Appendices

Appendix A: Excessive Oversight And Micromanaging

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, commercial activity

• 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 vendors.

• Procurement management directives have obliged the hiring of additional support staff, vastly increasing written procedures and hiring of procurement consultants.

• 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 of product.

• 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 for.

• 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 the 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 of 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 leaving.

• The Department of Energy acknowledges that waste management and environmental 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 alone.

• 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 inefficiency.

• The total laboratory program (10 laboratories, $6 billion budget, 17 thousand 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 the 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 to manage.

• The document pleads the case that all the various contract administrators, inspector generals, audit agencies, etc. are under staffed and need more people.

• 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 Environmental 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.

Appendix 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 performance measures.

• Eliminate DOE approval of labs' internal procedure documents.

• Eliminate DOE approval of individual transactions (e.g., in procurement and compensation).

• 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 agency.

• Eliminate these functions in DOE and reallocate resources.

Consolidate roles of DOE oversight offices

• Consolidate fragmented headquarters safety roles and responsibilities.

• Reduce vertical layering of responsibilities for general lab oversight.

  - Delegate oversight to one contracting office per lab, with a well-defined, limited scope of authority.

• Consolidate or eliminate field offices, at least.

Apply rational, consistent business management principles

• Institute a multiyear budget process, for both authorization and appropriation.

• Standardize DOE's budgeting and financial reporting requirements across program offices:

  - Offices have different criteria for schedule, format, type of budget data, or 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 mandates.

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 outside interference.

• Strengthen overhead-control efforts.

• Outsource work based on good business practice for each site.

• Re-engineer administrative processes to fully exploit benefits of modern information systems.

Other

• 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

Overview

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.

Objectives

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

Acknowledgments

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.