. At the time, labs received about 25 percent of all DOD 

RDT&E funding, and already outsourced about half of that. Of course, significant differences existed among the technology areas. For example, about 46 

percent of Air Vehicles RDT&E was outsourced, compared to 86 percent of 

Computers, Modeling, Software and Simulation RDT&E. And again, differences 

existed between S&T and engineering. The report suggested that “A comparative 

‘benchmarking’ analysis of the different approaches used by the various activities might reveal the ‘best practices’ in various functional areas.”(9)

The study recommended consolidation in four of the 12 technology areas 

and both outsourcing and consolidation for an additional five areas. Those recommended for consolidation – driven by excess capacity and duplication of effort and open for consideration in BRAC 95 – included Electronics and Sensors, 

C3I and Electronic Warfare, Weapons, and Space. Those recommended for both 

included NBC Counterproliferation, Human Systems, Environment and Civil 

Engineering, Air Vehicles, and Ships and Watercraft (tables provided specific 

proposals for each area). Unsurprisingly, non-government participants recommended much higher increases in outsourcing than did government participants. 

In the Air Technology area for example: the government panel suggested an 

increase up to 79 percent of total S&T, 21 percent of engineering development, 

and 64 percent of in-service engineering; the non-government panels recommended 90, 55 and 93 percent, respectively.

Other issues IDA addressed included management, procurement regulations, missions, and S&T planning. The report joined the chorus of those advising that lab directors have flexibility to manage rather than simply obey and that 

burdensome procurement regulations be eased. All panelists agreed on the need 

for better strategic management, for clearly defined missions, and for rightsizing 

based on a DOD clarification of necessary S&T and engineering functions. Regarding the planning process, the report stated that to succeed fully Tri-Service 

Reliance should expand to include engineering and other agencies such as NASA 

and the DOE labs. Similarly, although panelists considered the DDR&E S&T 

planning process successful, they disliked its separation from engineering.85

Finally, the study groups offered a few additional recommendations. They 

proposed examining exactly how the agencies’ varying methods of calculating 

___________________ 

85The JDL never did expand to include engineering planning or other S&T agencies such as 

DARPA. Despite its efforts then, Congress continued to call for a more comprehensive crossService planning process. Dr. Anita Jones, DDR&E from 1993-1997, took over the Reliance 

process but ultimately had little more success than the JDL, at least in part because BRACs 

overwhelmed such initiatives.
74 Reports on the Management of Navy and DOD Laboratories

costs determined outsourcing decisions. They recommended pilot programs for 

improving collaboration among government, industry, and academia, and urged 

fuller exploration of dual-use technologies. They recommended developing metrics, for example through best practices analyses, to gauge lab successes. And 

finally, noting the “mixed results” of previous efforts, they recommended pilot 

programs for reforming lab management.

The Interim Response

Interestingly, DOD’s final four reports responding to the interagency 

review of laboratories backed off from advocating outsourcing and highlighted 

lab capabilities. Based on the LIC study, the DDR&E published a memo Interim 

Response to the PRD on September 12, 1994.86 Postponing specific recommendations until the completion of BRAC 95, the memo discussed labs in relation 

to the five “Areas of National Need” and nine “Issues to Consider” the PRD had 

identified. It argued that “the DOD laboratories’ characteristics are tightly conditioned by their very clear National Security missions,”(1) that they were integral 

to technology development and acquisition, and that they would become increasingly significant to post-Cold War security. The Interim Response rephrased the 

central issue of the LIC study. Rather than seeking simply to outsource, it sought 

to determine the best organizational arrangements considering that labs had to 

consolidate and downsize while still fulfilling dual roles of performer (in-house) 

and purchaser (contracting) of RDT&E.87

As had the LIC study, the Interim Response mentioned the wide array of 

activities, management arrangements, and coordination mechanisms. Funded 

by DOD managers, labs are “directed performers...rather than free agents,”(4) 

yet they also purchase RDT&E. This dual role required the added capability of 

balancing in-house and out-of-house work. Another complicating aspect was that 

program managers used labs selectively for different roles and in different parts 

of the life cycle. And as the labs responded to BRAC by, for example, creating lab/other agency amalgams, it would become increasingly difficult even to 

draw a boundary around what constituted the “laboratory.” Instead, DOD would 

evolve “a spectrum of ‘laboratory-like’ approaches... [that] optimize the use of 

the national S&T and product development talent and infrastructure base wherever it is....”(6) Coordinating mechanisms included Reliance and the DDR&E 

Technology Area Plans (TAPs), which provided the basis for Service POMs. 

___________________ 

86DDR&E, Memorandum for Assistant to the President for Science and Technology, “Department of Defense Interim Response to NSTC/PRD #1, Presidential Review Directive on an 

Interagency Review of Federal Laboratories” (September 12, 1994).

87Noting the need for full life cycle support, which includes upgrading and determining the 

military use of off the shelf products, the report defined a lab as a DOD activity “that performs 

predominately S&T, Engineering Development, and/or ISE [in-service engineering] work.”(2) 

The definition was adopted from DSB’s report on lab management and also used by the JCSG 

for labs in BRAC 95.
Chapter 3 — The Triumph of Efficiency 75

Overall then, the labs’ directed, dual role of purchaser and performer “makes 

them uniquely effective” in planning and coordination.(6)

The memo also discussed the five “Areas of National Need” PRD #1 had 

identified.

• Fundamental Science – universities conducted most basic research for 

the DOD, and the Office of Naval Research (ONR), Air Force Office of 

Scientific Research (AFOSR), and Army Research Office (ARO) managed most of the funds.

• National Security – labs supported the full range of military needs, 

including areas not provocative or lucrative enough to interest academia 

or industry.

• Technologies that Contribute to Competitive Performance – technology 

transfer offices at all technical centers offered one example of developing dual-use or spin-off potential from the earliest stages of RDT&E.88

Also, in certain business sectors – civil engineering, aeronautics, shipbuilding – the labs directly contributed to the national economy.

• Environmental Protection and Cleanup – labs now considered social, 

economic, and environmental impacts from the earliest stages of applied 

research.

• Space Exploration – one example of interagency coordination included 

the NASA/DOD Space Technology Integration Group (STIG).

Of the nine “Issues to Consider” identified in PRD #1 (Comparative Advantages, Methods of Selecting Performers, Missions, Methods for Selecting and 

Re-orienting Research Areas, Quality and Performance Evaluation, Restructuring Opportunities, Alternative Management and Funding Options, Relations Between Parent Agencies and Laboratories, Work for Others), the memo relegated 

eight to a subset of the third: missions. “All DOD labs have very clearly stated 

national security missions....Decisions on their size, facilities, tasks, and funding 

are based solely on these missions. Other laboratory activities are secondary.” 

Therefore the response addressed national security at length, and then briefly discussed “the comparative advantages [in the other issues to consider] that result 

from...national security work.”(13)

The report also noted the fiscal and cultural changes in the three years since 

the Federal Advisory Commission’s (FAC) study of defense labs. Appropriations 

for S&T were expected to decline, and industrial IR&D had decreased about 80 

percent from its late 1980s peak. These reductions, combined with new environmental and economic responsibilities, signaled a cut of up to 50 percent (by FY 

1997) of S&T funding that directly supported warfighting. Likewise, acquisition 

reform, personnel reductions, and BRACs compelled the labs to remodel their 

business practices, yet regulatory constraints hampered their flexibility to do so.

___________________ 

88Dual-use or spin-off means something originally developed for military use that acquires 

commercial/civilian applications.
76 Reports on the Management of Navy and DOD Laboratories

Nonetheless, the report emphasized, DOD needed a laboratory system for 

many reasons. The Interim Response cited the LIC study but phrased the justifications differently:

• Translation – “technological expertise and the ability to translate (in 

both directions) between warfighters’ needs and technological opportunity is an essential in-house skill. This translation is a life’s work that 

must be nurtured with facilities, intellectual challenge, and opportunity 

for reward and advancement.”(15)

• Integration – across myriad technologies, across the life cycle, across 

numerous types of equipment, and across many performers and contractors. Although Program Offices might be able to do all this through contracts, the labs “are a convenient way to organize and provide facilities 

for this talent base.”(16).

• Rapid Response

• Non-competitive interchange (honest broker)

• Safety and surety

• Support to acquisition – acquisition managers typically have sparse 

technical staffs.

• Supplementary capacity – including surge/supply requirements, physical security, special facilities, and environmental or safety risks industry 

will not take.

Of the other eight Issues to Consider, the Interim Response focused most 

on the Comparative Advantages (and disadvantages) of in-house labs, industry, 

academia, Federally Funded Research and Development Centers (FFRDCs), 

and other agency labs. It commented that from a purely technical standpoint, 

most work could be outsourced. The labs’ primary competitive advantage, then, 

was identification with the customer and warfighter – a characteristic that also 

justified having Service rather than “purple” (DOD) labs. Other advantages 

included corporate memory, special facilities, full-spectrum capabilities – which 

helped streamline management because fewer organizations became involved 

– and “willingness and ability to perform long term, low payoff but nonetheless 

military essential R&D.”(18). Disadvantages included: burdensome regulations; limits on directors’ authority, which would worsen with the severe hiring 

restrictions; difficulties in abandoning facilities and programs and a potential 

bias toward in-house solutions, both of which mitigated the honest broker/smart 

buyer roles.

Industry, academia, FFRDCs, and other agency labs carried their own competitive advantages. The report listed 14 for industry, including a willingness to 

complete projects, a motivation to invest in products with dual-use potential, and 

an ability to provide technology and products sometimes far ahead of government capabilities. One advantage of academia (well understood by basementdwelling graduate students) was that “Universities are an excellent source of 

cheap smart labor with new ideas (i.e., students), who make the latest knowledge 

readily accessible to DOD.”(20). FFRDCs could perform inherently governmen-
Chapter 3 — The Triumph of Efficiency 77

tal functions but enjoyed more personnel flexibilities than GOGOs, and other 

agency labs possessed unique skills and facilities.

Finally, the memo spent less time on the other eight Issues to Consider but 

did address a number of salient points. Regarding evaluation, DDR&E planned 

to implement the GPRA for all labs via a pilot program by the end of FY 1995. 

As for alternative management, each Service had determined that restrictions 

and conversion costs rendered conversion to GOCOs infeasible. Also, each Service was trying to eliminate “managerial hierarchies.”(27) At the far end of that 

spectrum, the Naval Air Systems Command (NAVAIR) “wipes out the individual 

laboratory commands and integrates their personnel directly into a competencyaligned parent organization.”(27)

The DOD Response

In February 1995 DDR&E published the main body of its final report, the 

DOD Response to NSTC PRD#1. Noting that DOD would be implementing 

proposals from BRAC 95, the DSB study on lab management, and the upcoming 

report by the Commission on Roles and Missions of the Armed Forces, DDR&E 

published a descriptive survey rather than a set of recommendations. At over 500 

pages, the report focused on S&T modernization, organization, and management. 

Along with the LIC study, Interim Response, BRAC 95 addendum, and also a 

CNA report issued a few months earlier, the survey provided a comprehensive 

overview of DOD laboratory management in the immediate post-Cold War era.89

Although the report did not use the term “revolution in business affairs,” it 

did phrase the labs’ challenges similarly: they must nurture the ability to exploit 

commercial technologies and remain smart buyers while downsizing, reducing 

budgets, and helping reform acquisition. As “more and more of the critical technology...is derived by exploiting marketplace driven commercial advances,” the 

labs “basically act as interpreters and integrators [as opposed to producers]. They 

connect technology to need under the direction of acquisition managers, and help 

those managers make smart decisions.” The report described current reform efforts: integrating operations through the conjunction of S&T, T&E, and logistics; 

increasing Cross-Service planning and local lab director authority; instituting a 

SECDEF “full court press” to “eliminate debilitating directives and specifications;” beginning “Extensive experimentation” in modernization; increasing 

cooperation with academia and industry; and revising the Civil Service system 

for “reinvention” labs.(4-5)90

___________________ 

89DDR&E, “DOD Response to NSTC/PRD #1, Presidential Review Directive on an Interagency Review of Federal Laboratories” (February 1995). Most of those 500 pages are 

appendices. The main text is 75 (single-spaced) pages. Center for Naval Analyses, “Historical 

Trends in Navy RDT&E, Tech Centers, and Warfare Centers” (October 1994).

90Reinvention laboratories are discussed briefly Chapter 5.
78 Reports on the Management of Navy and DOD Laboratories

One major section described S&T organization and management. Each Service followed four basic management principles: organizing infrastructure with a 

systems approach to product lines (meaning that labs and T&E and logistics centers were subordinate to and often collocated with associated product elements of 

materiel commands); and attempting to minimize infrastructure, adapt best management practices to each product line, and provide sufficient authority for directors. This section also overviewed the 31 Reliance technology taxonomies, the 

FFRDCs and University labs, the Planning, Programming and Budgeting System 

(PPBS)/POM process for planning and selecting performers, and the Joint Mission Area/Support Area (JMA/SA) process for establishing requirements. It 

explained ONR’s management of funds in relation to the SYSCOMs, Program 

Executive Officers (PEOs), Navy Science Assistance Program (NSAP),91 and 

ILIR. ILIR explores “topics of exceptional promise” and “develop[s] a cadre of 

experienced researchers that will be available to the Navy for making intelligent 

decisions about future research ends.”(22)92 While NRL carried out most of its 

6.1 research in house, the warfare centers were the “key execution agents”(22) of 

6.2 and also key players in 6.3.

This section also discussed evaluation and planning/coordination. It 

mentioned the Research Advisory board under the National Research Council 

(NRC) for each Service, the Naval Research Advisory Committee, and ONR’s 

___________________ 

91The Navy RDT&E Management Archives at the Naval Historical Center has the complete 

records (approximately 50 cubic feet) of the Vietnam Laboratory Assistance/Navy Science 

Assistance Program (VLAP/NSAP).

92See Kavetsky et al., From Science to Seapower, 28-36.

Paul G. Gaffney II (retired Vice Admiral) 

served as NRL’s Commanding Officer 

from 1991 to 1994, as the Chief of 

Naval Research from 1996 to 2000, and 

as President of the National Defense 

University. He is currently the President 

of Monmouth University.
Chapter 3 — The Triumph of Efficiency 79

Integrated Program Reviews and Technical Reviews. In 1994 DDR&E began issuing the Defense Technology Plan (DTP) and Technology Area Plans (TAPs).93

Designed for “completeness, or sharpened skills across the full range of military 

operations,” these plans sought to connect S&T to overall acquisition. DTPs promulgated “what” S&T to pursue; TAPs developed strategy, or “how” to pursue 

it. “Each TAP extrapolates from current state of the art and provides a roadmap 

of quantifiable and achievable objectives vs. time.” Technology Area Reviews 

and Assessments (TARAs) then used TAPs to determine resource allocation. The 

third element – the “where” to invest – involved the in-house-versus-contracting 

decision. Overall, this DDR&E-led process would replace the Service-specific 

steps for developing the S&T elements of POMs.(37-38)

A second major section of DOD’s final response to NSTC PRD#1 reviewed 

modernization. Four premises directed these efforts:

• the labs had well defined, unaltered missions and functions

• they must remain within their respective Services

• the infrastructure – people, facilities, and equipment – must be of the 

highest quality

• investments must focus on core capabilities and maximize the abilities 

of partners.

The report discussed how the Services had consolidated along product lines 

and across life-cycle functions. It also reviewed recent GOCO studies, the “notoriously difficult”(44) efforts to establish metrics for R&D, and the plan to follow 

DSB’s recommendation for implementing the GPRA.

Other important modernization issues included personnel reductions, 

the LDP, and outsourcing partnerships. First, although personnel reductions 

remained necessary, regulations prevented hiring young people, and further, 

“quality plays no real role in the process.”(46) Second, the legislative plans for 

the LDP had never reached fruition, and DMRD-based consolidation of support 

functions eroded much of the authority directors had gained (DOD attempted 

to solve these problems through President Clinton’s “Reinvention Laboratory” 

initiative and LQIP, discussed in Chapter Five). Finally, the survey discussed 

developing cooperative relationships with industry and academia. Traditionally, 

the labs considered themselves “in the technically and managerially dominant 

position.”(50) Their desire to insure proper oversight, combined with restrictive 

regulations, created a competitive environment. In CRADAs, one of various 

efforts to change this, lab directors partnered with industry to develop a technology. Industry would commercialize the results, and, along with the labs, retain 

some royalties.

___________________ 

93As mentioned, the RDT&E Management Archives at the Naval Historical Center houses 

approximately 50 cubic feet of JDL records, including edited drafts, correspondence, and other 

material related to generating the DTPs, TARAs, and TAPs.
80 Reports on the Management of Navy and DOD Laboratories

Some of the many instructive appendices in the report include: RDT&E 

budget category performers, funding by category, outsourcing ratios, and lab 

organizational structures; FFRDCs; Service modernization efforts; Architecture/

Engineering and Construction (A/E&C) Industry R&D Partnership; laboratory 

basic research examples; environmental quality capabilities; military aeronautics; consolidation/realignment lessons learned; NAVAIR’s competency-aligned 

organization; ARL Federated Lab; GPRA guidelines for lab criteria; lab personnel levels; and LQIP.

The BRAC 95 Addendum

As the final step in DOD’s response to NSTC/PRD #1, DDR&E issued 

its brief BRAC 95 Addendum on April 3.94 The report explained the Laboratory Joint Cross Service Group’s (LJCSG) use of “common support functions” 

(CSFs) as an analytical rubric. DDR&E agreed with GAO’s assessment (issued 

two weeks later) of BRAC 95, admitting that the LJCSG recommendations “will 

achieve little toward the goal of cross-servicing.”(10) Appendices provided CSF 

definitions, detailed explanations of LJCSG recommendations, workload and 

budget trends, and changes in the acquisition structure of each Service during the 

last decade.

About half of the report explained the workings of the LCSG. The group 

identified 29 CSFs, or “lab functions important to and performed by at least two 

of the three Military Departments.”(3) It divided these into “Pervasive” (S&T 

only) and “Product” CSFs. “The assumption was that the output of this [pervasive] work flowed into ED [exploratory development] and ISE [in-service engineering] in Product CSFs.”(3) The group analyzed data calls based on a computer program that scored results according to functional capacity (maximum 

workload capacity), functional requirements (actual workload), and functional 

value.

The second half of the report basically explained why the process failed. 

For one, regardless of how many instructions respondents received, they still 

construed the data calls to their advantage. The CSF approach caused more 

problems, because it reviewed 90 percent of Air Force activities, but only 70 

percent of the Army’s and 40 percent of the Navy’s. Similarly, the approach 

captured only portions of many activities. As would GAO, the report concluded 

that breaking down work into small units or specific functions “cut much too 

fine, and led to recommendations for work shifts that were well below the level 

required to support closure or even major realignment decisions.”(8) Finally, the 

Military Departments simply considered the LJCSG recommendations costly 

and unsupportive of their objectives. The report did note, however, the successful formation of the tri-Service Armed Forces Medical Research and Development Agency.95

___________________ 

94DDR&E, “BRAC 95 Addendum to Department of Defense Response to NSTC/PRD #1” 

(April 3, 1995).

95See also Dorman, “BRAC 95 Lessons Learned.”
Chapter 3 — The Triumph of Efficiency 81

The Office of Science and Technology Policy (OSTP) Final Report

On May 15, 1995, as the last step in responding to NSTC PRD#1, the 

OSTP released the Interagency Federal Laboratory Review.

96 Ironically, for 

an effort touting inter-Service and interagency coordination, the report essentially cut and pasted DOE’s, NASA’s, and DOD’s separate conclusions into a 

single document. It also explained some of the more intransigent barriers to 

reform. The Cover Letter from President Clinton highlighted four guidelines for 

reform: rescinding unnecessary instructions, regulations, and oversight mechanisms; reducing redundancy by restructuring and clarifying missions; streamlining management and then eliminating programs of lower priority; and increasing 

interagency and inter-Service coordination.

The review listed many difficulties impeding laboratory reform. These included agency-level management flaws, environmental cleanup costs, a continuing need for downsizing and restructuring, and inflexible Civil Service rules that 

exacerbated the problem of maintaining staff quality while downsizing. Other 

barriers included insufficient joint planning across agencies and insufficient 

cross-Service integration.

OSTP offered recommendations in management/redundancy, modernization, basic and applied research, and environment. Although it deemed DOD lab 

management “generally effective,”(9) the review noted missed opportunities for 

cross-Service integration in biomedical R&D, energetics, C4I, and aircraft, airto-air, and air-to-ground weapons. And, as staff cuts continued, meeting mission 

requirements might very well hinge on the efficiencies created through integration. To deal with this experience drain, Congress had removed time limits on 

China Lake-type demos. Certain labs had planned on developing flexible personnel management plans and also basing Reductions in Force (RIFs) on performance rather than seniority. Recommendations for modernization dealt primarily 

with DOE and nuclear capabilities. Finally, regarding basic and applied research, 

the review proposed eliminating any programs the agencies could not support 

after streamlining management.97

Defense Conversion

Another, related initiative received considerable attention during this time 

but will not be discussed at length here: defense conversion. Briefly, defense 

conversion means transitioning personnel (both public and private) and resources to non-defense-related work. Part of the post-Cold War drawdown and 

peace dividend, it applied particularly to the third of the Five Areas of National 

Need outlined in PRD #1 – Technologies that Contribute to Competitive Performance. This push to advance industrial competitiveness by redirecting R&D to 

civilian or dual-use purposes fit with the efforts to reduce infrastructure through 

___________________ 

96OSTP, “Interagency Federal Laboratory Review Final Report” (May 15, 1995).

97See also, OSTP, “Status of Federal Laboratory Reforms: The Report of the Executive Office 

of the President Working Group on the Implementation of Presidential Decision Directive 

PDD/NSTC-5, Guidelines for Federal Laboratory Reform” (March 1997).
82 Reports on the Management of Navy and DOD Laboratories

commercialization. The endeavor produced a multitude of studies and reports. 

OTA’s After the Cold War and Defense Conversion, and the Naval Research 

Advisory Committee’s Defense Conversion provide good overviews. Also, 

Jacques Gansler, USD for Acquisition, Technology, and Logistics during President Clinton’s second term, published Defense Conversion: Transforming the 

Arsenal of Democracy.

The Commission on Roles and Missions of the Armed Forces (CORM)

The push for outsourcing R&D regained momentum with the major report 

Directions for Defense, by the Commission on Roles and Missions of the 

Armed Forces (CORM).98 Established by Congress, the 10-member Commission 

gathered information from Service, DOD, government, industry, and intelligentsia representatives. Its “central message” was that “every DOD element 

must focus on supporting the operations of the Unified Commanders in Chief 

(CINCs).”(ES-1) “Military operations,” the report continued, “are planned and 

conducted by joint forces under the direction of the CINCs, not by the Military 

Services, defense agencies, or Pentagon staffs.”(ES-2) In fact, the Commission 

believed most DOD problems stemmed from this underlying lack of focus. It 

grouped recommendations into three categories: Unified Military Operations, 

Productive and Responsive Support, and Improved Management and Direction. 

Of the five general goals, the most important in relation to the labs was the desire 

to “reduce the cost of the support infrastructure through increased outsourcing 

and better management.”(ES-3)

Asserting that “there are major opportunities to reduce the cost of DOD’s 

infrastructure while enhancing its effectiveness,”(3-1) the Commission discussed 

outsourcing and “reengineering” and expressed the central argument for shifting more work to the private sector. This argument derived from two related 

assumptions. One was the belief that in general, a private sector responsive to 

competitive market forces simply worked more effectively. Since the 1950s, this 

assertion has periodically motivated increased contracting in the lab community 

and is discussed in the next chapter. The second assumption interpreted recent 

American business practices as a dynamic restructuring to create a cost-effective 

and agile infrastructure. Proponents of outsourcing defense R&D argued that 

archaic laws, regulations, and even habits accumulated during the Cold War era 

weighed down the technical centers, causing them to lag behind the private sector in both technology development and management techniques. Divesting them 

of work and adopting new management principles for the tasks that remained 

would alleviate these problems.

The Commission offered numerous proposals on reengineering the activities that would remain in-house. It recommended adopting private sector practices such as activity-based cost accounting, and asked Congress to provide legislative relief from relevant impediments. Specific proposals focused on aircraft 

___________________ 

98Commission on Roles and Missions of the Armed Forces, “Directions for Defense” (May 

24, 1995).
Chapter 3 — The Triumph of Efficiency 83

support, contract audit and oversight functions, personnel restrictions, collocation and inter-Service consolidation, Federal Acquisition Regulations (FARs), 

and consolidation of the Defense Contract Management Command (DCMC) and 

Defense Contract Audit Agency (DCAA).

CORM and Outsourcing Commercial Activities

Along with many other studies written during this time, the Commission’s 

recommendations for outsourcing focused largely on commercial activities, 

or CA. Most simply, commercial activities provide goods or services generally available from the private sector. In early 1995 DOD had noted that some 

250,000 of its civilian employees performed such work.99 CA categories include 

education/training; social, installation, and health services; data processing; 

equipment, base, and real property maintenance; product manufacturing; and, 

most important for the discussion here, RDT&E “support.”

OMB Circular A-76 contains the basic rules that govern CA contracting.100

The first version appeared in 1966, modifying guidelines from the Bureau of 

the Budget (OMB’s predecessor). The Bureau’s policy, based on the principle 

that the government should not compete with the private sector in providing 

goods and services, had directed agencies to use commercial sources of supply. 

A-76 introduced competition into the process, directing that agencies perform 

public/private comparisons in situations in which savings might result from the 

government providing for its own needs. In other words, OMB sought to generate savings by granting a mechanism for government agencies to compete on a 

relatively level playing field for CA work. The Circular was modified in 1967, 

1976, 1977, and 1979, and the last revision included a detailed cost-comparison 

handbook for implementing competitions. It explicitly focused on routine work 

that could be specified in advance and for which performance criteria could be 

established.

A-76 specifically exempted R&D. First, much R&D work, especially in 

DOD, is considered “inherently governmental” and cannot be contracted out 

by any means. Further, A-76 in particular exempted R&D because, unlike most 

commercial activities, it cannot be captured in a set of circumscribed specifications and criteria, and it requires high-level, specialized training.

Over time however, modifications changed the exemption. The 1979 

revision proposed subjecting “non-core” R&D to competition and exempting 

inherently governmental, “core” R&D. Several agencies, and especially DOD 

and Congress, objected. In its report on the FY 1979 NDAA, the House Armed 

Services Committee wrote that “the present industry/government arrangement 

allows the laboratories to determine the percentage...to be contracted out and 

___________________ 

99DOD, “Report on the Performance of DOD Commercial Activities” (January 1995).

100The following discussion derives from Michael Marshall, “Outsourcing Commercial Activities as a Source of Infrastructure Savings: Are the Savings Claims Justified?” (January 1996), 

discussed in the next chapter, and Marshall, “Exemption of R&D from Application of OMB 

Circular A-76: A Historical Perspective” (February 7, 1997; updated September 15, 2000).
84 Reports on the Management of Navy and DOD Laboratories

is working well.” R&D therefore should not “be procured in the same manner 

as commercial and industrial type functions.” Nonetheless, OMB continued to 

push for incorporating some R&D within the scope of A-76, and in the FY 1980 

NDAA, Congress allowed that “those [R&D] support activities...more structured in nature, such as facility and equipment maintenance,” could be included. 

Clearly, Congress meant routine, continuing work easily described in a contract 

(or “performance work statement” in the Circular’s jargon).101 This language 

formed the basis for the subsequent “RDT&E support” category OMB incorporated into A-76.

Ultimately, the ambiguity that resulted from trying to settle this question 

led to continued efforts either to throw out the R&D exemption or to expand the 

concept of “non-core” or “R&D support.”102 The technological changes driving 

the Revolution in Business Affairs (RBA) helped initiate this impetus. For example, while CAs typically refer to low skill-level work, they also describe any 

work for which a significant commercial industry exists. IT, therefore, could be 

considered a commercial activity. And by the mid-1990s it at least appeared that 

DOD clearly lagged behind the private sector in this key area.103

CORM and others believed such developments justified expanding the 

category of RDT&E support – some would argue well beyond its intended purposes – or even doing away with A-76. The Commission argued that the “primary path to more efficient support is through ‘meaningful competition,’ which 

typically lowers costs by 20 percent for the types of commercial activities that 

DOD routinely reports to Congress....”(3-2)104 These savings amounted to about 

$3 billion per year to spend on priorities such as modernization. Acknowledging that DOD managers typically disagree with such estimates, the Commission 

pointed to “the continuing growth of outsourcing in the private sector.”(3-5).

It also claimed that “the results of academic studies provide clear evidence that 

such concerns are usually misplaced.”(3-5) No studies were cited.105

___________________ 

101House Conference Report No. 96-546, October 23, 1979. See also Mike Marshall and Eric 

Hazell, “Contracting Out: A Cycling of Attitudes” (unpublished paper, October 1997), 10.

102For a discussion of applying the concept of core competence to S&T corporate strategy, 

and a discussion of the implementation of core competency methodology at Sandia National 

Laboratories, see Mike Marshall and Dean Snyder, “Core Competence: A Basis for Corporate 

Strategy in a Changing Defense Environment” (briefing, October 27, 1993).

103Analysts often cite Information Technology to illustrate how DOD has become a technology “follower.” Certainly, the private sector leads in developing and producing advanced IT 

products. But this “mining” stage the electronics industry exploits has in part been driven by 

a prior “prospecting” – or research – stage. Some DOD organizations, such as NRL, perform 

the high-risk, long-term IT prospecting that does not interest the private sector. Both types of 

work are typically referred to as “research.” A policy maker unaware of the distinctions could 

easily assume the government’s IT “research” is pedestrian compared to industry’s “research.” 

See Timothy Coffey et al., “The S&T Innovation Conundrum” (August 2005).

104“Meaningful competition” means a market situation that includes a significant number of 

buyers and sellers.

105Savings claims regarding outsourcing are discussed in Chapter 4.
Chapter 3 — The Triumph of Efficiency 85

The Commission mentioned other objections to outsourcing. One was an 

asserted right of government employees to compete for government work. This 

unfortunately had “evolved into a rigid requirement for detailed and lengthy 

cost-based justification before outsourcing,” was “inconsistent with the basic 

policy preference for private enterprise,” and stifled both initiative and streamlining efforts.(3-5) As discussed in the next chapter, other analysts also noted the 

cumbersome A-76 competitive process but believed it better than other feasible 

alternatives. CORM mentioned a second objection to outsourcing. Some managers considered contract support unreliable, but “our research” suggested otherwise.

The Commission therefore asserted that “The Secretary should direct outsourcing of existing commercial-type support activities and all new support requirements....”(3-5) OMB should withdraw Circular A-76, and Congress should 

repeal all laws preventing commercial firms from providing logistics support 

to new weapons systems. Finally, DOD should privatize all depot maintenance, 

wholesale-level warehousing and distribution, property control, medical care, 

family housing, finance and accounting, data center operations, and education 

and training.

The Center for Naval Analyses on Outsourcing

The CNA also advocated outsourcing – sort of – in a late 1994 Examination of Tech Centers briefing to a Navy Steering Committee and in a more formal study published in April 1996.106 The briefing addressed size and efficiency. 

It concluded that the technical centers had in fact shrunk, meaning their workload and employment levels had decreased relative to their business base more 

quickly than in past drawdowns. Next, acknowledging the difficulties – indeed 

the virtual impossibility – of answering such questions, CNA nevertheless also 

sought to determine whether the centers’ efficiency had changed over time and 

whether outsourcing and other initiatives might help.

After attempting to gauge efficiency, CNA in effect threw up its hands: because output cannot be measured, “The truth is that it is hard to tell if the centers 

are efficient.”(27) The competitive process of the Defense Business Operations 

Fund (DBOF), whereby customers chose whether any of various tech centers 

or private companies performed a given task, “promotes efficiencies and product quality.”(27) A recent decline in expenditures per employee also indicated 

efficiency. However, certain problems existed. DBOF, for example, promoted 

inefficiency by failing both to offer incentives for saving money and to calculate 

the true costs of work.107 And facilitization, or the amount of facilities needed to 

do work, posed a seemingly larger problem, as it had apparently increased.

CNA’s brief set of recommendations focused on DBOF, outsourcing, 

and consolidation. It proposed that the Navy either change cost calculations or 

___________________ 

106Center for Naval Analyses, “CNA’s Examination of Tech Centers” (October 1994), and 

“Outsourcing Opportunities for the Navy” (April 1996).

107An overview of the Navy’s industrial funding system is in Appendix B and Chapter 5.
86 Reports on the Management of Navy and DOD Laboratories

remove the tech centers from DBOF. Second, acknowledging a lack of data, it 

guessed that further consolidation could save about 10 percent. And finally, it 

recommended increased outsourcing, noting that although all direct evidence 

addressed only non-technical staff, indirect evidence suggested savings would 

result from outsourcing technical staff as well.

The Center more forcefully advocated outsourcing – again, sort of – in its 

April 1996 report on Outsourcing Opportunities. On one hand the report encouraged increasing contracting in both commercial activities and military functions, as well as redefining certain RDT&E or inherently governmental functions 

as commercial activities. On the other hand, it acknowledged that competition 

itself, and not outsourcing per se, actually generated savings. In fact, in-house 

organizations “won” competitions about half the time (although on average 

saved less than the private sector). Examining Naval Undersea Warfare Center 

(NUWC) Keyport, Washington as a case study, CNA concluded that willingness 

to outsource in large part determined the extent of opportunity.

Primarily, the study described the potential savings derived from competition, especially regarding commercial activities. Competition told customers 

exactly what they paid, and offered more alternatives, flexibility, and access to 

new technologies and managerial innovations. The report noted that RDT&E 

outsourcing had already increased from 30 percent in 1970 to 50 percent in the 

mid-1990s but then acknowledged that currently, DOD used the term primarily in relation to CAs. And although the Navy outsourced, to varying degrees 

at various facilities, all CA categories, CNA claimed the Service could save up 

to an additional $3 billion per year if all such activities “were competed entirely.”(2) Analyzing the 900 competitions conducted in the Navy since 1978, 

the report determined that costs were reduced by an average of 30 – 40 percent 

when commercial firms performed the work and by 20 percent when the work 

remained in-house.

CNA also discussed lessons learned from outsourcing at NUWC Keyport. NUWC had grown from its origins as a torpedo design and test facility to 

include testing and evaluation of undersea warfare weapons, life-cycle support 

for Fleet-deployed systems, and support for materiel readiness. As an RDT&E 

facility, NUWC was not a commercial activity. However, CNA called RDT&E a 

“soft,” or vaguely defined, category, which meant managers could often choose 

whether to classify work as commercial or governmental. In short, CNA argued 

that willingness to reinterpret rules rather than the rules themselves determined 

the level of outsourcing.

A second, related issue arose: managers, happy to contract for functions 

such as public works or temporary technical work, resisted outsourcing longterm RDT&E. For one, NUWC considered many such functions “integral to its 

technological leadership.”(47) Also, technical work often developed in unforeseen directions, meaning it did not always lend itself to contract specifications. 

Likewise, NUWC already did outsource short-term, specialized RDT&E when 

the task could be captured in a contract. It did so precisely because the outsourcing saved money. To adapt to these and other concerns about further decreasing 

in-house work, CNA recommended allowing retention of some of the money 
Chapter 3 — The Triumph of Efficiency 87

saved from outsourcing, ensuring standardized procedures for writing enforceable contracts, and permitting consideration of past performance when dealing 

with high-risk bidders.

Again, part of the debate here arose from the A-76 exemption of R&D. In 

1979, in trying to distinguish core from non-core R&D, OMB had proposed that 

criteria be developed for defining commercial versus governmental. A subsequent study by the Federal Coordinating Council for Science, Engineering and 

Technology (FCCSET) recommended that R&D activities prepare management 

plans designed to differentiate. DOD disagreed, arguing, as mentioned, that all 

R&D should be exempted from A-76 cost studies, which in fact happened. The 

CNA report illustrates how outsourcing advocates in the 1990s turned to narrowing the definition of RDT&E while broadening that of commercial RDT&E or 

RDT&E support.108

Although CNA stated that competition rather than outsourcing itself facilitated efficiency, and although it did not advocate outsourcing as a panacea for 

inefficiency, it nonetheless clearly favored contracting. For one, it rejected the 

claim that some sensitive (e.g. cryptology) or military (e.g. recruiting) activities 

must remain in-house. Further, it commented that every revision to OMB A-76 

had hindered rather than facilitated outsourcing. It also recommended reconsidering all functions deemed inherently governmental. And its argument that 

the terms “RDT&E” and “commercial” depended chiefly on tactics of definition meant the Navy could define almost anything as commercial, which in turn 

meant a technical center could outsource almost anything it wanted.

An NUWC Keyport Range employee brings an ADCAP Mark 48 

Torpedo on deck after test firing at the Northwest Range Complex Dabob Bay Range. Photo courtesy of NUWC, Keyport.

___________________ 

108Carlisle, Management of the U.S. Navy Research and Development Centers, 66, and Marshall, “Outsourcing Commercial Activities.”
88 Reports on the Management of Navy and DOD Laboratories

The DSB’s Unqualified Advocacy of Outsourcing

After its 1994 report on lab management, DSB intensified its advocacy of 

contracting in a series of statements beginning with its 1996 report on Outsourcing and Privatization.

109 Chaired by Philip O’Deen of BDM International and 

composed primarily of members from the private sector, the task force unsurprisingly urged “a broader, more aggressive outsourcing effort,” estimating 

that DOD could save 30 to 40 percent in specific tasks and $10 billion per year 

overall by 2002. Arguing that outsourcing improved service and responsiveness, 

access to technology, and focus on core competencies, the group recommended 

that “all DOD support functions should be contracted out to private vendors 

except those functions that are inherently governmental, are directly involved in 

warfighting, or for which no adequate private sector capability exists or can be 

expected to be established.”(Cover memo)

As had various other reports, DSB explained the basic argument for 

increased contracting. While procurement/modernization spending had plummeted, infrastructure spending remained huge. Outsourcing would help redress 

the imbalance by “rightsizing” the support structure. The Board also noted the 

principle that the government should not compete for work with citizens.

DSB described the many benefits the private sector had gained from outsourcing. First utilized to reduce costs, the practice had become a key competitive strategy, allowing companies to focus on core competencies, providing them 

access to a wider variety of technologies and innovative practices, and improving responsiveness and quality. DOD could utilize the many service companies 

that had arisen in response to this trend. Interestingly, the report cited a survey 

concerning IT, the largest outsourcing market. DSB glowingly noted that no 

company considered contracting for IT a failure: 38 percent considered it successful and 29 percent reported mixed results (the other 30 percent had not had 

time to evaluate). However, extrapolating the survey answers indicates that some 

43 percent would have reported mixed results, and this in an area of outsourcing’s greatest success.

The Board also examined lessons learned from private sector outsourcing 

in business logistics, business services, and commercial airline maintenance.

1. Top-level management must aggressively pursue efforts, because midlevel managers tend to resist.

2. Contracting should focus on broad functions rather than narrow tasks.

3. The process requires a small, skilled oversight cadre who cooperate 

rather than compete with vendors.

4. Task descriptions should emphasize performance standards rather than 

product specifications.

5. Because disagreements between firms and providers most often arise 

over the scope of work, both parties, the report noted sagely, need to 

avoid any misunderstanding.

___________________ 

109DSB, “Outsourcing and Privatization” (August 1996). Despite its title, the report focused 

on outsourcing.
Chapter 3 — The Triumph of Efficiency 89

The task force believed hundreds of thousands of DOD employees engaged 

in work more appropriate for the private sector. At a minimum, 850,000 full-time 

equivalents (FTEs) performed commercial activities, including only 210,000 

contractors. Despite this relatively small percentage of contractors and various 

problems encountered with attempting to outsource, since 1978 DOD had saved 

some $1.5 billion a year when it subjected tasks to public/private competition 

under the rules of A-76. In 2,000 such competitions, the private sector won half 

but accounted for 78 percent of the savings. Outsourcing functions that military 

personnel traditionally performed saved 50 percent on average.

The report lamented the impediments preventing DOD from exploiting 

these opportunities. A-76 especially caused problems. Time consuming and biased toward the government, it required “exhaustive public/private cost comparisons before outsourcing....”(12A) In practice, the Board stated, A-76 meant the 

government should perform work absent a compelling reason not to. These and 

other statutory impediments indicated increasing congressional micromanagement. Further, poor government cost data prevented accurate estimates on government bids. Also, DOD or the Services had arbitrarily restricted the percentage 

of work contracted out in certain functions considered “core support.” And base 

commanders wanted to keep their staff, doubted that savings would ultimately 

fund modernization, and believed the whole buzz was simply the latest fad.

DSB therefore offered a host of recommendations to overcome these 

obstructions. Many involved easing the process of contracting. For example, it 

proposed that DOD end the “stovepipe” approach to base support contracting 

and consolidate all installation support functions into single contracts, a practice called bundling.110 It recommended activity-based costing to provide more 

accurate estimates of in-house work. It suggested logistical changes in Materiel 

Management, Depot Maintenance, and Sustaining Engineering, and increased 

contracting for commissaries, data centers, finance/accounting, training, and 

health care. It also recommended establishing a high-level “Tiger Team” to find 

methods for improving contracting procedures.

Primarily, the task force broadly recommended shifting work to the private 

sector whenever possible. It urged the following: OSD should reiterate the preference for private sector performance and limit the definition of inherently governmental to formulating policy, generating requirements, managing contracts, 

planning, and preparing budgets. Executives should reverse the bias in A-76, 

meaning DOD would have to provide a compelling reason to perform a function in house. Officials should exercise every available waiver in order to avoid 

extensive, unfair competitions. SECDEF should prioritize removing all statutory 

___________________

110In the DSB report, stove piping referred to hiring a range of contractors to perform narrow 

jobs, such as lawn maintenance. This required inordinate attention to contract management 

oversight and coordination. Discussed in Chapter 5, stove piping also refers to a situation in 

which a large activity (such as RDT&E at a Warfare Center) manages its own primary mission 

functions, but separate commands or activities centrally manage and/or provide the individual 

support functions.
90 Reports on the Management of Navy and DOD Laboratories

impediments and establish a top-level position devoted to outsourcing. DOD 

should institute “top-down” policies to remove the government completely from 

certain businesses or functions (such as warehousing or distribution). Activities 

should get to keep some of the savings they realize from contracting, and DOD 

must apply the rest to modernization.

In other reports issued during the next few years, DSB reiterated its message of funding modernization with the money saved through outsourcing. 

In Achieving an Innovative Support Structure for 21st Century Military 

Superiority, for example, it virtually recommended that DOD no longer maintain a laboratory system.111 The Board asserted that outsourcing and privatization 

would focus DOD on warfighting and policy, and the private sector on commercial type support. Expressed in the trendy terms of the day, this meant each 

community would be “leveraging its core competencies” while DOD utilized 

the “best practices” of industry. (Cover memos) The Board offered two general 

recommendations, estimated to save $30 billion per year: that DOD restructure 

its support system, using modern IT and business management principles and 

maximizing use of the private sector; and that it institute a planning and budgeting process more directly involving the CINCs and thereby better aligning 

resources with mission requirements.

In effect, DSB rejected every major report ever issued on DOD RDT&E 

and proposed discontinuing the system. The Services had developed plans for 

improving the T&E infrastructure and cutting its work force by 39 percent, but, 

the Board asserted, changes such as privatizing-in-place and increased modeling 

and simulation could yield more improvements. DSB believed similar process 

changes could improve the labs as well, even though Section 277 of the FY 1996 

NDAA (discussed below) called for a five-year plan to cut infrastructure by 20 

percent in addition to BRAC 95, and even though DOD planned an additional 

16 percent civilian personnel reduction. The study recommended outsourcing 

all 6.1 work to universities and the majority of 6.2 and 6.3 work to industry, 

and privatizing any remaining facilities. It suggested that DOD consider simply 

privatizing all labs, as NAWC Indianapolis had done while maintaining a worldclass facility.

In Defense Science and Technology Base for the 21st Century, DSB advocated short-term hiring of academic, non-profit, and industry S&Es to improve 

laboratory performance.112 This task force – composed exclusively of representatives from industry, academia, and FFRDCs – proposed that the Services “staff 

a majority of their S&T...positions with individuals provided from the private 

sector....”(Cover memo). Specifically, the Board addressed “revolutionary” 

(long-term) programs, funding, management, execution, and hiring and retention.

___________________ 

111DSB, “Achieving an Innovative Support Structure for 21st Century Military Superiority: 

Higher Performance at Lower Costs” (November 1996).

112DSB, “Defense Science and Technology Base for the 21st Century” (June 30, 1998).
Chapter 3 — The Triumph of Efficiency 91

The report pointed out how recent developments had created problems 

for defense S&T. For one, industry had shifted toward short-term, incremental 

market advances, meaning DOD would have to compensate by focusing on longterm 6.2 and 6.3 development. Further, globalization “leaked” private sector 

technology advances to other countries, and therefore “the primary investment 

applicable to providing unique U.S. military future capabilities must come from 

the DOD S&T component.”(15) In addition, research funding had decreased 

while its importance had increased, and every member of the task force and 

every company, university, and agency consulted agreed on the importance of 

funding stability. In sum, “Lower levels of funding could threaten future (20 

years and beyond) dominance of U.S. military forces.”(22) The Board recommended increasing S&T funding from $7.4 billion per year to at least $8 billion.

DSB also discussed problems in managing S&T. The numerous, complicated lines of authority contrasted with industry’s streamlined management. 

The cancellation of Public Law 313 in 1978 (with the establishment of the Civil 

Service Reform Act) meant R&D organizations could no longer recruit outstanding personnel from the private sector for limited terms. Service S&T budgets had 

shrunk while OSD’s and Defense agencies’ had increased, a trend that signaled 

two particular difficulties: budgets had decreased in part because of a shift in emphasis to short-term development, and a transition difficulty had arisen because, 

while a clear line from research to acquisition existed in the Services, it did not 

in OSD or in, say, DARPA. To remedy these problems, DSB recommended that 

Congress reinstate P.L. 313, that the Services devote one-third of Technology 

Base efforts to long-term programs, that they follow ONR’s integration of S&T 

management structures, and that DDR&E increase its responsibility for transition by assuming more oversight of 6.4 and 6.5.

Finally, the task force examined the reasons for dissatisfaction with DOD’s 

in-house laboratories. While competitive salaries, the ability to fire poor performers, modern facilities, adequate support staff, and collocation of similar 

work enabled success at private sector or university labs, DOD labs, conversely, 

suffered from an inflexible personnel system, outdated facilities, and poor support, and were geographically dispersed. Downsizing had exacerbated these 

problems – executed in a way that prevented new hires and prioritized seniority, 

it “aged” the labs.113

DSB proposed two general solutions. One, already mentioned, was to reestablish P. L. 313. Second, the Board considered three alternatives – amending the 

personnel system, converting to GOCOs, or establishing “mixed” organizations 

headed by the government but staffed by private sector employees who would 

rotate every five years or so. It recommended the third option, or using contractors and Intergovernmental Personnel Act (IPA) hires to staff at least 50 percent 

of the labs. The Board did not address the possible effect of all this rotation on 

the long-term (10- to 20-year), “revolutionary” technology it advocated.

___________________ 

113For a thorough discussion of personnel hiring and retention problems in the DOD labs, see 

Kavetsky et al., From Science to Seapower and Marshall, “Best and Brightest.”
92 Reports on the Management of Navy and DOD Laboratories

DSB used the same approach to submit similar recommendations in Technology Capabilities of Non-DOD Providers.

114 Part of a response to a congressional instruction to streamline S&T and acquisition organizations,115 the task 

force – again composed primarily of people from private industry and without a 

single GOGO representative – urged increased utilization of the private sector. 

Its four overall recommendations included the following:

1. The USD for Advanced Technology and Logistics (AT&L) should establish an Office of Global Technology Acquisition

2. 50 percent of labs’ staff should come from the private sector

3. The Services should increase by 30 percent the funding to universities 

for long-term research

4. SECDEF and the JCS should initiate a high-level “Packard”-type 

commission to establish “an integrated requirements/acquisition 

process.”(vi)

The report asserted that non-DOD entities performed much better S&T 

than DOD labs and discussed the impediments to transferring additional work to 

those entities.

DSB’s conclusion that DOD would automatically improve by relying 

increasingly on the private sector stemmed from the premise that in-house labs 

possessed inferior talent. For example, the task force used membership in National Science and Engineering Academies to argue that “The Country’s Intellectual Horsepower is Concentrated in Universities and Selected Industries and Not 

in Government Laboratories”(11, title of Figure 2). Although DSB mentioned 

that there were exceptions to this assertion, it offered nothing specific. Instead, 

one must refer to Appendix G, which showed NRL and NASA Langley tied for 

first place among government laboratories with six members each (the rest of the 

Navy Department had only five). The Army Corps of Engineers also had three 

members. NRL was also the only government laboratory on the list of leaders in 

patent citations. Regardless, DSB’s reasoning contained a major flaw – a number 

of obstacles, especially performance of classified work, often prevent defense 

S&Es from equal access to academy membership.116

Nonetheless, having asserted its potential benefits, the task force next 

discussed impediments to contracting. Cuts in 6.1 funding had limited work by 

universities, and Congress had limited staff levels at FFRDCs and University 

Affiliated Research Centers (UARCs). Industry often shied away from defense 

work because of statutory limits on profits or a reluctance to share intellectual 

property. Perhaps most important, the “intrusive” FAR inspection system had 

created an antagonistic DOD-industry relationship.

In sum, the various DSB reports reflected a complete shift in the prevailing 

approach to laboratory reform. In fact, by the turn of the century many analysts 

___________________ 

114DSB, “Technology Capabilities of Non-DOD Providers” (June 2000).

115Section 912, FY 1998 NDAA.

116See From Science to Seapower, 99-100.
Chapter 3 — The Triumph of Efficiency 93

had abandoned reform and simply sought efficiency by improving the methods for acquiring technology, i.e., outsourcing. DSB virtually ignored the issue 

of needed in-house capability. In part it did so out of necessity – funding and 

personnel cutbacks that disproportionately affected new talent threatened DOD’s 

ability to sustain technical proficiency, which meant the Department had to turn 

elsewhere. Also, DSB and others may have ignored reform because they tacitly 

believed DOD would never muster the will to follow through on improving the 

in-house labs. Nonetheless, rather than acknowledge dozens of studies’ findings 

about preserving internal competence, the DSB engaged representatives from industry who offered blanket assertions about poor defense laboratory performance 

and the money to be saved by shifting work their way.

Re-Investment and Infrastructure

Another major plan involving A-76 competitions temporarily swept 

through the Navy during this time. No one published a significant report on the 

venture, eventually named Re-Investment and Infrastructure (RII), after the 

group that created counter-proposals. This RII counter-initiative was informal 

and its operation strictly ad hoc. It exerted influence through briefings to the 

CNO and Navy Secretariat. The archive at NRL houses more than three cubic 

feet of relevant material, from which this discussion was drawn.

In 1997, as a result of three OSD-imposed “savings wedges” totaling

some $7.5 billion, the Navy sought to meet mandates for infrastructure reduction 

and outsourcing (to be executed from FY 1999 – 2005) by reinvigorating and 

formalizing its commercial activities outsourcing program. The Naval Outsourcing and Privatization Programs Division in the Office of the CNO established 

specific targets for the number of government positions each major command 

should compete under A-76 procedures and identified all positions eligible for 

Dr. Timothy Coffey was NRL’s Director of 

Research from 1982 to 2001. He received 

the Presidential Rank of Distinguished 

Executive (on two occasions), the Delmer 

S. Fahrney Medal, the Defense Distinguished Civilian Service Award, and the 

Executive Excellence Award for Distinguished Executive Service. He is currently 

the Thomas A. Edison Chair at the Center 

for Technology and National Security 

Policy.
94 Reports on the Management of Navy and DOD Laboratories

competition.117 It established these by applying a single simple rule: only those 

classes of positions prohibited by statute or regulation from being competed 

would be declared inherently governmental. All others could be competed.

This simplistic either/or rule disregarded numerous complexities. For one, 

it ignored the many complicating factors identified in a host of earlier blue-ribbon studies. And it failed to acknowledge that senior Navy management deliberated at length before deciding whether to execute a particular piece of RDT&E 

work in industry, academia, or at an in-house lab.118 Regardless, the rule dictated 

that virtually all of the S&Es and most support personnel be identified as compete-able.

Here are examples of the Navy’s 1997 A-76 targets:

NRL Washington: 2584 of 2701 positions (96%)

NAWC China Lake: 3429 of 3669 positions (93%)

NAWC Patuxent River: 4014 of 4271 positions (94%)

NCCOSC San Diego: 1360 of 1462 positions (93%)

NSWC Crane: 2993 of 3166 positions (95%)

NSWC Carderock: 1651 of 1735 positions (95%)

NSWC Dahlgren: 3011 of 3130 positions (96%)

NSWC Port Hueneme: 2157 of 2198 positions (98%)

NUWC Keyport: 1478 of 1540 positions (96%)

NUWC Newport: 2859 of 2938 positions (97%)

The RDT&E community scrambled both to comply with and resist this effort. In early 1998 the ASN(RDA) established a special process action team that 

developed definitions and templates for determining which positions in ONR, the 

Systems Commands, and their subordinate labs and warfare centers were inherently governmental.119 He also set up a Commercial Activities Working Group 

to identify compete-able positions.120 That summer, the SYSCOM commanders 

and the Chief of Naval Research (CNR) met with the Vice Chief of Naval Operations (VCNO) to point out the progress already made through downsizing and 

consolidation and that they already outsourced more than 75 percent of RDT&E 

funds. Ultimately, Navy management did not consider any ASN(RDA) working 

group proposal a satisfactory answer to the budget wedge problem.

Operational commands also resisted competing most of their civilian positions. In early 1999 Admiral A.R. Clemins, Commander in Chief, Pacific Fleet, 

orchestrated several meetings with the admirals who commanded each of the 

Navy claimants (major commands) to discuss satisfying the budget wedges and 

___________________ 

117CNO, N471F email with attachments, November 14-15, 1997, and CNO Outsourcing and 

Privatization Division memo Ser N47/7U597 180 of November 21, 1997.

118See the brief discussion in Chapter 4 of the S&T investment process.

119ASN(RDA) memo of February 4, 1998.

120Commercial Activities Working Group, “Navy Infrastructure Business Plan,” December 

17, 1998, distributed by Deputy CNO (Logistics) memo Ser N47/8U587856 of December 22, 

1998. 
Chapter 3 — The Triumph of Efficiency 95

A-76 mandates without destroying the morale and disrupting the productivity of 

every command in the Navy.121 These admirals, whose meetings sometimes included the VCNO, were named the Re-Investment and Infrastructure group and 

quickly instigated a forceful opposition. The concise message they transmitted to 

the office of the CNO: “Do you want us to execute our missions, or do you want 

us to execute the outsourcing strategy? Because we can’t do both.”122

After a few meetings, representation at the RII devolved to each command’s senior civilian, who generated alternatives that eventually prompted the 

Navy to liquidate the savings wedges through a combination of strategic sourcing, contracting savings, business process reengineering, and regionalization of 

some support functions, rather than through the mandated A-76 competitions. 

Strategic sourcing, for example, meant evaluating each command’s functions to 

determine which could be eliminated, contracted out, privatized, or competed, 

and which should be kept in house. Similarly, each command identified its 

“core equities” – functions it had to perform under all circumstances. The group 

decided to keep management of these functions in-house, and in many cases 

execution too, whether the associated positions met the definition of inherently 

governmental or not. Because of the influence the admirals wielded, the Navy 

ultimately had no choice but to accept the RII’s recommendations.

Competition of positions under A-76 continued, but at only a pittance 

compared to what the Navy proposed in 1997. The RII continued to meet for 

___________________ 

121Admiral Clemins email of January 24, 1999, and CINCPACFLT memo for the VCNO of 

January 26, 1999.

122Those present at the meeting agree that this statement, from one of the admirals, was essentially a direct quote with which the other admirals all agreed.

Admiral Archie Clemins, former 

Commander-in-Chief, Pacific Fleet, 

initiated the Re-Investment and 

Infrastructure group.
96 Reports on the Management of Navy and DOD Laboratories

several years and took on other controversial issues, such as the Navy Marine 

Corps Intranet (NMCI), regionalization of civilian human resources services, 

and recruitment and retention of civilian personnel. However, it never again had 

an impact comparable to its resistance against the plan to outsource most of the 

Navy’s civilian positions.

Infrastructure Reduction

Because many believed significant excess capacity remained even after 

four rounds of BRAC, DOD increased outsourcing in tandem with related efforts to further reduce the support infrastructure. The OSTP/NSTC final report 

of May 1995 had directed that DOD submit a plan for additional downsizing 

and cross-Service integration by February of 1996. But in the interim, in Section 

277 of the FY 1996 NDAA, Congress directed SECDEF to develop a five-year 

plan to consolidate and restructure the labs and centers, and asked for a report by 

May 1, 1996.123 That report, known as Vision 21, combined DOD’s response to 

the NSTC and Congress.124 It aimed to reduce infrastructure costs 20 percent by 

2005.

Although DOD called it “The Plan for 21st Century,” it was actually a plan 

to produce a plan, which included conducting a BRAC-like analysis to determine 

potential for cutbacks. DOD claimed “The plan will rest on [the] three implementing and integrating pillars”(i) of reduction, restructuring, and revitalization, 

and will pursue those equally and simultaneously. However, the report focused 

overwhelmingly on the first two, primarily regarding costs, and devoted only 

half a page to the third. It briefly surveyed ongoing consolidation and coordination efforts at the Service and DOD levels and set a schedule for implementation.

In concept, the planning would begin where BRACs left off and mimic the 

process. DOD would collect and analyze data to “determine the minimum essential set of capabilities, facilities, and installations necessary,”(i) compare that set 

to the existing infrastructure to identify duplication and determine consolidation, 

downsizing, and reengineering alternatives, and hire an independent accounting 

firm to develop cost analyses. Another element would include “sustaining that 

vision by creating a standing organization for the laboratories...”(6) along the 

lines of the Board of Directors for the T&E centers. Once again a report endorsed some sort of continuous, high-level, institutional attention to S&T.

The four basic premises Vision 21 said would guide the plan corresponded 

to the prevailing assumptions governing the RBA. First (and most trite), excellence required continuous improvement. Second, reengineering in industry 

“offers a rare opportunity to shed many of the old constraints that reduce...productivity and efficiency.”(1) Third, a “bold restructuring plan” could meet the 

___________________

123See GAO, “Defense Acquisition Infrastructure: Changes in RDT&E Laboratories and 

Centers” (September 1996).

124DOD, “Vision 21: The Plan for 21st Century Laboratories and Test and Evaluation Centers 

of the Department of Defense” (April 30, 1996). 
Chapter 3 — The Triumph of Efficiency 97

presidential and congressional downsizing requirements, which had already 

moved the labs and centers “toward more efficient operations.”(ii) Fourth, implementing the proposals would require legislative changes.

Vision 21 intended separate but coordinated plans for the labs and T&E 

centers. It briefly explained the goals of the LDP/LQIP – in addition to the 

long-standing aims of streamlining personnel and contract management and 

increasing minor construction thresholds, the program now sought a financial 

management approach for comparing costs across Services (discussed in Chapter 

Five). But “More advances are needed.”(ii) Vision 21 called the Major Range 

and Test Facility Base (MRTFB) “a national asset comprised of the 21 principal T&E centers, including ranges.”(19) Standardized management and pricing 

(established in 1971) fostered joint use and eliminated duplication, Congress had 

recently directed increased accessibility for commercial users, and, because users 

paid for services, work force size “is self-regulating.”(19) The system had excess 

capacity though, which Vision 21 would seek to redress.

Neither Vision 21 nor similar plans resulted in actions other than reviews 

and studies. Many grew concerned that requesting the enabling legislation Vision 

21 required would prejudice Congress against additional actions for broader 

consolidations (such as another BRAC round). DOD therefore never submitted 

follow-on plans. It did, however, expend considerable effort to further consolidate, close, and streamline the labs and centers and the support infrastructure. 

Secretary of Defense William Cohen’s “Defense Reform Initiative” and Section 

912 of the FY 1998 NDAA, for example, both stated goals for reducing excess 

capacity and improving management. For various reasons these failed, at least 

in the short term, until BRAC 2005 began the next major round of consolidation 

and closure.

Secretary Cohen published his Defense Reform Initiative in May 1997, 

which yet again encouraged the Department to institute the “management 

techniques and business practices that have restored American corporations 

to leadership in the marketplace.”(i) The report formed one element of the 

defense strategy promulgated in the Quadrennial Defense Review (QDR).125

The Defense Reform Initiative (DRI) lamented the usual suspects – Cold War 

management techniques and other habits that lagged at least a generation behind 

American business practices. Secretary Cohen had established the Defense 

Management Council to ensure sustained commitment to change. His report 

discussed best business practices, organizational change, streamlining through 

competition, and reducing infrastructure, all in the context of seven principles 

for reform:

• Focusing on a unifying vision

• Leadership committed to change

• Focusing on core competencies

___________________ 

125William S. Cohen, “Defense Reform Initiative Report” (November 1997), and “Report of 

the Quadrennial Defense Review” (May 1997). See also DOD, “Quadrennial Defense Review: 

Acquisition Infrastructure Task Force Report” (February 20, 1997).
98 Reports on the Management of Navy and DOD Laboratories

• Streamlining to increase agility

• Investing in people

• Exploiting IT

• Removing barriers between organizations.

Perhaps most notably, the report said nothing directly about savings 

through outsourcing but instead focused on competition. In fact, every section 

except for the one on competition sounded the same as the many other studies 

circulating at the time. Although the Secretary directed reevaluating all support 

functions to increase the number categorized as commercial activities, “We do 

not seek to replace government workers with private sector contractors....We 

fully expect...that the government sector will win a significant portion of these 

competitions.”(27) In the past, “Regardless of who won [competitions], the 

results have been positive.”(29) Potential candidates for competition included 

civilian pay, military retiree and annuitant pay, personnel services, national 

stockpile sales, management of leased property, and drug testing.

Secretary Cohen devoted a chapter to eliminating infrastructure. He noted 

that DOD planned to ask for additional BRAC rounds in 2001 and 2005. He also 

discussed plans to consolidate, restructure, and regionalize many support activities, and to privatize family housing construction and most utility systems.

Various Defense Reform Initiative Directives (DRIDs) and S.912 set off 

another flurry of activity in the technical centers. S.912 called for cutting acquisition personnel numbers by 10,000 to 25,000, and for a report on reductions to 

that point since FY 1989. It also directed a review of the support infrastructure 

for redundancy and excess, and for opportunities in streamlining acquisition processes, facilitating emphasis on core competencies, coordinating and consolidating at the cross-Service level, and improving the Civil Service system. Finally, 

it called for a report to Congress, along with requested changes in legislation, by 

April 1, 1998.126

Ultimately, what DOD requested were additional BRACs. In a 1998 report 

that offered nothing but fulsome praise for past closures, SECDEF Cohen asserted “We must have two more BRAC rounds if tomorrow’s forces are to be 

able to carry out their mission.”127(Cover Letter) The report argued that too 

much excess capacity still existed, and that further BRACs would yield $20 

billion with which to fund modernization as outlined in the DRI. The report also 

responded to Section 2824 of the FY 1998 NDAA, which requested a financial 

overview of previous BRACs.

Ignoring the maxim that something which sounds too good to be true probably is, the report essentially argued that two more BRAC rounds would markedly improve every effort in all key aspects of national security strategy without 

___________________ 

126Chapter 5 discusses DOD’s S.912 report.

127DOD, “The Report of the Department of Defense on Base Realignment and Closure” (April 

1998).
Chapter 3 — The Triumph of Efficiency 99

any substantial or even minor drawbacks. First, it defined closures as strategic 

maneuvers rather than simply reduction measures: reengineering, adopting best 

practices, and focusing on core competencies would enable the streamlined 

support and technological advances the Revolution in Military Affairs required. 

Likewise, these same efforts would enable the RBA. “In sum, congressional authorization of more BRAC rounds is a key component of the Department’s plans 

for defense reform.”(11)

The report also claimed that previous BRAC rounds had exceeded their 

goals and therefore provided the best model for future actions. After devoting a chapter to demonstrating that 23 percent excess capacity still existed, the 

Secretary estimated DOD could save about $3 billion per year. The “absence of 

new BRAC authority,” however, “would likely force the Department to decide 

whether to postpone needed modernization, delay quality of life programs, or 

reduce force structure....None of these are acceptable alternatives.”(22) Later 

chapters argued that prior BRAC rounds had cost less to implement and saved 

more than originally estimated, benefited affected communities in the long term, 

and improved military capabilities.

In sum, by the end of the decade most reports on DOD and Navy labs had 

all but completely shifted emphasis from effectiveness to efficiency. Most still 

offered a token section on improving performance, and different organizations 

advocated outsourcing and personnel cutbacks with different degrees of enthusiasm. Nonetheless, the prevailing doctrine claimed that smaller, reengineered 

R&D activities, dedicated to effective contract administration more than S&T 

work, would improve innovation and help fund modernization. However, some 

in DOD questioned the new orthodoxy. The next chapter discusses their arguments.

Chapter Four

Outsourcing and its Discontents

Introduction

While many reports, especially high-level ones such as those the DSB and 

CORM published, passionately advocated outsourcing and generated a lot of 

quotable material in doing so, a swarm of other studies presented a more careful interpretation of the evidence. All these latter studies agreed that contracting could sometimes save money and provide better service and that emulating 

innovative private sector management principles could benefit DOD. But few if 

any of them argued that outsourcing would automatically save billions of dollars 

per year.

This chapter focuses on reports which, taken together, showed that widespread downsizing and outsourcing could often cost rather than save money 

and even jeopardize an organization’s ability to carry out its mission. By the 

mid-1990s, a host of literature had shown that few private companies got better 

while getting smaller. Other studies, and DOD’s own experience in the 1950s 

and 1960s, both illustrated the limited benefits of contracting. And some reports 

simply disproved the notion that the public sector or DOD was riddled with 

outmoded management styles and incapable of producing good products or offering good services at competitive prices. Some studies concluded this almost 

against their will. The CNA report that examined contracting at NUWC Keyport, 

for example, did its best to point out missed opportunities but discovered that 

management already outsourced – and performed work in-house – to maximize 

both savings and effectiveness. Finally, those that promoted outsourcing either 

did not understand the compound intricacies of the S&T investment process or at 

least did not concede the difficulties those intricacies would present.

Overall, most studies – from CNA, GAO, the Navy Laboratory/Center Coordinating Group (NLCCG), and other government and non-government sources 

– examining the private sector, city and state governments, and DOD, did not 

conclude that outsourcing provided the best conditions for efficiency. Evidence 

from the 2,100 public/private competitions under OMB Circular A-76 occurring 

between 1978 and 1994 showed that although the process needed improving, it 

saved money regardless of which entity “won.” Evidence from the city of Indianapolis (which DSB cited as a prime example of the virtues of outsourcing), 

likewise clearly showed that the impressive results the city generated derived 

from competition. In sum, while everyone understood that outsourcing could 

help DOD maintain capability while shrinking, the reports that touted huge sav-
102 Reports on the Management of Navy and DOD Laboratories

ings across the board based their conclusions on limited, inconclusive evidence 

and played down the widespread findings about the benefits of competition.

Smaller Equals Better?

In addition to acknowledging that shrinking budgets forced reductions, 

most reports discussed in the previous chapter asserted that DOD would get better as it got smaller. In fact, this belief grew into a reflexive assumption: applying 

already identified, modern American business practices would, as it had in the 

private sector, provide access to better service while simultaneously sharpening 

support installations’ focus on their core competencies. In a typical expression of 

this sentiment, the NSTC final report commented that downsizing and consolidation “could be done in ways that preserve or improve [the labs’] service to the 

Nation, through better management, clear definition of missions for individual 

labs, and elimination of needless redundancies.”(7) And the Vision 21 report 

simply connected, prima facie, RDT&E personnel reductions to “more efficient 

operations.”(ii)

By the mid 1990s however, a sizeable and growing literature on downsizing in the private sector suggested otherwise, or at least indicated mixed results. 

Various studies did contend that downsizing sometimes benefited companies in 

the short term. But many researchers found that it often created more problems 

than it solved and rarely achieved a company’s financial objectives.128

In fact, study after study concluded that downsizing negatively affected the 

remaining employees in an organization and eroded their loyalty. Morale, job 

satisfaction, commitment, and productivity among surviving employees typically decreased, while tardiness, absenteeism, long-term sick leave, and even 

theft increased. Fear, frustration, and unease pervaded downsized organizations. 

Numerous analyses had demonstrated both a general decline in employee commitment and the corresponding costs of high turnover rates – both consequences, 

in part, of downsizing.

Studies also documented the damage downsizing wrought on valuable corporate memory. Corporate memory comprises the experience, specialized knowledge, networking skills, and familiarity with company culture employees bring 

to an organization over time. Companies that lose corporate memory through 

downsizing often end up “reinventing the wheel,” or reproducing and then fixing 

problems experienced employees solved long ago. Noting the correlation between informal collaborative networks and innovation, researchers emphatically 

linked corporate memory to productivity in R&D organizations.

Most important, the evidence showed that downsizing in the private sector generally cost money. Companies suffered direct costs from processing 

unemployment claims and other related paper work, experiencing temporary 

production drops, recruiting and training new personnel, and paying overtime to 

___________________ 

128For a fuller overview of the literature discussed here, see Michael Marshall and Eric Hazell, 

“Private Sector Downsizing: Implications for DOD,” Acquisition Review Quarterly (now 

Defense AR Journal) Vol. 7 No. 2 (Spring 2000): 143-159.
Chapter 4 — Outsourcing and its Discontents 103

employees left to take up the slack. They suffered indirect costs from increased 

apathy, product delays, workloads among rebuilding teams, and manager stress. 

In fact, by the middle and late 1990s, downsizing seemed almost archaic. Truly 

applying cutting edge business practices in the DOD would have entailed focusing on employee retention and organizational stability, which a growing number 

of companies had begun to consider key competitive strategies.

Further, the DOD R&D community could not sustain the connection 

among downsizing, outsourcing, and core competencies sought in the private 

sector. The theorists who developed the idea of core competence never equated 

it with reduction. Instead, they argued that resources provided should be as many 

or as few as needed for an organization to perform its basic mission.129 In DOD, 

that approach often transformed into the idea of an “irreducible core,” or the 

minimum of employees needed to engage in inherently governmental work only. 

Further complicating the application of core competence were the Civil Service 

rules that prevented the Department from targeting workforce reductions, which 

meant key employees were just as likely to leave as truly redundant ones.

The smaller-equals-better argument overlooked other considerations. For 

one, although DOD conceded that BRAC savings estimates stemmed from assumptions, it did not test those assumptions despite having years to do so. No 

systematic follow-up case studies compared before and after costs, for either 

shifting the work to a contractor or to a different in-house lab. Also, cost avoidance does not necessarily equal cost savings, particularly when the costs must 

ultimately be absorbed, often at a higher price. Some worried that cost avoidance 

measures, scored as BRAC savings, contributed to underfunded budgets (but the 

absence of follow-up studies meant there could be no lessons learned on what 

was and was not simply a cost “deferral”). And finally, opportunity costs were 

never even mentioned. The premise underlying “excess capacity” in the technical centers implicitly argued that departing employees would not have contributed to national security had they stayed. In other words, the BRAC process did 

not sufficiently value intellectual capital, a major concern for technical organizations.

Contracts Equal Efficiency?

A second problematic premise – that increased reliance on private-sector 

performance automatically improved performance – also underlay arguments to 

outsource. While even the most resolute advocates of outsourcing believed DOD 

needed some smart-buyer capability, their reports left unanswered the question 

of how much internal technical competence was needed to perform this role. 

Further, the premise derived from misrepresented or at least misapplied savings estimates, and it disregarded lessons learned from prior, similar pushes to 

outsource defense R&D.

The previous chapter’s discussion of the DSB report on lab management 

mentioned the dilemma associated with the claim that DOD should sustain inter-

___________________ 

129See Marshall and Snyder, “Core Competence.” 
104 Reports on the Management of Navy and DOD Laboratories

nal technical competence only when industry did not meet a need and to maintain knowledge of and access to critical technologies. In an oral history interview, Dr. James Colvard, a former Navy laboratory Technical Director, Deputy 

CNM, and Deputy Director of the Office of Personnel Management, noted how 

such an assertion begged rather than answered a question:130

The thing that you always have to own in the public sector is the 

knowledge of what the hell you want to do. The inherent governmental function of determining what you want, determining 

from whom you will get it, determining that you got it requires 

you to be knowledgeable internally. The argument is how much 

do you have to do in terms of actual execution of research and 

development in order to maintain that capability. Currency...is 

not an abstract thing, you must actually be working in the field 

to be vital...and literate.(8) [emphasis added]

Colvard further argued that with procurement budgets down, technical centers would need to maintain competence by modifying, upgrading, and supporting existing systems rather than buying new ones. They “can play that inherently 

governmental role of being the honest broker among the component suppliers....” The private sector cannot perform all systems engineering “because it 

still involves the inherently governmental decision of what do we want?”(8)

In addition to skipping over this problem of required internal technical 

capability, reports that touted outsourcing as a method to save 20 percent to 30 

percent across the board also misrepresented, or at least applied too broadly, 

the findings of the studies they cited (what those studies actually did find is 

discussed at length below). In a brief discussion of the most relevant research, 

the NLCCG’s Another Perspective on Outsourcing pointed out a number of 

problems with the arguments underpinning the savings claims.131

The NLCCG paper showed that in general, the research the DSB, CORM, 

and CNA cited was outdated and based on inadequate samples. For example, 

investigations of outsourcing commercial activities occurred prior to the many 

post-Cold War efficiency measures – DOD no longer had that same “low-hanging fruit” to pick, a fact outsourcing advocates ignored. Also, many installations had already cut back (e.g., libraries) or terminated many functions (e.g., 

on-site stores). These along with ongoing personnel cuts meant many potential 

outsourcing targets had already disappeared. Further, the CNA study on commercial activities, which proponents of outsourcing almost always cited, had fully 

examined only nine of 77 categories, all for work requiring unskilled labor and 

low capital investment with straightforward requirements. There was simply no 

evidence from large-scale, high-skill work. And finally, most employees in the 

1970s and 1980s whose work was outsourced found other government jobs or 

___________________ 

130From Colvard interview.

131NLCCG, “Another Perspective on Outsourcing: Beyond the Sound-Bites” (May 1997).
Chapter 4 — Outsourcing and its Discontents 105

worked for the contractor who won the A-76 competition. But personnel drawdowns would preclude such adjustments in the 1990s, which meant that costs 

from severance pay and retraining and relocation programs would erode some of 

the savings.

An article on Outsourcing R&D, from the NLCCG staff and published in 

the Naval Institute Proceedings, showed that vocal advocates of outsourcing also 

overlooked DOD’s past experience.132 The belief that the private sector, responsive to competitive pressures, worked more efficiently than the public sector had 

also motivated a drive to contract out defense work in the 1950s. The second 

Hoover Commission, established in 1953 to suggest ways to increase efficiency 

in the Federal Government, followed the pro-business sentiment of the decade 

and advocated reliance on the private sector. The Commission recommended that 

whoever could do the work most efficiently should execute defense R&D. But it 

assumed this meant DOD would contract much more, which in fact happened.133

This raises an important question: Is the private sector more efficient than 

the government? A CNA report (discussed further below) that drew upon a 

considerable literature noted, “While there is great intuitive appeal to the idea 

that the private sector inherently makes more efficient use of resources, the evidence is actually quite mixed.”(7)134 In R&D especially, the government sometimes simply performs better, particularly because firms tend to under invest 

in research. While contracting has its advantages, “Most surveys of empirical 

literature cannot prove that the public sector is inherently less efficient than the 

private sector.”(12)

___________________ 

132Michael Marshall and Eric Hazell, “Panacea or Pipe Dream? Outsourcing R&D,” Naval 

Institute Proceedings (October 2000): 86-89.

133On the Hoover Commission report, see Robert Mindak, “Management Studies and Their 

Effect on Navy R&D” (November 1, 1974), 32-34.

134CNA, “A Privatization Primer: Issues and Evidence” (January 1997).

Dr. James Colvard, former Technical Director 

of the Naval Weapons Laboratory in Dahlgren, 

Virginia, Deputy Chief of Naval Material, and 

Deputy Director of the Office of Personnel 

Management.
106 Reports on the Management of Navy and DOD Laboratories

The Proceedings article showed that by the end of the 1950s DOD had 

learned that the increased contracting out for R&D spurred by the Hoover Commission did not markedly improve efficiency. As President Eisenhower’s own 

Science Advisory Committee noted just a few years after the Hoover report, 

extreme reliance on contracts damaged “the morale and vitality of needed government laboratories.”(87) Also, it exacerbated the problems typically associated 

with contracting: an inability to pursue unexpected, exciting possibilities not 

specified in the contract, termination dates that impeded long-term planning, a 

job rather than mission focus, amplified administrative hassles, labyrinthine salary structures, and more.

By 1958 many analysts agreed with a House of Representatives R&D 

Committee’s conclusions that “contracting methods...have been carried over by 

brute force and sheer awkwardness into the area of scientific research contracting, in which they protect adequately the interests neither of the government or 

the contractor.” Then in 1961, SECDEF McNamara decided “in-house laboratories shall be used as a primary means of carrying out Defense Department 

[R&D] programs.” The following year the Bureau of the Budget asserted, “No 

matter how heavily the Government relies on private contracting, it should never 

lose a strong, internal competence in R&D.”(87-88)

This swinging of the pendulum toward a preference for in-house performance of R&D actually represented a return to DOD’s position in the immediate 

post-WWII era. But after the Vietnam War the pendulum again swung back the 

other way, as the apostles of outsourcing dusted off their sandals and again began 

carrying the message to a new generation of potential converts. Although that 

new round of evangelistic fervor had also waned by the mid 1980s, the return of 

the pendulum – as evidenced by the widespread sense of urgency about reforming the in-house laboratories – got interrupted by the post-Cold War defense 

drawdown.

Again, by the mid-1990s considerable evidence from the private sector 

already indicated mixed results from increased contracting. A CNA report (discussed below) on “rightsourcing” in the private sector, while generally positive 

about outsourcing, noted that companies had problems with cost creep, controlling access to sensitive material, and selecting the cheapest rather than best 

provider.135 While a Coopers and Lybrand report found fairly positive results 

from outsourcing – half the companies reviewed had saved money, 29 percent 

broke even, and only four percent lost money – a survey of 1,500 Chief Information Officers found that 69 percent were dissatisfied with the results. The IT 

sector, often touted as the most fertile ground for contracting, had also regularly 

reported disappointment.136

Also, while the CORM report at least acknowledged that DOD managers 

disagreed with the 20 percent to 30 percent savings estimates, it weakly refuted 

___________________ 

135CNA, “Rightsourcing Lessons Learned” (May 1997).

136Marshall and Hazell, “Panacea or Pipe Dream?” 87.
Chapter 4 — Outsourcing and its Discontents 107

their objection. Employing faulty ad populum logic – so many people cannot 

be wrong – the report pointed to “the continuing growth of outsourcing in the 

private sector,”(3-5). It also asserted that “the results of academic studies provide 

clear evidence that such concerns are usually misplaced.”(3-5). The Commission 

cited no sources, and as just shown, those studies in fact indicated mixed results.

The reports staunchly advocating outsourcing used other faulty logic. They 

often “cherry-picked” best-case scenarios from industry to compare either to 

DOD as a whole or even to DOD worst-case scenarios. These straw man-versusstraw man analyses misrepresented both sectors. Sometimes proposals verged on 

self-contradiction. The DSB report on the S&T base, for example, recommended 

that 50 percent of lab personnel come from IPAs and contractors who would 

rotate every five years, yet it also advocated increased attention to long-term (10 

to 20 years) research. How would a lab maintain continuity in a 20-year effort 

when half its personnel left on four separate occasions? Also, DSB’s report on 

outsourcing asserted that top-level management must aggressively pursue such 

efforts because mid-level managers tended to resist. Yet at the same time DOD 

was supposed to emulate modern business management principles – one wonders which principle advocated top-down imposition of policy over the objections of subordinates. And finally, like a hopeful undergraduate, that same report 

listed a whopping 175 sources in the bibliography – while citing only about 18 in 

the text.

Defense Department Equals Obsolescent?

Many reports that urged outsourcing lamented DOD’s outdated management, claiming it lagged at least a generation behind the private sector. Vision 21 

said its plan “leaves behind the remnants of the Cold War,”(1) and DSB called 

lab management an “obsolescent artifact” of the Cold War. But reports offered 

little specificity regarding what this meant. It appears that such comments really 

reflected frustration with bureaucracy. Leaving aside the issue of whether, for 

example, the remarkably successful Admirals and civilian directors of the Navy 

Warfare Centers were mired in archaic management techniques, and leaving 

aside the issue of what exactly constituted a “Cold War” style, it is still worthwhile to address the evidence the reports did offer.

As noted in the previous chapter, CNA’s Examination of Tech Centers

concluded “it is hard to tell if the centers are efficient.”(27) Although hardly 

a ringing endorsement, the assessment found nothing to indicate a hopelessly 

outdated system. CNA commented that the competitive environment in which 

the Navy labs had to attract customers, and the fact that only 25 percent of total 

RDT&E funding supported in-house technical work, both suggested efficiency. 

The report complained that the DBOF system of financing and accounting 

promoted inefficiency but then noted that the tech centers were among the best 

DBOF activities. Specifically, CNA’s assessment of expenditures per employee, 

outsourcing, and facilitization concluded that the first indicated increased efficiency, while the second and third possibly suggested increased inefficiency 

and deserved further study. Overall however, the Navy R&D process promoted 

resourcefulness.
108 Reports on the Management of Navy and DOD Laboratories

In its report on Outsourcing Opportunities for the Navy, CNA tried to 

prove that many such prospects existed for NUWC Keyport, but a close read of 

the case study suggests management there knew exactly how to maximize efficiency – and promote effectiveness – with the tools at its disposal.137 First, the 

Center disliked outsourcing RDT&E work for which it historically had trouble 

enforcing contracts. This problem was not unique to Keyport, as the DSB had 

noted that disagreement with contractors about the scope of work routinely embittered private-sector companies that outsourced much of their work.138 Second, 

CNA argued that NUWC could outsource even technically sophisticated work 

“if the processes are not likely to change and if the functions are well-documented.”(47) However, the Center pointed out that, as an R&D organization, it 

wanted to change processes as needed. An environment that allowed flexible, 

creative responses to unexpected opportunities fostered, and was in fact essential 

to, innovation.

The text of the report clearly – again if inadvertently – indicated that 

NUWC managers made sensible in-house/contracting-out decisions. They 

outsourced 82 percent of their public works dollars because the processes were 

standardized and contracts for labor-intensive, low-capitalization functions 

easy to write. Even for specialized, complex work they outsourced in “areas 

with transitory demand,”(47) a method that had proven more efficient than 

permanently maintaining the skills in-house. NUWC favored multifunctional 

A sample view from the Collaborative Test and Evaluation Center (CTEC) Theater at 

NUWC Keyport. Completed in 2006, this state of the art facility will provide real time 

feedback for exercises conducted at remote locations. Photo courtesy of NUWC, 

Keyport.

___________________ 

137CNA, “Outsourcing Opportunities for the Navy.”

138DSB, “Outsourcing and Privatization,” 23.
Chapter 4 — Outsourcing and its Discontents 109

(or omnibus) contracts, because they allowed flexibility and reduced administrative oversight. It used a variety of contract types (i.e. fixed price/fixed fee, cost 

plus/award fee, etc.). When CNA recommended award fees, the Center conceded 

that such incentives motivated contractors, but experience had shown that fixed 

fees significantly lowered administrative costs and resulted in higher efficiency 

overall. In the end, CNA’s recommendations focused more on giving NUWC the 

flexibility to do what it wanted to do rather than on dragging the Center out of 

some Cold War mentality.

The S&T Investment Process

The language of reports that advocated outsourcing sometimes suggested 

a one-dimensional misunderstanding of the process by which performers of 

R&D work are chosen. Rather than taking money out of one pile and putting it 

into another, investing in a particular performer in a particular scientific area is a 

multi-dimensional problem that requires balancing widely varying factors. Each 

Service’s S&T Executive continually trades off among four general types of 

categories, which contain a number of elements that intersect.

1. Performers

• In-house labs and centers

• Academia

• Industry

• UARCs

• FFRDCs

2. Areas (that themselves require trade offs)

• Between 6.1 disciplines (chemistry, physics, math, oceanography, etc.)

• Between 6.1 and applied areas (IT, materials, optics, electronics, etc.)

• Among 6.1, applied areas, and warfare-related areas (space, electronic 

warfare, anti-submarine warfare, sensors, energetics, armor, etc.)

• Among different Budget Activities

3. Continuing, broad-spectrum, discipline-related programs (e.g., chemistry) and 

multi-disciplinary efforts typically focused on transitioning technology(ies) into 

prototype platforms or systems (e.g. all-electric ship)

4. Conflicting requirements to respond to specific needs

• Supporting areas with military but no commercial application

• Funding new performers that have promising ideas

• Funding the best performer in every area

• Funding center-industry collaborations that transition technologies into 

new or existing systems

• Maintaining smart-buyer capabilities for areas in which DOD follows 

rather than leads technology development

• Maintaining some S&T base in centers focused on applied work, to help 

recruit new staff and generate new ideas
110 Reports on the Management of Navy and DOD Laboratories

In addition, DDR&E attempts to gauge all of the above factors in a way that 

ensures the appropriate investment among the three Military Departments and 

the OSD components.139 Only the Laboratory Infrastructure Capabilities (LIC) 

report, and to some extent the DOD response to NSTC/PRD#1, expressed any 

consideration of such complexities.

Efficiency and Competition

While many high-level, well-publicized reports on R&D and acquisition 

management equated downsizing with improvement, categorically touted the virtues of contracting, and compared DOD unfavorably to the private sector, many 

others argued differently. In fact, overall the studies of the time demonstrated 

a remarkable consensus about the relationship among contracting out work, 

performing it in house, and improving efficiency. That consensus can be summarized in one word: competition.

In a paper on Outsourcing Commercial Activities, Michael Marshall, the 

NLCCG’s Executive Secretary and former head of the DNL Corporate Projects Office, more or less demolished the generalizations circulating about how 

outsourcing commercial activities would automatically produce savings.140 The 

report, citing a great deal of the relevant research, briefly traced the history of 

OMB Circular A-76 competitions and examined the anecdotal and otherwise extremely limited nature of the evidence outsourcing advocates used. Marshall also 

identified what the data did indicate: that efficiency resulted from “maintaining 

a competitive environment in which market-place forces will drive efficiencies 

whether work is done in-house or on contract.”(2)

The paper discussed at length the shaky evidence outsourcing advocates 

typically cited in their claims that contracting for commercial activities saved 30 

percent or more. This was particularly important because, as Marshall discovered, studies frequently referenced the same research, or even more indirectly, 

the conclusions of another study that had used that same research. In other 

words, much of the enthusiasm for contracting stemmed from the classic logical 

fallacy of begging the question, or circular reasoning. In such instances, the “evidence” used to support a claim is ultimately the same as the claim itself.

One study frequently cited to support outsourcing, OMB’s “Enhancing 

Government Productivity Through Competition,” had not actually advocated 

contracting, but as the title indicates recommended evaluation and competition 

to determine which organizations should perform work.141 It noted that in-house 

groups won about 40 percent of the A-76 competitions and typically saved 20 

percent, while private companies typically saved 40 percent – but it provided no 

sources for these claims. The OMB paper also warned that contractors usually 

___________________ 

139Information is from Kenneth Lackie point paper, Fall 2006. See also DDR&E “Interim 

Response,” esp. 16. 

140Marshall, “Outsourcing Commercial Activities.”

141OMB, “Enhancing Government Productivity Through Competition: A New Way of Doing 

Business” (August 1988).
Chapter 4 — Outsourcing and its Discontents 111

won competitions by offering to do the function with fewer, less well paid employees than the government bidder, a situation that caused employee turnover.

Marshall showed that an article about Great Britain’s Ministry of Defence 

(MOD) and a CNA study on depot maintenance – two other studies outsourcing 

advocates frequently mentioned – contained similarly limited conclusions.142

Like the OMB study, the MOD article identified competition rather than outsourcing as the key factor. In addition, it emphasized the anecdotal nature of the 

evidence and that outsourcing for professional services would likely cost more 

than for ancillary functions. CNA also connected competition and efficiency. 

And when it did discuss the virtues of outsourcing, it cited the OMB report that 

offered no data, the MOD study, a 1976 study (written before standardization 

of the public-private A-76 competitions), and two RAND reports, one on motor 

vehicle maintenance in the Air Force and another on base support at two undergraduate pilot training bases.

Other reports and evidence provided yet additional reasons for skepticism about savings claims.143 Perhaps most amazing was GAO’s discovery that 

DOD’s statistics on contracting commercial activities reported projected rather 

than actual results and that even the projections derived from assumptions rather 

than data. In a study of commercial activities, CNA noted it had insufficient data 

for 86 percent of the categories of functions contracted out, and most of the data 

it did have related to small-scale, relatively inexpensive, low-skill work. Other 

issues Marshall pointed out included the price of cost comparison studies and 

contract administration, neither of which were included in savings estimates. 

And certainly the price of contract administration would rise if DOD followed 

___________________ 

142CNA, “Issues Concerning Public and Private Provision of Depot Maintenance” (April 

1994). Matthew Uttley, “Competition in the Provision of Defense Support Services: The U.K. 

Experience.” Defense Analysis, Vol. 9, No. 3 (1993): 271-288.

143Marshall cited a host of such sources.

Michael L. Marshall, former head of the 

DNL Corporate Projects Office, NLCCG 

Executive Secretary, and Assistant to 

the Director of the Applied Research 

Laboratory at The Pennsylvania State 

University.
112 Reports on the Management of Navy and DOD Laboratories

CORM’s recommendation to outsource complex, multi-function commercial 

activities. Another GAO study found that activities reported general dissatisfaction with contractor performance 28 percent of the time.

Finally, Marshall poked yet another hole in the DSB/CORM approach – the 

Navy’s RDT&E activities, operating under DBOF, had already done much to 

create the competitive environment essential to promoting efficiency.

144 Recall 

that DBOF charged customers (such as a Program Executive Officer, or PEO) for 

work and also allowed them to choose who did what, which meant that to continue working, DBOF activities such as the labs had to offer competitive prices (see 

Appendix B). RDT&E centers had therefore instituted initiatives to reduce infrastructure and other costs. These included contracting out any commercial activity 

or other function the private sector could perform more efficiently. Indeed, the 

Navy SYSCOMs already outsourced about 70 percent of their work.

CNA published reports on outsourcing and privatization in addition to 

those already discussed, and these also demonstrated how the limited evidence 

Marshall revealed was often alchemized into conventional wisdom. Although 

sometimes CNA provided well-researched and nuanced interpretations, sometimes it did not, and some of its studies contradicted themselves. However, much 

more than any other point, the think tank’s reports showed that competition, not 

outsourcing or privatization itself, produced results.

Responding to an ASN(RDA) direction, CNA examined Rightsourcing

strategies in the private sector to provide lessons learned for DOD.145 While the 

report distinguished rightsourcing – finding the best source to perform a function 

– from outsourcing – finding the cheapest source – it nonetheless dealt primarily with the ASN(RDA) guidance to find ways to reduce Total Operational Cost. 

CNA’s survey of companies, including Lockheed Martin, Unisys, Northrop 

Grumman, Hughes Electronics, Commonwealth Edison, and Ameritech, found 

that by far, cost reduction most frequently motivated outsourcing. To support its 

claims here, CNA cited the DSB report on outsourcing. Other important reasons 

for private sector outsourcing included access to better facilities and freedom 

to use internal resources for other purposes. In a finding particularly relevant 

to labs, the survey noted that outsourcing had increased for “mature” technologies – those for which an in-house capability was no longer unique – but had 

remained low for new technologies. “The most consistently cited lesson learned 

is the need to accurately identify the in-house costs for any product or function 

to be outsourced.”(26) This conclusion corresponded with Marshall’s point that 

decisions should be based on a case by case economic analysis.

CNA’s December 1996 report on Privatization and Outsourcing examined case studies that had generated savings.146 It asserted that although some 

in DOD believed privatization and outsourcing actually cost more, “experience argues the opposite.”(5) However, the experience report cited was in fact 

___________________ 

144As noted above, CNA’s “Examination of Tech Centers” had reached the same conclusion. 

145CNA, “Rightsourcing.”

146CNA, “A Survey of Privatization and Outsourcing Initiatives” (December 1996).
Chapter 4 — Outsourcing and its Discontents 113

quite limited. Four of the 12 references included other CNA studies, and two 

others were the CORM and DSB reports. Nonetheless, the report showed how 

outsourcing and privatization saved the Army’s Logistics Civil Augmentation 

Program $140 million, the Public Service Electric and Gas Company in New 

Jersey a half million a year, and the city of Chicago, which outsourced car towing, $1.2 million. As did many other studies, it also cited NAWC Indianapolis as 

a success story in privatization (it is worth noting that many in the Navy laboratory community believed the Indianapolis plan worked so well not because 

of privatization per se, but because of the preexisting, robust business base). 

Most important, it drew from GAO analyses to show that neither outsourcing 

nor privatization saved as expected when carried out without competition. CNA 

therefore concluded that “Competition appears to be the key element for success 

in most of these ventures.”(17)

During this time CNA also examined A-76 Competitions, again relying on 

very few sources, but again emphasizing the benefits of competition, such as cost 

visibility and alternative providers.147 Although A-76 competitions remained 

disruptive, cumbersome, and time-consuming, “it’s important to remember that 

the existing process has yielded real and permanent savings.”(2) CNA believed 

that allowing in-house managers to keep even a fraction of the savings gained 

through competing work would do as much to improve the process as anything 

else it could recommend. As it had in other reports, the organization again commented on the ambiguity between an inherently governmental and commercial 

activity and between RDT&E and RDT&E support, noting that different managers often defined the same functions differently. CNA recommended that DOD 

either remove or clarify the distinctions and offered other proposals for speeding 

up or standardizing the competitive process.

In an extensively researched study called A Privatization Primer, CNA 

once again found that privatization and outsourcing saved money only in competitive situations.148 The study concluded that neither contractors nor privatized 

facilities increased efficiency when they were the sole provider available. It also 

discussed a number of privatization projects (again, including NAWC Indianapolis). And as briefly mentioned above, it presented an unexpected twist to one of 

the country’s most widely accepted assumptions: that the private sector works 

more efficiently than the government.

Drawing from considerable research, the primer showed that “While there 

is great intuitive appeal to the idea that the private sector inherently makes more 

efficient use of resources, the evidence is actually quite mixed.”(7) In R&D 

especially, “market failures” create situations in which the government simply 

performs better. For example, firms tend to under invest in research, because despite patents they still cannot insure exclusive use of their findings. The government therefore intervenes, funding and performing additional research. Contracting clearly has advantages: it can save money, enable a strategic decision to 

___________________ 

147CNA, “Implementing A-76 Competitions” (May 1996).

148CNA, “A Privatization Primer.” 
114 Reports on the Management of Navy and DOD Laboratories

discontinue a certain type of activity, and provide a politically feasible method 

of downsizing. But generally, “Most surveys of empirical literature cannot prove 

that the public sector is inherently less efficient than the private sector.”(12)

Most important, CNA found that the so-called outsourcing initiatives 

(among which was the NAWC plan) in the city of Indianapolis so often cited as 

reengineering feats worth emulating in DOD were really competition initiatives. 

Large-scale competition began with the election of Stephen Goldsmith as mayor 

in 1991. Goldsmith initially favored outsourcing, but then agreed to let city 

workers compete for work. He also agreed to cut the bureaucracy (so the city 

could better compete) without any RIFs and to let city organizations retain some 

of their savings. Afterwards, city workers won 80 percent of the competitions. A 

key element of success, and one CNA stressed in many of its reports, was that after winning a competition, public sector entities signed an MOU that delineated 

performance standards and penalties for non-performance.

DSB’s report on outsourcing also discussed Indianapolis, and while not 

misrepresenting the results, it spun them to imply that outsourcing alone – rather 

than as one option within a competitive environment – had catapulted the city 

to financial deliverance. DSB allowed that improved services and $80 million in reductions stemmed from public/private competitions, but it thereafter 

equated competition to outsourcing, or even substituted the latter for the former. For example, the report stated that “after introduction of competition and 

outsourcing strategy in 1992, city budgets fell dramatically,” and it mentioned 

the “benefits obtained...from...competition and outsourcing.”(27) However, in 

its major conclusion the report said the city “has used outsourcing as an effective tool....”(28A) While not untrue, a more accurate assertion would have cited 

competition as an effective tool. In fact, because the public sector won more 

than half the competitions, the most accurate statement would not have emphasized “outsourcing strategy” but the strategy of letting city employees compete 

for work. This is all the more true considering that Mayor Goldsmith initially 

advocated increased contracting, which DSB did not mention. The CORM report 

likewise cited research on competition to advocate outsourcing.

In sum, the CNA and DSB reports showed that Indianapolis did benefit 

from outsourcing but more so from competition. DSB claimed private companies 

won almost half of the city’s competitions but that those projects accounted for 

85 percent of the total value involved. CNA said private companies won only 20 

percent, and it did not address total value. Regardless of the discrepancy (perhaps partly a result of the study periods) over which sector won what percentage 

of the competitions, the total value figure, even if DSB overstated it, would have 

nonetheless demonstrated how outsourcing benefited the city. However, CNA 

offered the more valid conclusion: “the city’s experience supports the view that 

government organizations are not inherently inefficient; they can provide superior services given the right business tools and incentives.”(17)

Conclusion

The reports discussed here and in the previous chapter, even those least 

enthusiastic about contracting, addressed many benefits associated with it. The 
Chapter 4 — Outsourcing and its Discontents 115

RDT&E community needed no convincing on the general principle, as it had 

always contracted out the majority of its work. Nor did anyone resist the idea 

that DOD or the labs and centers could benefit from applying innovative private sector management techniques. NAVAIR’s “competency-based alignment” 

received glowing reviews throughout the Navy and DOD. And Rear Admiral 

John J. Donegan, the first Commander of NCCOSC and former Commanding 

Officer of NRL, deliberately sought to manage government R&D organizations 

like businesses.149

But some of the influential studies obscured the real lessons learned. As 

a result, innovating – no matter who did it – came to mean imitating the private sector, while performing work in-house – no matter how efficient – came 

to mean adding infrastructure. However, as a whole the reports suggested an 

entirely different lesson and presented a high degree of consensus on the matter: in general and for DOD in particular, what made the difference was not who 

performed the work but whether competition existed in choosing the performer.

___________________ 

149RADM John J. Donegan, interview by Rodney Carlisle, April 20, 1995.

Introduction

While every major post-Cold War report on defense labs and R&D in 

general emphasized cost reductions, many also argued, more than parenthetically, that removing barriers to effectiveness would enable the efficiency DOD 

so zealously sought. In other words, freeing the technical centers to do their jobs, 

allowing them to engage in healthy competition with one another, and ensuring 

they had high-level officials advocating on their behalf – rather than delegating away all their work – would both enhance output and create savings. This 

chapter discusses reports and plans oriented toward improving rather than simply 

shrinking the labs.

Not surprisingly, many such studies originated within the lab community. However, while they reflected the predispositions of the authors, they also 

demonstrated an immediately recognizable depth of expertise often lacking 

among ad hoc, external panels, no matter how capable or well-intentioned. The 

DNL and Naval Research Advisory Committee (NRAC), for example, prepared 

reports that examined in convincing detail specific ways to optimize the productivity of the technical centers.

One major DOD endeavor that somewhat balanced the drive for efficiency 

and effectiveness involved cost visibility and cost comparability in the Service 

technical centers. As mentioned in previous chapters, many analysts had noted 

that the impossibility of comparing the costs of comparable work at different 

centers frustrated many cross-Service consolidation efforts. Members of Congress, dissatisfied with the inaction and with DOD’s inability to tell them how 

much RDT&E work actually cost, directed further studies and reductions.

The primary difficulty involved different approaches to finance and accounting (see Appendix B). Most briefly, the Navy labs charge customers the 

full costs of work, while the Air Force lab(s) is institutionally funded through 

appropriations. The Army combines customer reimbursement and institutional 

funding. It therefore appears to the uninitiated that RDT&E work cost significantly more in the Navy.150

The attempt to provide Congress with full cost visibility and to create an 

environment for fair, healthy competition among the Service labs continued for 

Chapter Five

Effectiveness Defeated

___________________ 

150One good, brief overview is in GAO’s “Defense Acquisition Infrastructure: Changes in 

RDT&E Laboratories and Centers” (September 1996).
118 Reports on the Management of Navy and DOD Laboratories

years, entwined with the many concurrent consolidation initiatives. Section 277 

of the FY 1996 NDAA, the NSTC lab review, Vision 21, the DRI, and Section 

907 of the FY 1999 NDAA all directed responses to this financial management 

issue. The recommendations of an LQIP financial subpanel, an OSD overarching 

Integrated Product Team, and many other groups generally fit into one of three 

categories: charging full costs to customers, migrating the centers to a common 

financial system, or using activity-based costing methods.

In 1999 DOD developed a Cost-Based Management Tool (CBMT) aimed 

at providing cost visibility without full cost recovery. The labs clambered to 

respond to data calls. All three Services loathed the tool to varying degrees, and 

eventually OSD discarded it. The next year a DOD report and Program Budget 

Decision (PBD) directed migration of all labs to a Working Capital Fund, but the 

PBD was withdrawn after fierce resistance from the Services (a chronology is 

provided at the end of the chapter).

While the desire for cost reductions certainly drove this effort, so did the 

desire to have the best, most qualified organizations performing the work. Many 

also believed DOD should reward those doing the best work with more work, 

instead of having each Service fund its own labs regardless of quality. In these 

ways then, the endeavor to facilitate fair competition among the labs aimed at 

both efficiency and quality.

DOD and Congress took other steps to improve lab and center effectiveness, but these too bore few results. The Laboratory Demonstration Program 

morphed into the LQIP under President Clinton’s National Performance Review, 

but both met organizational resistance at all levels and never brought relief from 

barriers in OSD, the Office of Personnel Management (OPM), or even the Services. Section 246 of the FY 1999 NDAA set up a pilot program, for both labs 

and T&E centers, designed to improve partnering and allow waivers on numerous restrictions. Later defense authorization bills contained sections promising 

other types of flexibilities. While Congress did provide some legislative relief 

for the labs in regard to personnel demos and Military Construction (MILCON), 

ultimately, cost-cutting efficiency measures were prioritized while effectiveness 

initiatives never had the chance to get their sea legs.

The Laboratory Community on Barriers to Effectiveness

The DNL’s Impediments to Cost Reductions at the Warfare Centers 

and Corporate Lab identified three types of institutional barriers preventing the 

Navy’s technical institutions from reengineering.151 Issues involving procurement authority and procedures, centralized management of support functions 

(stove piping), and facilities modernization needed to be resolved at the Navy, 

DOD, OMB, and congressional levels before the lab directors would have the 

___________________ 

151Director of Navy Laboratories, “Impediments to Cost Reductions at the Warfare Centers 

and Corporate Lab” (May 20, 1991).
Chapter 5 — Effectiveness Defeated 119

authority to operate their organizations like commercial firms. Unlike many of 

the reports containing vague generalizations about inefficiency, this one, with 

48 accompanying Issue Papers, addressed specific, concrete problems in the 

lab community – problems which, because they were institutional in nature and 

involved such matters as contract administration and oversight of support functions, could be not solved by outsourcing.152

Contract administration presented particular types of barriers.

• The Head Contract Activity (HCA) authority resided outside the 

RDT&E chain of command, a situation that multiplied reporting channels and obscured responsibilities.

• Excessive procurement lead times – how long it takes to buy products 

and services – exacerbated an already inefficient process.

• Complex administrative procedures created a host of problems. To give 

just one example, an extremely low small-purchase threshold meant that 

buying almost anything required navigating numerous procedures.

• Excessive procurement operation oversight reviews presented a fourth 

type of problem.

• The report listed others as well, for example contractor protest procedures.

Stove piping typically refers to a situation in which a large field activity, 

say RDT&E at a warfare center, supervises its primary mission functions, but 

separate commands or activities centrally manage and/or provide the support 

functions. The organizational chart depicting such an arrangement therefore 

shows reporting lines for support functions separated to various higher-level 

organizations, hence the term stove pipe. The DNL report noted that in practice, 

such arrangements might save money but also reduce effectiveness, because 

___________________ 

152Issue Papers: Public Works Centers, Travel Support Services, Effect of Stove Piping on 

Procurement, Personnel Administration, Medical Services, Communication Services, Printing and Publication Services, Davis-Bacon Constraints, Service Imposed Regulations, HCA 

Authority, Simplified Purchase Procedure, Short Form Research Contract Technique, Procurement Authority of Technical Director, Procurement Review Process, Navy Stock System, Supply System Preference Requirements, Automatic Data Processing (ADP) Approval Process, 

ADP Approval Authority, Legal Review, R&D Under $100K, Contract Action Reporting, 

Small Business/Small Purchase Set Aside Requirements, Small Purchase Procedures, Direct 

Contracting with 8(a) Contractors, Procurement Protest Procedures, Direct Contact with 

DCAA, Broad Agency Announcement (BAA) and Exceptions to Competition in Contracting 

Act (CICA), Expensing Funds Beyond Fiscal Year, Authority to Use Grants and Cooperative Agreements, Small Business Specialists, Minor Construction Limitations, Long-Term 

Facilities Investment Planning, Local Approval Authority for Equipment Installation, Duration 

Requirement for Relocatable Usage, Definition of Facility Repair, Personnel System, Position 

Classification System, Reduction in Force and Adverse Actions, Managing to Payroll (MTP), 

Overrun Write-Off Authority, Letters of Intent, Multiple Audits and Reviews, Efficiency 

Reviews (ER), Military Personnel Command Inspections, External Administrative Reports, 

Records Holding and Filing Equipment, Property Management, Control of Printing Requirements.
120 Reports on the Management of Navy and DOD Laboratories

they were based on doing the minimum amount of work required with the fewest personnel possible. A second problem: the dynamic process of managing a 

warfare center required that a technical director balance funding among different 

elements as needs shifted. Otherwise, in times of scarcity, both the center manager and the support function manager would desperately hoard whatever they 

had. In addition, support personnel and their customers (for example a warfare 

center) had different interests and internal requirements and worked for different 

people, all of which impeded team building. And finally, hidden costs arose. For 

example, a warfare center often had to create its own small support staff to serve 

as liaison with the central support function.153

The DNL report also stated that impediments thwarted application of the 

planned warfare center concept designed to jettison some aging facilities and 

focus investments to procure new ones within budget constraints. For example, 

special projects required numerous approval and validation steps. The Davis-Bacon Act prevented taking advantage of low wage rates in particular geographic 

areas. And MILCON limits and procedures made it extremely difficult for the 

centers to construct new R&D facilities – approvals required an average of three 

years. In fact, MILCON procedures made it so difficult to obtain funds for new 

construction that it was easier for a center to spend 15 times as much to revamp 

an old facility than to build new one – a situation that encouraged using old 

facilities.

A few years later, in a point paper titled The Navy’s Technical Institutions: Under Siege, Thomas Clare, Executive Director of NSWC’s Dahlgren 

Division, presented his views about barriers to effectiveness.154 Clare discussed 

what he called the four cornerstones of technical institutions’ strength – their 

reason for existence, roles and functions, adequate resources, and a compatible 

regulatory environment – to argue that the current environment attacked each of 

these. As in the DNL report, he described barriers that prevented labs from emulating private industry. He also recommended modifying DBOF and organizing 

the technical community by functions.

Clare defined the inherently governmental role of the labs as a unique connection between the warfighter and weapons developer. Understanding technical 

aspects of military problems, knowing who could solve those problems, and preserving the expertise to know if problems were being solved, all required a longterm continuity and accumulated expertise industry could not provide. Overall, 

this “corporate technical continuity” was the inherently governmental function.

The paper discussed negative consequences of outsourcing and why the 

centers could not operate as businesses. Clare believed that as more and more 

officials wanted to define fewer and fewer functions as inherently governmental, 

the labs devolved into government-owned contractors competing for work with 

the private sector, and doing so at a disadvantage because of preferences for the 

___________________ 

153Similar points are addressed in a paper by the Undersecretary of Defense for Research and 

Engineering, “Institutional Barriers on DOD Laboratories” (September 1979).

154Thomas Clare, “The Navy’s Technical Institutions: Under Siege” (draft of August 1996).
Chapter 5 — Effectiveness Defeated 121

latter. As for operating like businesses, Clare asserted, most variables that determined outcome – work years, spending on equipment, overhead budget controls, 

high grade personnel numbers – were controlled at levels above the labs and 

based on considerations other than market conditions, which would never happen in industry. Limits on “carryover” funding prohibited effective planning for 

resource distribution. Labs did not have the flexibility to assign personnel where 

needed. DBOF rate stabilization limited what labs could charge customers and 

often led to rates that fluctuated widely from year to year. And finally, despite all 

the insistence on partnerships, technical centers still had to charge up front for 

any service they might perform for their partners, another practice without parallel in industry.

Clare’s recommendations focused on functions and modifying DBOF. He 

suggested dividing corporate technical continuity into specific functions and 

including these in reports, charters, and “enabling directives.” Second, he recommended eliminating Rate Stabilization and Net Operating Result (NOR) recovery objectives, and holding the centers accountable “for annually achieving zero 

NOR, plus or minus .5% of earned revenue. Immediately, the unit of measure 

switches from inputs to results, [which] automatically introduces effectiveness 

as a measure of success.” This would obviate the need for outside controls on 

capital investment, high grades, overhead expenses, and employment. And if 

“the customer supported product quality and price, and the Technical Institution 

delivered ‘break even’ operating results on the resulting volume of business, the 

conditions of the competitive paradigm would be satisfied.”(quotes from 16-17)

The Naval Research Advisory Committee

NRAC’s report on Naval R&D similarly focused on how to improve the 

effectiveness of the technical centers in an austere budget environment.155 The 

panel, composed of members from industry, academia, and the Navy, heard presentations from representatives throughout the R&D community and visited 17 

sites.156 Its report sketched a brief history of Navy R&D, noted critical resources 

the Navy must retain, and discussed problems of organization and process. It 

focused throughout on improving the link between warfighter requirements and 

technology development. Of its recommendations, the most ambitious was to 

disestablish the SYSCOMs and designate their chiefs as Deputy Commanders 

under a new, four-star level Warfare Systems Command, which would report 

directly to both the ASN(RDA) and CNO.157

___________________ 

155Naval Research Advisory Committee, “Naval Research and Development” (October 1994). 

NRAC is the senior scientific advisory group to the SECNAV, CNO, Commandant of the 

Marine Corps, and CNR. Formed in 1946 along with ONR, it reports to SECNAV through 

the ASN(RDA). Its members, appointed for two-year terms, come from industry, academia, 

research organizations, and non-DOD government agencies. Usually, a member chairs each 

NRAC study, carried out by panels of experts. 

156NSWC’s briefing to the panel.

157See also Thomas Hone, “What Shall We Do With the SYSCOMs? An Issue that Won’t Go 

Away” (Fall 2001).
122 Reports on the Management of Navy and DOD Laboratories

One chapter examined five critical R&D resources. These included T&E 

facilities needed for unique products, support capabilities to analyze, develop, 

and prototype unique products and requirements (for example ordnance development), and unique “very high value fixed facilities”(36) (for example the tow 

tank at NSWC Carderock, Maryland and the airframe motion simulator centrifuge at NAWC Warminster). Other critical resources included rapid response 

capabilities (for example infrared countermeasures used in the first Gulf War). 

And finally, the report designated people and their corporate memory as “perhaps the most vital resource.”(36) One cannot help but notice the difference in 

tone between reports that carped about a grievously outdated R&D system and 

one that acknowledged the vital assets R&D people possessed.

The report also devoted a chapter to seven significant problems in organization, the first of which – separation of material resources into the SYSCOMs 

and then again into the warfare centers – received the most attention. The panel 

believed this separation led to four specific difficulties. First, the integration of 

technical resources and program execution did not occur until the ASN(RDA) 

level, where there existed many additional demands. Second, because capable, 

influential people with their own agendas led the SYSCOMs, the Navy could 

never create uniform policies and procedures. Third, too much layering and redundancy resulted from the SYSCOMs and warfare centers managing additional 

field commands or divisions. And finally, the non-redundant yet similar efforts 

of some technical activities suggested the potential for improvement through 

integrating resources.

NRAC noted six other organizational problems, many of them related to 

downsizing. First, separating the PEOs and Program Managers (PMs) from the 

executing command imposed conflicting demands on warfare centers or field 

activities. In particular, downsizing requirements prevented those activities 

from meeting workloads. Second, SYSCOMs headquarters performed a host 

of support functions that diverted their attention from management and policy. 

Third, Manufacturing Technology (MANTECH), which could help save critiDr. Thomas Clare, Executive Director of the Naval 

Surface Warfare Center, Dahlgren Division, from 

1989 to 1998.
Chapter 5 — Effectiveness Defeated 123

cal resources, received insufficient funding.158 Fourth, budget reductions, hiring 

freezes, high grade controls, and an inflexible personnel system all thwarted 

strategic downsizing. Fifth, as Clare had mentioned, stabilizing DBOF rates two 

years in advance of the year the work was to be performed complicated budgeting for the field activities, especially during periods of reduction. And finally, 

although each field activity had its own downsizing plan, the Navy had no highlevel, “corporate” plan.

The study panel offered three recommendations on organization. The 

first and most radical was to consolidate the trilateral (SYSCOM) headquarters 

structure into a unified “warfare system command” led by a four-star who would 

report to the ASN(RDA) and also to the CNO, the latter for logistics and administration matters. The SYSCOMs would be disestablished, and commanders for 

the four warfare areas – air, surface, undersea, and space – would be double-hatted as both Deputies to the Warfare Systems Commander and Commanders of 

the warfare centers. “Most significantly,” the report asserted, “the Commander 

[of the overarching Warfare Systems Command] would constantly provide the 

leadership, consistency of policy, long-term perspective and overall advocacy 

needed to ensure the viability of the Navy’s R&D/Material infrastructure into the 

future.”(46)

The two other recommendations on organization involved downsizing 

and DBOF. The panel proposed that the Navy generate an overarching policy to 

guide strategic downsizing and that it invest local activities with the authority 

to tailor that policy to their needs. Regarding DBOF, it suggested either use of 

actual rates or more frequent stabilization.

Additionally, NRAC sought to improve the R&D process – translating 

warfighter capability requirements into technology requirements. The panel 

considered the 6.1-6.3 progression too cumbersome and disconnected to development (6.4-6.5). It mentioned the “present ad hoc process” by which 16 S&T 

“roundtable” meetings generated technology requirements. “The process is 

presently cumbersome and demanding of manpower and time. Neither attendance nor acceptance are uniform....This reflects the embryonic nature of [a] 

process...[that] requires a thorough review and validation.”(61-62) Further, as 

budget cuts necessitated increased expertise in monitoring and acquiring outside 

technology, the Navy must “continue to perform technology development across 

a wide spectrum of areas so that competence is maintained.”(63) Jim Colvard 

asserted this very point in his oral history interview discussed in Chapter Four.

The report discussed three additional process issues. The Navy badly 

needed an overall investment strategy, again as a means to improve the connection between warfighter and technologist. The panel suggested that the new 

Warfare Systems Command oversee this. Further, although the S&T portion of 

planning and execution “is presently the most mature and successful segment of 

___________________ 

158The Navy Manufacturing Technology Program develops manufacturing technology to 

produce, sustain, and repair weapons systems.
124 Reports on the Management of Navy and DOD Laboratories

the R&D process,”(67) the Navy should resolve issues of in-house versus out-ofhouse needs through planning rather than arbitrary quotas. And finally, the panel 

recommended that the Navy evaluate R&D against an overall corporate investment strategy.

Clearly, the NRAC panel, while acknowledging the importance of responding to reductions by increasing efficiency, framed its discussion within a context 

of respect for the labs and centers and focused on improving them rather than 

getting rid of as much of their work as possible. The panel asserted that the key 

lesson learned from the period between world wars was the need to maintain 

unique facilities and in-house talent, especially during drawdowns. Similarly, it 

emphasized that “downsizing must not destroy capabilities that are irreplaceable 

and needed.”(29) It discussed problems – such as the separation of the PEOs 

and PMs from executing commands – in terms of barriers to effectiveness rather 

than indicators of obsolescence. And it reminded its audience that “perhaps the 

most vital resource that we have is our people, and the knowledge and corporate 

memory that reside in them.”(36)

Another distinction between efficiency and effectiveness reports involved 

premises versus conclusions. NRAC, Clare, the LIC and CORM studies, and 

many others agreed on how to frame the basic goal of R&D – translation of 

warfare requirements into technological capabilities. Outsourcing advocates did 

not explain how removing more and more work from the technical centers would 

improve connections to the warfighter, but presumably they believed that bureaucratic inertia and institutional myopia, so entrenched as to defy reform, should be 

bypassed. Studies focusing on effectiveness also lamented these obstructions but 

urged improvement rather than circumvention, based on the belief that the private sector could not provide the essential defense-oriented technical continuity.

Two years later another NRAC panel, chaired by Robert Galvin of Motorola, reported on the Science and Technology Base.

159 The substance of the 

Galvin report was 13 findings and 26 recommendations, grouped under the 

categories of vision, policy, and environment. The panel devoted attention to 

the relationship between ONR and the SYSCOMs, the Congress’ “suffocating 

regulations and micromanagement” that “are driving us to mediocrity,”(8) and 

effectiveness in academic, industrial, and uniformed officer involvement in S&T.

The panel’s discussion of an overall S&T vision dealt largely with the 

relationships among and responsibilities of the major players and advocated 

more ONR influence. After more or less asserting that downsizing can be fun 

– such periods, “painful as they are, also offer a special opportunity for taking a 

long-range view....”(9) – the panel analyzed the disconnect between ONR, the 

SYSCOMs and PEOs, and the Office of Navy Test and Evaluation and Technology Requirements (N091). While the SYSCOMs lamented that ONR investments 

___________________ 

159NRAC, “Visiting Panel Report on the Department of the Navy Science and Technology 

Base” (Galvin Report) (August 1996). Galvin chaired the panel on the DOE response to 

NSTC/PRD#1, which was also referred to as the Galvin report. 
Chapter 5 — Effectiveness Defeated 125

ignored later development, ONR bemoaned the SYSCOMs’ fixation on the short 

term. NRAC proposed that ONR have an “unqualified charter” to manage tech 

base programs and that it become “the senior institutional cognizance of the 

long-term programs....”(13) It suggested that the Warfare Centers, “surrogate 

program managers” for 6.2 and 6.3, only provide administrative and contract 

support to ONR, which would actually manage those programs. It also recommended elevating the rank of Chief of Naval Research (CNR) to equal that of the 

SYSCOM commanders.

The report underscored the importance of S&T in other ways. For example, 

it recommended channeling some money to academia simply to explore the 

unknown, “to come up with solutions that are literally looking for a problem to 

solve.”(15) It also suggested modifying rotation requirements so that both civilian and military S&Es could help ensure long-term continuity in S&T.

The section on policy dealt with the 6.1-6.7 categorization and burdensome 

bureaucratic requirements. The panel asserted that separate research categories 

created communication and administrative barriers.160 It lamented the steady decline of 6.1 and 6.2 funding and again noted the mistrust and poor communication among the Office of Naval Technology (ONT), ONR, NRL, the SYSCOMs, 

and the warfare centers. It recommended modifying the Goldwater-Nichols Act 

to improve SECNAV and CNO cooperation. It also recommended relaxing the 

profuse accountability and personnel policy requirements.

The panel also disliked the churning environment created through constant 

policy, budget, and restructuring adjustments. The Warfare Centers struggled to 

hire and retain even the minimum number of high-quality S&Es needed – not 

even to carry out research, but simply to make informed investment decisions. 

The Navy would have to cooperate better with industry and academia, bringing 

industrial partners into the process as early as possible and expanding prototyping, increasing the role of UARCs in 6.2 and 6.3, and re-establishing SECNAV 

and CNO chairs in academic departments. Likewise, officers should serve in 

S&T units “as part of routine in-service training.”(20) NRAC also suggested 

spending at least 50 percent of S&T funds in industry and academia (a proposal 

that contradicted its earlier report, which criticized arbitrary in-house/contracting 

out quotas).

The report also contains appendices, written by people with extensive 

experience in the R&D community, on impediments to executing the S&T 

program, management of personnel in the Warfare Centers, and human resource 

management. The first appendix discussed issues such as contracting procedures, 

problems with DBOF, intellectual property rights, and the proliferation of congressional requirements that prioritized compliance over execution. The second, 

written by Dr. Ira Blatstein, Executive Director of NSWC, described the diffi-

___________________ 

160NRAC also analyzed this issue in a November 1992 report, “Techbase Strategy for the Year 

2010.” That report examined many of the same matters as in the two reports discussed here, 

including prototyping, modeling and simulation, Advanced Technology Demonstrations, and 

increased discretionary funding for the labs and centers.
126 Reports on the Management of Navy and DOD Laboratories

culties of maintaining a talent base during downsizing. He recommended better 

support of the Laboratory Personnel Demonstration Project, increased flexibility 

in the Personnel Placement Program, and the use of some BRAC-related savings 

for new hires. The appendix on human resource management discussed external 

controls, recruitment, compensation, and performance management.

Leveling the Playing Field – A Common Financial System

The Navy and DOD tried to address many of the problems with DBOF 

that Clare and others mentioned, and many additional problems, in a large-scale, 

long-term, ultimately unsuccessful effort to “level the playing field” regarding cost accounting and cost distribution at the Defense technical centers. Parts 

of DMRD 922, consolidation plans, and Reliance included a commitment to 

increase healthy competition among the Service R&D communities. However, 

as studies noted, a number of disparities prevented meaningful cost comparisons. 

This caused many difficulties when, for example, Congress or DOD attempted 

reform efforts that would help the labs equally.161

Two of the most significant differences involved the ways in which labs received funding and calculated the costs of doing business (see Appendix B). The 

Navy’s industrial type funding under DBOF provided a fairly accurate accounting of costs, both direct and overhead, because those costs had to be recovered 

from customers. On the other hand, Air Force technical centers were institutionally funded through congressional appropriations. Most of the Army’s centers 

combined direct appropriations and partial overhead reimbursement. Also, Air 

Force labs, typically tenant organizations, received free support services from 

their hosts, while Navy centers were most often host activities themselves and 

had to recover those costs from customers as well.

These arrangements created all kinds of problems in trying to establish 

healthy and fair competition among the Service labs. For example, a member of 

Congress, looking at the total dollar figures without knowing the system, would 

believe the Air Force worked more cheaply than the Navy because the former 

listed only direct costs. But while a customer could get a better deal from the 

Army or Air Force, the taxpayer might not.

Other differences that affected competition included scope of mission, private sector capabilities, and organizational arrangements. Unlike the Air Force, 

the Navy’s mission includes undersea, surface, land, and air warfare, all of which 

require their own specialized personnel and technologies. Further, while the 

Army and Air Force draw from robust commercial aviation, automotive, and 

armament industries, the Navy relies much more on internal capabilities for its 

ships, submarines, mines, and torpedoes. To give just one example, organizational differences include a full-spectrum versus a more narrow focus. As men-

___________________ 

161The discussion in this section draws from NRAC, “S&T Community in Crisis,” Michael 

Marshall, “Differing Service Approaches to RDT&E” (June 1996), and material in the NRL 

archive. See also GAO, “Defense Acquisition Infrastructure,” esp. 24-29.
Chapter 5 — Effectiveness Defeated 127

tioned in previous chapters, labs across and within the Services work in different 

areas along the research-testing-engineering spectrum. They differ in how much 

work they conduct in-house, how much of their staff consists of military personnel, and in the structures of their reporting chains.

Throughout 1994 and into 1995, the effort to create comparability among 

the labs and centers intensified. The DBOF Corporate Board examined ways to 

reduce costs at DBOF activities and recommended increased cross-Servicing, 

especially in light of the failure of BRAC in this area. The Deputy DDR&E for 

lab management, Dr. Craig Dorman, responded with a request for the LQIP to 

charter a financial subpanel. This group would seek a management system that 

could provide flexibility, facilitate cost visibility and control, and allow equity in 

costing and pricing, not only among Service labs but also with partners in industry, academia, and other agencies.

The Laboratory Quality Improvement Program (LQIP)

Chapter One discussed the difficulties of the highly touted Laboratory 

Demonstration Program (LDP), particularly the ways in which it floundered up 

against conflicting DMRD efforts. In early 1993 the three Service Acquisition 

Executives (SAEs) committed to reinvigorating the venture, renaming it the Laboratory Quality Improvement Program, or LQIP. About the same time, President 

Clinton’s National Performance Review (NPR) set up a Defense Performance 

Review (DPR) office to, among other things, guide laboratory “reinvention” 

efforts within DOD. In March 1994 the DPR designated the LQIP and all of its 

participating labs as a single NPR “reinvention laboratory,” which allowed the 

technical centers to request waivers of certain policies and regulations (the fate 

of the LQIP in general and other similar programs is discussed below).

Although the Services and DOD discussed LQIP in terms of saving money, 

it derived from efforts most concerned with effectiveness. Rather than fixating 

on increased outsourcing, for example, the program sought to provide lab directors with the authority and flexibility to improve their operations, a byproduct of 

which would be savings. In practice, efficiency meant excising and effectiveness 

meant enabling.

The LQIP Financial Subpanel Report

In April 1996 an LQIP financial subpanel, chartered a year earlier and 

composed of 22 people with vast experience in DOD R&D management, published Recommendations for a Common Financial Management Approach 

at the DOD Laboratories.

162 It sought “a single standard approach” that would 

increase directors’ flexibility, “facilitate cost visibility and control...and allow equity in costing and pricing for comparable work performed at different 

___________________ 

162Laboratory Quality Improvement Program (LQIP) Financial Subpanel, “Recommendations 

for a Common Financial Management Approach at the DOD Laboratories” (April 1996).
128 Reports on the Management of Navy and DOD Laboratories

activities.”(ES-1) However, the subpanel concluded that no current method 

could achieve those goals. Further, any such homogenizing would excessively 

alter “programmatic policies, requirements, and procedures,”(ES-1) all of which 

had grown from financial management infrastructures based in turn on well-established philosophies. In short, changing the labs’ financial management would 

have meant changing almost everything. The subpanel therefore recommended 

a “hybrid approach” whereby each Service would retain its arrangements but the 

system as a whole would reach something resembling comparability.

Essentially, only two options existed – revolving funds or direct/institutional funds. The former, used in the Navy DBOF centers and four Army Corps 

of Engineers (CE) centers, entailed financing operations by customer orders. The 

latter, used in the Air Force and other Army centers, entailed financing operations by appropriations through headquarters.

The first of four considerations – flexibility – also involved two issues: did 

a lab director have the authority and resources to pursue opportunities at his/her 

discretion; and did the director have alternative means to perform the mission, 

including alternatives for support services? At least in practice, DBOF gave 

directors little flexibility because higher headquarters levels (customers) exercised significant control. On the other hand, institutionally funded directors had 

flexibility in program direction but fiscal controls prevented significant adaptations during execution. Regarding support services, the Navy and Army CE labs 

enjoyed flexibility but the Air Force and other Army labs did not.

Program versus financial management complicated this question of flexibility. The differences just discussed resulted from organizational cultures, not from 

financial systems. Stated another way, program management rather than financial 

management determined a director’s authority to carry out a mission. Changing 

the latter depended on first changing the former.

The next two considerations – cost visibility and cost control – were related. The Navy’s revolving fund system arose largely for the purpose of providing cost visibility and for the most part had succeeded. Institutional funding 

provided less visibility, but the capacity could readily be extended. The problem 

was not the system but its application. Revolving fund visibility existed because 

activities had to fund all costs through customer rates. As tenants, on the other 

hand, institutionally funded centers received support/overhead services for free, 

which obscured overall cost visibility. Cost control, in turn, should result from 

visibility, but consolidations that centralized support services had wrested control from center directors by determining who did what, and when, where, and 

how they did it.

The problem with the fourth and final consideration – equity in pricing 

– arose not from cost recovery but from the way the Services treated and assigned costs. Again, revolving funds expensed all costs to labs, institutional 

funding only direct costs. A second inequity involved the DBOF stabilization 

rates both Clare and NRAC had criticized. Established two years in advance, the 

rates in theory gave customers up-front knowledge of costs. The Navy’s inability 

to predict the future, however, complicated what seemed like a good idea at the 

time. This problem did not arise automatically from the nature of funding either 
Chapter 5 — Effectiveness Defeated 129

– an Army CE lab director, operating under a non-DBOF revolving fund, could 

modify rates based on changes as they occurred, just as any business could.

Ultimately, the subpanel found that imposing a single financial system that 

satisfied the objectives in the study charter would require major structural and 

cultural changes in at least one if not all three Services. Even if feasible, such an 

imposition was undesirable because the varied systems had evolved over time in 

response to specific responsibilities, concepts, policies, and organizational relationships. Further, the change would mean “putting the cart before the horse,” or 

forcing management to accommodate a support system.

The study charter had directed particular attention to DBOF, which the subpanel deemed unsuitable as a DOD-wide system (for many of the same reasons 

Clare discussed). First, while it met the cost visibility and equity objectives, it 

gave the OSD and Service comptrollers control over matters more appropriately 

the purview of lab directors. In other words, it failed the flexibility test. Second, because headquarters levels not fiscally accountable for lab missions set 

regulations and work-year rates, reporting requirements had proliferated under 

the funding system. Imposing it on other Services would simply expand the 

bureaucracy and reduce what flexibility they had. Third, stabilizing work-year 

rates caused more problems than it solved. Fourth, DBOF regulations made it 

too expensive to employ significant numbers of military personnel, which would 

sever connections with operational elements. And finally, DBOF was simply 

incompatible with the Air Force and Army cultures.

The report recommended a modified, or hybrid, arrangement called Cost 

Accounting for Science and Technology (CAST). A “hybrid management approach expressly designed to achieve...the charter objectives,”(19) CAST could 

be implemented without adding staff and would spread out the pain of transition 

more or less equally. It would improve cost visibility and control for Air Force 

and (non-CE) Army labs and “achieve the flexibility and cost objectives of the 

study, without the unnecessary burdens that uniform conversion to DBOF would 

impose.”(20) The features of CAST included:

• Charging customers for work

• Charging customers for overhead directly related to a project

• Not charging government customers for military pay

• Retaining MILCON without changes

• Tracking funding and distributing costs through job order cost accounting systems

• Establishing labor hour rates at the beginning of each fiscal year

• Charging government customers the same rates for work done at same 

lab

• Charging non-government customers for other costs incurred (for example military personnel)

• Reimbursing host commands for services provided, and charging for 

services to other activities

• Including equipment costs in project costs

• Funding functions not central to a lab’s mission from the appropriate 

account
130 Reports on the Management of Navy and DOD Laboratories

Although no optimum solution, only CAST met both the study objectives and 

the limits the study charter imposed.

The Cost-Based Management Tool (CBMT)

DOD responded to the LQIP report by saying, in effect, “not good 

enough,” and efforts to find a financial approach applicable to all Service labs 

continued and became intertwined with other plans. In February 1997, as part 

of the DRI (discussed in Chapter Three), OSD chartered a Laboratory Financial 

Management Integrated Product Team (IPT) to recommend a way for migrating 

the labs to full cost visibility and recovery. The IPT (an SES/flag/general officer 

group) proposed three options, one of which contained two sub-alternatives: 1a) 

moving all labs to a Working Capital Fund (WCF) or 1b) to a WCF with modifications; 2) achieving full cost recovery within existing financial management 

structures; 3) employing an approach that provided full cost visibility but did not 

require full cost recovery. The Navy favored Option 1b, the Air Force Option 3. 

The Army also favored 1b but pointed out various inequities that would complicate immediate implementation.

As discussed in Chapter Three, at this same time S.912 of the FY 1998 

NDAA directed a review of all acquisition activities in order to streamline 

management and reduce personnel by between 10,000 and 25,000. Part of the 

SECDEF’s response included establishing a Senior Steering Group (SSG) to examine smart-buyer capabilities, duplication of effort, competing non-core functions, management reforms under the NPR, partnering, reinvesting savings in the 

labs and centers, and alternative management structures. SECDEF also directed 

the SSG to find a way to identify the true costs to taxpayers in each functional 

area in each Service.

In addition to the overarching IPT, other DRI efforts sought a common 

financial management system for the technical centers. One of Secretary Cohen’s 

DRIDs, an RDT&E action memo issued on December 2, 1997, urged reviving 

some of the Vision 21 efforts (S. 277, FY 1996 NDAA, discussed in Chapter 

Three) and following through on the IPT’s recommendations. It also directed 

using a CBMT as the vehicle for collecting financial data from the technical 

centers. In theory the CBMT, an activity-based (as opposed to budget-based) 

financial management tool, would allow DOD to determine operating costs of all 

Service RDT&E activities.

Many in the Navy adamantly objected to the CBMT and engaged in discussions with Deputy DDR&E Dr. Lance Davis about its flaws. An ASN(RDA) 

memo to DDR&E (ca. Jan 1998) argued that, rather than launching another 

study, DOD should fix problems everybody in the lab community had understood and been trying to fix for at least 25 years. The memo also pointed out that 

the CBMT contradicted every Service option the LQIP financial subpanel had 

proposed.

In a series of emails in July 1998, many NLCCG members explained why 

they believed the CBMT could not identify operating costs. Primarily, a flawed 

taxonomy, which categorized work into nine bins for cross-Service comparison, 

threw a wrench into the entire full-spectrum concept. Requiring centers to report 
Chapter 5 — Effectiveness Defeated 131

S&T work separately from engineering work would mean reporting related 

activities of the same center independently and otherwise artificially dividing 

unified work. And second, the NLCCG argued that the CBMT could not be certified and audited, unlike DBOF and the WCF, which the Navy already employed. 

Nevertheless, OSD forwarded CBMT data calls to all Service RDT&E activities.

Meanwhile, DOD’s April 1998 response to S.912(c), “Actions to Accelerate the Movement to the New Workforce Vision,” focused on RDT&E restructuring and “sustainment” (product support), workforce education and training, an 

integrated, paperless acquisition process, a price-based approach to acquisition, 

and T&E integration.163 Like Vision 21, this document stated guiding principles 

for further studies (one of which is discussed below). As with other studies 

concerned primarily with efficiency, this one also stemmed from the by now 

reflexive assumption that DOD maintained too many capabilities duplicated in a 

more efficient private sector. It also called for yet another review of all S&T and 

engineering capabilities in DOD, industry, and academia.

Later that year, S.907 of the NDAA for FY 1999 also called for a plan to 

improve the labs and centers and included paragraph (b) – “Cost-Based Management Information System.” DOD responded to both S.907 and S.912c with its 

report on streamlining DOD’s Science and Technology, Engineering, and Test 

and Evaluation Infrastructure.

164 The previously abandoned Vision 21 guided 

this study’s four main initiatives: intra-Service and intra-Agency plans, crossService efforts, and improvement in both T&E and cost visibility. The report 

detailed each Service’s response to S.912c, including consolidations, workload 

changes, and business process reengineering. The discussion here focuses on the 

CBMT.

The chapter on the CBMT provided tables derived from data calls sent to 

the labs. The tool, which organized costs and resources along organizational, 

cost-element, and workload axes, tried to account for the fact that Navy’s technical centers had the broadest missions and employed many of their own support 

staff personnel. The tables included data generated for operations costs in total 

and by Service; mission versus overhead costs; costs by life cycle taxonomy, 

product taxonomy, and support taxonomy; in-house versus total technical costs; 

work-year analysis; capital equipment; and building condition.

The report’s conclusions regarding the CBMT are a model of rhetorical 

dexterity:

Populating the CBMT has allowed a better understanding of the 

complexities involved in collecting and using cost data for the diverse 

enterprises [in the labs and centers]. Lessons learned from the initial 

___________________ 

163Secretary of Defense, “Actions to Accelerate the Movement to the New Workforce Vision” 

(April 1, 1998).

164DOD, “A Plan to Streamline DOD’s Science and Technology, Engineering, and Test and 

Evaluation Infrastructure: Report of the Section 907 and 912(c) Senior Steering Group for 

Review of the RDT&E Infrastructure” (July 1999).
132 Reports on the Management of Navy and DOD Laboratories

experience will allow OSD to further assess the utility in providing 

additional cost visibility.... Future improvement will focus on finding 

already-existing alternative sources for some of the data to reduce the 

burden of data collection, refining the definitions of the data elements, 

reducing the data collection to just those aspects that contribute to improved management, and maximizing the fidelity of the data.(x) 

In other words, the tool failed to serve its purpose, unless demonstrating 

its own futility counted. It forced redundant data collection, defined key terms 

improperly, failed to narrow its scope sufficiently, and provided inaccurate data. 

Not surprisingly, OSD deemed the CBMT unsatisfactory and abandoned it.

Migrating DOD Labs to a Working Capital Fund

Congress continued to press for change, and in response to the FY 2000 

Defense Authorization Conference Report, DOD published a study on financing 

all RDT&E facilities through a Working Capital Fund Financial System.

165

The report described funding at the labs and Major Range Test Facility Base 

(MRTFB) activities and discussed the necessity of combining appropriations and 

a WCF in some instances. It projected one-time implementation costs of $55 to 

$85 million but deemed the transition to a WCF feasible and beneficial. The report noted the Air Force’s and Army’s objections but nonetheless recommended 

completing the shift by FY 2003.

As had other overviews, this too explained the advantages and disadvantages of a WCF versus appropriations. The latter provided stability during the 

fiscal year, but did not allow a laboratory Commanding Officer to reallocate 

funds already designated for specific program elements. And it did not provide 

cost visibility. Conversely, a WCF gave lab directors more authority, and more 

important, provided the cost visibility essential to competitive pricing.

Transitioning MRTFB activities to a WCF presented particular but not insurmountable difficulties, and the report recommended a combination of appropriation and industrial funding. The problem: customer demand did not cover the 

costs of unique capabilities DOD had to sustain. The report asserted the Navy 

had solved this problem by excluding certain “well-defined expenses”(13) from 

its rates and charging military customers only for costs directly incurred. This 

system allowed both flexibility and visibility.

The paper listed four criteria for and eight steps to the transition to a WCF. 

The four criteria:

• Outputs can be identified.

• An accounting system can collect and identify costs to outputs.

• Customers can be identified so resources can be aligned properly in accounts.

___________________ 

165DOD Comptroller, “Report on the Evaluation of the Potential for Financing DOD Research 

Development Test and Evaluation Facilities Through a Working Capital Fund Financial System” (August 2000).
Chapter 5 — Effectiveness Defeated 133

• Buyer-seller advantages and disadvantages are evaluated, including 

“an assessment of the customer’s ability to influence cost by changing 

demand.”(14)

The eight steps:

1. Define customer and product areas.

2. Identify all costs, including those for military personnel.

3. Categorize costs into direct, indirect, general, and administrative.

4. Establish cash requirements and develop a plan to provide cash balances.

5. Identify the value of capital assets and establish a depreciation schedule.

6. Establish a cost recovery pricing methodology.

7. Use a job order cost accounting system.

8. Realign funding from direct program elements or sub activity groups to 

customer accounts.

Despite objections from the Air Force and Army, the report recommended 

all Service RDT&E facilities operate with a WCF. The Air Force claimed to have 

sufficient cost visibility already, and the Army declared willingness to convert 

provided that DOD could generate an acceptable cost accounting system. The 

report discussed the funding and organizational changes required for those two 

Services to transition but concluded that the “implementation of working capital 

funds at additional RDT&E facilities is clearly feasible.”(22) WCF would provide cost visibility, pricing comparability, and allocation flexibility, and promote 

healthy competition, efficiency, and cost control.

After publication of this report, DOD’s PBD 411C in fact directed migration of all RDT&E activities to a WCF. The Services strenuously objected 

– inexplicably, even the Navy. Navy Comptroller Charles Nemfakos believed 

the change would actually increase operating costs and complicate infrastructure 

control. He noted, for example, that even with the Navy’s diverse customer base 

“it is difficult to ensure a focus on core mission areas.” With presumably less 

diversity for Army and Air Force labs, “you will see a tendency to grow product lines in an attempt to spread overhead more thinly, thus increasing organic 

infrastructure.” Also, a WCF worked well when DOD’s “business-like activities 

operated within a robust and very competitive environment” and could “take 

advantage of the customer-provider relationship engendered by WCF financing.” 

But downsizing had dissipated this competitive pressure and DOD instead had to 

protect core capabilities.166

The DOD Comptroller soon withdrew PBD 411C. Thus ended more than a 

decade of attempts to improve inter-Service competition by leveling the playing field and determining the true cost of doing business in the DOD labs and 

centers.

___________________ 

166Charles Nemfakos, Memorandum for Undersecretary of Defense (Comptroller). Subj: 

Program Budget Decision (PBD) 411C, Research, Development, Test, Evaluation (RDT&E) 

Activities” (December 5, 2000).
134 Reports on the Management of Navy and DOD Laboratories

LDP and LQIP Successes and Failures167

The LDP, officially chartered in November 1989 (see Chapter One), 

enjoyed about as much praise as one could expect for any reform initiative and 

seemed certain to succeed. A consensus existed about the problems in personnel management, laboratory management, contracting and procurement, and 

facilities modernization. The China Lake personnel demo had received fulsome 

acclaim throughout DOD and Congress and extending its scope into similar 

programs seemed feasible. DDR&E established an oversight working group and 

several sub-groups to provide continuous attention to the LDP. The Navy had 

nine and the Army 18 labs and centers participating. For three years, they identified specific barriers to effectiveness and offered detailed plans – the Navy, for 

example, proposed 62 specific actions.

For various reasons, some already discussed, despite this vigorous effort 

the program never achieved the reforms envisioned. Some personnel authorities 

were withdrawn, while others languished awaiting the necessary approval. Further, even after prolonged discussions, OPM remained unwilling to approve any 

personnel demos. In fact, the relevant organizations resisted nearly every request 

for legislative and regulatory relief. And as mentioned, DMRD steamrolled over 

any conflicting LDP programs, as was the case throughout the decade whenever 

efficiency clashed with effectiveness.

When DEPSECDEF Atwood, the DDR&E, and the three SAEs recommitted in 1993 to revamping the program as LQIP, and as the program entwined 

with President Clinton’s NPR and reinvention efforts, the labs and centers again 

sought waivers of burdensome policies and regulations. Again the requests met 

with resistance from stakeholders, and again protracted negotiations occurred. 

The compromises the principals finally reached were too watered down to benefit the technical centers substantively.

Ultimately then, both LDP and LQIP failed to generate relief from OSD-, 

OPM-, and Service-imposed barriers. Laboratory managers actually lost authority. Although the centers benefited somewhat from streamlined procurement 

regulations, none of those had resulted from LDP/LQIP. The few changes that 

occurred in personnel management, such as consolidation and centralization of 

human resources support, slowed rather than sped processes. And only slight 

improvements occurred in facilities modernization, the fourth and final area 

LDP/LQIP targeted.

The latter improvement resulted from congressional relief in regard to 

MILCON funding thresholds. The competitive advantage of operational commands had left the labs with aging buildings that hampered cutting edge research. After five years of trying, the labs finally convinced Congress to raise 

both the major and unspecified minor MILCON financial limits. However, this 

___________________ 

167The following discussion is drawn from NRAC, “S&T Community in Crisis,” esp. 22-29. 

See also Jacqueline Caldwell, Bridget Schay, Craig Simmons (Office of Personnel Management), “Summative Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988-1995 (June 21, 1997).
Chapter 5 — Effectiveness Defeated 135

did not translate into additional funds but rather raised the dollar amount the 

centers could use for construction without specific congressional approval of 

each project.

Legislation regarding the personnel demo projects also resulted in measurable success, although not commensurate with their full potential. Provisions 

such as flexible job classification and performance-based pay had reduced 

administrative costs and helped decrease turnover among high performers. Other 

agencies, both within and outside DOD, set up personnel demo projects as a 

result. Again however, as the labs sought to take full advantage, OPM and OSD 

blocked or significantly delayed proposals, many of which contained wording 

almost identical to that of already approved plans.

Other Congressional Attempts at Laboratory Reform

Section 912(c) Technology Leaders Workshop

DOD’s S.912 report to Congress in April 1998 directed further study of, 

among other things, the ability to “recruit, develop, and retain technology leaders.”(15) The USD(AT&L) and USD for Personnel and Readiness(P&R) sponsored a workshop on this subject in December. Representatives from most of the 

Service labs and centers attended. As with previous efforts, they accumulated 

and analyzed data and crafted plans. The resulting proposals included most of 

those previously proposed but rejected under the Lab Demo program. A Senior 

Steering Group’s draft plan168 underwent exhaustive review for more than a year. 

However, USD(P&R) could not accept its recommendations, and the plan never 

appeared in final form.

Section 246 Pilot Program

Toward the end of the decade Congress tried other ways to give technical 

centers the authority and flexibility to improve operations. One of these, established in S.246 of the FY 1999 NDAA, was described in a DOD report on the 

Pilot Program for Revitalizing the Laboratories and Test and Evaluation 

Centers.

169 S.246 allowed each Service to designate one lab and one T&E center 

for a three-year program that provided directors the authority and flexibility to 

improve partnering with universities and the private sector, waive restrictions 

not legally required, and develop methods to improve return on investment. The 

report also focused on hiring and retaining high-quality personnel and improving 

facilities.

___________________ 

168Senior Steering Group for Technology Leaders, “A Plan to Recruit, Develop, Reward and 

Retain Technology Leaders: Report of the Section 912(c) Senior Steering Group for Technology Leaders” (April 2000), working draft.

169DOD, “Pilot Program for Revitalizing the Laboratories and Test and Evaluation Centers 

of the Department of Defense: A Report in Response to Section 246 of the Strom Thurmond 

National Defense Authorization Act of FY 1999” (July 1999). 
136 Reports on the Management of Navy and DOD Laboratories

The short description of the pilot program explained five critical elements 

for measuring progress in sustaining the world-class, organic capabilities DOD 

required. First, effective partnerships must include not only interactions with 

industry, academia, and other government agencies but also joint publications, 

increased revenue from joint ventures, and innovative business processes such 

as non-government management of facilities. Second, recruitment and retention 

must involve reducing hiring time and rewarding individual technical excellence. 

Third, accessing state of the art facilities should include improving both recapitalization and the use of the best technical information resources. The fourth and 

fifth metrics, visionary leadership and challenging problems, were “expected to 

benefit from strong cooperative relationships formed in the laboratories.”(4)

The report listed the participants and mentioned some categories of potential innovations. The labs and centers chosen, respectively, were the Army 

Medical Research Laboratory and Materiel Command, and Aberdeen Test 

Center; the Space Vehicles Directorate of the Air Force Research Laboratory 

and Arnold Engineering Development Center; and NRL and the Aircraft and 

Weapons Divisions of NAWC. The labs planned to focus on pricing and intellectual property flexibilities, Cooperative Research and Development Agreements 

(CRADAs), limits on high grade ratios, term employees, pay comparability, 

the Priority Placement Program, retention of uniformed S&Es, and local director authority, especially in managing budgets. The T&E centers would focus on 

Small Business Innovative Research (SBIR) partnerships, mini-CRADAs (where 

one partner combines an S&T capability with the other partner’s T&E capability), and Commercial Service Agreements designed to expand prototyping and 

production.

The following year, in S.245 of the FY 2000 NDAA, Congress approved 

another, similar three-year pilot program directed toward personnel issues. 

DDR&E jointly managed the two efforts, both of which met the same internal resistance that foiled the LDP and LQIP. In May 2000, the DOD Office of General 

Counsel ruled that neither program gave SECDEF any additional authority – in 

other words he could already begin every one of the proposed reforms if he so 

chose, without congressional direction or a special program.170 (DSB had commented similarly in its 1987 report on technology base management). Nevertheless, meetings continued to be held to plan reforms. In August, the USD(P&R) 

informed the USD(AT&L) that many of the proposals under S.245 and S.246 

contradicted long-term plans for the DOD personnel system.171 USD(P&R) 

therefore insisted on participating in any planning. Then in November, DDR&E 

announced that the authorities required to inaugurate the S.245 program at the 

participating labs could not be obtained.172

___________________ 

170OGC memo of May 8, 2000 to Director, Operational Test and Evaluation, and Deputy 

Director, DDR&E.

171USD(P&R) memo of Aug 10, 2000 to USD(AT&L).

172Robert Tuohy (Office of DDR&E) email of November 14, 2000.
Chapter 5 — Effectiveness Defeated 137

In December NRL responded to DDR&E and withdrew from participation in the S.246 pilot.173 It noted its great investment in both overall program 

planning and the development of initiatives but stated that by now it was clear 

the program would yield nothing of value. In essence, the memo summarized lab 

reform programs of the 1990s.

Other Legislation

Congress passed other lab-related legislation.174 S.1107 of the FY 2000 

NDAA eliminated controls on high-grade S&E positions at those technical centers with personnel demo programs (such controls remained for other activities). 

Although a significant development – both the LDP and LQIP had identified it 

as a goal – unfortunately, neither program had actually made any progress on 

achieving it. S.1113 of the FY 2001 NDAA permitted recruiting S&Es outside of DOD for short-term projects. S.1151-1153 aimed to give more control 

over downsizing. And S.1114 sought to enhance personnel demo projects by 

transferring OPM’s statutory authorities to the Secretary of Defense. The latter 

enormously powerful provision allowed SECDEF to create new demos, modify 

existing ones, and in effect establish entirely new personnel systems free from 

the strictures of OPM’s interpretation of Title 5. However, SECDEF never used 

the authorities granted.

In sum, based on DSB’s 1987 study on technology base management and 

many reports with similar recommendations, the LDP, LQIP, personnel demos, 

pilot programs, and legislation attempted to provide DOD’s labs and centers with 

the authority to manage their own fate. None of these projects approached their 

potential – not for lack of effort, because they consumed tens of thousands of lab 

personnel work-hours and produced thousands of pages of carefully reasoned 

plans and justifications. However, the climate of the decade simply favored 

contractors over federal laboratories. And in the end, bureaucratic obstructions 

stifled the initiatives designed to relieve the technical centers of stifling bureaucratic obstructions.

Bibliographic Note – Other Studies on Lab/Center Effectiveness

Two other subjects oriented toward RDT&E effectiveness received considerable additional attention before, during, and after the period under discussion. 

The first – hiring and retaining high-quality personnel – troubled the RDT&E 

community throughout the post-WWII era and has been mentioned periodically 

here. However, in the late 1990s it took on a new dimension as many grew worried about the effects of a decade of hiring freezes and personnel downsizing. 

Reports began discussing the “graying” of the workforce and the attendant loss 

of corporate memory and long-term continuity.

Two recent studies have reviewed at considerable length the relevant literature. One book-length paper, Michael Marshall’s The Key to a ‘World-Class’ 

___________________ 

173Director of Research, NRL memo of December 18, 2000.

174See NRAC, “S&T Community in Crisis,” 53-55.
138 Reports on the Management of Navy and DOD Laboratories

Science and Technology Enterprise, deals with many of the issues discussed in 

this book and also examines more specifically matters such as human resource 

strategy, competitive compensation, the “contingent” workforce, and the personnel system overall. Robert Kavetsky’s, Michael Marshall’s, and Davinder 

Anand’s From Science to Seapower also discusses these and many similar issues.

Many articles and studies have addressed the second issue – “alternative” governance. Alternatives to GOGOs include GOCOs, GOCAs, COCOs, 

FFRDCs, Public-Private Partnerships, and Government-Owned Corporations. 

Ideally, such alternatives combine the best of private and public sector arrangements, allow tailoring to specific missions and functions, and/or facilitate 

partnering and collaboration. Although studies have often recommended consideration of such options, DOD has never attempted conversion, even in a smallscale pilot program. One of the best overviews is Timothy Coffey’s, Kenneth 

Lackie’s, and Michael Marshall’s Alternative Governance: A Tool for Military 

Laboratory Reform.

175

Alternative governance at NRL has been examined in considerable detail. 

A proposed structure evolved over the years, culminating with a recommendation for a government-owned corporation. Although the Federal Government 

had established more than a dozen such corporations (Saint Lawrence Seaway 

Development Corporation, Federal Prison Industries, Uranium Enrichment Corporation), no two were alike. The NRL plan resembled a state university in its 

organization and governance. While the proposal received a relatively positive 

response, it never got approved at all the required levels of the Navy and OSD 

at the same time. It remains a viable option and might still some day receive 

consideration. The NRL archive houses the following studies:

1. NRL, “Management of the Naval Research Laboratory: An Examination 

of Alternative Approaches.” September 17, 1988.

2. NRL, “Study of Alternative Laboratory Management Structures for the 

Naval Research Laboratory.” May 1994.

3. NRL, “Alternative Management Approaches for the Naval Research 

Laboratory.” May 1998.

4. National Academy of Public Administration, “NRL: Position Management Analysis.” March 1999.

Overviews of FFRDCs include:

1. Congressional Research Service (CRS), “DOD’s Federally Funded 

Research and Development Centers.” June 3, 1993.

2. Ibid., April 13, 1995.

3. DSB, “The Role of Federally Funded Research and Development 

Centers in the Mission of the Department of Defense.” April 25, 1995 

(Available online).

___________________ 

175Coffey, Lackie, and Marshall, “Alternative Governance.”
Chapter 5 — Effectiveness Defeated 139

4. Office of Technology Assessment (OTA), “A History of the Department 

of Defense Federally Funded Research and Development Centers.” June 

1995.

5. DSB, “Federally Funded Research and Development Centers (FFRDC) 

and University Affiliated Research Centers (UARC).” January 1997.

Cost Visibility/Comparability Chronology

August 15, 1994 DBOF RDT&E review, chaired by OSD Comptroller, states that a method for comparing costs would 

improve cross-Servicing decisions.

May 17, 1995 DDR&E charters LQIP Financial Subpanel.

April 1996 LQIP Financial Subpanel recommends “hybrid” 

solution for common financial approach among 

Services.

April 30, 1996 Vision 21 combines response to NSTC and S.277. 

Abandoned when Congress declines to authorize 

another BRAC.

September 1996 GAO report on Defense Acquisition Infrastructure, 

directed to provide information on operating costs, 

reports that DOD itself did not know true costs.

FY 1998 NDAA, S.912(c) Directs review of all acquisition activities, personnel, and infrastructure, reduction of personnel 

numbers by 10,000 to 25,000 and report to Congress 

by April 1, 1998.

November 4, 1997 OSD(Comptroller)/USD(A&T) IPT generates three 

options for a common financial approach, and each 

Service chooses the one most resembling its current 

system.

November 26, 1997 In response to DRI/DRID on labs, Deputy DDR&E 

(Lab Management) brief to USD(A&T) says optimum restructuring can be achieved only if costs can 

be identified and recommends CBMT to track costs 

(not revenues).

August 17, 1998 S.912(c) charter for SSG on S&T, Engineering, and 

T&E says CBMT to be instituted within 60 days.
140 Reports on the Management of Navy and DOD Laboratories

FY 1999 NDAA S.907(a), USD(A&T) to develop lab/center management plan and consider consolidation via designating lead agencies by area or function. S. 907(b), 

SECDEF to develop Cost-Based Management Information System for identifying and comparing costs 

and to assess feasibility of common methodology 

for measuring costs.

February 23, 1999 USD letter response to Congress for S.907(b), states 

that if CBMT works it will become the model for 

implementation.

July 1999 SSG 907/912 report concludes CBMT efforts 

showed the significant complexity of task. Services 

identify CBMT deficiencies, and it is abandoned.

FY 2000 Defense Authorization Conference Report

Directs a study to examine migrating all Service 

labs to WCF.

August 2000 OSD(Comptroller) study favors migration to WCF.

Fall 2000 PBD 411C directs migration to WCF, fierce Service 

resistance, PBD withdrawn.
Conclusion

In 1987, the Defense Science Board wrote, “This nation has long been 

well served by defense laboratories in innovative research and in the support 

of national emergencies....The quality of the laboratories and their technical 

leadership are of supreme importance....” Two years later the Office of Technology Assessment wrote that DOD S&Es “are a national asset that...should be 

retained beyond the immediate programs for which they were hired,” and “the 

lab is a going concern, not a job shop...[whose] professional staff must do basic 

and exploratory research, simply to evaluate work done outside its walls.” And 

two years after that, the Congressional Research Service noted that since World 

War II, DOD labs “have played a crucial role in solving science and engineering 

problems and in meeting needs that are unique to the military.”176 Most studies 

of this time reiterated the basic reasons for a DOD laboratory system: to perform 

smart-buyer, inherently governmental, special- or unique-purpose, and/or lifecycle support work that aligned directly with the missions of their customers.

By 1994 however, DSB called the laboratory system “an obsolescent 

artifact of the Cold War” and a few years later claimed “The effectiveness of the 

technical staff of the Service laboratories is significantly impaired compared with 

the private sector.”177 Many similar statements indicated a prevailing view that 

DOD not only must turn to commercial companies in order to reduce unneeded 

infrastructure but also should in order to receive quality work. Although major 

reports continued to contain superficial declarations about the labs’ performance, 

fewer and fewer bothered to include substantive sections about their key roles.

What changed? At least part of the answer is perceptions. In other words, 

the technical centers did not suffer from some sort of prolonged slump over the 

course of a few years, during which their performance level dropped off from 

outstanding to outdated. Instead, interpretations changed. And as has been noted, 

this change usually derived not so much from analysts reconsidering their positions but from a changed composition in high-level study groups. Many panels 

in the mid and late 1990s either had no representatives from the in-house S&T 

community or ignored their input.

What allowed this more negative view to prevail? For one, just like the rest 

of DOD, technical centers simply met continuing pressure to shrink. Because 

a national security mission meant reductions could not be justified on the basis 

___________________ 

176DSB, “Technology Base Management,” E-2, OTA, “Holding the Edge,” 65, and CRS, 

“Defense Labs” 1991, 1.

177DSB, “Defense Laboratory Management,” Cover Letter, and “Science and Technology Base 

for the 21st Century,” 4.
142 Conclusion

of quantity alone, DOD had to argue that they would actually enhance defense. 

And it was much easier to justify a downsizing process that targeted obsolescent 

artifacts rather than national assets. Second, reports emanating from panels with 

plenty of representatives from DOD labs had for years rued the sad situation resulting from aging equipment and facilities, barriers to hiring and retention, and 

bureaucratic millstones. Like any jeremiad, such lamentations originated from a 

hope for reformation, but perhaps by the mid 1990s that general optimism had 

vanished given that little progress had occurred.

One subject addressed in many reports offers another explanation – the 

problem of continuous, aggressive support for S&T from high-ranking leaders. 

In the Navy, the Naval Material Command (NAVMAT) had managed the R&D 

Centers (but not NRL) through the DNL. In 1985, when SECNAV Lehman 

disestablished NAVMAT, the act not only removed a four-star R&D advocate 

but also “demoted” the DNL. Although not a senior rank official, the DNL had 

in practice functioned as a Deputy ASN for labs, helped coordinate lab activities 

and communications, represented the labs on panels carrying out major studies, 

and served as a principal member (along with CNR) of the Joint Directors of 

Laboratories (JDL). The JDL’s parent group – the three/four-star Joint Logistics 

Commanders (JLC) – collaborated regularly with OSD. The DNL could at least 

indirectly advocate for labs on almost any issue at almost any level.

The creation of the Warfare Centers in 1991-92 further altered the advocacy for Navy R&D. The Office of DNL was disestablished. The NLCCG was 

created to help coordinate the activities of the Warfare Centers. ASN(RDA) 

Gerald Cann also established the Navy Laboratory/Center Oversight Council 

(NLCOC), which he chaired – in part “to be the benefactor of the [lab] community” – and which also consisted of the VCNO, Assistant Commandant of the 

Marine Corps, SYSCOM Commanders, and other senior DON representatives. 

The NLCCG/NLCOC arrangement somewhat mirrored, at the Service level, the 

JDL/JLC channel. However, the NLCOC ceased to function after Cann left office only a year later.178

The overall organization below the ASN(RDA) left the labs with only one 

high-ranking official to provide continuous advocacy – the CNR. CNR represented the ASN(RDA) for S&T, but while this position theoretically equaled 

a Deputy ASN, the CNR was typically a two-star admiral. The SYSCOMs 

Commanders, two of whom were typically three-stars, also reported to both 

ASN(RDA) and the CNO and now oversaw the labs that had been realigned into 

the larger Warfare Centers.

These organizational changes tended to emphasize acquisition over S&T. 

As acquisition commands, the SYSCOMs naturally focused on the short-term 

needs of the current Fleet more so than the long-term “Fleet after next” objectives natural to performers of S&T. Although the SYSCOMs still supported 

RDT&E activities, they also often worked more closely with the engineering and 

acquisition elements of those activities. And further, just as everyone else, they 

___________________ 

178Cann interview, 4, and NLCCG, “A Historical Perspective,” 16.
Conclusion 143

faced pressure to downsize. The warfare/systems centers provided them a logical 

“outside” source of engineering. In fact, the centers had generally resisted such 

an organizational arrangement precisely for fear of becoming “job shops” for the 

SYSCOMs. Articulation of that very concern had led ASN(RDA) Cann to say 

he would act with the NLCOC to check and balance those tendencies, as had the 

DNL.179

Similarly, while the Packard/Goldwater-Nichols/DMR reforms streamlined customer impact on R&D management, they also gave one person – the 

ASN(RDA), or Navy SAE – responsibility for the entire acquisition process. As 

with the SYSCOMs, the SAEs naturally focused on acquisition (the “A” rather 

than the “R&D”), as people at every level from Congress through DOD to the 

taxpayers expect products in return for large investments.180 Recognition of the 

imbalance between acquisition and S&T led the NRAC Galvin Panel in 1996 to 

recommend elevating the CNR to the same rank as the SYSCOMs Commanders.

The void in S&T leadership – again, filled almost exclusively by the CNR 

– manifested itself even in the basic material for this survey: reports. Because 

the NLCOC never materialized as planned, because the emphasis shifted toward 

acquisition, and because the warfare/systems centers and NRL reported through 

multiple chains, many S&T management issues were dealt with through ad hoc 

forums, as the NRAC Galvin panel discussed. Typically, these had no reporting requirement. The Re-Investment and Infrastructure (RII) group (although it 

included more than just RDT&E commands) is a prime example.

It might also seem that the missed opportunities to reshape the DOD and 

Navy technical centers as envisioned in the LDP and similar efforts resulted 

inevitably from sheer bureaucratic and organizational resistance and inertia. 

However, the 45 percent reduction in workforce personnel occurring between 

1991 and 2005 and the ever increasing proportion of work contracted to the private sector both show unambiguously that the system could produce a revolution 

when it wanted to. Changes in the Navy laboratory community did not affect 

everyone equally. Significant sites with proud histories – those at New London, 

Warminster, and White Oak, for example – closed, while others – Dahlgren, and 

Patuxent River and Indian Head (Maryland), for example – gained new facilities 

and responsibilities. Overall however, the Navy RDT&E community as it existed 

in the four-plus decades after World War II is gone.

Will it return? Should it? While it is highly unlikely that the technical 

centers will ever exist again as they did during the Cold War era, reviews from a 

growing number of analysts suggest a need to strengthen significantly the internal capabilities of defense R&D organizations. In fact, something of a cottage industry has developed for books warning of the dangers of outsourcing. Most, but 

certainly not all, focus on the Iraq War. Paul Verkuil’s well publicized Outsourcing Sovereignty, primarily a legal analysis, argues that the obsession with efficiency through contracting “threatens democracy” because it removes too many 

___________________ 

179Cann interview, 11.

180Marshall, “Best and Brightest,” 38-41.
144 Conclusion

key decisions from elected public officials. Jeremy Scahill’s Blackwater likewise 

argues that over reliance on privatization endangers democracy. Tim Shorrock 

has written about the negative effects of outsourcing in the CIA. There is even a 

novel in the thriller genre about the dangers of privatizing military functions; it 

has what now is apparently assumed to be an ominous title – Outsourced.

181

While a war and privatization of actual fighting have made outsourcing 

more dramatic and palpable, the issues raised have troubled DOD in the past. 

As discussed in Chapter Four, the rush to contract out defense work following 

the Hoover Commission report in the mid 1950s stemmed from a belief that the 

private sector performed work more efficiently than the government. Then a few 

years later, DOD reversed the trend, especially in R&D. Analysts documented 

the many unforeseen problems resulting from contracting, lamented the “brute 

force” with which it had been applied, urged that in-house labs must again 

become a “primary means” of executing research, and insisted that labs “should 

never lose a strong, internal competence.”

Major reports on defense S&T indicate that DOD remembered this lesson 

for quite some time. Despite the drawdown following the end of the Vietnam 

conflict and the generally pro-business approach of the Reagan administration, 

every report that dealt with the labs echoed the argument that they were indispensable to national security and performed certain types of crucial work more 

effectively than any other type of organization. As demonstrated in Chapter One, 

most of those reports expressed frustration at the inability of the system to solve 

long-standing, widely-recognized problems. But an underlying premise remained: that the technical centers played a vital role in creating the most formidable fighting force in history, one based on technological rather than numerical 

superiority.

That lesson was forgotten or ignored in the 1990s. In effect, this means 

DOD can once again join the ranks of those who, discouraged by difficulties, 

have left a solid, working relationship for the beguiling charms of a flashy seductress, only to find some serious dysfunction under the surface.

While defense laboratories always struggled to offer the pay frequently 

necessary to recruit and retain top talent, they also attracted people motivated by 

meaningful work and a desire for public service. Ask anybody who worked at 

White Oak in the 1960s or 1970s what it was like to decide to spend a Saturday 

at the lab and to arrive to find a half-full parking lot. And even though bureaucracy often prevented the labs from becoming models of efficiency, the White 

___________________ 

181Paul Verkuil, Outsourcing Sovereignty: Why Privatization of Government Functions 

Threatens Democracy and What We Can Do About It (Cambridge, 2007), Jeremy Scahill, 

Blackwater: The Rise of the World’s Most Powerful Mercenary Army (New York, 2008), Tim 

Shorrock, Spies for Hire: The Secret World of Intelligence Outsourcing (New York, 2008), R.J. 

Hillhouse, Outsourced (Toronto, 2008). See also Deborah D. Avant, The Market for Force: 

The Consequences of Privatizing Security (Cambridge, 2005), Robert Young Pelton, Licensed 

to Kill: Hired Guns in the War on Terror (New York, 2007), and Ann Markusen, “The Case 

Against Privatizing National Security,” in Governance, Vol. 16 No. 4 (October 2003), 471-

501.
Conclusion 145

Oak (and other) anecdotes along with plenty of other evidence indicate they 

were good at effectiveness – getting the job done. Yet DOD nonetheless charted 

a course that sailed away from what had worked for decades. As argued in the 

many recent publications detailing the problems with outsourcing, the course 

apparently needs some correcting.

This book has focused on developments in the technical centers in the 

1990s and the causes of those changes; specific recommendations are beyond its 

scope. However, it is worth noting that there is still a tremendous body of expertise among professionals who have spent their careers in the laboratory community. They know how the labs solved pressing technical problems and spurred 

innovations that provided unforeseen capabilities. Surely, that body of corporate 

memory along with the technical and managerial savvy of a new generation of 

S&Es could combine to create state of the art organizations with the ability to 

help build a Fleet tailored to the exigencies of modern warfare. 

A number of recent publications have in fact offered suggestions for 

strengthening defense in-house capabilities. For example, the final chapter of 

From Science to Seapower (cited several times in this book) gives ten recommendations in its “roadmap for S&T revitalization.” An article on S&T innovation, written by highly regarded experts, provides a different set of justifications 

for in-house expertise.182 Again, the point here is not to endorse specific recommendations, but to remind readers of some reasons for maintaining an internal 

technical expertise – and to warn about the costs of losing it.

___________________ 

182Timothy Coffey’s, Jill Dahlburg’s, and Eli Zimet’s “The S&T Innovation Conundrum,” 

cited in Chapter Three.

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Adolph, Charles “Pete.” Oral History Interview conducted by Rodney Carlisle. 

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Allison, David K. “The Role of Navy Laboratories: A Historical Review.” December 1984.

____. “U.S. Navy Research and Development since World War II.” In NRL 

archive, and also in Military Enterprise and Technological Change, ed. Merritt 

Roe Smith, 290-328, 1984.

Anspacher, William B., Betty Gay, Donald Marlowe, Paul Morgan, and Samuel 

Raff. The Legacy of the White Oak Laboratory. Dahlgren, VA, 2000.

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From November 1989 to April 1990 on the Restructuring of the Navy’s RDT&E 

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Caldwell, Jacqueline, Brigette Schay, and Craig Simons (Office of Price Management). Summative Evaluation Report, National Institute of Standards and 

Technology Demonstration Project: 1988-1995. June 21, 1997.

Cann, Gerald. Oral History Interview conducted by Rodney Carlisle. February 9, 

1995.

Carlisle, Rodney. Management of the U.S. Navy Research and Development 

Centers During the Cold War: A Survey Guide to Reports. Washington, D.C., 

1996.

____. “Navy RDT&E Planning in an Age of Transition: A Survey Guide to Contemporary Literature.” Washington, D.C., 1997.
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Center for Naval Analyses (CNA) (Samuel Kleinman, Derek Trunkey). “CNA’s 

Examination of Tech Centers.” October 1994.

____ (Carla Tighe et al.). “Outsourcing Opportunities for the Navy.” April 1996.

____ (Carla Tighe et al.). “Implementing A-76 Competitions.” May 1996. 

(Available online).

____ (Darlene Stafford, James Jonrow). “A Survey of Privatization and Outsourcing Initiatives.” December 1996. (Available online).

____ (Carla Tighe et al.). “A Privatization Primer: Issues and Evidence.” January 

1997. (Available online).

____ (Anthony DiTripani). “Rightsourcing Lessons Learned.” May 1997. (Available online).

____ (Glenn Ackerman, Samuel Kleinman). “Creating a ‘Revolution in Business 

Affairs’ in DOD.” December 1997. (Available online).

Cheney, Dick. “Defense Management: Report to the President.” July 1989.

Clare, Thomas. “The Navy’s Technical Institutions: Under Siege.” August 1996 

draft.

Coffey, Timothy, Kenneth Lackie, and Michael Marshall. “Alternative Governance: A Tool for Military Laboratory Reform.” Defense Horizons 34 (November 2003): 1-8.

Coffey, Timothy, Jill Dahlburg, and Eli Zimet. “The S&T Innovation Conundrum.” Research Paper for the Center for Technology and National Security 

Policy, National Defense University. August 2005.

Cohen, William S. “Report of the Quadrennial Defense Review.” May 1997. 

____. “Defense Reform Initiative Report.” November 1997.

Colvard, James. “Some Thoughts on the Navy’s Organization Under the DMR.” 

Unpublished paper, February 20, 1990.

____. Oral History Interview conducted by Rodney Carlisle. May 13, 1994.

Commission on Roles and Missions of the Armed Forces. “Directions for Defense.” May 24, 1995.
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Congressional Research Service (CRS, Michael Davey). “Defense Laboratories: 

Proposals for Closure and Consolidation.” January 24, 1991.

____ (John Moteff). “Defense Research: A Primer on the Department of Defense’s Research, Development, Test and Evaluation (RDT&E) Program.” May 

5, 1998. (Available online).

Defense Base Closure and Realignment Commission. “Report to the President.” 

July 1, 1991. (NHC).

____. “Report to the President.” July 1, 1993. (Available online).

____. “Report to the President.” July 1, 1995. (Available online).

Defense Science Board (DSB). “Technology Base Management.” December 

1987.

____. “The Defense Industrial and Technology Base.” October 1988.

____. “Defense Laboratory Management.” April 1994. (Available online).

____. “Outsourcing and Privatization.” August 1996. (Available online).

____. “Achieving an Innovative Support Structure for 21st Century Military 

Superiority: Higher Performance at Lower Costs.” November 1996. (Available 

online).

____. “Defense Science and Technology Base for the 21st Century.” June 30, 

1998. (Available online).

____. “Technology Capabilities of Non-DOD Providers.” June 2000. (Available 

online).

Department of Defense (DOD) Management Review Task Force. “DOD Management of Technology Development: Implementation of Recommendations of 

the DMR.” February 1990 (The file folder also contains an October, 1989 draft 

and the responses from JDL, SPAWAR, OASN(RE&S), and OCNR).

____. “DOD Base Closure and Realignment Report.” April 1991. (Available 

online).

____. “Department of Defense Base Closure and Realignment Report.” March 

1993. (Available online).
150 Bibliography

____. “Department of Defense Base Closure and Realignment Report.” March 

1995. (NHC).

____. “Vision 21: The Plan for 21st Century Laboratories and Test and Evaluation Centers of the Department of Defense.” April 30, 1996.

____. “Quadrennial Defense Review: Acquisition Infrastructure Task Force 

Report.” February 20, 1997.

____. “The Report of the Department of Defense on Base Realignment and Closure.” April 1998. (Available online).

____. “A Plan to Streamline DOD’s Science and Technology, Engineering, and 

Test and Evaluation Infrastructure: Report of the Section 907 and 912(c) Senior 

Steering Group for Review of the RDT&E Infrastructure.” July 1999.

____. “Pilot Program for Revitalizing the Laboratories and Test and Evaluation 

Centers of the Department of Defense: A Report in Response to Section 246 

of the Strom Thurmond National Defense Authorization Act of FY 1999.” July 

1999.

Department of the Navy (DON) Management Review Task Force. “Program Executive Officer and Systems Command Reorganization Plan.” September 1989 

(NHC).

____. “Plans for Initial Implementation of the Defense Management Report.” 

October 1, 1989.

____. “Base Closure and Realignment Recommendations, Detailed Analysis.” 

April 1991. (NHC).

____. “DOD Base Closure and Realignment Report to the Commission, Department of the Navy Analyses and Recommendations (Volume IV).” March 1993.

Ibid. March 1995. (Available online).

DeSavage, Bernard. Oral History Interview conducted by Howard Law. November 4, 1997.

Dilworth, Guy. Oral History Interview conducted by Howard Law. November 

12, 1997.

Director of Defense Research and Engineering, Memorandum for Assistant 

to the President for Science and Technology. “Department of Defense Interim 
Bibliography 151

Response to NSTC/PRD #1, Presidential Review Directive on an Interagency 

Review of Federal Laboratories.” September 12, 1994.

____. “DOD Response to NSTC/PRD #1, Presidential Review Directive on an 

Interagency Review of Federal Laboratories.” February 1995.

____. “BRAC 95 Addendum to Department of Defense Response to NSTC/PRD 

#1.” April 3, 1995.

Director of Navy Laboratories. “A Review of Studies Conducted from November 1989 to April 1990 on Restructuring the Navy RDT&E Community.” July 

1990. (This review contains the most complete record of the key events, decisions, memoranda, and efforts of the study teams involved in the Navy’s implementation of the DMR.)

____. “Impediments to Cost Reductions at the Warfare Centers and Corporate 

Lab.” May 20, 1991.

Dorman, Craig. “Parting Shots: A speech presented at the DOD Laboratory 

Workshop, 20-22 June 1995, Waterways Experiment Station, Vicksburg, Mississippi.” June 20, 1995.

____. “BRAC 95 Lessons Learned: A Laboratory Perspective.” (Two papers and 

a briefing), 1996.

Federal Advisory Commission. “Federal Advisory Commission on Consolidation 

and Conversion of Defense Research and Development Laboratories.” September 1991.

Gansler, Jacques. Defense Conversion: Transforming the Arsenal of Democracy. 

August 1996. (Available online).

General Accounting Office/Government Accountability Office (GAO. “Military 

Bases: Observations on the Analyses Supporting Proposed Closures and Realignments.” May 1991. (Available online).

____. “Navy Laboratories: Plans for Consolidation and Progress Towards Implementation.” June 1993.

____. “Military Bases: Analysis of DOD’s Recommendations and Selection Process for Closures and Realignments.” April 1993. (Available online).

____. “Military Bases: Analysis of DOD’s 1995 Process and Recommendations 

for Closure and Realignment.” April 1995.
152 Bibliography

____. “Defense Acquisition Infrastructure: Changes in RDT&E Laboratories and 

Centers.” September 1996.

Hone, Thomas. “What Shall We Do With the SYSCOMs? An Issue that Won’t 

Go Away.” Fall 2001.

Institute for Defense Analyses (IDA). “Report of the Task Force for Improved 

Coordination of the DOD Science and Technology Programs. Volume I, Summary Report and Recommendations.” July 1988.

____. “Long-Term Modernization of Research, Development, Test and Evaluation (RDT&E) Facilities.” 1991. (Available through IDA).

____. (John Metzko, Jesse Orlansky). “Study II of Scientists and Engineers in 

the DOD Laboratories.” July 1990.

____. (David R. Graham et al.), “Laboratory Infrastructure Capabilities Study: 

Phase I Report. November 1994. (Available online).

Joint Directors of Laboratories (JDL). “White Paper on Tri-Service Reliance in 

Science and Technology.” January 1992. (NHC – the archive houses almost 50 

cubic feet of JDL material.)

Kavetsky, Robert, Michael Marshall, and Davinder Anand. From Science to 

Seapower: A Roadmap for S&T Revitalization. College Park, Maryland, 2006.

Laboratory Quality Improvement Program Financial Subpanel. “Recommendations for a Common Financial Management Approach at the DOD Laboratories.” 

April 1996.

Marchese, Joseph, ed. Index of Oral Histories Relating to Navy Research, Development, Test, Evaluation, and Acquisition. 1992. (NHC)

Marshall, Michael. “Discussion Paper: Management of Service Science and 

Technology (S&T).” October 5, 1989. (NHC, in folder with “Challenges Confronting the DOD Laboratories”).

____. “Tri-Service Reliance: Just a Stop on the Road to a Purple POM?” Briefing to NSWC Board of Directors, October 6, 1993.

Marshall, Michael, and Dean Snyder. “Core Competence: A Basis for Corporate 

Strategy in a Changing Defense Environment. A Presentation for Dr. Ira Blatstein, Technical Director, Naval Surface Warfare Center.” October 27, 1993.

Marshall, Michael. “Differing Service Approaches to RDT&E.” June 1996.
Bibliography 153

____. “Outsourcing Commercial Activities as a Source of Infrastructure Savings: 

Are the Savings Claims Justified?” January 1996.

____. “Reducing Defense Infrastructure: Workforce Vs. Workload Trends.” April 

1997.

Marshall, Michael, and Eric Hazell. “Contracting Out: A Cycling of Attitudes.” 

Unpublished paper, October 1997.

____. “Private Sector Downsizing: Implications for DOD.” Acquisition Review 

Quarterly (now Defense AR Journal), Vol. 7 No. 2, Spring 2000: 143-159.

Marshall, Michael. “Exemption of R&D from Application of OMB Circular 

A76: A Historical Perspective.” February 7, 1997, updated September 15, 2000.

Marshall, Michael, and Eric Hazell. “Panacea or Pipe Dream? Outsourcing 

R&D.” Naval Institute Proceedings, October 2000: 86-89.

Marshall, Michael. “The Key to a ‘World-Class’ Science and Technology Enterprise: Hiring and Retaining the Best and Brightest Scientists and Engineers.” 

March 2001. 

Mindak, Robert. “Management Studies and Their Effect on Navy R&D.” November 1, 1974.

Naval Research Advisory Committee. “S&T (Techbase Strategy for the Year 

2010).” November 1992. (Available online).

____. “Defense Conversion.” December 1993.

____. “Naval Research and Development.” October 1994.

____. “Visiting Panel Report on the Department of the Navy Science and Technology Base” (Galvin Report). August 1996.

____. “Science and Technology Community in Crisis.” May 2002.

Navy Laboratory/Center Coordinating Group (NLCCG). “A Historical Perspective on the Creation of the Navy Laboratory/Center Oversight Council and the 

Navy Laboratory/Center Coordinating Group.” September 1995.

____. “Another Perspective on Outsourcing: Beyond the Sound-Bites.” May 

1997.
154 Bibliography

Office of Science and Technology Policy (OSTP) Executive Office of the President. “Report of the White House Science Council Federal Laboratory Review 

Panel.” May 1983. Also “Progress Report on Implementing the Recommendations of the White House Science Council’s Federal Laboratory Review Panel,” 

Vol. I, Summary Report, and Vol. II, Status Reports by Agencies. July 1984.

____. “Interagency Federal Laboratory Review Final Report.” May 15, 1995.

____. “Status of Federal Laboratory Reforms: The Report of the Executive 

Office of the President Working Group on the Implementation of Presidential 

Decision Directive PDD/NSTC-5, Guidelines for Federal Laboratory Reform.” 

(March 1997).

Office of the Chief of Naval Material. Ad Hoc Group on Functional Realignment. “A Functional Analysis of the Research and Development Process in the 

U.S. Navy.” December 15, 1977. (NHC).

Office of the Undersecretary of Defense (Comptroller). “Report on the Evaluation of the Potential for Financing DOD Research Development Test and Evaluation Facilities Through a Working Capital Fund Financial System.” August 2000.

President’s Blue Ribbon Commission on Defense Management. A Quest for 

Excellence (Packard Report). June 1986.

Proctor, James. Oral History Interview conducted by Howard Law. September 

24, 1997.

Schiefer, Gerald. Oral History Interview conducted by Rodney Carlisle. March 

23, 1995.

Secretary of Defense. “Actions to Accelerate the Movement to the New Workforce Vision.” April 1, 1998.

Senior Steering Group for Technology Leaders. “A Plan to Recruit, Develop, 

Reward and Retain Technology Leaders: Report of the Section 912(c) Senior 

Steering Group for Technology Leaders.” April 2000, working draft.

Undersecretary of Defense for Research and Engineering. “Institutional Barriers 

on DOD Laboratories.” September 1979.

U.S. Congress, House Armed Services Committee Subcommittee on Research 

and Development (Michael Davey). “Challenges Confronting the DOD Laboratories.” February 22, 1990. (NHC. The file also contains commentary material 

– white paper, memoranda – circulated prior to the workshop of October 1989 

that prepared the report. Of particular interest is Michael Marshall’s discussion 

on “Management of Service Science and Technology,” which examines in part 
Bibliography 155

how the makeup of various study groups may have affected their recommendations.)

U.S. Congress, Office of Technology Assessment. Holding the Edge: Maintaining the Defense Technology Base. April 1989. 

____. “After the Cold War: Living with Lower Defense Spending.” February 

1992.

____. “Defense Conversion: Redirecting R&D.” May 1993.

Appendix A

Sources on the Management

of Navy/DOD RDT&E

The reports section of NRL’s archive served as the basis for this survey. 

The collection is an unclassified resource for post-Cold War management initiatives at the DOD and especially DON scientific and engineering activities. Collected over the course of some two decades by people serving as immediate staff 

of the DNL, NLCCG, DDR&E, and Research/Executive/Technical Directors 

of NRL and NSWC, the material reflects efforts to coordinate RDT&E across 

the Navy and in some instances DOD.183 The collection complements the much 

larger RDT&E Management Archives housed at the Naval Historical Center, 

Washington Navy Yard. Together, they are the sole, formal repositories for the 

Navy’s materiel establishment. 

Overview of NRL Archive184

The records effectively preserve the major laboratory management initiatives between 1984 and 2001 that affected the DON, especially during the 

NLCCG era. The collection consists of four record groups.

1. Government-wide management initiatives affecting defense laboratories 

– among these records is material on outsourcing and privatization and 

the Government Performance and Results Act.

2. DOD and non-Navy initiatives – includes material on acquisition 

reform, Laboratory Demonstration Program, Laboratory Quality Improvement Program, Defense Management Review, Base Closure and 

Realignment, and DOD common financial system.

3. Navy – the largest record group contains documents on alternative 

governance (especially as related to NRL), reinvestment/infrastructure, 

return on investment, defense conversion and revitalization, RDT&E 

___________________ 

183Director of Research (NRL), Technical Director, and Executive Director all mean the chief 

civilian at a laboratory or other technical center or one of its divisions.

184This refers to the post-Cold War management collection only. NRL also has an archive 

devoted to its own history.
158 Appendix A

management/acquisition guides, and policy instructions, directives, 

notes, and drafts. There is also a near complete set of NLCCG meeting 

minutes and minutes summaries, which addresses every issue of significance to the Navy RDT&E community during the era.

4. Reports/Oral histories – some 300 reports, with authors including 

but not limited to the White House National Science and Technology 

Council, the Defense Science Board, the General Accounting Office, 

the Naval Research Advisory Committee, Blue Ribbon Defense Panels/Commissions, the Office of Technology Assessment, the Institute for 

Defense Analysis, the Center for Naval Analyses, and the NRL. Brief 

abstracts are provided for about half the reports. 19 oral histories, all 

abstracted, deal primarily with BRACs.
Appendix A 159

Box Index (September 2007)

Record Collection 1 – Government-Wide Initiatives

Box 1-2 Government Performance and Results Act (GPRA)

Box 3 Office of Science and Technology Policy (OSTP)

Box 4-12 Office of Management and Budget (OMB) Circular A-76, 

Outsourcing of Commercial Activities/Privatization/Inherently 

Governmental Functions

Box 12A Congressional Testimony

Record Collection 2 – DOD and Non-Navy Initiatives

Series 1 – DOD-Wide, Cross-Service, Academia

Box 13 Acquisition Reform

Box 14 Quadrennial Defense Review (QDR)

Box 15 Office of Director of Defense Research and Engineering 

(ODDR&E), Academia, Air Force, Army

Box 16-17 Joint Directors of Laboratories (JDL)

Box 18 Laboratory Management Task Force (LMTF), Laboratory 

Demonstration Program (LDP), 1988-90

Box 19-27 LDP, 1990-1993

Box 28 LDP/Laboratory Quality Improvement Program (LQIP), 

1993-1994

Box 29-30 LQIP, 1994

Box 31 LQIP Travel Reengineering, 1995

Box 32-35 LQIP NRL Demo, 1994-2000

Box 36-38 LQIP, 1995-2003

Box 39 LQIP Waiver Process, 1994-1998

Record Collection 2 – DOD and Non-Navy Initiatives

Series 2 – DOD In-House RDT&E/S&T Activities Reports

Box 40-43 Available Reports, FY 1973-2004

Record Collection 2 – DOD and Non-Navy Initiatives

Series 3 – DOD Subject/Chronological File

Box 44 Goldwater-Nichols, COBRA, BRAC91, Defense Management 

Review (DMR)

Box 45 Director of Navy Laboratories (DNL) Briefings (BRAC

related)

Box 46-48 DMR, BRAC, Consolidation

Box 49 COBRA, BRAC, DMR, RDT&E Facilities Study

Box 50 NRL/NOARL Merger

Box 51 DMR, BRAC
160 Appendix A

Box 52-56 RDT&E Facilities Study/Consolidation, DMR, BRAC

Box 57 Mission Purification

Box 58 S&T Consolidation

Box 59-61 DMRD/BRAC

Box 62 BRAC/RAND/RDA Industrial Study

Box 63 BRAC95, NRL

Box 64-66 BRAC95

Box 67 RDT&E Facilities Consolidation/Vision 21

Box 68 Defense Reform Initiative (DRI)

Box 69-72 Acquisition Workforce

Box 73-74 RDT&E Infrastructure

Box 75-76 Scientists and Engineers, S.912C

Box 77-78 Revitalization Pilot, S.246

Box 78A Research and Technology Protection

Box 79-80 Recruiting and Retaining

Box 81-85 DOD/Service Common Financial System, Defense Business 

Operations Fund (DBOF), LQIP, Integrated Product Team, 

Working Capital Fund

Record Collection 3 – Navy Initiatives

Series 1 – Navy Subject/Chronological File

Box 86-90 Reinvestment\Infrastructure (RII)

Box 91-93 Core Competencies

Box 94 Work For Others

Box 95 Workload Planning

Box 96 Human Resources

Box 97 Facilities

Box 98 Metrics

Box 99-100 Return on Investment (ROI)

Box 101 Management Barriers

Box 102 Cost Comparisons

Box 103 High Grades

Box 103A Security

Record Collection 3 – Navy Initiatives

Series 2 – Navy Laboratory/Center Coordinating Group (NLCCG) Meetings 

(Finding Guide has full text summaries of meeting minutes)

Box 104-121 NLCCG and Navy Laboratory/Center Oversight Council

(NLCOC) Meetings

Box 121 NLCCG Initiatives

Box 122 NLCCG Member Command Briefs

Box 123-124 NLCCG Briefings (1992-2003)
Appendix A 161

Record Collection 3 – Navy Initiatives

Series 3 – S&T, Centers, and NLCCG

Box 125 In-House Laboratory Independent Research (ILIR), Independent Research, Independent Exploratory Development 

(IR/IED), Other Material

Box 126 ILIR, NLCCG, DDR&E, Warfare Centers

Box 127-129 Defense Conversion, Revitalization, Deputy Assistant Secretary of the Navy (DASN) for RDT&E

Box 130-138 RDT&E Center/NLCCG Management Briefs/Acquisition 

Guides, Statistical/Biographical Information, 1975-2004

Box 139 NOARL

Box 140-145 NORDA

Box 146-157 NRL

Box 158-164 NRL/Alternative Governance, Model Laboratory

Box 165-166 Centers

Record Collection 3 – Navy Initiatives

Series 4 - Navy Policy Instructions, Directives, Notes, Drafts, Incl. SECNAV, 

OPNAV, NAVMAT, SPAWAR

Box 167-169

Record Collection 3 – Navy Initiatives

Series 5 – Systems Commands

Box 170

Record Collection 3 – Navy Initiatives

Series 6 - Other

Box 171 ASN(RDA) Operating Plan

Box 172 ONR

Box 173 S&T Focus Requirements Process; S&T Investment Planning/

Joint Mission Area (JMA)/Strategic Deterrence

Box 174-175 Office of the DNL Files

Record Collection 4 – Reports, Oral Histories

Box 176-180 Cold War Era (1945-1989)

Box 181-191 Post-Cold War Era (1989-2004)

Box 191-193 Defense Science Board (DSB) Reports

Box 193-195 General Accounting Office (GAO) Reports

Box 195-198 Naval Research Advisory Committee (NRAC) Reports

Box 199 Oral Histories (BRAC related)

Box 200-209 Books, Brochures, Pamphlets, Videos, Phone Directories
162 Appendix A

Overview of Cold War-Era RDT&E Management Archive, Naval

Historical Center (NHC)

This archive, comprising some 700 cubic feet, was established in 1980 as 

part of an effort by then Chief of Naval Material Admiral Frederick Michaelis to 

create a broader awareness of the contributions of the Navy’s materiel establishment. Under the aegis of the DNL, a small history and archives program was 

begun. The records reflect the concerns of that office, providing a macro-level 

view of the laboratory community during the Cold War, with an emphasis on the 

DNL era (1966-1992). 

Some of the types of records included:

1. Oral histories – more than 300 interviews of numerous major players in 

the community. Many, such as 44 interviews on the establishment of SPAWAR, 

are a tremendous asset to researchers trying to understand the nuances of DOD 

policy and program decision processes. The Abstracts of Oral Histories Related 

to Navy RDT&E and Acquisition, available upon request, provides abstracts of 

these and other interviews and also includes an extensive subject index.

2. R&D Center records – includes congressional correspondence files, 

personnel, organizational, policy, and budget records, Independent Research/Independent Exploratory Development (IR/IED) reports (abstracts of the center 

programs), long-range and five-year plans, program reviews and summaries, and 

management briefs.

3. Management reports – contains most of the major reports on the management of Navy and often DOD labs issued from the late 1940s to the late 

1980s. In some cases the working papers, correspondence, and other related 

background material are included. The reports are the basis for Rodney Carlisle’s 

Management of the U.S. Navy R&D Centers during the Cold War (available 

upon request).

4. The Navy Industrial Fund (NIF) – the archive contains a complete set of 

the NIF resource/financial management records of the R&D centers in the 1980s.

5. Eminent Naval scientists and engineers – an example is the Records of 

Waldo Lyon and the Arctic Submarine Laboratory (ASL). Fondly known in the 

Navy as “Mr. Arctic,” Waldo Lyon ran the ASL for more than 40 years and was 

the Chief Scientist on board the Nautilus submarine in 1958 for the first transpolar crossing. This collection, approximately 75 cubic feet, has a separate finding 

guide, with abstracts for every document and a complete subject index.

6. Vietnam Laboratory Assistance Program/Navy Science Assistance 

Program (VLAP/NSAP) – established during the Vietnam War, VLAP rapidly 

transitioned war fighting innovations from the laboratory to the field and provided technologists with field experience. The collection contains final reports 

for all the projects and much of the working material generated.

For additional information contact Dr. Eric Hazell at 202-433-3224, or 

erichaze@aol.com 
Appendix A 163

Box Index

NHC Record Collection 1 – Executive and Congressional Research and

Development Records

Box 1-10

NHC Record Collection 2 – DOD/Joint RDT&E Records

Box 11-14 Office of the Secretary of Defense/Offices of the Undersecretaries of Defense

Box 14-15 DOD Inspector General Files

Box 15-17 DOD In-House RDT&E Activities (1967-1993)

Box 17-19 Laboratory Management Task Force (LMTF)

Box 19-21 Defense Agencies and Boards - includes Defense Science 

Board (DSB) reports

Box 22-24 DOD Directories, 1971-1991

Box 25-37 Joint Director of Laboratories (JDL) Meetings (1982-1995)

Box 37-65 JDL Chronological File (1974-1997)

Box 66-81 JDL Technology Panels - Advanced Materials, Air Vehicles, 

Artificial Intelligence, Chemical/Biological Defense, Cockpit 

Automation, Command, Control, Communications (C3) and 

Intelligence, Computer Sciences, Conventional Air/Surface 

Weaponry, Directed Energy Weapons, Electronic Devices, 

Electronic Warfare, Environmental Sciences, Laser Radar, 

Manufacturing Sciences, Munitions, Robotics, Sensors, Signal 

Processing, Space Vehicles, Strategic Computing, Thermal 

Imaging

Box 81-84 JDL Management Panel

Box 84-91 Joint Logistics Commanders (JLC)

Box 91-94 Reading Files (January 1994-June 1996)

(Box 1-23) JDL Addendum – includes Defense Technology Area Plans 

(DTAP), Defense Technology Objectives (DTO), Technology 

Area Review Assessments (TARA), JDL Meetings (1996-

1998), and Reading Files (July 1996-June 1997)
164 Appendix A

Box 94-99 DOD Chronological File (1964-1996)

NHC Record Collection 3-1 – Navy RDT&E Management

Box 100-101 RDT&E Management/Acquisition Guides (1964-1993)

Box 101 RDT&E Navy Industrial Fund (NIF) Activities (1976-1982)

Box 102-112 Naval Research Advisory Committee (NRAC), 1959-1996

Box 113-115 Five-Year Defense Program/Justification of Estimates Files, 

1966-1980

Box 116-122 Chronological Files (1963-1993)

Box 122-125 Navy Laboratory Coordinating Group (NLCCG), Navy Laboratory/Center Oversight Council (NLCOC)

NHC Record Collection 3-2 – DON R&D Center and Laboratory Reports

Box 126 Corporate/Long Range Plans/Objectives (1977-1986)

Box 127-150 Independent Research/Independent Exploratory Development 

(IR/IED) Reports (1969-1987)

NHC Record Collection 4 – Naval Material Command, Office of the Chief of 

Naval Research, Space and Naval Warfare Systems Command Organization and 

Administrative Files

Box 151-157 Laboratory/Center Management Briefs (1975-1991)

Box 157-162 Civilian Executive Research Board (CERB)

Box 163-176 Commanding Officer/Technical Director (CO/TD) Meetings 

(1975-1989)

Box 177-194 Realignments, Closures, Consolidations, BRAC (1966-1995)

Box 195-207 Judge Advocate General (JAG), 1983-1990

Box 208-210 Senior Executive Service (SES)

Box 211-215 RDT&E Center Personnel Data

Box 216-221 Biographical Files of Laboratory/Center Personnel
Appendix A 165

NHC Record Collection 5 – Navy Research and Development Centers

Box 222-292 David Taylor Research Center (DTRC), Experimental Model 

Basin (EMB), U.S. Naval Engineering Experiment Stations (EES), Naval Ship Research and Development Center 

(NSRDC)

Box 293-307 Naval Air Development Center (NADC)

Box 308-314 Naval Coastal Systems Center (NCSC)

Box 315-334 Naval Ocean Systems Center (NOSC)

Box 335-344 Naval Personnel Research and Development Center (NPRDC)

Box 345-364 Naval Surface Warfare Center (NSWC), Naval Weapons 

Laboratory (NWL), Naval Ordnance Laboratory (NOL)

Box 365-377 Naval Underwater Systems Center (NUSC)

Box 378-408 Naval Weapons Center (NWC), Naval Ordnance Test Station 

(NOTS)

Box 409-419 R&D Centers General Chronological Files (1950-1990)

Box 420A Naval Warfare Centers

NHC Record Collection 6 – Other Naval Shore Establishments

Box 421-433 Various Shore Establishments

Box 434-460 Naval Material Command (NMC) – includes speeches from 

many Chiefs of Naval Material

Box 461-463 Various Shore Establishments

Box 463-466 Naval Research Laboratory (NRL)

Box 467-471 Various Shore Establishments

Box 472-481 Office of Naval Research (ONR) – includes Technical Reviews of IR/IED Programs

Box 482 Pacific Missile Test Center

Box 483-490 Space and Naval Warfare Systems Command (SPAWAR)
166 Appendix A

Box 491-548 DNL/DLP Reading File (1966-1990)

Box 549-641 DNL Subject File – more than 100 subjects, including Acquisition, Closures, Consolidation, Desert Shield/Storm, Empress, FOSAD, GOGO/GOCO, High-Speed Anti-Radiation 

Missile (HARM), Laboratory Demonstration Program (LDP), 

Managing to Payroll (MTP), Navy Industrial Fund (NIF), 

Navy Science Assistance Program (NSAP), STILO, SEACON, Small Business Innovation Research (SBIR), Strategic 

Planning, Technology Transfer, UNDEX

Box 642-659 DNL Reading File (1979-1985)

Box 660-671 Navy Science and Technical Employee Program (NSTEP)

Box 672-678 Laboratory Programs Division Subject File

Box 679-688 Originator Files – C.E. Biele, J.A. Corrado, G.R. Gay, Robert 

Hillyer, Al Himes, William Hunt, Mike Marshall, Gary Morton, Z.L. Newcomb, D.F. Parrish, James Probus, Jerry Reed, 

Susan Sampson, Edward Tunstall, L.P. Woodburn

Box 689-713 DNL Resources, Plans, and Programs Division – includes 

Series Correspondence, Memoranda, REFLEX, R&D Center 

Personnel Ceiling and Hiring Information, NIF

Box 713-717 DNL E-mail Files (1985-1987)

Box 718-744 DNL Laboratory Desk Officer Files (Contact Points Between 

DNL/R&D Centers)

Box 745-772 DNL Chronological Files (1962-1986)

Box 773-819 NIF, System/Standard Automated Financial System (STAFS)

Box 820-831 R&D Centers Operations Files

Box 832 United States Naval Academy

NHC Record Collection 7 – Reports

Box 833-867 (1945-1994)
Appendix A 167

NHC Record Collection 8 – Oral Histories

Box 868-887

NHC Record Collection 9 – Other Government Agencies

Box 888-890

NHC Record Collection 10 – Non-Government Research Organizations

Box 891-911

NHC Record Collection 11 – Individual Contributions

Box 912-914

NHC Record Collection 12 – Personal Papers

Box 915-1024 Includes Al Christman, Robert Hillyer, Gerald Johnson, 

Marvin Lasky, Joel Lawson, William McLean, Gary Morton, 

David Parrish, Alan Powell, James Probus, Gerald Schiefer, 

David Taylor, L.T.E. Thompson

NHC Record Collection 13 – DNL History Office

Box 1025-1032

NHC Papers of Captain Joseph P. Kelly

Box 1-29

NHC Records of Waldo Lyon and the Arctic Submarine Laboratory

Box 1-155 Includes 1,544-item fully searchable finding guide 

NHC Records of the Vietnam Laboratory Assistance Program (VLAP), Naval 

Research and Development Unit Vietnam (NRDU), Navy Science Assistance 

Program (NSAP)

Box 1-100 In processing

The Navy Working Capital Fund (NWCF, formerly known as the Defense 

Business Operations Fund, or DBOF, and the Navy Industrial Fund, or NIF) is 

the Navy component of a DOD financial management and cost-distribution system similar to that employed by private industry. The general concept, known as 

“industrial funding,” is applied under a number of different titles in the Federal 

Government. Under industrial funding, performing activities (such as laboratories) charge customers (PMs, SYSCOMs, other agencies) not only for the direct 

cost of providing a product or service but also for a proportional share of all 

overhead costs (such as support services, utilities, buildings and grounds maintenance) not directly related to the specific task being funded. WCF activities 

receive no direct funding from Congress or their Service headquarters, and their 

customers are under no obligation to fund them.

Most of the larger Navy RDT&E activities have worked under some form 

of industrial funding since the 1950s (prior to DBOF, the labs operated under 

NIF). The Navy was an early proponent of industrial funding mechanisms in 

the Federal Government because its technical centers have always supported a 

number of different Service customers rather than being totally beholden to a 

single headquarters command. Industrial funding fairly and equitably distributed 

overhead costs to all customers.

This arrangement has a number of consequences, both positive and negative. Because customers can choose who performs needed work, competition 

permeates the culture of Navy technical activities. In addition, the requirement 

to identify and properly distribute all costs provides a high level of cost visibility 

and also forces performers to reduce costs wherever possible. In other words, the 

DON and DOD can rather accurately account for the price of doing business at 

a WCF activity. This, in turn, helps measure somewhat objectively an organization’s efficiency in the use of resources.

On the other hand, most Army and Air Force labs (with the significant 

exception of the Army Corps of Engineers labs) receive some or all of their 

funding as direct appropriations. They also charge customers for little or none of 

the overhead expenses, because generally host commands, funded from different accounts, provide them free support services. These differences significantly 

affect what R&D work the Service labs do, how much they charge, and whether 

the “playing field” on which they operate can be truly leveled so their efforts can 

Appendix B

A Brief Overview of the

Navy’s Industrial Funding
170 Appendix B

be integrated. The differences also create many situations in which it appears, at 

least to those unfamiliar with the systems, that the Air Force or Army can do the 

same work as the Navy for a significantly lower price. And while an Air Force 

or Army lab can frequently charge a customer less for a given job, the arrangements obscure the total cost to the taxpayer. In fact, Congress has often lamented 

the fact that the Services (or at least the Army and Air Force) cannot identify the 

true costs of R&D.

Also, although designed to replicate industrial practice, DOD WCF 

procedures include some inequities. For example, new facility construction 

over certain dollar limits must be funded from the MILCON budget and cannot 

employ funds derived from the depreciation of existing facilities (which is industrial practice). Another example: most Navy WCF activities have generally been 

required to employ “stabilized rates,” or work-year rates established about a 

year and a half in advance in an attempt to maintain both the predictability of the 

costs charged to customers and a zero profit/loss. Service comptrollers approve 

these rates, which cannot be modified later to accommodate fact-of-life changes. 

As a result, charges to a customer may misrepresent the true cost of providing 

the service. A third example: military personnel assigned to WCF activities are 

usually paid out of the Military Personnel (MilPers) budget rather than by the 

activity. If the WCF activity reimburses MilPers, it usually must do so based 

on a comptroller-established formula, not on the actual cost of employing the 

uniformed personnel.

As discussed in Chapter Five, the LQIP Financial Subpanel’s “Recommendations for a Common Financial Approach at the DOD Laboratories” (April 

1996) and GAO’s “Defense Acquisition Infrastructure: Changes in RDT&E 

Laboratories and Centers” (September 1996, available online) contain straightforward summaries of these differences. A later draft statement, “Report on the 

Evaluation of the Potential for Financing DOD Research Development Test and 

Evaluation Facilities Through a Working Capital Financial System” (August 

2000), provides a more detailed discussion.

Both the NRL and NHC archives contain a wealth of information on funding of the Navy’s technical activities. The latter repository, for example, houses a 

complete set of the NIF management records of the R&D centers in the 1980s.
Acronyms

A&M Acquisition and Modernization

A/E&C Architecture/Engineering and Construction

ACAT Acquisition Category

AFOSR Air Force Office of Scientific Research

ARL Army Research Laboratory

ARO Army Research Office

ASN Assistant Secretary of the Navy

ASN(RDA, RD&A) Assistant Secretary of the Navy for Research,

Development and Acquisition

ASN(RE&S) Assistant Secretary of the Navy for Research,

Engineering and Systems

ATTD Advanced Technology Transition Demonstration

BSAT (BRAC) Base Structure Analysis Team

BSEC (BRAC) Base Structure and Evaluation Committee

BRAC Base Realignment and Closure

C3I Command, Control, Communications and Intelligence

C4I Command, Control, Communications, Computing

and Intelligence

CA Commercial Activities

CAS Contract Administrative Services

CAST Cost Accounting for Science and Technology

CBMT Cost-Based Management Tool

CCC Commission on Consolidation and Closure

CINC Commander in Chief

CMP Civilian Materiel Professional

CNA Center for Naval Analyses

CNR Chief of Naval Research

COBRA Cost of Base Realignment Actions

COCO Contractor-Owned, Contractor-Operated

CORM Commission on Roles and Missions

CRADA Cooperative Research and Development Agreement

CRS Congressional Research Service

CSF Common Support Function

DAB Defense Acquisition Board

DAE Defense Acquisition Executive

DBOF Defense Business Operations Fund

DCAA Defense Contract Auditing Agency

DCMA Defense Contract Management Agency

DDR&E Director of Defense Research and Engineering
172 Acronyms

DEPSECDEF Deputy Secretary of Defense

DMR Defense Management Review

DMRD Defense Management Review Decision

DNL Director of Navy Laboratories

DOD Department of Defense

DOE Department of Energy

DON Department of the Navy

DPR Defense Performance Review

DRI Defense Reform Initiative

DRID Defense Reform Initiative Directive

DSB Defense Science Board

DTP Defense Technology Plan

DTRC David Taylor Research Center

ED Exploratory Development

ESOP Employee Stock Ownership Plan

FAC Federal Advisory Commission

FAR Federal Acquisition Regulation

FCCSET Federal Coordinating Council for Science,

Engineering and Technology

FEPCA Federal Employees Pay Comparability Act

FFRDC Federally Funded Research and Development Center

FTE Full-Time Equivalent

GAO General Accounting Office, now Government

Accountability Office

GOCA Government-Owned, Contractor-Assisted

GOCO Government-Owned, Contractor-Operated

GOGO Government-Owned, Government-Operated

GPRA Government Performance and Results Act

HCA Head of Contract Activity

ICP (BRAC) Internal Control Plan

IDA Institute for Defense Analyses

ILIR In-House Laboratory Independent Research

IPA Intergovernmental Personnel Act (1971)

IR&D, IRAD Independent Research and Development

ISE In-Service Engineering

IT Information Technology

JCS Joint Chiefs of Staff

JCSG (BRAC) Joint Cross-Service Group

JDL Joint Directors of Laboratories

JLC Joint Logistics Commanders

JMA/SA (Navy) Joint Mission Area/Support Area

JRMB Joint Requirements Management Board

LDP Laboratory Demonstration Program

LIC Laboratory Infrastructure Capability

LJCSG Laboratory Joint Cross Service Group

LQIP Laboratory Quality Improvement Program
Acronyms 173

MANTECH Navy Manufacturing Technology Program

MILCON Military Construction

MIS Management Information System

MRTF Management Review Task Force

MRTFB Major Range Test Facility Base

NAE Navy Acquisition Executive

NAVAIR Naval Air Systems Command

NAVELEX Naval Electronics Systems Command

NAVMAT Naval Material Command

NAVSEA Naval Sea Systems Command

NAWC Naval Air Warfare Center

NBC Nuclear-Biological-Chemical

NCCOSC Naval Command, Control, and Ocean

Surveillance Center

NDAA National Defense Authorization Act

NESEC Naval Electronics Systems Engineering Center

NHC Naval Historical Center

NIF Navy Industrial Fund

NLCCG Navy Laboratory/Center Coordinating Group

NLCOC Navy Laboratory/Center Oversight Council

NMCI Navy/Marine Corps Intranet

NORDA Naval Ocean Research and Development Activity

NOSC Naval Ocean Systems Center

NPR National Performance Review

NRAC Naval Research Advisory Committee

NRC National Research Council

NRL Naval Research Laboratory

NSAP Navy Science Assistance Program

NSTC National Science and Technology Council

NSWC Naval Surface Warfare Center

NUSC Naval Undersea Systems Center

NUWC Naval Undersea Warfare Center

NWC Naval Weapons Center

O&M, O&MN Operations and Maintenance (Navy)

OCNR Office of the Chief of Naval Research

OMB, OM&B Office of Management and Budget

ONR Office of Naval Research

ONT Office of Naval Technology

OPM Office of Personnel Management

OSTP Office of Science and Technology Policy

OTA Office of Technology Assessment

PBD Program Budget Decision

PEO Program Executive Officer

PM Program Manager

POM Program Objective Memorandum

PPBS Planning, Programming and Budgeting System
174 Acronyms

PPP Public-Private Partnerships; Priority

Placement Program

PPV Public/Private Venture

PRD Presidential Review Directive

QDR Quadrennial Defense Review

R&D Research and Development

RBA Revolution in Business Affairs

RDT&E Research, Development, Test and Evaluation

RIF Reduction in Force

RII Re-Investment and Infrastructure (group)

S&Es Scientists and Engineers

S&T Science and Technology

SBIR Small Business Innovative Research

SA Support Area

SAE Service Acquisition Executive

SECDEF Secretary of Defense

SES Senior Executive Service

SPAWAR Space and Naval Warfare Systems Command

SSC SPAWAR Systems Center

SSG Senior Steering Group

STIG Space Technology Integration Group

SYSCOM Systems Command

T&E Test and Evaluation

TAP Technology Area Plan

TARA Technology Area Review and Assessment

TOA Total Obligational Authority

UARC University Affiliated Research Center

USD(A) Undersecretary of Defense for Acquisition

USD(A&T) Undersecretary of Defense for Acquisition

and Technology

USD(AT&L) Undersecretary of Defense for Acquisition,

Technology and Logistics

USD(P&R) Undersecretary of Defense for Personnel

and Readiness

USDRE Undersecretary of Defense for Research and

Engineering (now DDR&E)

VCNO Vice Chief of Naval Operations

WCF Working Capital Fund

WSA&E Warfare Systems Architecture and Engineering
Index

A-76 (see OMB Circular A-76)

Aberdeen Test Center, 136

Academia (see Industry-Academia)

Acquisition and Modernization (A&M), 69

Acquisition Category (ACAT), 28

Activity-Based Costing (ABC), 2, 82, 89, 118, 130

Adolph, Charles “Pete,” 37

Advanced Technology Transition Demonstration (ATTD), 17-18, 29, 125(n)

Air Force Laboratories, 2, 5, 34, 80, 117, 126-133, 134, Appendix B

Air Force Laboratory, Space Vehicles Directorate, 136

Air Force Office of Scientific Research (AFOSR), 75

Alternative 1/Alternative 2 Decision, 35-36

Alternative Dispute Resolution, 2

Alternative Governance, 6, 11, 21, 79(n), 130, 138

Ameritech, 112

Anand, Davinder, 138

Annuitant Pay, 98

Armed Forces Medical Research and Development Agency, 80

Army Corps of Engineers, 92

Army Laboratories, 2, 34, 80, 117, 126-133, 134, Appendix B

Army Logistics Civil Augmentation Program, 113

Army Medical Research Laboratory and Materiel Command, 136

Army Research Office (ARO), 75

Arnold Engineering Development Center, 136

Aspen, Les, 54

Assistant Commandant, Marine Corps, 44, 142

Assistant Secretary of the Navy for Installations and Environment (ASN/I&E), 

27

Assistant Secretary of the Navy for Research, Development and Acquisition

(ASN/RDA), 27, 28, 31, 33, 43, 44, 94, 112, 121(n), 122, 123, 130, 142-143

Assistant Secretary of the Navy for Research, Engineering and Systems

(ASN/RE&S), 27, 32

Assistant Secretary of the Navy for Shipbuilding and Logistics (ASN/S&L), 27

Atwood, Donald, 25, 35, 36, 44, 46, 47, 134

Base Realignment and Closure (BRAC), 4, 5, 8, 75, 96-99, 103, 126, 127, 139

BRAC Selection Criteria, 38, 39, 49(n), 50, 51, 53, 55

BRAC 1988, 40, 41, 59, 63

BRAC 1991, 8, 11, 35, 37-41, 46, 47, 49, 50, 51, 52, 53, 59, 62, 63

BRAC 1993, 8, 40, Chapter Two
176 Index

BRAC 1995, 8, 40, Chapter Two, 67, 74, 77, 80, 90

BRAC 2005, 97

Base Structure Analysis Team (BSAT), 51-52, 56

Base Structure Data Base, 56, 63

Base Structure Evaluation Committee(BSEC), 51-52, 56, 58, 60, 63

and BRAC Selection Process, 56-57

Bell Report, 22

Berlin Wall, 25, 46

Best Practices, 33, 66, 73, 74, 90, 99

Biomedical R&D, 81

Blatstein, Dr. Ira, 125-126

Browning, Robert, 65

Budget Categories, 14-16, 17, 20(n), 27, 28, 80, 109, 123, 125

Budgets (see Funding)

Bundling (Contracts), 89

Bureau of the Budget, 83, 106

Bureaucratic/Regulatory Encumbrances, 7, 11, 15, 16, 35, 107, 114, 125, 129, 

137, 142, 143

Bush, President George H.W., 7, 11, 19, 24, 46, 47

Business Logistics, 88

Business Process Reengineering, 95

Business Services, 88

Cann, Gerald, 33, 34, 43, 142-143

Center for Naval Analyses (CNA), 33, 67, 77, 85-87, 101, 104-109, 111-114

Centers of Excellence for Artificial Intelligence, 36

Cheney, Richard, 8, 11, 24, 26, 35, 41, 51

Chief of Naval Material (CNM), 16, 44

Chief of Naval Operations (CNO), 27, 93, 95, 121(n), 123, 125, 142

Chief of Naval Research (CNR), 16, 27, 44, 78, 94, 121(n), 125, 126(n), 142-143

China Lake Personnel Demonstration Project (See Personnel Demonstration 

Project)

Civil Service Reform Act (1978), 13, 91

Civil Service System, 77, 81, 98, 103

Civilian Materiel Professional (CMP) Program, 28

Clare, Thomas, 120-122, 124, 126, 128, 129

Clemins, Admiral Archie, 94-95

Clinton, President William J., 8, 67, 79, 81, 118, 127, 134

Coffey, Dr. Timothy, 84(n), 93, 138

Cohen, William, 67, 97-99, 130

Colvard, Dr. James, 31, 69(n), 104, 105, 123

Command, Control, Communication and Intelligence (C3I), 33, 71

Command, Control, Communication, Computing and Intelligence (C4I), 60, 81

Commandant, Marine Corps, 121(n)

Commercial Activities (CAs), 8, 67, 83-85, 93, 98, 104, 110-114

Commercial Activities Working Group, 94

Commercial Airline Maintenance, 88
Index 177

Commercial Service Agreements, 136

Commission on Roles and Missions of the Armed Forces (CORM), 77, 82-85, 

101, 104, 106-107, 112-114, 124

Common Financial System, 126-133

Common Support Functions (CSFs), 80

Commonwealth Edison, 112

Competency Aligned Organization (CAO), 2, 77(n), 115

Competition (as a source of savings; see also public/private competitions), 86-

87, 98, 110-115

Congress (U.S.), 1, 4, 5, 8, 9, 11, 15, 20, 21, 24, 29, 30, 35, 38, 41, 49, 50, 51, 

52, 53, 54, 65, 67, 81, 82, 83, 84, 85, 89, 92, 96, 97, 98, 99, 117, 118, 124, 

125, 126, 134, 135, 136, 139, 143

Congressional Research Service, 29, 37-38, 138, 141

Consolidation/Closure (see also BRAC), 7, 8, 9, 11, 25, 26, 30, 32-47, 73, 85-86, 

94, 97, 98, 131

Contract Administration, 99, 111, 119, 125

Contract Administrative Services (CAS), 26

Contracting/Outsourcing, 4, 6, 7, 8, 9, 22-23, Chapter Three-Four, 120, 124, 127, 

143

Contractor-Owned, Contractor-Operated Laboratories (COCOs), 22, 138

Cooperative Research and Development Agreements (CRADAs), 69, 79, 136

Coopers and Lybrand, 106

Coordination, 11, 21, 28-29, 43, 75

Core Capabilities/Competencies, 66, 79, 88, 90, 97, 98, 99, 102, 103, 130, 133

Core Equities, 95

Corporate Memory, 6, 44, 71-72, 76, 102, 122, 123, 137

Cost Accounting for Science and Technology (CAST), 129-130

Cost as Independent Variable, 2

Cost-Based Management Tool (CBMT), 118, 130-132, 139-140

Cost of Base Realignment Actions (COBRA) Model, 39, 40, 50, 52, 57, 58(n), 

60, 61, 62, 63

Cost Visibility/Comparability, 117, 126-133

Critical Mass, 39, 42, 43, 69, 71

Cross-Service Coordination, 19, 20, 33, 56, 58, 68, 73, 77, 81, 96, 98, 117, 127, 

131

Cruise Missiles, 19

Customer Service Centers, 2

Davis, Lance, 130

Davis-Bacon Act, 120

Defense Acquisition Board (DAB), 29

Defense Acquisition Executive (DAE), 15

Defense Advanced Research Projects Agency (DARPA), 91

Defense Base Closure and Realignment Commission, 8, 35, 37, 38, 40-41, 47, 

Chapter Two

Defense Business Operations Fund (DBOF), 85, 86, 107, 112, 120, 121, 123, 

125, 126, 127, 130, 167-168
178 Index

Defense Contract Audit Agency, 83

Defense Contract Management Agency, 26

Defense Contract Management Command, 83

Defense Conversion, 81-82

Defense Critical Technologies Plan, 36

Defense Management Council, 97

Defense Management Review, 8, 11, 24-33, 35, 37, 38, 46, 127, 143

Defense Management Review Directive (DMRD) 922, 8, 11, 25, 26, 32, 33, 34, 

36, 38, 44, 46, 47, 79, 126, 134

Defense Reform Initiative (DRI), 67, 118, 130

DRI Directives (DRIDs), 98, 130, 139

Defense Science Board, 12, 17(n), 22, 29, 30, 35, 67-70, 77, 88-93, 101, 103, 

104, 107, 108, 112-114, 136, 137, 138, 139, 141

Defense Senior Scientists Council, 68

Defense Technology Plan (DTP), 79

Department of Defense Comptroller, 52

Department of Defense Inspector General, 52

Depot Maintenance, 54, 58, 85, 89

DeSavage, Bernard, 62

Deutch, John, 67

Dilworth, Guy, 62

Director, Defense Research and Engineering (DDR&E), 19, 20, 28, 34, 35, 37, 

44, 47, 68, 74, 77, 79, 80, 91, 110, 126(n), 130, 134, 136, 139

Director of Navy Laboratories (DNL), 4, 16-17, 32, 33, 40, 44, 110, 117, 118-

120, 142-143

Directors/Commanders (Laboratory), 6, 13, 18, 22, 28, 30, 35, 43, 67, 69, 73, 76, 

77, 78, 79, 118, 127, 128, 129, 132, 134, 135, 136

Donegan, RADM John J., 115

Dorman, Dr. Craig, 63(n), 70, 71, 80(n), 127

Downsizing, 53, 81, 91, 94, 96, 101, 102-103, 114, 122, 123, 124, 125, 133, 137

Negative Effects of, 102-103

Drug Testing, 98

Dual-Use Technologies, 22, 28, 74, 75(n), 76, 81-82

Duplication of Effort, 8, 16, 32, 33, 36, 39, 43, 46, 73, 81, 96, 97, 102, 122, 130

Eisenhower, President Dwight, 106

Employee Stock Ownership Plans (ESOPs), 67

Energetics, 81

Environmental Concerns, 39, 50, 52, 53, 54, 57, 75, 76, 80, 81

Excess Capacity, 38, 49, 51, 52, 53, 54, 55, 56-57, 60, 73, 97-99, 103

Facilities/Equipment, 6, 11, 22, 28, 30, 35, 37, 38, 41, 42(n), 84, 91, 120, 134-

135, 136, 142

Facilitization, 85, 107

Family Housing Construction, 98

Federal Acquisition Regulations (FARs), 83, 92

Federal Advisory Commission (FAC) on Consolidation and Closure of Defense

Research Laboratories (Adolph Commission), 8, 37, 38, 41-44, 47, 75
Index 179

Federal Coordinating Council for Science, Engineering, and Technology 

(FCCSET), 14, 87

Federal Employees Pay Comparability Act (FEPCA), 43

Federally Funded Research and Development Centers (FFRDCs), 6, 21, 30, 76, 

78, 90, 92, 109, 138-139

Federal Prison Industries, 138

Federated Laboratories, 70

Force Structure Plan, 38, 40, 49, 51, 53

Full-spectrum Capabilities, 24, 29, 33-34, 50, 60, 71, 76, 127

Funding/Budgets, 2, 4-9, 11, 12, 13, 14, 15, 17, 20, 21, 25, 28, 30, 33, 43, 57, 58, 

72, 80, 89, 90, 91, 103, 109-110, 121, 125-133, 136

Gaffney, Captain/Admiral Paul, 34, 78

Galvin, Robert, 124

Gansler, Jacques, 82

Garrett, Lawrence, 35, 47

General Accounting Office/Government Accountability Office (GAO), 8, 39-41, 

49, 51, 52, 53, 55, 56, 58, 63, 80, 101, 111, 112, 113, 139

Globalization, 21, 22, 66, 91

Goldsmith, Stephen, 114

Goldwater-Nichols Defense Reorganization Act, 7, 11, 24, 46, 125, 143

Gorbachev, Mikhail, 47

Government-Owned, Contractor-Assisted Labs (GOCAs), 22, 138

Government-Owned, Contractor-Operated Labs (GOCOs), 6, 21, 22, 29, 30, 37, 

41, 42, 67, 77, 79, 91, 138

Government Owned Corporations, 138

Government Performance and Results Act (GPRA), 68, 77, 79(n)

Head Contract Activity (HCA), 119

Hiring and Retention, 6, 11, 12, 13, 18, 21, 22, 29, 30, 41, 79, 90, 91, 96, 103, 

123, 125, 135-138, 142

Honest Broker, 27, 76, 104

Hoover Commission, 105-106

House Armed Services Committee, 83

Hughes Electronics, 112

Human Resource Management, 125, 126, 134, 138

Independent Research and Development (IR&D), 21, 75

Indianapolis, 101, 114

Industrial Funding (see also DBOF, Funding), 167-168

Industrial Policy Committee, 21

Industry-Academia Interaction with Laboratories, 4, 6, 12, 14, 20-21, 24, 42-43, 

46, 68-70, 71, 74, 75, 77, 79, 90, 92, 109, 125, 127, 131, 135-136

Information Technology (IT), 66, 84(n), 88, 90, 98, 106

Infrared Countermeasures, 122

Infrastructure Reduction (post-BRAC), 96-98

Inherently Governmental Functions, 7, 8, 22-23, 67, 69, 71, 76, 83, 86-87, 88, 

89, 94, 95, 103, 104, 113, 120, 141

In-House Laboratory Independent Research (ILIR), 11, 13-14, 23, 43, 69, 78, 
180 Index

125(n)

In-House Versus Out-of-House R&D (see also contracting), 33, 124, 125

In-Service Engineering, 3, 5, 59, 73, 80

Institute for Defense Analysis (IDA), 19-20, 36, 67

Intellectual Property (IP), 92, 125, 136

Intergovernmental Personnel Act (IPA), 91, 107

Internal Control Plan (ICP), 52, 56

Investment Process (for S&T), 109-110

Joint Chiefs of Staff (JCS), 60, 61, 92

Joint Cross-Service Groups (JCSGs) 4, 56, 58, 60(n), 74(n), 80

Joint Directors of Laboratories (JDL) (see also Tri-Service Reliance), 36, 47, 

73(n), 79(n), 142

Joint Logistics Commanders (JLC), 47, 142

Joint Mission Area/Support Area (JMA/SA), 78

Joint Requirements Management Board, 15-16

Jones, Dr. Anita, 73(n)

Kavetsky, Robert, 138

Laboratory Infrastructure Capabilities (LIC) Study, 70-74, 110

Labor-Management Partnership Councils, 2

Laboratories, primary reasons for, 6, 22-24, 42, 44, 71-72, 76

Laboratory Demonstration Program (LDP), 8, 9, 11, 17, 18, 19, 29, 35, 37, 38, 

41, 43, 46, 68, 79, 97, 118, 126, 127, 134-135, 136, 137, 143

Laboratory Financial Management Integrated Product Team (IPT), 130

Laboratory Quality Improvement Program (LQIP), 9, 68, 79, 97, 118, 127, 134-

135, 136, 137

LQIP Financial Subpanel, 118, 127-130, 139

Lackie, Kenneth “Skip,” 138

Lasers, 19

Lehman, John, 16, 31, 142

Lockheed Martin, 112

Long-Term Research/Investment, 11, 28, 29, 30, 125

Los Alamos National Laboratory, 21

Major Range and Test Facility Base (MRTFB), 97, 132

Management Information System (MIS), 68

Management of Leased Property, 98

Management Review Task Force (MRTF), 25-28, 46

Manufacturing Technology (MANTECH), 122-123

Marshall, Michael, 110-112, 137-138

Materiel Management, 89

McNamara, Robert, 106

Metrics (R&D), 79(n)

Microelectronics, 19

Military Construction (MILCON), 22, 30, 68, 118, 120, 129, 134

Military Retiree Pay, 98

Miller, RADM William, 45

Ministry of Defence (Great Britain), 111
Index 181

Missions/Roles/Functions, 11, 12, 23, 30, 33, 36, 37, 38, 41, 67, 68, 70, 73, 74, 

75, 79, 81, 102, 106, 120, 126, 138

Mission Purification, 39

Modeling and Simulation, 90, 125(n)

Modernization, 65, 66, 67, 68, 71, 77, 79, 81, 84, 88, 89, 90, 98, 99, 118

National Academy of Engineering, 92

National Academy of Science, 92

National Defense Authorization Act (NDAA), 1979, 83

NDAA 1980, 84

NDAA 1990, 8, 37, 39, 47

NDAA 1991, 37, 47

NDAA 1996, 65

Section 277, 90, 96, 118, 130, 139

NDAA 1998 Section 912, 65, 92(n), 97, 98, 130, 131, 135, 139-140

Section 2824, 98

NDAA 1999 Section 246 Pilot Program, 9, 118, 135, 137

Section 907, 118, 131, 140

NDAA 2000 Section 245 Pilot Program, 136

Section 1107, 137

NDAA 2001 Section 1113, 1114, and 1151-1153, 137

National Performance Review, 9, 118, 127, 130, 134

National Research Council (NRC), 78

National Science and Technology Council Presidential Review Directive (NSTC/

PRD) #1, 70-81, 96, 102, 110, 118, 124(n), 139

National Stockpile Sales, 98

Naval Air Development Center (NADC), 40, 49, 62, 143

Naval Air Systems Command (NAVAIR), 44, 77

Naval Air Warfare Center (NAWC), 5, 44, 115, 136

NAWC China Lake, 18, 60, 94

NAWC Indianapolis, 58, 59, 62, 90, 113-114

NAWC Lakehurst, 58, 59, 62

NAWC Patuxent River, 94, 143

NAWC Warminster, 58, 59, 122

Naval Audit Service, 51, 56

Naval Coastal Systems Center (NCSC), 40

Naval Command, Control, and Ocean Surveillance Center (NCCOSC), 44, 59, 

94, 115

Naval Electronics Systems Command (NAVELEX), 16

Naval Electronics Systems Engineering Centers (NESEC), 53, 55

Naval Historical Center (NHC), Operational and RDT&E Archives, 1, 3, 78(n), 

160-165

Naval Institute Proceedings, 105-106

Naval Material Command (NAVMAT), 16, 27, 31, 142

Naval Ocean Research and Development Activity (NORDA), 16

Naval Ocean Systems Center (NOSC), 13, 18

Naval Outsourcing and Privatization Programs Division, 67, 93
182 Index

Naval Research Advisory Committee (NRAC), 78, 82, 117, 121-126, 128, 143

Naval Research Laboratory (NRL), 5, 6, 9, 12, 16, 33, 35, 44, 47, 78, 84(n), 92, 

93, 94, 115, 125, 136, 138, 142-143

Underwater Sound Reference Detachment, Orlando, 59, 61

NRL Archive, 1, 2, 3, 8, 49(n), 77(n), 79(n), 93, 96(n), 98(n), 115(n), 118(n), 

124(n), 126(n), 131(n), 138, 155-159

Naval Reserve Centers, 51

Naval Sea Systems Command (NAVSEA), 44, 53, 55

Naval Surface Warfare Center (NSWC), 5, 33, 40, 44, 45, 49, 50, 121(n)

NSWC Annapolis, 53, 55, 59

NSWC Carderock, 53, 55, 94, 122

NSWC Crane, 94

NSWC Dahlgren, 45, 50, 53, 55, 94, 120, 122, 125, 143

NSWC Indian Head, 55, 143

NSWC Louisville, 58, 59, 62

NSWC Panama City, 55

NSWC Port Hueneme, 94

NSWC White Oak, 49-50, 53, 55, 57, 58, 60, 61-63, 143

Naval Undersea Warfare Center (NUWC), 5, 44, 143

NUWC Keyport, 86-87, 94, 101, 108-109

NUWC Newport, 94

Naval Underwater Systems Center, 59, 61, 62

Naval Weapons Center (NWC), 13, 18

Navy Acquisition Executive (NAE), 26, 27

Navy Laboratories, defined, 3-6

Navy Laboratory/Center Coordinating Group (NLCCG), 5, 9, 32(n), 44, 101, 

130-131, 142

Navy Laboratory/Center Oversight Council (NLCOC), 44, 142-143

Navy-Marine Corps Intranet (NMCI), 2, 96

Navy Science Assistance Program (NSAP), 78(n)

Navy Working Capital Fund (See Working Capital Fund)

Nemfakos, Charles, 133

Northrup Grumman, 112

O’Deen, Philip, 88

Office of Economic Adjustment, 54

Office of Global Technology Acquisition, 92

Office of Management and Budget (OMB), 13, 14, 83-84, 110-111, 118

OMB Circular A-76 (see also public/private competitions), 67, 83-85, 87, 89, 93, 

94, 95, 101, 105, 110-114

Office of Naval Research (ONR), 14, 33, 75, 78, 91, 94, 121(n), 124-125

Office of Naval Technology (ONT), 14, 32, 125

Office of Navy Test and Evaluation and Technology Requirements (N091), 124

Office of Personnel Management (OPM), 118, 134, 135, 137

Office of Science and Technology Policy (OSTP), 81, 96

Office of Technology Assessment (OTA), 21-24, 30, 71, 82, 139, 141

Office of the Secretary of Defense (OSD), 17, 20, 24, 25, 27, 28, 29, 32, 33, 34, 
Index 183

35, 36, 37, 54, 58, 60, 62, 67, 68, 89, 91, 93, 118, 129, 130, 131, 132, 135, 

137, 142

Omnibus (multifunctional) Contract, 109

Packard Commissions, 7, 11, 12-17, 18, 25, 26, 27, 30, 42, 43, 46, 92, 143

Perry, William, 42

Personnel/Personnel Reductions/Personnel System, 6, 8, 9, 11, 12, 14, 24, 29, 

30, 38, 39, 41, 43, 52, 56, 62, 66, 67, 77, 90, 91, 94, 98, 102, 107, 121, 123, 

130, 136, 138

Personnel Ceilings, 12, 14

Personnel Demonstration Project (“China Lake Demo”), 2-3, 16, 17, 18, 24, 25, 

30, 33, 35, 81, 134

Personnel Placement Program, 126

Planning, Programming and Budgeting System (PPBS), 78

Presidential Decision Directive PDD/NSTC-5, 81(n)

Priority Placement Program, 136

Privatization, 61, 62, 66, 88, 90, 98, 112-114

Proctor, James, 62

Procurement, 6, 7, 8, 11, 14, 15, 16, 21, 25, 29, 30, 35, 37, 73, 88, 104, 118, 134

Program Budget Decision (PBD) 411C, 133, 140

Program Executive Officer (PEO), 15-16, 25-28, 31, 78, 112, 122, 123

Program Manager (PM), 15-16, 25, 74, 122, 123

Program Objectives Memorandum (POM), 37, 68, 74, 78, 79

Prototyping, 16, 18, 25, 28, 109, 122, 125(n), 136

Public Law (P.L) 100-526, 37, 51

P.L. 101-510, 37, 47, 49, 50, 51, 58

P.L. 313, 91

Public/Private Competitions (see also OMB Circular A-76), 9, 83-85, 89, 101

Public/Private Partnerships (PPPs), 62, 66, 138

“Purple” (DOD) Laboratories, 34, 47, 76

Quadrennial Defense Review (QDR), 97

Quality Management Boards, 2

RAND Corporation, 111

Rate Stabilization, 121, 123, 128

Reagan, President Ronald, 12, 14, 19, 25

Recapitalization, 136

Reduction in Force (RIF), 81, 114

Redundancy (see Duplication of Effort)

Reengineering, 82, 96, 99, 118, 131

Regionalization, 2, 95, 96, 98

Reinvention Laboratories, 77, 79, 127

Re-Investment and Infrastructure (RII), 2, 93-96, 143

Revolution in Business Affairs (RBA), 65-66, 77, 84, 96, 99

Revolution in Military Affairs (RMA), 65, 99

Rightsourcing, 106, 112

Rumpf, Richard, 32, 33

Saint Lawrence Seaway Development Corporation, 138
184 Index

Schiefer, Gerald, 33, 34

Science and Technology (S&T) Executive, 29, 41, 44

Secretary of Defense (SECDEF), 21, 37, 38, 40, 46, 49, 51, 55, 56, 61, 77, 89, 

92, 96, 136

Secretary of the Navy (SECNAV), 44, 46, 47, 53, 55, 58, 61, 93, 121(n), 125

Senior Executive Service (SES), 43

Senior Scientific Technical Acquisition Executive Program, 18

Service Acquisition Executive (SAE), 15-16, 25, 36, 47, 127, 134, 143

Service Personnel in S&T/Acquisition, 25, 28, 124, 125, 136

Small Business Innovation Research (SBIR), 136

Smart Buyer, 6, 23-24, 34, 42, 44, 71-72, 76, 77, 103, 109, 130, 141

Software Technology Plan, 36

Soviet Union, 11, 12, 17, 20, 49, 65

Space and Naval Warfare Systems Command (SPAWAR), 5, 16, 44

Space Technology Integration Group (STIG), 75

Stove Piping, 30(n), 89(n), 118, 119-120

Strategic Planning, 20, 22

Strategic Sourcing, 95

Streamlining, 25, 35, 36, 46, 76, 81, 85, 91, 92, 98, 134

Support Functions, 67, 83, 113

Sustaining Engineering, 89

Systems Commands (SYSCOMs), 16, 25-28, 31, 33, 34, 44, 57, 78, 94, 112, 

121-123, 124-125, 142-143

Defined, 27(n)

Technical Directors (see Directors)

Technology Area Plans (TAPs), 74, 79

Technology Area Reviews and Assessments (TARAs), 79

Technology Base (defined), 14-16, 17, 20(n)

Technology Insertion, 68

Technology PEO, 31-32

Technology “Pull,” 34(n)

Technology/Product Areas, 71, 73

Technology “Push,” 34(n)

Technology Transfer, 69

Technology Transition, 22, 24, 28, 33

Test and Evaluation (T&E) Centers, 4, 32, 33, 34, 60, 96, 97, 118, 122, 135

Total Obligation Authority (TOA), 20

Total Operational Cost, 112

Tri-Service Activities, 11, 26, 34

Tri-Service Reliance, 11, 36-37, 41, 47, 68, 73, 74, 78, 126

Undersecretary of Defense for Acquisition (USD(A)), 15-16, 17, 20, 21, 25, 33, 

37, 46

Undersecretary of Defense for Advanced Technology and Logistics 

(USD(AT&L)), 92, 135, 136, 139-140

Undersecretary of Defense for Personnel and Readiness (USD(P&R)), 135, 136

Unified Commanders in Chief (CINCs), 82, 90
Index 185

Unisys, 112

University Affiliated Research Centers (UARCs), 6, 31(n), 78, 92, 109, 125, 139

Utility Systems, 98

Uranium Enrichment Corporation, 138

Vice Chief of Naval Operations (VCNO), 44, 94, 95, 142

Vietnam Laboratory Assistance Program (VLAP), see Navy Science Assistance 

Program

Vietnam War, 50, 106

Vision 21, 96-97, 102, 107, 118, 130, 131, 139

Warfare Centers, 8, 9, 12, 32, 39, 41, 42, 43, 78, 107, 120, 122-123, 125, 143

Establishment of, 32-35, 44-45, 47, 142

Warfare Systems Architecture and Engineering (WSA&E), 16

White, Admiral Steven, 31

White House Science Council, 7

Work Breakdown Databases, 2

Working Capital Fund (WCF), 4-5, 118, 130-133, 140, 167-168

Yeltsin, Boris, 11, 12, 47