The present structuring and operation of the laboratories is governed by the
class of contracting: Government-Owned, Contractor-Operated (GOCO).
Were it possible to have a true government-owned, contractor-operated system it
is conceivable that there could be a continuing activity under such a rubric.
But wherever we turn we see evidence of nothing but a government owned and more
government operated system.
As a function of the detail with which the Congress prescribes what should be
done in the laboratories and the Congress's obsession with the issue of
accountability, the Department is driven both to honor the prescriptions from
Congress and to overprescribe in order not to be at risk of failing to be super
attentive to the Congress's intentions.
The net effect is that thousands of people are engaged on the government
payroll to oversee and prescribe tens of thousands of how-to functions. The
laboratories must staff up or reallocate the resources of its people to be
responsive to such myriads of directives; more and more of the science intended
resources are having to be redirected to the phenomenon of accountability
versus producing science and technology benefits.
This report could contain thousands of supportive pages from the thousands of
involved people who unanimously complain of this phenomenon. We will merely
illustrate with a few examples that could be multiplied were we to fully
evidence this overaccountability practice.
The essence of our governance is to account for all the how-to's in contrast to
"what" the laboratories contribute.
As a consequence the system is rife with:
- Hundreds of full-time equivalents are attending to issues per laboratory to
see to the meeting of DOE requirements that are in excess of Federal, state and
local regulations and/or are in excess of requirements for a comparable,
- Hundreds of thousands of pages of budget information documents are prepared
and circulated throughout the system. Many of the laboratories find themselves
submitting their budget documents to well over one hundred offices.
- Department of Energy orders to the laboratories range from a few to a few
hundred pages in length and are prescriptive to detail processes
- There are some 30 thousand individual requirements embodied in these orders
to certain of the major laboratories
- Once an individual order has been determined as obliged to resolve a
particular situation it is more often then spread universally throughout the
system without any differentiation as to the uniqueness of the initial concern.
For example an employee of a contractor only indirectly related to the
principal work of a laboratory was involved in an automobile accident. This
generated a prescription that all employees who drive their vehicle on
laboratory affairs were obliged to take defensive driving lessons with the
consumption of an inordinate number of hours and excessive dollars in
unnecessary training costs.
- Auditors and inspectors often by the dozens descend often daily on many of
the laboratories. The laboratories have to staff up to be responsive to the
engagement and then are obliged to spend a significant amount of time putting
in place whatever are the prescriptions of these auditors. Virtually every
audit that was accounted to the Task Force added a cost, versus saved a cost.
- Almost everyone must follow new rules and orders not necessarily relevant to
their situation, if perchance a few have erred elsewhere.
- DOE Headquarters has insisted that copies of DOE terms and conditions be
attached to all file copies of literally thousands of small purchase orders in
order to document that these terms and conditions had been transmitted to
- Procurement management directives have obliged the hiring of additional
support staff, vastly increasing written procedures and hiring of procurement
- Construction projects and operational and equipment activities are to be
managed to various different tracks of regulations complicating the common
sense approach to resolving the particulars of such functions way beyond what
other institutions in society bear.
- The capital asset management process and condition assessment survey is a
hornet's nest of complex documentation without cost benefit consequences.
- Senior audit and inspection officials state that they must concentrate on
reviewing and insisting on processes, audits, etc. because there is to them
little demonstrated "product" against which to evaluate if the labs are
producing a knowledge value for the money appropriated. Process is a surrogate
- Department of Energy people report that many Congressmen believe that the
Department of Energy should treat the oversight of employees of the private
contractors just as if they were employees of the government.
- More controls are in the offing regarding overtime, pension costs and
decisions regarding make or buy.
- From time to time the Congress or the Department allocates funds for a
general research program and then put fences around what the money can be spent
- Congress and the Department often specify what it wants done but does not
allocate the money for that new additional function.
- Funds are segmented to what are colloquially called "stove pipes" whereas
aggregation of funds would be far more effective and efficient allowing the
people who know what the technology is all about to work out the allocations.
- Consortia are a recommended institutional way of the private sector
interfacing with the laboratories. AMTEX (AMerican TEXtiles) is one such
consortia. It took scores and scores of CRADAs to be written in order to have
a relationship with the one consortia. Certain consortia that would want its
work done most effectively in the laboratory system cannot get the work done in
the appropriate laboratory.
- The system is input oriented versus output oriented.
- Each laboratory acknowledges that it has more people than it needs because
the Federal prescriptions and the inability to add the flexibility of assigning
people in the manner that would be most productive.
- Environmental, safety and health objectives are worthy and all reasonable
ones should be accomplished. The degree to which the Government is specifying
how these are to be handled is beginning to absorb virtually as much funds as
funds remaining for science.
- A laboratory wanted to outsource its cafeteria service. The Government
obliged that the outsourcing of the 22 cafeteria workers required the
laboratory to write a complete workforce restructuring plan, in spite of the
fact that the authorizing act for such was intended to deal with fundamental
structuring or changes in missions versus a minor change in a department.
Incidentally, all of the 22 people would have been candidates to work for the
outside supplier if that were to their and the supplier's best interest.
- Everyone wants in on the act--headquarters, the DOE area office, the DOE
field office, program offices of the DOE, the Defense Nuclear Facilities Safety
Board (DNFSB), the Department of Labor's office of Federal Contract Compliance,
the EPA, the General Accounting Office (GAO) and the state where the lab is
located. Each has oversight entities. Each thinks that their audit is the
most important. Most audit without any coordination with others. Some audits
take as long as six months. The number of auditors in an audit team vary
greatly but has been as high as 150 people. The major financial impact of this
is not the cost of the auditor's time but the cost and lost productivity of
those interfacing with the auditors. This leads to an enormous escalation of
cost. Possibly the greatest negative effect is the affect on the motivation of
the scientists and engineers, all of whom are loyal to their science and loyal
citizens wanting to be able peers with their respected associates in the
laboratory. But we heard from any number of people the message that can be
simply summarized that "more and more of us are more concerned about our job
than doing the job." Too much time is distracted to the unpleasant and
unproductive aspects of the job. An increasing number, though still a
minority, lean to questioning the conditions of the job. Good people are
- The Department of Energy acknowledges that waste management and
remediation programs are the most rapidly growing Department of Energy demand
on funds. To the extent that these obligations which derive from defense
functions of decades ago could be more clearly segmented, the other major
future interests including new science for environmental subjects, could stand
- Starts and stops of assignments have caused an inordinate unproductive waste
of funds. For example, the mesas around Los Alamos are strewn with the
skeletons of facilities that were started with much enthusiasm on the part of
the laboratory, the Department of Energy and Congress but were prematurely
terminated before completion because the annual funding appropriation could not
be sustained. Often these projects were more than 75 percent complete at the
point of cancellation. The annual programming of funds is a major waste.
Multiyear programming should in some fashion be accomplishable, providing the
confidence of predictability.
- The very process of annually having to resell a program is an act of
- The total laboratory program (10 laboratories, $6 billion budget, 17
active R&D personnel, etc.) is modest in size compared to many of the
large corporations. Any corporation that you would compare this to would have
but a small fraction of audit costs compared to what is involved in the
oversight of the DOE laboratories. The laboratories are run by the same high
quality class of honorable people (though they, like corporate people, make an
occasional mistake or misallocation) and do not need to be overseen in the
fashion that is prescribed. Those in the private sector rarely audit and
inspect their suppliers' business processes, and for the most part no
corporation allows any of its customers to audit and inspect its activities.
The private sector does respect the laws that apply specifically to financial
accounts, safety factors, etc., and the government laboratories should be
limited to the same class of oversight.
- Recently the Department has been engaged in a sincere interest to improve
contracting process aimed at having the contracts be performance-based. Yet in
the first major paragraph of the news announcement concerning performance-based
management contracting, it says "the reforms would increase competition for DOE
business, hold contractors more accountable for fines and penalties, reduce
excessive outside attorney fees, require a specific performance criteria and
measures on all contracts, impose stricter cost controls on expenses such as
administrative support, maintenance, pensions, overtime and property
management." The document that explains the performance-based contract is
scores and scores of pages long.
- Page 46 of the contract explanation document indicates that the Department's
current information system does not provide the kind of data needed to
manage contractors effectively. The words convey: the Department wants
- The document pleads the case that all the various contract administrators,
inspector generals, audit agencies, etc. are under staffed and need more
- There has been an avalanche of DOE orders including 4,800 project orders and
8,400 Environment, Safety and Health (ES&H) orders with from 200-400
oversight reviews per lab per year.
- There are at least 12 principal layers of management between the assistant
secretary for defense programs down through the layers of DOE and the
laboratory program management to the bench scientist working of a project
financed through defense programs. There are additional oversight and
administrative chain of commands through the field offices which probably add
two or three more layers.
- One array of difficulties with which DOE has not yet been able to deal
properly is ironically self-inflicted. Far too much influence has been ceded
to non-regulatory advisory boards, such as the Defense Nuclear Facilities
Safety Board (DNFSB). Such organizations generate recommendations with no
apparent cost / benefit analysis, resulting in significant unnecessary
expenditures and productivity losses.
- There is neither a mechanism within DOE to evaluate and stand against
poorly-taken DNFSB edicts nor to ensure Department-wide compliance with those
edicts judged appropriate. The Board has itself noted this last defect.
- At Pacific Northwest Laboratory, for example, overhead costs of
Safety and Health (ES&H) increased 40% over a four year period with no
demonstrable improvement. A study of 13 DOE labs indicated that ES&H
funding increased 100% and manpower increased 50% between 1985 and 1990.
Safety performance was independent of funding and negative indicators (lost
work days, radiation exposure, etc.) remained constant or increased.
- In many areas the regulations parallel rules already enforced by agencies
outside of DOE under federal and state legislation. Frequently they prove
unnecessarily stringent. As an example: Radiological control of radiation
sources at Lawrence Livermore National Laboratory requires sources 100 times
smaller than a Coleman lantern mantle and 300 times smaller than a smoke
detector to be treated under the same standards as larger sources.
- EG&G, the management and operations (M&O) contractor at Rocky Flats,
recently spent about $500,000 to write a record of decision to document that no
further action was required to close out one of the Individual Hazardous
Substance Sites (Operable Unit #16), mostly free of mixed waste contamination,
where no further pumping or digging was needed.
- This was the result of an environmental gridlock involving the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA), the
Environmental Protection Agency (EPA) and the Colorado Dept. of Health, which
DOE was unable to resolve.
- Requirements for maintaining the "safety envelope" at the Rocky Flats site,
which among other matters involves 245,000 surveillances annually, preparing
inspection reports and maintenance improvement records, costs the plant $100
million per year, a level that senior management considers "very unreasonable."
Many staff members echo the desire for a clarification of goals for the site.
Moreover while the delays mount, the experience base continues to degrade as
seasoned employees retire or quit.
B: If GOCO System Is Obliged
If the authorities oblige that the GOCO system is retained, the Congress
and the Department must improve operational efficiencies and motivational
conditions of the federal system by correcting the policies and practices
listed below. If these are not completely revised the
Congress/Department/Laboratory system is destined to bear excessive
unaffordable, micromanaging costs and demotivational consequences. It will
follow that plan to deactivate and/or dispose of the laboratories at some
liquidation value will be inevitable because the public will not countenance
the high cost/low value output that will be destined.
Base DOE Oversight on Laboratories' Performance
- Replace compliance-based directives with simple, well-defined
- Eliminate DOE approval of labs' internal procedure documents.
- Eliminate DOE approval of individual transactions (e.g., in procurement and
- Base audits and appraisals on serious risk.
- Eliminate duplication of audits, appraisals, and reviews.
- Reward success with decreased oversight.
Operate labs according to industry-wide regulatory standards
- Eliminate DOE self-regulation.
- Shift regulatory oversight and inspection functions to responsible federal
- Eliminate these functions in DOE and reallocate resources.
Consolidate roles of DOE oversight offices
Apply rational, consistent business management principles
- Institute a multiyear budget process, for both authorization and
- Standardize DOE's budgeting and financial reporting requirements across
- Offices have different criteria for schedule, format, type of budget data,
type of cost reporting.
- Cross-cut budgeting should be examined for appropriateness.
- Empower labs to establish long-term supplier relationships.
- Empower labs to locally determine "color of money", except for Congressional
Manage lab infrastructure in a responsible fashion
- Re-establish a strong, well-defined landlord function, with one
landlord per lab.
- Consolidate funding sources for infrastructure maintenance and improvement
with each lab's DOE landlord.
- Initiate a multiyear "get well" program for labs' infrastructures.
Challenge labs to reduce costs
- Allow the quality management programs to become fully applied without
- Strengthen overhead-control efforts.
- Outsource work based on good business practice for each site.
- Re-engineer administrative processes to fully exploit benefits of modern
- Simplify CRADAs much more.
Appendix C: Terms of Reference
Terms of Reference
Secretary of Energy Advisory Board Task Force on
Alternative Futures for the Department of Energy National Laboratories
The 1990s are a period of substantial change for the Department of Energy's
(DOE) nine multi-program National Laboratories, particularly the Department's
three nuclear weapons laboratories. Sweeping geopolitical changes, limitations
on nuclear weapons testing, increased attention to economic competitiveness,
and the continuing demands of energy development and environmental quality--all
within the context of tight federal budgets--are but a few of the factors that
confront the DOE laboratories with challenges and opportunities for the future.
The purpose for establishing the Advisory Board Task Force on Alternative
Futures for the DOE Laboratories is to carefully examine options for change
within these laboratories and to propose specific alternatives for directing
the scientific and engineering resources of these institutions toward the
economic, environmental, defense, scientific, and energy needs of the nation.
The Task Force should focus its initial efforts on developing a comprehensive
and current understanding of the facilities, resources, core competencies,
activities, and missions of the Department's multi-program national
laboratories, both as individual institutions and as a system. The Task
Force should also develop an early understanding of the national defense
requirements that necessarily will play a major role in shaping the
configuration of the defense laboratories for years to come, and should closely
examine the unprecedented recent growth in collaborations between DOE
laboratories and the private sector.
Once a fundamental understanding of these matters has been established, the
Task Force should broadly explore critical issues facing DOE's multiprogram
laboratories (and single-program laboratories, as deemed appropriate) and
should examine alternative scenarios for future utilization of these
laboratories for meeting national missions. Among the alternative scenarios,
the Task Force should specifically address options involving the possible
redirection, restructuring, and/or closure of elements of the DOE laboratory
system. The Task Force should identify the costs and benefits to the nation of
various alternative futures for the DOE multiprogram laboratories, and within
one year (January 1995) should report these assessments along with
recommendations, as deemed appropriate.
- The Task Force should develop a clear understanding of the roles played by
the DOE multi-program laboratories in the research and technology development
process. Specifically, the Task Force should examine the roles of the
laboratories in meeting public missions, in serving as an R&D provider to
other agencies and the private sector, and in working with academia to advance
fundamental science. This examination should include an assessment of the
contribution of the DOE laboratory system to the overall national investment in
science and technology, and a comparison of the activities of the DOE
laboratories to the R&D focus of other government agencies, academia, and
the private sector.
- The Task Force should become well versed with the nuclear weapons-related
research, development, testing, and evaluation (RDT&E) needs for the nation
over the coming decade, and the options for satisfying these needs.
Specifically, the Task Force should closely examine the strategic planning
efforts currently underway within DOE Defense Programs, particularly those
efforts aimed at shifting the nuclear weapons safeguards program from
underground nuclear testing to science-based stockpile stewardship.
- The Task Force should examine the current configuration of nuclear weapons
RDT&E activities among Los Alamos National Laboratory, Livermore National
Laboratory, and Sandia National Laboratories. This should include an
assessment of the strategy behind the current configuration, which involves
purposeful redundancy to promote competition and peer review. Alternatives to
the existing configuration should be examined.
- The Task Force should assess the role of the National Laboratories in
supporting economic competitiveness and contributing to the U.S. industrial
R&D base. This should include an examination of the opportunities and the
mechanisms for the National Laboratories--as a system--to contribute to large
partnerships with the private sector.
- With a current assessment of the roles and missions of the DOE multiprogram
laboratories in mind, the Task Force should examine several options for the
future of these institutions in terms of budgets, management, and mission
assignments, including an analysis of possible costs and benefits of each
alternative. As part of the examination of costs and benefits, the Task Force
should assess the ability of R&D institutions such as the DOE laboratories
to adapt to varying levels of change. This analysis should assist the Task
Force in recommending implementation options.
The Task Force members would like to acknowledge the support of a large number
of people in the laboratories, the Department of Energy, the contractor
organizations, and the affected communities, for their insights, information,
and opinions. In particular, we would like to thank Sean McDonald, Sean
Headrick, John Clarke, Tom Jervis, and Susan Barisas, Frances Musgrove, and
Mable Dawson for their significant contributions.
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