[Senate Hearing 108-97]
[From the U.S. Government Publishing Office]
S. Hrg. 108-97
DEPARTMENT OF ENERGY LAB MANAGEMENT
=======================================================================
HEARINGS
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
TO EVALUATE CHANGES OVER TIME IN THE RELATIONSHIP BETWEEN THE
DEPARTMENT OF ENERGY AND ITS PREDECESSORS AND CONTRACTORS OPERATING DOE
LABORATORIES AND SITES TO DETERMINE IF THESE CHANGES HAVE AFFECTED THE
ABILITY OF SCIENTISTS AND ENGINEERS TO RESPOND TO NATIONAL MISSIONS
AND
TO CONTRAST THE MANAGEMENT OF SCIENCE AND TECHNOLOGY RESOURCES BY THE
DEPARTMENT OF ENERGY WITH MANAGEMENT OF SUCH RESOURCES IN OTHER
AGENCIES AND IN THE PRIVATE SECTOR TOWARDS THE GOAL OF SUGGESTING
APPROACHES FOR OPTIMIZING THE DOE'S MANAGEMENT AND USE OF ITS SCIENCE
AND TECHNOLOGY RESOURCES
__________
JUNE 24, 2003
JULY 17, 2003
Printed for the use of the
Committee on Energy and Natural Resources
______
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
PETE V. DOMENICI, New Mexico, Chairman
DON NICKLES, Oklahoma JEFF BINGAMAN, New Mexico
LARRY E. CRAIG, Idaho DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado BYRON L. DORGAN, North Dakota
CRAIG THOMAS, Wyoming BOB GRAHAM, Florida
LAMAR ALEXANDER, Tennessee RON WYDEN, Oregon
LISA MURKOWSKI, Alaska TIM JOHNSON, South Dakota
JAMES M. TALENT, Missouri MARY L. LANDRIEU, Louisiana
CONRAD BURNS, Montana EVAN BAYH, Indiana
GORDON SMITH, Oregon DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky CHARLES E. SCHUMER, New York
JON KYL, Arizona MARIA CANTWELL, Washington
Alex Flint, Staff Director
James P. Beirne, Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Pete Lyons, Professional Staff Member
Jonathan Epstein, Legislative Fellow
C O N T E N T S
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Page
Hearings:
June 24, 2003................................................ 1
July 17, 2003................................................ 49
STATEMENTS
June 24, 2003
Bunning, Hon. Jim, U.S. Senator from Kentucky.................... 2
Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 1
Hecker, Sigfried S., Senior Fellow, Los Alamos National
Laboratory, Los Alamos, NM..................................... 18
Krebs, Dr. Martha, President, Science Strategies, Los Angeles, CA 8
Peoples, Dr. John, Jr., Director Emeritus, Fermi National
Accelerator Laboratory, Batavia, IL............................ 30
Postma, Dr. Herman, Oak Ridge, TN................................ 3
July 17, 2003
Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 49
Gibbons, Dr. John H., President, Resource Strategies............. 58
Reis, Dr. Victor H., Senior Vice President, Hicks & Associates,
Inc............................................................ 50
Schneider, Dr. William, Jr., Chairman, Defense Science Board,
Department of Defense.......................................... 61
Spencer, Dr. William J., Chairman Emeritus, International
SEMATECH....................................................... 54
DEPARTMENT OF ENERGY LAB MANAGEMENT
----------
TUESDAY, JUNE 24, 2003
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:13 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Pete V.
Domenici, chairman, presiding.
OPENING STATEMENT OF HON. PETE V. DOMENICI,
U.S. SENATOR FROM NEW MEXICO
The Chairman. The hearing will please come to order. First,
I want to apologize for being late, and thank the Senators for
coming, the two of you. With this hearing today we begin a
series of hearings devoted to the relationship between the
Department of Energy and its laboratories and other facilities.
From these hearings, my goal is to develop a better
understanding of how to optimize the relationship in order to
balance the critical contributions of these laboratories
towards national missions with increasing demands from the
Department and Congress for ``improved accountability,'' in
quotation marks.
Recent discussions about contract issues at the
laboratories have highlighted the fact that the criteria on
which the Department judges the extension or competition on
current contracts are all extremely vague. In addition, there
have been many studies noting that increased micro-management
of the labs, much of it in the name of providing increased
accountability, has greatly complicated the ability of lab
scientists and engineers to deliver on their critical national
missions. In addition, there have been many problems identified
at various laboratories encompassing security, environmental,
financial, or administrative issues. These concerns increase
desires to provide still more micro-management for the
laboratories.
With the current decision to compete the Idaho and Los
Alamos contracts, this is an appropriate time to explore these
issues. In today's hearings, I hope we can explain the changes
that have occurred in the relationship between the Federal
Government and the lab scientists and engineers. We need to
understand how these changes may have complicated their ability
to address national missions.
In a second hearing set for July 17, we will hear from
witnesses with experience in multiple Federal agencies or with
experience in both the private sector and a Federal agency.
From that hearing, we can better understand how the DOE's labs
are viewed relative to other Federal or private laboratories.
In future hearings, we will hear from leaders of some of
the studies that have explored the productivity of the DOE labs
and ways to increase their productivity. In addition, I plan to
hear testimony on the various contract models that are now used
by the Department, with the hopes of exploring ``best
practices'' that might be applicable to more of the labs.
We have four witnesses today. Each of these witnesses has
great leadership experience, either within the laboratory or
from the vantage point of the Department.
Dr. Herman Postma served as Director at Oak Ridge under
both Union Carbide and Martin Marietta. He has served for 12
years on Sandia's advisory board. His career at Oak Ridge
included the Atomic Energy Commission, the Energy Research and
Development Administration, and the Department of Energy
leadership.
The Honorable Martha Krebs--nice to see you again--served
as subcommittee staff director at the House Committee on
Science. She has held management positions at Lawrence Berkeley
lab before she served as Director of the DOE Office of Science.
She is now president of Science Strategies. Her experience
includes views of the labs from DOE headquarters as well as
from within the laboratory.
Dr. John Peoples has been with Fermilab for more than three
decades. He served as director from 1989 to 1999 of that
institution, and is now Director emeritus of the lab. The
single-purpose labs of the Department provide critical
facilities to our great Nation and the world of science. Dr.
Peoples brings the perspective of these single-purpose labs to
today's discussion.
And finally, my good friend, longtime friend, Dr. Sig
Hecker, it is so great to see you again. I hope we speak a
little bit after the hearing. He joins us from Los Alamos,
where he is now a senior fellow. Sig served as Director of the
lab for 11 years, from 1986 to 1997. He has been associated
with Los Alamos in various ways over the last 38 years. Over
many years of working with Sig, I know he has carefully
considered the changes in the Department's governance of the
laboratories.
With those introductions, let us begin with you, Dr.
Postma, and proceed with the rest of the witnesses. Your
written testimony will be made part of the record now, so you
don't have to worry about that. Limit your oral arguments to 5
minutes. The clock is right up here in front. Please proceed.
[A prepared statement from Senator Bunning Follows:]
Prepared Statement of Hon. Jim Bunning, U.S. Senator From Kentucky
Thank you, Mr. Chairman.
I appreciate having this opportunity to take a look at the
Department of Energy's contractors.
This hearing will focus mainly on the Department of Energy's
project management and contracts at its national laboratories. These
laboratories play an important role in our national security.
As some of my colleagues on the committee know, the Paducah uranium
enrichment plant is located in Paducah, Kentucky. And while it is not a
national laboratory, I think this hearing may help answer some project
management and contract questions I have about the Department of
Energy's role in cleaning it up.
We have been dealing with contamination at the uranium gaseous
diffusion plant in Paducah for some time now. After more than five
decades of operation at the Paducah plant, there is now severe
contamination from improper disposal of hazardous and radioactive
materials at the site.
The progress with cleaning up the site has been very slow. The
schedule for cleanup at the plant has been repeatedly delayed and
projected costs have increased. Currently, the plant is proposed to be
cleaned up by 2024.
The Paducah plant has had several contractors to manage the cleanup
over the past decades. The Department of Energy recently announced its
plan to rebid the Paducah contract. I am hopeful that the Department of
Energy's new contractors will work hard to efficiently cleanup the
site.
I look forward to hearing the testimony from our witnesses today
about issues concerning the Department of Energy's project management
and contracts. I hope that what is revealed today and in subsequent
hearings will help to improve the cleanup at the Paducah plant.
STATEMENT OF DR. HERMAN POSTMA, OAK RIDGE, TN
Dr. Postma. Thank you. Thank you, Mr. Chairman, and
Senators. It is good to be here. I want to start off with what
I call the top line or the bottom line, which is that the
relationship between DOE and its laboratories has been
fundamentally sound for about 60 years. These are some of the
very best laboratories in the world, and in order to be so they
had to change over that period of time into many different
things and different ways.
They have successfully done so, but that does not mean they
are perfect. It does not mean that the relationship could not
stand some improvement, as every organization that is an
organization must confront those things which influence it and
make changes appropriately.
I have some observations on the structure and the
governance of that relationship. I call some of them Postma's
laws. This is taking off a little bit after Augustine's laws,
except they are not as funny as his were. One was the action-
reaction law, that any time DOE did something to change the
structure, we could count on about 8 to 10 years later they
would precisely undo what they had done for exactly the
opposite reasons, and we would go through that cycle again.
There is what I call the ``music man theory,'' in which
contractors have great resolve in formulating precisely their
proposal, finding out ways to precisely improve everything in
all kinds of ways, except they do not know the territory. When
they get in, they find things are quite different and have to
make appropriate modifications, in often too fast a manner.
There is the bait-and-switch theory, in which some of the
winning team stays together for a year or two and then runs off
to another proposal, in which case there is another transition
that takes place.
There is the halo theory, which I have also called the wave
theory. This has to do with the initial halo effect. A new
contractor arrives with the Department of Energy and looks good
because they bring in a good team. They sort of like it after a
while, and then they start bidding on new proposals from the
Department of Energy, and DOE is enamored with that. Pretty
soon, we have a company that has four or five contracts and a
substantial part of DOE's business.
Well, somebody stumbles out of those organizations, and
then everybody looks bad from that contractor. The latest case
was Martin Marietta-Lockheed Martin, but you can go back
through the history and look at Westinghouse, who rose and
fell; EG&G, who rose and fell; Lockheed Martin, who rose and
fell; and now Bechtel, where there are signs of a little
crumbling here and there, and disenchantment by the Department
of Energy. So there is an anti-halo theory, as well.
There is another thing, living with your sins. The
contractor and team don't stay long enough together to see that
what they started, they have to live with the results. That is,
don't cut and run. Don't go do something and get out of town
before your sins catch up with you.
There is the ``breaking the back'' theory, which is not a
theory. This says the demands, audits, and everything performed
by the Department of Energy on contractors and the contractor's
mother organization also does the same thing, turn out to be in
many cases an unbearable load.
I remember one time there were 23 audits going on in my
organization at the same time by outsiders. That is an awful
lot to bear.
It was also impacted by what I call the ``closet
dictator.'' There are some people who have been waiting in the
wings for years to get even one way or another. As soon as
something happens, they can jump on the perpetrator of that
misdeed and just pounce on them with a lot of new rules.
There are some good changes. They have to be good, because
if you don't change, well, you will be changed. But there are
ways to avoid these problems. I think better consideration to
fit the contractors with the job is important, like a science
lab should have strong university involvement as either single
or consortia; that the comprehensive energy laboratories should
have strong university and industrial teams, because they do
have a mix. The lab should have strong industrial teams, and
the university has a role as well.
The production complex should have strong industrial
contractors. I think the contractors ought to be around long
enough, but there maybe ought to be some limits. Currently, the
rule is, DOE bids for a 5-year contract, extends for 5 years
more, unless things are not great, and gets rid of them. I
think that is too hard and fast a rule. I have found, for
example, in looking that Lockheed Martin has a contract with a
team member in the United Kingdom and they just got a 25-year
extension, which would be unheard of.
There is another contractor here in the United States, a
Department of Energy contractor, who normally would get a 5-
year contract and had been doing very well, but they are only
going to get a 1-year contract extension at a time. No one can
plan well with this kind of thing.
The original Procurement Policy and Acquisition Act said
that long-term relationships should be the expectation. ``Long-
term'' has a quite different meaning. It does not mean forever,
and it should not mean forever; but it should not mean 5 years
or 1 year at a time.
The contractor team longevity should be part of the
contract. The contract ought to include community involvement
where it is appropriate. I believe strongly that technology
transfer ought to be restored as an incentive within such
contracts to help the American economy and to make sure that
the work done at laboratories gets out.
Particularly, I think there ought to be an encouragement of
Sandia-like experiments and more appropriate governance. John
Gordon testified about 16 months ago about a new governance
model for Sandia. His testimony is quoted in here, but it has
fallen on deaf ears, apparently. What started off as a great
intention of allowing more self--not control, but more self-
audits, more rules internally, and more things really
appropriate to industrial practices, has been thwarted
essentially by a contract extension and nobody doing anything.
I viewed this as a step forward, but apparently it has fallen
into disarray.
Don't attribute the transgressions of one lab to all labs.
Not all labs are alike. Not all of them had the transgressions.
If someone does something bad, penalize them; don't penalize
everybody. I think that nurturing future laboratory directors
from within is important. They should have outside experience
early in their career. But too often we find that people
brought in from the outside completely fresh to the system are
shocked by the system, and sometimes cannot exist within it. It
is so alien to their past practices that they have sometimes
left after only a few months.
I believe one of DEA's most important roles is to make sure
that the right person for the prime leadership role is chosen,
and stand behind that person as they are learning.
Finally, I believe that the GOCO structure, government-
owned and contractor-operated, has served the country very
well. It has gone through some ups and downs. It can be
improved. But 60 years of outstanding performance ought to
stand for something. Thank you.
[The prepared statement of Dr. Postma follows:]
Prepared Statement of Dr. Herman Postma, Oak Ridge, TN
INTRODUCTION
Bottom (top) line: The GOCO (Government Owned Contractor Operated)
governance of DOE Laboratories has served the U.S. extremely well
yielding some of the best labs and best science and engineering in the
world. These laboratories founded during or immediately after WWII were
at the beginning comprehensive and dominated both the performance of
the Nation's science agenda and quality for many years. Today there is
much more competition from other national labs (National Institutes of
Health, NASA, Agency) in the U.S. and abroad and not surprisingly that
early dominance is not as great. But to have maintained a strong
leadership role for these 60 years as science, governments, budgets and
priorities have changed, is a testimony to their ability to morph,
change, adapt, create, and reinvent themselves many times. But I
believe that those changes have been made more difficult because of
unwise practices, undue burdens and unnecessary mistakes. There are
lessons to be learned from past experiences, which I will try to
recount some here with some ideas for avoidance in the future.
HISTORICAL OVERVIEW ON STRUCTURAL AND GOVERNANCE
Early day relationships had very short contracts, no competition,
fewer rules, regulations, and orders and there was a consistent joint
focus on ability to get work done. Lab Directors often got together
themselves in 70s and 80s to compare notes and forge some common
directions to improve the labs overall-best practices in today's
jargon. These confabs were later attended by field office and then
became HQ oriented (so the early format died).
Various structural formats exist in today's FFRDCs (Federally
Funded Research and Development Centers): Primes, Teams, Intramural/
Extramural, Agency Labs, GOGO, GOCO, COCO and some joint arrangements
of private/DOE common labs (at PNL.) But it is primarily GOCO
throughout DOE. There is no one very best and obvious mode or everyone
would be going in that direction.
Personal Observations lead to Evolution of Postma Laws (some result
from Fads, Foolishness, and Fickleness):
Action-Reaction Law: Most past actions in taking things apart have
later reversed those actions to put back them together again after
several years lapse (Hanford + others).
Music Man Theory: Contractors who have great resolve in formulating
the proposal find that upon winning they didn't know the territory as
well as they thought and many things are either not possible or are too
daunting.
Bait and Switch Theory: Sometimes the winning team stays together
as such only long enough to put some changes in place and then that
crew becomes the leadership for a new proposal elsewhere.
Halo Theory: New contractors seemingly enjoy an initial halo effect
(look really good and can do no wrong) and quickly get other contracts
(a significant fraction of DOE contracts) after nabbing the first one--
Westinghouse, EGG, Lockheed Martin, Bechtel--but then rapidly fall from
grace (halo shatters) after a few years and even disappear entirely
from that business.
Why this rise and fall? Theories abound. Shallow reserve of talent,
lose interest, can't make money compared to core business, changing
priorities within company. The converse is also true (anti-halo?). When
DOE sees failure in one contract, it carries over to all of that
company's contracts and thus gets rid of them all in an equally short
time period.
Living With Your Sins: Contract and team ought to stay long enough
to see the outcome of their changes but not so long as to become too
comfortable, arrogant or irrelevant.
Breaking the Back (Not a Theory): Increasing demands, regulations,
rules, simultaneous audits make the job unnecessarily hard to perform.
Every review committee (latest was Galvin) has denounced the
overbearing bureaucracy and its impact on getting the job done. I
believe there is also the role of the ``closet dictators'' in which
some people extract vengeance for past sins or multiply the intent of
the original order by laying on extra levels of compliance.
Good Changes: Some of this change is inevitable since times change,
missions change, interests change, so contractors must change or be
changed. Also time causes ``bureaucratic creep''. Easy mechanisms seem
to exist to increase the loads but not to reduce them. Unless a
significant recent exception becomes implemented: the NNSA has made
several good changes and Sandia has been approved to suggest an
innovative team approach to governance.
SOME WAYS TO AVOID THESE PROBLEMS
Better Fit the Contractor(s) With the Job
Science Labs should have strong University involvement (single or
consortia).
Comprehensive Energy Labs should have a strong University and
industrial team.
Weapons Labs should have strong industrial and University team.
Production Complex should have industrial contractors.
Keep Contractors Long Enough But Also Consider Some Limits
Good Procurement Rules Exist Now: Currently and normally DOE bids
five-year contracts with a very likely one five-year extension but then
competitively rebids if longer (including current holder). Beware of
``If you compete it that means you don't love us and we won't play''
(They almost always do). Some other contracts indicate the spread of
what is deemed an appropriate time: the UK in March 2003 extended a
contract to Lockheed Martin and partner for 25 years for managing its
weapons production. Conversely DOE recently conditionally and narrowly
extended a well-performed contract (normally 5 years) for only 1 year.
The Office Federal Procurement Policy (Letter of 4/4/89) and FAR
(Federal Acquisition Act) on FFRDC 35.017 section 4-both argue toward
the establishment of ``long term relationships'' as the expectation.
Long term has a quite different meaning now.
New Kind of Limit: Limit contractors to holding few contracts
whether prime or as team member regardless of mix and match unless a
compelling overall need and commitment is there-not a fill in for other
work, not a bait and switch, deep management talent, not a place to
``put'' people. Avoid the halo effect. Spread the competitive net to
get other interests and views involved.
Have contractor team longevity as part of contract. Keeping a good
team together long enough to accomplish promised changes and train
successors. Have community involvement as part of contract. Have
contractors commit in the bid to explicit community involvement and
investment. It is important to the government interests to be a good
corporate citizen and to have the mission's acceptance widespread in
the region especially in communities in which DOE is dominant. Good
community involvement increases tolerance for future mission changes.
Restore Technology Transfer as incentive. Make sure contractors
establish a strong technology transfer program to create strong
American technology-it is a national security issue (security and
economic) and has been diminishing in last decade and doesn't seem to
be in the DOE mission any longer.
Encourage Sandia like experiments in more appropriate governance.
Sandia received permission in 2001 from NNSA to think about a series of
simplifications toward more self-audits, fewer and better orders.
Sandia started a series of suggestions based on successful industrial
approaches that would return more people to the bench within the same
money constraints.
As General John Gordon testified 16 months ago:
``A new governance model will be designed to capitalize on
the private-sector expertise and experience of NNSA's
management and operating contractors while simultaneously
increasing their accountability for high performance and
responsiveness to NNSA program and stewardship requirements.''
``The governance strategy will be accompanied by an assurance
model that will rely as much as practicable on third-party,
private-sector assurance systems such as comprehensive internal
auditing, oversight by boards and external panels, third-party
certification, and direct engagement between oversight bodies
and NNSA's leadership.''
Progress Report to Congress on the Organization
and Operations of the NNSA--February, 2002 By
Gen. John Gordon
The Sandia advisory board of which I was a member thought that to
be a very encouraging development and strongly urged its speedy
implementation. Unfortunately that early enthusiastic start has been
greatly slowed down due in part to negotiating it into a contract
extension.
If and when progress once again resumes, I hope all parties would
refrain from jumping all over Sandia for simple mistakes during this
trial and transition period.
Don't automatically attribute the transgressions of one lab to all
labs. Deal out penalties accordingly. Too often when one lab makes a
mistake it is assumed that all labs have same attitude and warrant the
same orders. Limit the punishment to the transgressor and proportion
the punishment to the transgression.
Nurture cadre (cross fertilization) of future lab directors from
within. Too many brand new ``outsiders'' have had problems adapting.
The labs ought to be encouraged to develop management talent used to
dealing in the DOE culture but also encourage and acquire those high
potential people who have some outside experience in other settings.
When top officials come in cold from the outside they too often are in
shock at the contrasts and limitations. Talent developed earlier in
career ought to be made available to other labs to cross-fertilize.
Complete outsiders are appropriate more if things are seriously broken
and need vast overhaul and fresh insights.
Be very hesitant to jump on transgressions with new heavy rules.
Often the 1% mistake will increase new rules by many fold. Every
outside review undertaken of the labs has emphasized that too much of
scientist's time is taken with foolishness having nothing to do with
the goal. This has not been reduced despite more than a decade of
concerns and recommendations. Be prepared to push DOE to NNSA like
steps if DOE cannot do it on its own.
DOE's most important role. Just as a board's most important job
whether corporate or university is to choose the right person for the
prime leadership role, so too is that DOE's most important
consideration is in vetting the initial contractor's choice, later
retention and renewal.
CONCLUSION
I firmly believe that the GOCO structure in DOE has served the
country very well but that there are always improvements possible and
that some things need to be changed. Just as even great scientists
change interests, fields and approaches to stay relevant, so too must
DOE and its laboratories constantly seek out those changes that improve
the ability to get the right things done right. Among those are
recognizing that the C in GOCO is being constantly diminished to the
detriment of the system and the country There are excellent models to
every mode for improvement suggested in this testimony.
The Chairman. Thank you very much. I appreciate your
testimony.
Dr. Krebs.
STATEMENT OF DR. MARTHA KREBS, PRESIDENT,
SCIENCE STRATEGIES, LOS ANGELES, CA
Dr. Krebs. Mr. Chairman and members of the committee, it is
a great honor to appear before you and the committee again. I
appreciate the opportunity to discuss the subjects of the
hearing. As you know, most of my professional career has been
involved with the Department of Energy, but I have served
inside and outside the beltway a number of times.
At first, when I was a staff member of the House committee,
I was here when the Energy Research and Development
Administration transferred or transitioned into the Department
of Energy. I read and reviewed at least three major studies
during that time on the laboratories and their contracts.
At the lab, I watched certain committees here in the Senate
and on the House side review business practices and disagree
with judgments that were made by laboratory and Department of
Energy managers at that time. I also saw the tiger teams
created, and the creation of the Office of Environmental
Management, as well as an increased oversight responsibility
for the ES&H programs in DOE.
Finally, when I had the great honor to serve as the
Director of the Office of Science, I had responsibility for 10
of those laboratories, and was part of a contract reform
initiative, another review by the Secretary of Energy's
advisory board with respect to the laboratories, and the
recompete of the contracts for Brookhaven and the Oak Ridge
National Laboratory. I would recount this history--and I do so
in more detail in my testimony--to show how the Department has
grappled with the role of the laboratories, their missions, the
technical and business management, and the extent to which
laboratory contracts result in under- or over-management by the
Department of Energy.
What began in the AEC as a clear concept of what was
required to manage unique research and development for a high
national purpose has diminished to concerns about good contract
law.
When I served at the Department of Energy and had occasion
to testify here and before other committees, I always focused
on the positive, because the Department's mission was
important, and its laboratories had made so many contributions
to that mission. Here today I have tried to convey the
difficulties that face the DOE and its laboratories. I do not
excuse the laboratories' deficiencies, some of which I
certainly know to be real.
I have also observed occasional misjudgments by laboratory
and contractor leadership. I do not oppose recompetition of
laboratory contracts categorically. As I said, I was involved
in two of them. However, I also believe that since the creation
of the Department there has been well-meaning, often
unintentional, but ultimately and unfortunately malign neglect
on the part of the internal and external programmatic sponsors
of the laboratories.
In general, I considered myself one when I was in the
Department of Energy, and there, as I did often in my career, I
placed an emphasis on keeping the money flowing, and assumed
that the organizational issues would be overcome.
The oversight and management elements of the Department and
of the Congress, which are not responsible for delivering the
Department's mission, have not been effectively countered by
program sponsors. I think of the Senate Committee on Energy and
Natural Resources, Armed Services, the Appropriations
Committee, as programmatic sponsors of the Department.
Other agencies suffer embarrassments for their
ineffectiveness, but they are rarely browbeaten. They are not
expected to change their procurement policies, and their
contractors are rarely removed, despite overruns, schedule
slips, and occasional ethical lapses.
Although much criticized, the Department has a real and
important mission. It is complicated, but it has four clear
elements: energy, the nuclear weapons stockpile, environmental
management, and science. There may be questions about the
policies that underlie these missions, but it is not the
Department of Energy's sole responsibility for brokering
agreements on policy.
When there have been disagreements about policy, I often
see that the content and competition of the management and
operating contracts for the laboratories have become one of the
hobbyhorses that critics have ridden.
Changes in policy or its interpretations may change
programmatic content, but each of the mission elements will
need R&D to achieve its goals. The DOE laboratories do
integrate the full span of basic and applied research, and they
develop the unique facilities required to support the DOE
mission in ways that cannot take place in university campuses
or private sector laboratories. The contractors for these
laboratories must have the capacity to attract and lead the
best scientific and engineering talent our Nation can muster.
Administrative systems at a laboratory cannot be developed
independently of programmatic activities. Laboratory
contractors may be partnerships, but the partnership must be
structured as a single entity. Technical leadership is primary.
Administrative excellence without technical excellence is
useless to the Department mission.
Technical staff can and should be expected to incorporate
high standards for protecting their safety, the environment,
and other critical national assets, which is the knowledge they
generate, as they carry out their daily technical work. To make
this happen, laboratory leadership must be committed and the
technical staff must be intimately involved. Self-assessments
and reviews by the laboratories are critical, but should not be
used against them as part of what I consider grandstanding
oversight, in some cases.
Having said this, adding detailed clauses to contracts or
competing laboratory contracts for the sake of competition will
not achieve this kind of performance, and they will not prevent
intentional individual ethical misdeeds. More reviews won't
help. The history recounted in my testimony shows that the
patterns of these reviews are pretty well established. There
are basically two kinds of reviews. The first kind finds the
laboratories to be technically outstanding, the crown jewels,
critical to the Department's missions. They also find that DOE
micro-manages the laboratories and adds unnecessary cost.
The second sort of review focuses on specific institutional
or individual deficiencies that may have already been
identified by the laboratories or DOE. These findings are then
used to call into question the contractors of the laboratories
and the nature of the contracts. They also result in added
oversight by the Department, which leads to accusations of
micro-management and added costs.
The M&O contract concept used by the AEC and supported by
the Joint Committee on Atomic Energy provided a framework that
lasted 30 years. The last 25 years have seen continuous attacks
on that framework. The House and Senate committees, which have
the principal responsibility for scientific and technical
program content, must work together to establish a new
understanding of what the laboratories' M&O contracts should
be, can be for the next 30 years. That is why I think the
hearings that you are having today and in the next few months
are critically important.
I believe, however, they should also be carried out in some
way in a joint fashion with the other programmatic committees,
like the Committee on Armed Services, like the Committee on
Appropriations; although I know that on this side of the Hill
appropriations and authorization overlap considerably. A report
should be written. Hearings are simply not enough.
We need a written formulation of what your thinking is on
this matter. If you could work with the corresponding House
committees, it would be extraordinarily helpful. A clear
statement from you and from the congressional sponsors, the
programmatic sponsors, would allow the Department and the
laboratories to move forward with some assurance of stability.
I know how hard it would be and will be to do this, but I
also know that of all the committees that have authority over
the Department and its laboratories, these are the committees
which have the biggest commitment to seeing something happen
with the Nation's investment in the Department.
Having arrived at such new understanding, I would urge you
to then support the Department as it resists what will
undoubtedly be continuing attempts to use the laboratories and
their contracts to express opposition to the fundamental work
of the Department, be it nuclear weapons or energy policy.
I have appreciated the opportunity to speak today.
[The prepared statement of Dr. Krebs follows:]
Prepared Statement of Dr. Martha Krebs, President, Science Strategies,
Los Angeles, CA
Mr. Chairman, Members of the Committee, it is a great honor to
appear before you and the Committee again. I appreciate the opportunity
to discuss the relationships among the Congress, the Department of
Energy, and the management of the National Laboratories. These hearings
are important and as I congratulate the Committee as they begin, later
I will encourage you to do more not only within the Senate but with
your colleagues in the House. This testimony provides a brief
description of my career and its intersection with the recent history
of the Department of Energy. I then provide a similarly brief
discussion of the relationship between the Laboratories and the AEC.
With that as context, I summarize the many reviews of the DOE
Laboratories that have addressed both technical performance and the
character of the DOE's relationship with the Laboratories. I also
review internal and external oversight of Laboratory business practices
that resulted in criticism of the details and the long-term nature of
the Laboratory contracts. Finally, I make some recommendations.
As you know, Mr. Chairman, most of my professional career has been
involved with the Department of Energy, its science and energy
programs, and its Laboratories. From 1977 to 1983, I served as staff
member and Subcommittee Staff Director on the House Science Committee
during the transition from the Energy Research and Development
Administration (ERDA) to the cabinet Department of Energy. The
Laboratory missions and the Management and Operating Contract concept
were reviewed three times in that period by the DOE Energy Research
Advisory Board (ERAB), the President's Council of Science and
Technology Advisors (Packard Panel), and the President's Private Sector
Survey on Cost Control (The Grace Commission),
From 1983 to 1993, I was Associate Director for Planning and
Development at the Lawrence Berkeley National Laboratory, operated for
the DOE by the University of California. During that period,
legislation was enacted that gave new authorities for technology
transfer to the DOE laboratories; the Competition in Contracting Act
also placed new expectations on Federal agencies for competitive
procurements for goods and services. In addition, oversight by the
House Committees on Energy and Commerce and Government Operations and
the Senate Committee on Governmental Affairs focused on DOE and
Laboratory management of procurement, security and environmental
compliance. The Department initiated the broad reviews of
environmental, health and safety performance at the Laboratories, known
as the Tiger Teams. The Department created the Environmental Management
program and raised its own questions about the need to reform the
contracts for the Laboratories and the new clean-up sites. It also
expanded the role of the ES&H Office from policy to detailed guidance
and oversight.
From 1993 to 2000, I served as Director of the Office of Science,
an Assistant Secretary level position. I had responsibility for the
DOE's basic research programs and its 10 multi-program and single-
purpose National Laboratories. During this time, the Department
undertook a Contract Reform initiative, chartered the Secretary of
Energy Advisory Board Review of the Laboratories (Galvin Committee),
created the Laboratory Operations Board, and competed the contracts for
the Brookhaven National Laboratory and the Oak Ridge National
Laboratory. Throughout this whole time, the GAO has issued numerous
reports, both specific and general, on the Department's management of
the Laboratories.
I recount this intertwined history of my career and the Department
of Energy not just to convey my experience, but also to show how the
Department has grappled with the role of the Laboratories, their
missions, their technical and business management and the extent to
which the Laboratory contracts result in under- or over-management by
the Department of Energy staff.
BACKGROUND: THE ATOMIC ENERGY COMMISSION
The National Laboratories began as part of the Manhattan Project;
by the end of World War II, there were numerous universities and non-
profit institutions intimately engaged in research and development for
the Project. Soon after the establishment of the AEC in 1946, the
General Manager, Carroll Wilson, convened an Advisory Board to
recommend how the Commission should interact with contractors for
research and development. (Ref. 1) It was recognized that the wartime
urgency and command relationships of the Manhattan Engineering District
would not be necessary or even desirable in peacetime. The Atomic
Energy Act of 1946 provided new contracting authorities to permit the
new agency flexibility.
The continuing need to engage the best scientific and engineering
minds also argued for a different organizational structure that would
attract the right people and provide an effective environment where
scientifically driven work of vital national security interest could be
carried out. Its recommendations focused predominantly on university
and non-profit institutions. The Board also enumerated the motivations
and risks that a university or non-profit would face in operating an
AEC laboratory. In large measure they have not changed dramatically.
Among the possible motivations were:
(1) patriotic motives;
(2) opportunities for enlargement of staff in certain fields
of activity;
(3) provision of additional research and educational
facilities for staff and students;
(4) underwriting of direct and indirect costs of research of
such a character as to enhance the prestige of the institution.
Among the risks were:
(1) need to use institutional funds as working capital;
(2) need to assume financial risks to insure continuity of
operation when contract renewals are delayed;
(3) possible overexpansion of plant involving continued fixed
charges after government contract work ceases.
Throughout the report of the Board, the Commission is urged to
recognize that these contracts would procure management as well as
goods and services. It noted that Commission staff should not manage
research but rather should determine high level program requirements
and, in the field, oversee the fulfillment of the contract provisions.
In large measure, the detailed scientific and engineering activities
required to meet program requirements were left to Laboratory
management. When questions arose as to contractual compliance,
solutions should be developed in an interactive and mutual manner. It
was expected that the private sector contractors were ``financially and
morally respectable'' parties, which would not require the detailed and
adversarial provisions and processes of traditional government
contracts.
The Advisory Board addressed procurement in some detail. They noted
that detailed records that would follow the evolution of components
into larger research equipment and facilities would require tracking
systems that would cost more than they were worth. They dealt with the
need for much of the facilities to be government-owned, due to both
programmatic and security considerations. As a result, the standard,
university R&D contract would not suffice. It was expected that the
contracts would be long term; the issue of competing specific
Laboratory contracts was not raised.
Thus, it is clear that the general characteristics of the
Management and Operating (M&O) Contract for the AEC Laboratories were
laid out early in its existence. In the late 1940s and early 1950s, as
the Department of Defense found itself in need of independent technical
studies and analyses, it used the AEC M&O contract as a model for
establishing institutions such as IDA, CNA and RAND. The Federal
Acquisition Regulation for FFRDCs provides that ``FFRDCs are operated,
managed, and/or administered by either a university, consortium of
universities, other not-for-profit or nonprofit organization, or
industrial firm, as an autonomous organization or as an identifiable
separate operating unit of a parent organization. Long-term
relationships between the Government and FFRDCs are encouraged in order
to provide the continuity that will attract high-quality personnel.
This relationship should be of the type to encourage the FFRDC to
maintain currency in its field(s) of expertise, maintain its
objectivity and independence, preserve its familiarity with the needs
of its sponsor(s) and provide a quick response capability.'' (Ref. 4,
App. B) Most of the DOE laboratories are FFRDCs. It is also worth
noting that the DOD FFRDCs have been renewed without competition for
the last half century.
Another notable characteristic of the AEC was its relationship with
the Congress, as embodied in the Joint Committee on Atomic Energy. It
was effectively the Commission's Board of Directors; it focused on the
performance of Commission programs by both Commission staff and the
Laboratories. It authorized the Commission programs; it provided
exemptions from many regulations in the ES&H arena; its Members sat
with the Subcommittees on Energy and Water Appropriations, when the AEC
budget was considered. In some respects, the Joint Committee protected
the Commission and especially the Laboratories from the larger
political forces that were being debated in the post World War II era.
The disestablishment of the Joint Committee in 1977 and the creation of
the Department of Energy later in 1977 opened the new Department as a
whole to the oversight and legislative jurisdiction of more than 20
Congressional committees and subcommittees. In later sections, I will
discuss the impact of this broadening of Congressional oversight and
loss of institutional memory in wake of the abolition of the Joint
Committee and the merger of disparate Federal agencies that became the
Department of Energy. Let me now turn to more recent times.
TECHNICAL PERFORMANCE OF THE LABORATORIES--THE CROWN JEWELS
The early Department of Energy strove to organize itself to manage
its complex mission of (1) energy policy, technology development and
regulation; (2) development and production of an effective and safe
nuclear deterrent; and (3) the advancement of the scientific
foundations of fields critical to DOE and other national purposes. The
role of the National Laboratories was in question in almost every area.
Energy technology was to be used by the private sector but should
federally funded laboratories be the source of that technology? There
were also disagreements as to technological emphasis from one
Administration to the next; this resulted in dramatic budget swings in
DOE energy technology programs and at the Laboratories.
The role of the Laboratories was clear in nuclear weapons but
increasingly controversial. They were a lightning rod for anti-nuclear
weapons activists and the broadened Congressional jurisdiction provided
a venue for investigation and debate. The public was also confused as
to how many weapons labs there were. Every DOE Laboratory was seen as
part of the weapons program. Even to this day, non-weapons laboratories
struggle to distinguish themselves in the public view as basic science
and/or energy technology institutions.
In the area of scientific foundations, the broader university
community saw itself as a more efficient and creative competitor for
Laboratory funds. Funding increases for NIH and NSF in the last decade
have muted these latter concerns somewhat.
In the early Reagan Administration, three reviews mentioned earlier
essentially identified the DOE Laboratories as extraordinary national
scientific and technical resources, with special capabilities for the
DOE mission. However, they called for better mission statements for the
Laboratories. All three reports were concerned about the increasing
``micromanagement'' of the Laboratories by Department staff. It was
clear that detailed management guidance had begun to proliferate even
before DOE was created. The PCAST report, which reviewed what were then
the more than 700 Federal laboratories, noted the strengths of the DOE
M&O contracts and the NASA JPL contract. In particular, these
contracts, permitted the Laboratories to attract and retain the
nationally competitive staff in comparison to Federal laboratories tied
to government pay scales. They recommended that other agencies look at
using such contracts for R&D.
The ERAB and PCAST reports recommended that Laboratory Directors be
given authority to use a limited amount of DOE program funds for
independent research. DOE responded to the report and authorized what
has come to be called Laboratory Directed R&D (LDRD). In the 1990s,
LDRD became an interesting example of the lack of historical memory and
coordination in the Congress. The House sought to terminate LDRD at the
three weapons laboratories as a use of funds for unauthorized and
unappropriated purposes. Fortunately the Senate did remember and this
vital capability was preserved. However, the price paid is specific
language in Laboratory contracts and a detailed annual prospective
report. This could be called more ``micromanagement'' or,
alternatively, a small price to pay.
By the beginning of the Clinton Administration, DOE's mission had
expanded to include clean-up of DOE sites. The end of the Cold War and
the emerging Comprehensive Test Ban Treaty made the structure and
content of the nuclear weapons program an issue and, of course, the
character and number of the weapons laboratories was involved. On the
science side, the Superconducting Super Collider (SSC) was in trouble
and seen as only one of a number of Lab-based facilities that were over
budget and behind schedule. And the energy programs were once again
caught up in a change of emphasis--efficiency and renewables were seen
as critical. As part of the National Performance Review examining
Federal agency activities, the Department of Energy chartered a SEAB
panel, chaired by Robert Galvin to look at the Labs once again. And
once again the Laboratories were judged to be wonderful scientific
institutions. It found that DOE requirements and processes were overly
detailed, and that both the Department and the Laboratories could
improve performance, if they would do benchmarking and adopt best
practices from the private sector.
Another area of the Laboratories' programmatic performance received
less than sterling reviews during this period, i.e. project management.
This came to a head early in the Clinton Administration in the wake of
the termination of the SSC and increasing cost and schedule estimates
of clean up projects at the Laboratories and former weapons production
sites. Other lab-based technical projects subsequently had management
problems as well. The General Accounting Office (GAO) produced several
reports during this period about DOE project management problems. I
personally took issue with them on several of their findings related to
Office of Science projects. A National Research Council Committee was
charged to review these issues and made suggestions with respect to
both DOE and laboratory project planning, management and training.
The issue of project management was of special interest in the new
Environmental Management Program. Once cleaned up, some of the former
weapons production sites like Rocky Flats would no longer have a DOE
program role. For such sites, the issue was raised about the character
of the contract and the contractors needed to carry out the clean-up.
In particular, what kind of capabilities were needed and what kind of
incentives and disincentives were appropriate tools to include in these
contracts? A dramatically different contractual instrument was
envisioned. But at the Laboratories, where critical work would
continue, the task was to merge a contract based on predictable
outcomes for the clean-up program with the traditional M&O contract
that had worked well for not easily predictable R&D activities. It was
not an easy marriage to arrange and the concept of performance-based
contracts arose with very specific, often quantitative, outcomes in
project management and more qualitative expectations in R&D. This is
still a work in progress.
In general, the Laboratories were seen as critical programmatic
resources. Even in the case of problems with the management of
technical projects, the role of the Laboratories was not questioned,
and often DOE's inappropriate, if not ``micro'', management received
more criticism than the Laboratories' internal management. After each
of these reviews, the Laboratories and their program sponsors in DOE
and in Congress were able to turn their attention once more to program
performance.
But this is not the whole story. Through out the 1980's and 1990's,
Congressional oversight subcommittees and GAO began to review
Laboratory performance of administrative services. They stipulated the
contractors' ability to manage R&D but raised questions as to their
capability to manage routine administrative activities that are
expected of any government contractor. The very character of the M&O
contract, the preference to renew rather than compete, and its
oversight by DOE was attacked.
PROCUREMENT, SECURITY, ENVIRONMENTAL, SAFETY AND HEALTH (ESH)
ADMINISTRATION AT THE LABORATORIES
Business Practices Oversight--Part 1. In the mid 1980s, the House
Energy and Commerce Committee held a series of hearings that examined
certain procurement and security practices at the Lawrence Livermore
National Laboratory. With the assistance of the GAO to examine internal
DOE and Laboratory reviews, the Committee identified what they judged
to be deficiencies or irregularities: high costs for bicycles used for
getting around inside the one square mile Laboratory site, inability to
locate high-value property at acceptable (better than 99%) rates within
24 hours; the management of a joint LLNL and FBI on-site drug sting,
called ``Snowstorm'', and the performance of LLNL guards with respect
to practice drills and security exercises at the Laboratory site. The
Committee investigation required that DOE answer hundreds of detailed
questions. The hearings called representatives from DOE headquarters,
the field offices and the Laboratory for lengthy interrogations. All of
these issues had been identified by the DOE and the Laboratory and
involved judgment calls on the part of both as to how or whether to
respond. The Committee disagreed with those judgments.
The Committee identified the non-adversarial, interactive
relationship between DOE staff and Laboratory management as problematic
and concluded that the M&O contract was one source that fostered such a
situation. In addition, the Committee was troubled by the fact that
DOE's M&O policy included a preference for renewal of the contract
rather than competition. The burden was on the Department to
demonstrate why competition was needed. In the light of the Competition
in Contracting Act, this was seen as another unacceptable irregularity.
The fact that other agencies continued to make exceptions for both
sole source procurements and uncompleted contract renewals was not
addressed by the Committee. It is also the case that the Committee did
not consider the impacts of its considerations on the nuclear weapons
program activities at the Laboratory, because they were not under the
Committee's jurisdiction. On the other hand, the House Committees on
Armed Services and Appropriations with programmatic jurisdiction did
not take on the Commerce Committee. The result was that the Department
listened to the loudest complaints as a record was built portraying the
M&O contract as an impediment to effective management of the DOE
contractors.
Environmental Compliance at DOE Sites. At the same time, the new
openness of the Department of Energy began to bring State and local
attention to the hazardous chemical contamination at the DOE sites. The
Congressional exemption of DOE from compliance with federal and state
ES&H standards was still in force, but pressure was growing to clean up
the sites. Some facilities had made budget requests to the Department
for support. However, funding was not forthcoming; neither the
Administration nor the Congress felt it was a priority. The Senate
Committee on Governmental Affairs held several hearings on DOE
environmental and contractor governance issues.
All of this changed in the Fall of 1989, when the FBI along with
the EPA raided the Rocky Flats Weapons Production Facility. Eventually
criminal charges were brought against contractor personnel. The DOE
declared that it would abide by Federal, State and local laws. Congress
later enacted legislation that required compliance with Federal
environmental laws at DOE sites.
As part of DOE's response, comprehensive reviews (Tiger Teams) of
ES&H management and compliance took place at every DOE contractor under
extraordinarily rigorous schedules for both the reviews and corrective
action implementation. The Teams consisted of DOE staff and consulting
specialists who had limited understanding of the history of the
specific sites. The Tiger Teams also took a comprehensive and formal
view of ES&H management and looked into financial, procurement,
property management and personnel activities at the site. Almost every
site was judged to have substantial non-compliance problems. Many of
these problems had to do with the paperwork required by Federal laws.
Work rules did not deal systematically with waste disposal or materials
storage. While contamination sites were often known, they were not
characterized at a level that would comply with Federal regulations.
Insufficient remediation activities were underway. The public was
alarmed.
Given the Congressional exemption from Federal environmental
regulation, this state of affairs should not have been a surprise. What
was surprising at least from the Laboratory perspective, was that both
the Department and the Congress forgot that they had had a role in
creating the problem. What had been ``our'' problem became solely the
Laboratories' problems and their fault.
There is no question that it was long overdue for the Laboratories
and DOE to be accountable for environmental compliance. The
Laboratories learned a lot by bringing their activities and management
procedures up to date. It was sudden and it was grueling at every level
of the Laboratories.
Implications for Contract Management. But as DOE Headquarters moved
forward, they wanted changes in the contractor relationship and the
contract. From their point of view, the trust and mutuality implicit in
the M&O contract was no longer functional. Until this time, the
Laboratory leadership had seen themselves as the ``contractor'' and so
did their superiors in the parent organizations. The Department senior
management wanted separate accountability from the ``contractor'' as
opposed to the ``Laboratory.'' As a result, many contractors, and
certainly the University of California, built a whole new
organizational structure between itself and its Laboratories and its
senior leadership. The comprehensive view of management for
environmental compliance also brought a whole new set of reviews and
expectations for what came to be called the business functions of the
Laboratories. The new contractor organizations were given
responsibility for assuring these functions as well. And it was also
the case that the ES&H Office in DOE grew dramatically and broadened
its focus from policy to include inspection and compliance.
Another concept of Laboratory management was also broached at this
time, which was that technical leadership and business management were
different skills not to be expected from the same individuals or
organizations. The notion, called the ``hospital model'', went
something like this: Doctors practice medicine; they don't manage
hospitals; administrators do. According to the model, new kinds of
contractors would be required for Laboratories as well as the clean-up
sites. Thus, the preference for M&O contract renewal was also broken.
The Laboratories made the argument that business practices managed in a
disconnected way from the technical, programmatic work of the
Laboratories would not gain the respect or commitment of the
researchers. The business practices used by the Laboratory are a
critical element of the overall environment, which enabled the
scientific work to get done. Lab morale and recruitment would suffer if
the technical and business leadership were not seamless. This
particular discussion went no further, but for the first time, serious
questions were raised inside DOE about competition.
By the time the Clinton Administration took office, multiple layers
of reviews were occurring at the labs carried out by DOE programs, by
the ES&H Office, by the DOE field organizations, State and local
regulators, contractor central organizations and by the Laboratories
themselves. Costs for the DOE Environmental Management Office were
skyrocketing. Confidence in field offices and the clean up site
contractors were at a low ebb. The Integrated Safety Management
approach, as developed and applied at the Laboratories and included in
revised contracts, helped to reduce the burden of repetitive and costly
inspections.
The Contract Reform Initiative was intended to codify the changed
relationship with the Department's contractors. In its early stages, it
addressed the changed needs at the clean-up sites. There was a
conviction that these sites could be managed as a set of small and
large projects by a contractor incentivized by a structured fee that
would motivate timely and compliant completion of the projects. This
fee would be sufficient to motivate the contractor to put their own
assets at risk as they do for certain other government contracts. The
need for a long-term relationship with these contractors was not a high
priority. Competition for renewal was expected.
While the Laboratories were recognized as different and that a
long-term relationship was desired, the preference for renewal was
replaced with a preference for competition. This is a good example of
the ``one size fits all'' mentality that is pervasive at the
Department. The expectation that the contractors could be economically
motivated to put their own assets at risk for a high enough fee was
never fully put to rest in the minds of DOE procurement officials. They
never quite understood that universities and non-profit contractors had
either very little or no assets to risk or little direct control over
the assets that they did have. They also did not understand that the
fees were essentially overhead on the appropriated research programs,
which would hurt research progress when higher fees were assessed. The
Laboratory contractor thus would be in a very hard place between the
DOE research program and their own scientists, if they negotiated for
higher fees. But the policy still reflects this misunderstanding. It is
also further perpetuated in the recent Laboratory Operations Board
Review of the proposed Best Practices Pilot, where some members of the
review panel believed that a financial incentive was stronger than
contract term extension. (Ref. 7)
Business Practices Oversight--Part 2. The Wen Ho Lee case in the
late 1990s raised many of these concerns again but in the context of
security. In some respects, security violations, especially at DOE
weapons laboratories, are more than a failure of business practices.
The critical generators of information that must be held secure are the
scientists and engineers themselves. But like environmental management,
good security management means an integrated approach to all areas of
the Laboratory's business--procurement, finance, human resources,
property management--as well as technical programs. Thus it is
understandable that failures in these systems may and should mean more
at a weapons laboratory than at other DOE sites. Consider the recent P-
card misuses, which precipitated the recent decisions about the LANL
contract. P-cards were introduced, because they had been identified as
a cost-saving best business practice, and DOE had approved of the
implementation. Further, the abuses were identified through a regularly
scheduled internal review by the Lab and DOE. This is how a
``management system'' is supposed to work.
The fundamental lesson here is clear: contracts and integrated
management systems cannot protect an institution--DOE, Los Alamos, or
the University of California--against the intentional, unethical
behavior of individuals. While the decision to compete the Los Alamos
contract may be irreversible and well founded, much of the rhetoric
betrays a view that a competition will get an intrinsically better deal
for the Department and from the University of California, if it chooses
to compete. The encouragement of the University to compete with
possible partners with demonstrated management skills suggests that the
``hospital'' model is still alive and well in the Department. It
betrays a fundamental misunderstanding of what it takes to provide and
manage an environment where creative science can happen.
CONCLUSIONS
When I served at the Department of Energy and had the occasion to
testify before Congress, I always focused on the positive, because the
Department's mission was important and its Laboratories had made so
many significant contributions to that mission and were needed in the
future. None of that has changed.
I have tried to describe the evolution of the Department and its
Laboratories in an objective manner. As I come to conclusions, I can no
longer do that. I care too much. Today I have dwelled on the
difficulties that have faced the DOE and its Laboratories. I do not
excuse the Laboratories' deficiencies, some of which I certainly know
to be real. I have also shaken my head at what I have seen as
occasional misjudgments by Laboratory and contractor leadership. I do
not oppose recompetition of Laboratory contracts categorically.
However, I also believe that since the creation of the Department,
there has been well-meaning, often unintentional, but ultimately malign
neglect on the part of the internal and external programmatic sponsors
of the Laboratories. The oversight and 'management' elements of the
Department and of the Congress, which are not responsible for
delivering the Department's mission, have not been effectively
countered by program sponsors. Other agencies suffer embarrassments for
their ineffectiveness, but they are rarely browbeaten. They are not
expected to change their procurement policies, and their contractors
are rarely removed despite overruns, schedule slips and occasionally
ethical lapses.
Although much criticized, the Department has a real and important
mission. It is complicated but it has four clear elements: energy,
nuclear weapons stockpile, environmental management and science. There
may be questions about the policies that underlie this mission.
Disagreements about nuclear weapons policy or energy policy do not mean
that the Department does not have a mission. And the Department is not
solely responsible for brokering agreements on policy. Both the
Executive branch and the Congress have often been unable to do their
parts in developing proactive policies and have used deficiencies in
the Department as an excuse to avoid the effort. The content and
competition of the Management & Operating contracts for the
Laboratories have become one of the hobbyhorses that critics have
ridden.
Changes in policy or its interpretation may change programmatic
content, but each of the mission elements will need R&D to achieve its
goals. The DOE Laboratories do integrate the full span of basic and
applied research and they develop the unique facilities required to
support the mission in ways that cannot take place on university
campuses or private sector laboratories.
The contractors for these Laboratories must have the capacity to
attract and lead the best scientific and engineering talent our Nation
can muster. Administrative systems at a Laboratory cannot be developed
independently of programmatic activities. Laboratory contractors may be
partnerships, but the partnership must be structured as a single
entity. Technical leadership is primary; administrative excellence
without technical excellence is useless to the Department mission.
Technical staff can and should be expected to incorporate high
standards for protecting their safety, the environment and other
critical national assets as they carry out their daily technical work.
To make this happen, Laboratory leadership must be committed and the
technical staff must be involved in identifying how individual actions
in research facilities can be carried out to meet these standards. Self
assessments and reviews by the Laboratories are critical but should not
be used against them as part of grandstanding oversight. Having said
this, adding detailed clauses to contracts or competing Laboratory
contracts for the sake of competition will not achieve this kind of
performance.
More reviews won't help. The history recounted above shows that the
patterns of these reviews are established. There are basically two
kinds of reviews. The first type finds the Laboratories to be
technically outstanding crown jewels critical to the Department's
mission. They also often find that DOE micro-manages the Laboratories.
The second sort of review focuses on specific institutional or
individual deficiencies, that may have already been identified by the
Laboratories or DOE. These findings are then used to call into question
the contractors of the Laboratories and the nature of the contracts.
The M&O contract concept used by the AEC and supported by the Joint
Committee provided a framework that lasted thirty years. The last 25
years have seen continuous attacks on that framework. The House and
Senate Committees, which have the principle responsibility for
scientific and technical program content, must work together to
establish a new understanding of what the Laboratories' M&O contract
should be for the next thirty years. The Joint Committee should not and
cannot be reestablished, but the Senate Committees and the staff of
Energy and Natural Resources and Armed Services and Appropriations
should hold joint hearings on this topic. A report should be written;
hearings alone are not enough. We need a record of Congressional
thinking on this matter. This should be done in cooperation and
consultation with the House Committees on Science, Armed Services and
Appropriations. You may decide that you want a strict preference for
competition and a more standard 'goods and services' contract. I do not
believe that is the right position, but a clear statement from this
group of sponsors will allow the Department and the Laboratories to
move forward with some assurance of stability.
I know how hard it would be to do this but I also know that of all
the Committees that have authority over the Department and its
Laboratories, these are the Committees which have the biggest
commitment to seeing something happen with the Nation's investment in
the Department. Having arrived at such an understanding, I urge these
Committees to support the Department as it resists what will
undoubtedly be continuing attempts to use the Laboratories and their
contracts to express opposition to the fundamental work of the
Department, be it nuclear weapons or energy policy.
I have appreciated the opportunity to speak with you today. The
conclusions from these hearings can set the tone for this
Administration and future Administrations at the Department as to how
they use and exercise their stewardship for the remarkable set of
institutions that are the National Laboratories. Thank you.
References:
The chronology of events in this document relies strongly on my
personal memories of events referenced here. A true history would
require considerably more research into the records of the Congress and
the Department. The references listed below are also not comprehensive,
but are useful but not always widely known documents that have or are
now shaping the DOE-Laboratory relationships.
1. Report of the Advisory Board on Relationships of the
Atomic Energy Commission with its Contractors. First Revision.
June 30, 1947. J.W. Hinkley et al.
2. James T. Ramey and John A. Erlewine. Introduction to the
Concept of the ``Administrative Contract'' in Government
Sponsored Research and Development. 17 The Federal Bar Journal
354 (1957), p.371.
3. O.S. Hiestand, Jr. and Mark J. Florsheim. The AEC
Management Contract Concept. 29 Federal Bar Journal 67 (1969),
p.68.
4. At the Crossroads, A National Laboratory Staff Paper on
the M&O Relationship. June 28, 1993.
5. ``Department of Energy: Clear Missions and More Effective
DOE Management Can Enhance the Value of the National
Laboratories.'' (GAO/RCED-95-10).
6. DOE Best Practices Pilot Study. (February 2002)
7. Need for and Barriers to the Adoption of the 'DOE Best
Practices Pilot'. DOE Laboratory Operations Board. April 16,
2002.
8. NNSA Model for Improving Management and Performance.
Albuquerque Operations Office. May 2002.
The Chairman. Thank you very much.
Dr. Hecker.
STATEMENT OF SIGFRIED S. HECKER, SENIOR FELLOW,
LOS ALAMOS NATIONAL LABORATORY, LOS ALAMOS, NM
Dr. Hecker. Thank you, Senator Domenici, Senator Bingaman,
Senator Craig. It is a pleasure to be here this morning to
share my thoughts.
I would like to make three points. The first is the GOCO
system of governance that you have discussed, Senator Domenici,
for the DOE nuclear weapons labs was based on a partnership
between the Government to deal with what I call the inherently
governmental nature of the development, construction, and the
life cycle support of nuclear weapons. So I will address
principally my views of GOCO from the defense laboratories'
standpoint.
This partnership was designed to steer between the
alternatives of a completely Federal operation on one hand and
a procurement-oriented contract operation on the other. I
maintain that this GOCO partnership was deliberate, it was
innovative, and it was successful. Not only did these defense
laboratories provide the cradle-to-grave care for nuclear
weapons, of course helped to end World War II, helped to
resolve the Cold War in our favor, but we have also contributed
to other critical national security missions. I think that
system of governance is just as important today as it was over
the past 60 years.
The second point I want to make is that over the years as
the missions have evolved and as the public expectations of the
nuclear enterprises have changed, and the public expectations
of the laboratories have changed, and the nuclear enterprise
expectations particularly changed as a result of Three Mile
Island and the Chernobyl accidents, that both the Department of
Energy and the laboratories were often slow to make the
necessary changes.
However, rather than working together in the spirit of this
partnership to make the necessary changes, the Department of
Energy typically responded to public criticism and to intense
congressional pressure with new orders, more rules, and
contract terms that fundamentally shifted this governance away
from a partnership and towards what I would call a hybrid
Federal operation or procurement operation, perhaps adopting
the worst of both.
The lines of responsibilities have then become blurred
between the Department of Energy and the laboratory, with more
and more of the operational decisions actually being made by
Federal employees, but more of the accountability and the
liability being shifted to the contractors.
Consequently, it has become increasingly difficult for the
contractors to take the public service approach that is
absolutely necessary to do this inherently governmental
mission. It has also become more difficult to nurture world
class science, to deal with the risks of nuclear operations,
and to provide a buffer from the political pressures, as well
as to provide the continuity that is necessary for stewardship.
These changes were not made by design, with the best
governance in mind, but, rather, resulted from the accumulated
reactions of the Department of Energy to various governmental
audits, and, as I have mentioned, congressional pressures. The
net result is a significantly diminished ability of the
laboratories to accomplish their mission and to dramatically
reduce the productivity of the laboratories. In other words,
the current system of governance as it has evolved I would
maintain is neither deliberate, innovative, nor successful.
The third point: these problems must be repaired before the
damage to the entire system becomes irreparable. Although the
contractors must be held to the highest standards in managing
all of the operations, the solution to the current crisis is
not as simple as just competing or changing contractors. If the
some of governance of is broken, as I maintain it is, then no
contractor will be able to accomplish the mission successfully
and productively. To achieve world-class performance, you not
only need a world-class contractor but you need a world-class
customer, and you need a revitalized system of governance. Such
a system must be established, a partnership between the
government and the contractor.
By the way, that is a word that is never used in a positive
sense in any of the GAO audits that I have ever read. We must
rebuild the trust. Again, trust is viewed as an offense, rather
than being something inherently necessary in the system when
you read these audits. They must increase flexibility and value
this public service orientation of the contractor. In fact, the
changes that have been made over the past few years if anything
seemed to go counter to valuing a public and private sector
partnership and those institutions that have a long record and
history of public service.
Mr. Chairman, members of the committee, I go into much
greater detail in my written statement. Particularly I try to
convince you there that these are not just abstract thoughts
about this, but they come first of all from the heart, and they
come from having had a front row seat in this business for 38
years. I first came to Los Alamos, in fact, this week 38 years
ago. I was there as a student, as a scientist, as a manager, as
a director, and now back as a scientist. I went back as a
scientist because I felt it was so important that, once we
develop nuclear weapon stewardship, that we can actually make
it successful.
Unfortunately, what I have found is no longer the type of
attractive environment that brought me to Los Alamos. Quite
frankly, I came there not to design bombs, not to build bombs;
I came there because it had the ``University of California''
label in front. I was going to be a university professor. It
created an environment that was the best research environment
in the world. It brought me back to Los Alamos two other times
because of that research environment. Only with the course of
time did I get the sense of the importance and the challenge of
the nuclear weapons mission, so in essence I was co-opted into
that. I have done that now for a total of 38 years.
But now, we no longer have that same supportive research
environment: the trust, the flexibility, the sense of
partnership. I don't see it. I hate to say this, but the
environment is no longer as conducive for the next generation
of scientists to start at Los Alamos the way I did some years
ago.
These are not just my own thoughts. You have heard
reference made to various other commissions, the Galvin task
force, and more recently the Hamre Commission on Science and
Security. If you look through, they will use the words
``partnership,'' ``trust,'' ``system of governance is broken.''
Mr. Chairman, I am very encouraged by the fact that you are
holding this series of hearings. It is especially important
today, because interestingly, thanks to your efforts and those
of your colleagues today, we at the weapons laboratories have
important missions. We actually have adequate budgets. For the
first time in a long time, we are replacing the aging
facilities and infrastructure.
All of those things are very ready to go, but we have
undermined the environment by letting this partnership
dissolve. I hope we can fix that. I agree with Martha's
comments that something needs to be done. The importance of
Congress and the committees cannot be overstated. My
recommendation is actually for a congressionally-appointed blue
ribbon task force to design a system of governance, 60 years
from when it was first designed, in order that we can meet the
government missions.
In the end, if we cannot attract the best of the people to
the laboratories to do the job for the country, nothing else
matters much. Thank you.
[The prepared statement of Dr. Hecker follows:]
Prepared Statement of Sigfried S. Hecker, Senior Fellow, Los Alamos
National Laboratory, Los Alamos, NM
Mr. Chairman, I am pleased to be invited to share my views on a
subject that is of great concern to me. I have prepared this written
statement. With your permission, I would like to enter it into the
record along with a comprehensive article I wrote on this subject in
1997. I will briefly summarize my statement this morning. Specifically,
I want to make three points.
First, the GOCO (government owned, contractor operated) system of
governance for the Department of Energy nuclear weapons laboratories
was based on a partnership between the government and a contractor to
deal with the inherently governmental nature of the development,
construction, and life-cycle support of nuclear weapons. The
partnership was designed to steer between the alternatives of a
completely federal operation and a procurement-oriented, contract
operation. The GOCO partnership was deliberate, innovative and
successful. Not only did the weapons laboratories provide the cradle-
to-grave care of the nuclear weapons that helped end World War II and
deter the Soviet Union during the Cold War, but they also contributed
to other critical national security and civilian missions. The need for
a successful system of governance for these laboratories is as great as
ever in light of the challenges of stockpile stewardship in a no-test
environment and of the increased threats of proliferation of weapons of
mass destruction and terrorism.
Second, over the years, as missions evolved and as public
expectations of these institutions changed, the laboratories were often
slow to make the necessary changes. However, rather than working with
the laboratories to institute the necessary changes in the spirit of
the GOCO partnership, the DOE typically responded to public criticism
and congressional pressure with new orders, rules, and contract terms
that fundamentally shifted governance away from the GOCO partnership
toward a hybrid federal operation and procurement contract operation.
The lines of responsibility and authority between the DOE and the
contractors have become blurred, with more and more of the operational
decisions made by federal employees, but more accountability and
liability shifted to the contractors. Consequently, it has become
increasingly difficult for contractors to take the public-service
approach required for nuclear weapons stewardship, to nurture world-
class science, to deal with the risk of nuclear operations, to provide
a buffer from political pressures, and to provide the continuity
necessary for stewardship. These changes were made not by design with
the best governance in mind, but rather resulted from the accumulated
reactions of the DOE to government audits and congressional pressure.
The net result has been to significantly diminish the ability of the
laboratories to accomplish their missions and to dramatically reduce
productivity.
Third, these problems must be repaired before the damage to the
entire system becomes irreparable. Although contractors must be held to
the highest standards in managing all of their operations, the solution
to the current crisis is not as simple as changing contractors. If the
system of governance is broken, as I contend it is, then no contractor
will be able to accomplish its mission successfully and productively.
To achieve world-class performance we must have not only a world-class
contractor, but also a world-class customer and a revitalized system of
governance. Such a system must re-establish the partnership between the
government and the contractor, it must rebuild trust, flexibility, and
a public-service orientation, and it must opt for contract terms that
encourage implementation of best practices from the private sector
rather than adopting prescriptive federal practices. These changes will
be difficult to implement now that the system has swung so far from
these features. I believe that a congressionally mandated Blue Ribbon
Task Force chartered to design an improved system of governance is the
best way to address this important and urgent problem.
THE GOCO (GOVERNMENT-OWNED, CONTRACTOR-OPERATED) PARTNERSHIP FOR THE
NUCLEAR WEAPONS PROGRAM
I will first discuss the salient features of the GOCO partnership
that formed the basis of governance of the DOE laboratories. Although
many of these features applied to both weapons and civilian
laboratories, I will focus my remarks on the nuclear weapons
laboratories.
The development, construction, and life-cycle support of the
nuclear weapons required during the Cold War were inherently
governmental functions.\1\ However, the government realized that it
could not enlist the necessary talent to do the job with its own civil-
service employees. Instead, it enlisted contractors to perform the
government's work on government land, in government facilities, using
the specialized procurement vehicle of an M&O (management and
operations) contract.
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\1\ ``Inherently governmental function'' means, as a matter of
policy, a function that is so intimately related to the public interest
as to mandate performance by government employees. This definition is a
policy determination, not a legal determination. An inherently
governmental function includes activities that require either the
exercise of discretion in applying government authority, or the making
of value judgments in making decisions for the government. (Quoted from
the Federal Acquisition Regulations [FAR], Part 7.5).
---------------------------------------------------------------------------
The government does not normally contract out inherently
governmental functions such as managing the armed services, conducting
international relations, or the printing of money. But when it does,
there is sufficient authority (notably the Atomic Energy Act in the
case of nuclear weapons) to tailor the resulting contracts in a way
that addresses the special concerns of both the government and the
contractor. The government used the M&O contracting vehicle to develop
the GOCO partnership for atomic energy activities.
The GOCO partnership was deliberate, innovative and successful. Not
only did the weapons laboratories provide the cradle-to-grave care of
the nuclear weapons that helped end World War II and deter the Soviet
Union during the Cold War, but they also became world-class research
institutions that positively impacted the broader interests of the
United States. The GOCO concept was designed as a partnership to steer
between the alternatives of a completely federal operation and a
procurement-oriented, contract operation.
Specifically, for the nuclear weapons laboratories the contractor
was chosen to bring to the job scientific and management talents that
typically do not exist in the federal government. Furthermore, the
contractor was not to be saddled with all federal rules and regulations
governing procurement, personnel policies, etc., in order to be
quicker, more flexible, and more effective than the government itself.
Under the GOCO partnership, the government defines general policy
and programmatic goals. The contractor is responsible for performing
the research programs in a technically sound, cost-effective and safe
manner. In simple terms, the government decides what's to be done, and
the contractor decides how and by whom. The government, as owner and
customer, had the responsibility of holding the contractor accountable
for its performance, for safe and secure operations, and environmental
stewardship of the government's facilities.
The nuclear weapons program required the following characteristics:
--Long-term commitment, but limited access (the government
did not want dozens of institutions involved in the design and
development of nuclear weapons).
--Technical excellence and innovation in a highly classified
environment.
--Ability to cope with potentially enormous risks and
hazards.
--Unwavering technical integrity.
--Unique, expensive facilities.
--Cost-effective, safe, and environmentally responsible
operations.
These requirements were met by appealing to organizations such as
the University of California and AT&T Bell Labs (two of the most
respected and innovative research institutions in the world) to join
the government in a public-service partnership.
The sine qua non of the University of California's agreement to
serve the nation was ``no gain, no loss,'' while providing outstanding
public service. The government's interest in accomplishing high-risk
research at minimum cost was served by the University's commitment to
public service with no profit or fee. The University's concern with
financial risks and liabilities was alleviated by the government's
commitment to broad indemnification. The laboratories performed large-
scale, complex research and development activities that were essential
to the mission, but by their very nature carried great inherent risks.
The only reasonable condition under which the University could serve
was with federal indemnification. The University's service was rendered
solely for the advancement of the national interest, without personal
or institutional gain.
Under this arrangement, the University did the work, and the
government covered the cost and took the major financial risks. While
the government's indemnification of the University was never absolute,
the basic approach was that the government would bear the risks to
essentially the same extent as if the government were performing the
work itself, while appropriately holding the contractor accountable for
stewardship of government resources.
changes of the goco relationship over time--a personal view
Mr. Chairman, in your letter of invitation you asked me to address
how changes in federal governance of the laboratories over the years
have impacted the ability of laboratory scientists to respond to
national missions. I had a front-row seat for 38 of the 60 years of the
existence of the laboratory system first as a student, then a
scientist, than a manager and laboratory director, and now, again, as a
scientist. So, I will take the liberty of providing a brief journey
through my career at the Los Alamos National Laboratory as a way to
answer your question and touch upon some of the broader issues you
raised.
Nirvana
I first came to Los Alamos in the summer of 1965 as a 21-year old
student in search of adventure and scientific challenge. Within a week,
I was working productively in a plutonium lab under the guidance of a
hands-on mentor in the most modern plutonium facility in the world, the
Chemistry Metallurgy Research (CMR) Building. I had a productive and
fascinating summer that greatly influenced the rest of my life.
Looking back now, what happened that summer was astonishing. First,
I received a security clearance to work ``inside the fence'' within
three months--in spite of the fact that I was born in Poland, grew up
in Austria, had been in the United States less than 10 years, and a
citizen less than five years. The necessary background checks were done
expeditiously to allow me to start at the laboratory that summer. The
clear message was that my new country trusted me and for me that trust
became the most demanding gift of all. During the past 10 years, the
clearance process for American-born applicants has typically taken one
to two years (because of a variety of bureaucratic impediments, not
because the background checks are more thorough)--a period that seems
like an eternity, especially for young people eager to get to work.
Moreover, as I will demonstrate below, the sense of trust, so essential
to the conduct of our national security mission, has been seriously
eroded over the years.
Also, having a 21-year old with no nuclear materials experience
working in a plutonium lab within one week is not only unheard of
today, but the federal authorities would most likely consider it
irresponsible management practice. Yet, I believe that I received an
excellent, professional, and safe indoctrination because I was mentored
by experienced scientists and engineers, not guided by a thousand-page
rulebook. I was taught that safety is an integral part of the fabric of
work, not something that is added on because of compliance with rules
and regulations. Safety was our responsibility and every employee knew
that. However, as I will explain below, environmental, safety, and
health issues became major issues in the DOE complex and the
laboratories around 1990. The DOE response was very compliance driven
and the increased presence of DOE overseers and auditors blurred lines
of responsibility instead of improving safety. The laboratories, on the
other hand, were slow to adapt to changing requirements and public
expectations. Over a period of a few years, they began to adopt best
practices from the private sector through an integrated safety
management approach. However, this was very difficult under an overly
prescriptive federal environment.
After returning to school to complete my graduate work, I returned
to Los Alamos three years later as a postdoctoral research fellow and
what I considered a stop on the way to a university professorship. Los
Alamos offered one of the most attractive research environments in the
country and it belonged to the prestigious University of California
family of campuses and labs. Los Alamos had excellent research
facilities, a broad spectrum of great scientists and engineers, and
great financial support. Moreover, the laboratory had the flexibility
to permit me to follow my research interests. These were times when the
spirit of partnership permeated every aspect of the laboratory's
operations. It was a time when the Congress (through the Joint
Committee on Atomic Energy), the executive branch (through the Atomic
Energy Commission), and the contractor (the University of California,
for our laboratory) were true partners in the nation's nuclear
enterprise. Subsequent to my two-year appointment, I decided to make a
stop in an industrial research laboratory at General Motors before
moving on to a university. However, I never reached my destination
because my Los Alamos colleagues were sufficiently persuasive to
convince me to return instead to Los Alamos as a technical staff member
in 1973.
My goal was to do materials research, not weapons research and
development. I did not go to school to design or build bombs. I never
imagined that I would get deeply involved in nuclear materials and
nuclear weapons. Yet, the environment created by the University of
California at Los Alamos hooked me to this very day. It gave me the
opportunity to do world-class research and it allowed me to serve my
country at the same time. I learned how scientifically fascinating the
nuclear weapons problems were. It allowed me to learn from Nobel
laureates and Manhattan Project pioneers. It was an atmosphere that
awakened a sense of patriotism and public service. I was proud to be
contributing to the compelling missions of the laboratory--
fundamentally, that of national security, but also contributing to
energy, environment, and public health. Partnership, flexibility, and
trust were still central. The bureaucracy at that time was much less
and seemed bearable; although the old timers complained that things
were not the way they used to be.
Winds of Change
During the late 1970s and early 1980s, things began to change. The
broadened missions of the laboratories that followed the transformation
in 1977 of the Atomic Energy Commission to the Department of Energy
(via the short-lived Energy Research and Development Administration)
brought with them significantly more government bureaucracy. The new
department was clearly a political entity, not the focused,
professionally staffed AEC. Moreover, the elimination of the Joint
Committee on Atomic Energy in Congress decreased the support for
nuclear activities in Congress and added much bureaucracy because of
complicated jurisdictional issues.
During the 1980s, things also changed for me. I took on
increasingly greater management responsibility along with my research.
I was fortunate to be asked to lead the laboratory, beginning in
January 1986 and to serve as its director, which I did until November
1997. In spite of the changes noted above, the spirit of the GOCO
partnership between the Department of Energy and the laboratories still
existed. The laboratories were still part of the DOE family. The DOE
leadership set overall policies and directions, provided oversight, and
held us accountable. We, the laboratories, had cradle-to-grave
technical responsibility for the nation's nuclear weapons. We provided
continuity from one government administration to the next. For example,
my tenure as director overlapped that of four Secretaries of Energy.
This relationship was enabled by the special nature of the GOCO
partnership contract. The laboratory directors had the responsibility
for the safety, security, and reliability of nuclear weapons. The
President's confidence in the nuclear arsenal was based to a large
extent on the judgment of the directors. Clearly, the directors had to
act in the best interest of the nation. I was able to do so because the
University of California had a long history of public service and it
was protected by a special contract with the government that covered
major liabilities.
The partnership between the DOE and the laboratories also
manifested itself in a number of exciting initiatives to respond to
changing missions during the late 1980s. As the Soviet Union began to
disintegrate, we jointly launched initiatives that addressed other
critical national problems that could benefit from the capabilities of
the laboratories. These projects included addressing non-proliferation
concerns, improved conventional munitions, ballistic missile defense,
enhanced energy supply, the development of high-temperature
superconductors, the Human Genome Project, and industrial partnerships
with industries such as the oil and gas industry. These projects were
partnerships between DOE and the laboratories and had strong backing
from Congress, especially from Senators Domenici and Bingaman.
The DOE Complex Under Stress and a Retreat From the GOCO Partnership
But the late 1980s witnessed not only the disintegration of the
Soviet Union, but also the slow but steady disintegration of the DOE
nuclear complex. In Washington, there was a loss of a sense of urgency
for the nuclear weapons mission. In addition, the growing national
environmental awareness brought into question many past practices in
the nuclear weapons complex. The public expected greater scrutiny of
the nuclear complex and better stewardship of the nuclear enterprises,
especially following the Three Mile Island accident in 1979 and the
Chernobyl reactor disaster in 1986. The DOE complex experienced
particularly intense public and congressional scrutiny following a 1984
federal court decision on an environmental lawsuit regarding the Oak
Ridge site that ordered all DOE facilities to be placed under federal,
state, and local environmental regulations instead of being self-
regulated. The resulting changes in operations in the DOE complex
greatly impacted the productivity of the complex and changed the
relationship between the DOE and its contractors. Many of the
production facilities in the nuclear weapons and materials complex were
shut down, some in keeping with changing mission requirements (such as
the plutonium production reactors and uranium enrichment facilities)
and others principally because of regulatory concerns (pit production
at Rocky Flats, for example).
It was not the stricter governmental safety and environmental
regulations per se, but the way DOE responded to these regulations that
led to these problems. Driven by intense public and congressional
pressures, the DOE responded with increased oversight and prescriptive
remedies that focused on compliance and paperwork, rather than improved
safety and better environmental practices. The increased scrutiny began
in the weapons production complex, but moved to the laboratories around
1990 with the implementation of the DOE Tiger Team inspections. The DOE
increasingly prescribed how the work by the contractors in the complex
should be performed, rather than specifying what was to be done and
then holding contractors accountable for doing it safely and
effectively. The Department and other agencies increased the number of
audits dramatically (for example, at the Los Alamos National Laboratory
we had roughly 160 audits in 1992) and put more and more of its federal
employees on site to oversee operations. The roles, responsibilities,
and authorities of federal overseers and contractor personnel became
confused, often leading to an adversarial relationship.
The DOE Tiger Team inspections were symptomatic of the change
attention focused on regulatory compliance that was mostly process and
paperwork oriented instead of outcome driven. These changes led to a
great proliferation of DOE employees in the audit chain at the
laboratories. The laboratories responded by staffing up their own
auditing staffs and functions, even creating new internal organizations
to respond to the requirements imposed by the DOE. In addition, the
laboratories were trying to balance programmatic requirements with
newly imposed environmental, safety, and health requirements without
adequate financial support from the government. Moreover, they were
trying to make all these changes in facilities and infrastructures that
were old and often beyond repair. For example, the CMR Building in
which I began my career was nearing the end of its useful life, yet we
were not able to get DOE approval for a replacement facility at this
time.
Consequently, much of the trust that formed the basis of the GOCO
relationship between the DOE and the contractor was lost. The
Department's relationship with the laboratories, driven to a large
extent by pressure from Congress, changed from one of owner/operator to
policeman/operator. The relationship changed from one of partnership to
an arms-length government procurement. Congress insisted on greater
``accountability'' from the Department and its contractors, but it too
often measured success by how well the Department or the contractors
fared during government audits, rather than by how well they
accomplished their missions. Virtually every audit by the Government
Accounting Office (GAO) of the DOE complex concluded that the
``insufficient DOE oversight'' was a major contributing factor to
whatever problems were cited.
It was no surprise then that with each contract renewal, the DOE
further dismantled the GOCO partnership to make the contracts more like
standard government procurements. The Department began to take away
many of the special procurement practices built into the GOCO contracts
that allowed flexibility and speed. Yet, it was these special
contractual provisions that allowed the laboratories to emulate private
sector practice, rather than cumbersome federal procurement
regulations. It began to impose federal personnel policies and business
practices on the contractors. It began to chip away at the
indemnification provisions offered to GOCO contractors since the
inception of the concept. It began to shift the risks of operations of
its nuclear facilities increasingly to the contractors, offering
financial incentives to those who were willing to compete in this new
contractual environment. Consequently, the DOE either lost or fired
many of the stellar American companies that agreed to step in after the
Manhattan Project to help create and manage the nuclear complex. In the
early 1990s, AT&T, which had operated Sandia National Laboratories
since its inception, declined to consider continuation of its
management role when the DOE decided not to renew its presidential
indemnification (first approved by President Truman) for operation of
the Sandia laboratories. Lost to the DOE complex for a variety of
reasons were such stellar companies as DuPont, General Electric, Dow,
Union Carbide, and Rockwell. These changes may have made it easier to
audit the laboratories, but they did not make them more effective. In
fact, these changes very negatively affected the operational
environment. It also made it more difficult to recruit the best
scientists and engineers, and it discouraged qualified individuals from
taking on scientific leadership/management positions. Over time, it
diminished the laboratories' ability to accomplish their technical
missions effectively.
These problems were noted by the Galvin Task Force, which reviewed
the governance of the DOE laboratories and issued its report on
Alternative Futures for the Department of Energy Laboratories in
February 1995. The Task Force lamented the fact that the GOCO
relationship between the DOE and the contractors had deteriorated to
the point where the laboratories look essentially like GOGO
(government-owned, government-operated) institutions. The report
states: ``. . . wherever we turn we see evidence of nothing but a
government owned and more government operated system.'' The report
pointed out that both DOE and Congress must shoulder the responsibility
for this erosion. The Task Force further observed: ``. . . the
Department is driven both to honor the prescriptions from Congress and
to over-prescribe 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 a myriad 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.'' The
Task Force indicated that productivity at the DOE laboratories could be
enhanced by 20 to 50 percent. It concluded that the system of
governance was broken, having veered significantly from its GOCO
practices.
At this point, most of the contractors and their laboratories
looked to the private sector to attempt to re-engineer the
laboratories. We at Los Alamos began a ``productivity initiative'' in
the early 1990s to apply the lessons learned by the private sector in
the 1980s to make our operations more productive while ensuring safety
and environmental responsibility. We brought in private-sector
consultants, we went to school at the private industrial universities
(such as Motorola University) to learn quality principles, we began the
Baldrige Quality Award assessment process, and we co-opted the DOE
leadership to join us in these endeavors. We began to re-engineer our
business systems and our work processes, to implement an integrated
safety management system, and we restructured the laboratory. These
changes began to improve our productivity. The University of California
also negotiated a performance-based contract with the DOE.
Unfortunately, the DOE did not change its management system or
oversight practices; nor did it adequately support the changes at the
laboratories and the University. For example, at Los Alamos we did not
get the necessary backing and cooperation of the DOE when we had to
make difficult manpower decisions that were necessary to enable our
productivity initiative. Unfortunately, the bottom line was that
neither DOE nor the Congress was prepared to make the type of changes
we were implementing, cutting short our ambitious re-engineering
efforts. A great opportunity to fundamentally improve the laboratory's
operations and its overall productivity was lost.
Strong Mission Support From the Government and the Role of the
University of California
I would like to add a success story that ran counter to our
disappointing experience in trying to change the operating environment
for the better at the laboratories. In the 1990s, the DOE and the
laboratories together successfully dealt with the changing mission
requirements that accompanied the end of the Cold War. The collapse of
the Soviet Union was as remarkable as it was unexpected. With the
backing of Charles Curtis, then DOE Under Secretary, the laboratory
directors established successful threat reduction efforts with their
counterparts in Russia. Most of the early cooperative nuclear programs
with Russia were initiated by laboratory personnel with the explicit
support of DOE. Under the leadership of then DOE Assistant Secretary
for Defense Programs, Dr. Victor Reis, the laboratories helped to forge
the nuclear weapons stewardship program. The laboratories also began an
effort in the mid-1990s to help the country develop technologies
necessary to deal with terrorism and weapons of mass destruction. These
changes were profound and essential to our national security. The
programs and changing missions were strongly encouraged and supported
by Congress. Unfortunately, the same was not true of helping us deal
with the deteriorating operational environment at the laboratories.
I had the fortune of leading the Los Alamos National Laboratory
during these historic times. I began to increasingly appreciate the
role of the University of California in dealing with these complex
issues. The University not only provided a technical peer review system
for all of our laboratory's technical activities to make sure they
remained world class, but it also had the convening power to engage
high-level advisors that helped me and our laboratory management to
think through the necessary mission and operational changes. With the
strong backing of the University and its advisory council, then
director of the Lawrence Livermore National Laboratory, John Nuckolls,
and I visited the Russian nuclear weapons laboratories in February
1992, less than two months after the dissolution of the Soviet Union.
We initiated many cooperative activities that helped to lessen the
dangers inherent in the Russian nuclear enterprise faced with a sudden
and dramatic breakdown of its government and its economy. We received
the University's backing in spite of the fact that these initiatives
were very risky and that liability issues had not been directly
addressed. The University's own public service orientation and the
special nature of the GOCO contract that still prevailed at that time
made this possible.
During the 1990s, the DOE and the laboratories also faced some
difficult decisions with respect to arms control agreements, nuclear
weapons safety, nuclear testing, and the evolution of stockpile
stewardship. It was essential that the laboratory directors provided
the best technical advice to the government, regardless of its
political correctness. The directors, in spite of the fact that they
did not work for the federal government, had to act as public servants
because these issues were of an inherently governmental nature.
Beginning in 1996, the directors of the three DOE weapons laboratories
were asked to certify the nuclear stockpile with letters to the
secretaries of Defense and Energy (who then advised the President). To
sign the letter that states: ``I certify the nuclear weapons in the
stockpile that our laboratory has designed to be safe and reliable,
without nuclear testing at this time,'' the directors should not be
motivated by personal salaries, corporate fees or corporate profits.
The directors can do this job responsibly only by acting as an
extension of the Department--as ``public servants.'' It is the very
nature of the GOCO partnership that allowed the directors to do so.
Furthermore, the regents and the president of the University of
California made it clear that they expected me to place the national
interest above all. They provided the backing and the confidence for me
to make the tough decisions we faced during this time. Over the years,
the presence of the University of California in the nuclear weapons
complex also enriched the debate about the role of nuclear weapons and
their stewardship.
Political Turmoil and Serious Setbacks for the Laboratories
I left the directorship at Los Alamos in November 1997 to return to
my research interests and to spend more time on the threat reduction
activities with the Russian nuclear complex. I remained at Los Alamos
because I believed this was the best way to serve my country. My
principal research interest is plutonium metallurgy. Potential problems
with the re-manufacture of plutonium pits for weapons or problems with
the aging of existing pits are at the heart of the challenge of
stockpile stewardship that is, keeping our nuclear weapons safe,
secure, and reliable. I helped to craft the concept of science-based
stockpile stewardship--now I wanted to help it succeed. I wanted to
attract the best young talent to this task and I hoped to help restore
a productive work environment for plutonium research. I knew that the
working environment at the laboratory was no longer the nirvana that I
experienced when I first arrived, but I found that it had deteriorated
even more than I had realized as director.
Unfortunately, two unfortunate events caused even more severe
damage to the work environment at Los Alamos--the Wen Ho Lee security
affair that came to light in 1999 and the missing hard drive incident
in 2000. Both incidents raised serious questions about security
practices at Los Alamos and at DOE. However, instead of careful
analysis of how to correct the cyber and counter-intelligence
weaknesses that the case exposed, the politically charged environment
resulted in reactions in Congress and by the DOE leadership that proved
devastating for the laboratory and the entire system of laboratories.
Additional security measures were enacted at the laboratories that were
not well thought out and that could have disastrous long-term
consequences for the laboratories and the ability to fulfill their
missions. For example, polygraph testing was implemented in spite of
substantial scientific evidence that it is unreliable (a view recently
confirmed by a study by the prestigious National Academies).
Insufficient consideration was giving to the down side of polygraph
testing; that is, not only what to do about false positives and false
negatives, but also how to deal with the overall damaging effect such
testing has on recruitment and retention). In the case of the hard-
drive incident, the security frenzy led to an FBI investigation that
utilized strong-armed tactics in one of the most sensitive divisions of
the laboratory, resulting in the creation of a hostile work
environment.
The concerns about the government's reaction to the security
incidents at Los Alamos are shared by others, who perhaps can view
these incidents more dispassionately than I. John Hamre, chair of the
Commission on Science and Security established by the Secretary of
Energy in October 2000, recently summarized his concerns based on the
Commission's report in Issues in Science and Technology, Summer 2002.
Hamre stated: ``The commission concluded that DOE's current policies
and practices risk undermining its security and compromising its
science and technology programs. The central cause of this worrisome
conclusion is that the spirit of shared responsibility between the
scientists and the security professionals has broken down.'' Hamre
continued: ``The damaging consequences of this collapse of mutual trust
cannot be overstated. It is not possible either to pursue creative
science or to secure national secrets if scientists and security
professionals do not trust each other.'' He also pointed out that to
fix these problems the DOE must confront the long-standing management
problems in the Department. Donald Kennedy echoed many of the same
concerns about the Department's approach to security in his editorial
in the 23 May 2003 issue of Science.
Unlike the security environment, the operational environment in the
laboratory's experimental facilities (especially the plutonium
facilities) suffered no catastrophic event, but instead faced
continuing erosion in our ability to do experimental work. The safety
and environmental regulations continued to become increasingly
prescriptive. In spite of our progress in implementing integrated
safety management systems and improving our nuclear operations, more
DOE oversight was prescribed and approval through the DOE maze became
increasingly cumbersome. More and more, the key safety decisions were
moved from knowledgeable engineers and scientists to overseers with
little hands-on nuclear experience. I realize that DOE must provide
oversight of our operations; after all it is the owner and has a
responsibility to the public. However, for the reasons discussed
before, DOE oversight has evolved over the years to become so intrusive
and counterproductive that it has diminished our scientific quality and
productivity.
Let me provide you with one of the most egregious examples of an
approval system gone awry. It is the tale of a colleague who had an
experience far removed from that I experienced when I started at Los
Alamos as a student. In early 1992, he began to design and build a
full-scale hydriding test facility for plutonium pits at our TA-55
plutonium facility. In spite of the fact that his project was of great
importance and significant urgency for stockpile stewardship, he was
not able to run his first experiment until December 1999, almost eight
years later. The Tiger-Team atmosphere slowed down initial approvals
and the paperwork became excruciatingly cumbersome. In spite of
excellent design and engineering work, the project suffered repeated
delays due to additional reviews and approvals required by DOE. The
flammable gas issue associated with hydrogen alone required three and a
half years approval through DOE Los Alamos Office, DOE Albuquerque, and
DOE Headquarters. In spite of some 18 to 20 reviews of the system and
eight years in preparation, only two minor physical changes were made
to the system. How can we meet our mission requirements and how can we
prevent our scientists and engineers from giving up in frustration in
this type of an environment? In addition, changes in indemnification
now threaten laboratory employees working directly with nuclear
materials with Price Anderson violations, which presents an additional
impediment to getting people to do experimental nuclear work.
During this time we also experienced increasing micro-management
and a loss of flexibility in the laboratories' technical and
programmatic activities. Over the years, DOE provided the programmatic
requirements and broad budgetary flexibility, whereas technical
decisions were made at the laboratories. Now, both congressional
committees and DOE insisted on budgeting and managing programmatic
activities at an increasingly finer scale to achieve greater
accountability. Unfortunately, this shifted more of the technical
decision making to DOE Headquarters and limited the flexibility at the
laboratories to do the best possible job. So, although today the
overall budgets are sufficient to get the job done, the
compartmentalization of the budget diminishes our ability to do so
effectively.
These problems and the conclusions of the Hamre Commission and the
Galvin Task Force paint a very different picture from that of numerous
governmental audits and investigations by offices such as the GAO or
the Inspector General. These audits consistently fault the DOE for lack
of sufficient oversight. None of these reports laments the lack of
trust and flexibility, or the fact that an environment has been created
in which we cannot get our work done productively. Instead, trusting a
contractor is treated more like an offense than a necessity. Moreover,
the GAO and IG reports become ammunition for congressional hearings,
which often lead to further admonition of DOE practices. DOE officials,
in turn, become more prescriptive in their management and oversight.
This cycle has repeated itself many times during the past dozen years,
resulting in the loss of trust and the loss of the partnership concept
that made the laboratories successful over the years. Moreover we lost
many good people who gave up in frustration.
In an effort to improve the ability of the government to conduct
its nuclear national security mission, Congress created the semi-
autonomous National Nuclear Security Administration to carry out the
national security responsibilities of the Department of Energy,
including maintenance of a safe, secure and reliable stockpile of
nuclear weapons and associated materials capabilities and technologies;
promotion of international nuclear safety and nonproliferation; and
administration and management of the naval nuclear propulsion program.
The NNSA officially began operations on March 1, 2000. In my view, the
previous DOE administration resisted the autonomy of the new
administration and hampered its effective implementation. In General
John Gordon and Ambassador Linton Brooks, the NNSA has had the type of
competent, nonpolitical leadership that Congress envisioned. Ambassador
Brooks has made some positive changes such as the organizational
changes he announced on Dec. 18, 2002. However, the difficulties in the
structure and operational environment run deep in the organization. I
believe that he will need encouragement and help from the Congress to
make additional operational improvements in the NNSA.
THE CURRENT CONTRACTING CRISIS AND A PATH FORWARD
The latest crisis in governance and contracting was triggered by
concerns over poor procurement and property management practices at Los
Alamos. Although many of the initial accusations and headlines have
proven incorrect or misleading, much needs to be and is being done to
improve business practices at the laboratory. These concerns brought
into question the University of California's ability to manage the
laboratory, and they triggered several congressional hearings. At the
end of April, Secretary Abraham decided to compete the Los Alamos
contract for the first time in its 60-year history. Quite naturally
this decision is causing serious concern and unrest within the Los
Alamos workforce.
The regents of the University of California have not yet decided
whether or not to compete for this contract. In my opinion, the
University has served the nation with distinction by operating the
nuclear weapons laboratories at Los Alamos and at Livermore since their
inception. However, that success was made possible by the very nature
of governance and the partnership inherent in the GOCO contracting
model. As pointed out, this model has been effectively dissolved over
the past dozen years, and the University has come under increasing
criticism for its management of the laboratories. Unless the next
contract begins to restore the partnership between the government and
the contractor, it may not be in the University's or the nation's best
interest to continue with UC management. Moreover, I believe that no
contractor will succeed unless the governance model is fixed.
Mr. Chairman, your hearings are designed to examine governance and
contracting. As I have pointed out, the GOCO M&O contract was designed
as a partnership to steer between the alternatives of a completely
federal operation and a procurement-oriented, contract operation. As
missions evolved and as public expectations of these institutions
changed, the laboratories were often slow to make the necessary
changes. However, rather than working with the laboratories to
institute the necessary changes in the spirit of the GOCO partnership,
the DOE typically responded to public criticism and congressional
pressure with new orders, rules, and contract terms that fundamentally
shifted governance away from the GOCO partnership toward a hybrid
federal operation and procurement contract operation. The lines of
responsibility and authority between the DOE and the contractors have
become blurred, with more and more of the operational decisions made by
federal employees, but more accountability and liability shifted to the
contractors. Consequently, it has become increasingly difficult for
contractors to take the public-service approach required for nuclear
weapons stewardship, to nurture world-class science, to deal with the
risk of nuclear operations, to provide a buffer from political
pressures, and to provide the continuity necessary for stewardship.
These changes were made not by design with the best governance in mind,
but rather resulted from the accumulated reactions of the DOE to
government audits and congressional pressure. The net result has been
to significantly diminish the ability of the laboratories to accomplish
their missions and to dramatically reduce their productivity. The
laboratories are on the cusp of being irreparably damaged as scientific
institutions in service to the nation.
Now one must make a clear choice. On one hand, one can follow that
path that is, respond to every problem by increasing federal oversight,
increasing the presence of federal on-site employees, writing more
rules, stepping up audits, and increasing penalties and fees for
noncompliance. This approach has led us in the direction of making the
laboratories look and act increasingly like federal institutions with a
major toll on scientific productivity. On the other hand, one can try
to revitalize the GOCO partnership to ensure that we are able to
continue to attract the best scientific and management talent to the
nation's nuclear weapons enterprise and to bring the best practices
from the private sector to bear on their operations.
I mentioned that the GOCO concept as originally conceived was
deliberate, innovative, and successful. I believe that the current
situation is none of the above. The current system of governance is not
deliberate. The GOCO partnership has been effectively dissolved by a
series of piece meal actions mostly in response to the crisis de jour,
not by design. The current system is bureaucratic not innovative. The
organizational lines of authority have become blurred and ineffective.
It leans heavily toward a GOGO mode of operation, which has not
distinguished itself in practice in the rest of the government. And the
current system is not successful. The prescriptive mode of operations
and the enormous burdens of federal oversight and micromanagement have
taken an unacceptable toll on the scientific quality and productivity
of the laboratories. Moreover, it is becoming so difficult to get work
done at the laboratories that it will be very difficult to attract the
talent required for the demanding missions. I believe that the best way
to redesign the system of governance and to reestablish a productive
work environment is to charter a high-level Blue Ribbon Task Force, one
that would follow up on the previous Galvin Task Force and Hamre
Commission and help to design a vastly improved system of governance
and contracting for the future.
Based on my experience at Los Alamos, I view the following as
necessary ingredients of a successfully redesigned system of
governance:
Partnership based on trust between government and
contractors. The inherently governmental nature of the nuclear
weapons enterprise requires rebuilding a partnership based on
trust and a long-term contracting commitment. Congress should
steer governance back toward a partnership and away from
emulating federal operations or a procurement-oriented contract
model. Although the government must verify trust, it must
concurrently nurture it to ensure safe, secure,
environmentally, and cost-effective operations of the nuclear
weapons enterprise.
Scientific excellence and integrity. Fostering creativity,
innovation, and freedom of expression, in a highly classified
environment, is essential to providing and certifying a
reliable, safe, and secure nuclear deterrent. Hence, the
contractor of a nuclear weapons design laboratory should have a
strong tradition of scientific excellence in research
management and unwavering technical integrity. It should also
have the reputation and convening power to attract the best
talent and the best advisors to the laboratory. The two design
physics laboratories at Los Alamos and Livermore should be
managed by the same contractor to foster competition for ideas
rather than for corporate profits or market share.
Public service in the nation's interest. The directors of
the laboratories must discharge their duties, especially the
certification of the nuclear stockpile, to be in the best
interest of the nation, and not be motivated by personal
benefits, corporate fees, or corporate profits. This requires
institutions steeped in public service and a special contract
with indemnification provisions to deal with the high risk of
nuclear operations. Recent changes in contracting have made it
increasingly unattractive for not-for-profit organizations such
as universities to operate the laboratories in spite of the
fact that it is precisely these institutions that have a
distinguished history of public service.
Safe, secure, and effective nuclear operations. To deal with
the inherent risks of nuclear operations requires a contractual
relationship with special indemnification provisions, a risk-
based approach to both safety and security, and clearer lines
of authority within the government. Those functions that
require regulatory oversight and compliance should be made
independent of the Department.
Best business practices. Encouraging business reforms based
on quality approaches as used by U.S. industry rather than
forcing compliance with federal procurement, personnel, and
business practices are necessary to make the laboratories more
productive and to attract best business and management talent.
Such reforms will require substantial changes to current
contracting language, which has increasingly forced practices
into the federal mold. Contracts should be performance based,
focused on outcomes. The DOE should return to specifying what
the contractors are required to do, then hold them accountable
for delivering results, and not prescribe how it should be
done.
Government reform. Providing for an organizational structure
in the DOE that provides clearer lines of authority, and
garners bipartisan political support, is essential for the
future of the nuclear weapons enterprise. The establishment of
the new National Nuclear Security Administration was a step in
that direction, but more needs to be done. This will require
strong backing of Congress.
CONCLUDING REMARKS
Mr. Chairman, the fact that you are holding a series of hearings to
examine the system of governance and contracting practices at the
laboratories gives us hope that these issues will receive the attention
they deserve. At stake is nothing less than restoring the scientific
productivity of the laboratories and the successful execution of the
nation's stockpile stewardship mission. In addition, congressional
actions over the past several years and your tireless efforts on behalf
of our nation's defense preparedness have also sent a clear signal that
these laboratories are needed more than ever. Thanks to you and your
colleagues, we have an important mission, we have financial support, we
are upgrading our facilities (that includes replacing the CMR Building,
which last year turned 50 years old), but the system of governance is
broken and our operational environment is not productive and not
conducive to attracting and keeping the best talent to do this
important job for the nation. Sixty years ago our country devised an
innovative concept, the GOCO partnership model, to bring science to
bear to the nation's defense. This concept helped to end the most
devastating war in history. It helped end the Cold War in our favor and
to the benefit of all of mankind. Now we area not threatened by a
similar external enemy, but instead we have ourselves brought on a
crisis in the effectiveness of our laboratories and, consequently, in
the nation's nuclear weapons stewardship. These internal problems are
often more difficult for the United States to overcome than defeating
an external adversary. However, this time the stakes are too high not
to act. I know that all of my colleagues at the laboratories and the
University of California are prepared to do our part.
The Chairman. Thank you very much, Sig.
Dr. Peoples.
STATEMENT OF DR. JOHN PEOPLES, JR., DIRECTOR EMERITUS, FERMI
NATIONAL ACCELERATOR LABORATORY, BATAVIA, IL
Dr. Peoples. Mr. Chairman, thank you for giving me the
opportunity to comment on the evolution of the relationships
between the Department of Energy and its M&O contractors that
operate the Department of Energy laboratories.
When I became Director of Fermilab in 1989, the Department
was struggling to deal with problems in the clean-up of old
weapons production facilities and the downsizing of then-
existing production facilities. The public and Congress were
very critical of the Department's management of those
facilities.
In response to those criticisms, the Department chose to
address these problems with a very prescriptive, compliance-
driven management system that was applied to all departmental
facilities, including the national laboratories. Now,
typically--at least in the Office of Science--a consortium of
universities or a single university operates one or more
laboratories. Exceptions which were in the weapons program were
Sandia National Laboratories, which was operated by AT&T, and
Oak Ridge, operated by Martin Marietta. URA manages Fermilab.
That represents 83 universities, and it is essentially all the
major universities that are interested in the high energy
business.
The contractors that operated these laboratories did so as
a service to the Nation on the principle of no loss, no gain.
This has served the Nation very well since World War II. I
think it still serves the Nation very well. The universities
were also motivated by the desire to give their facilities and
students access to large facilities such as accelerators and
reactors that only the Federal Government could afford. In
1971, that is what got me to go from Cornell, where I was a
happy university professor, to work on an experiment. I have
not gone back yet.
Now, the management of these laboratories, as my
predecessors have said, began as a set of long-term
partnerships between the contractors and the AEC. However, by
the mid-1980's the partnerships had begun to degenerate into
buyer-seller relationships for research, and the Department was
seriously questioning the value of M&O contracts. Some people
in the Department looked on long-term partnerships with
universities as an unfortunate consequence of the past, or
rather, an accident of the past.
Now, the Packard Panel in 1983, the Grace Commission in
1985, the Galvin Committee in 1995, looked at the governance of
these laboratories. They all more or less came to the same
conclusion. Since their findings are similar, I just want to
comment on the Galvin Committee. That report found that DOE
oversight of M&O contractors that managed the laboratories had
become an expensive compliance management system. It was
compliance-driven. It brought little value for the costs that
it imposed upon the labs.
They found the M&O contractors were subject to excessive
regulation and management by many organizations: the field
offices, the site offices, the various headquarters, ES&H
offices, the program offices. I could go on. There were some I
did not realize existed, but they could create orders. They
found little value in this burden. On top of this, the M&O
contractors had to comply with appropriate Federal, State and
local laws and regulations. Now, I said ``had to.'' It really
is the appropriate thing to comply with Federal, State and
local regulations. At the time, DOE orders had become so
prescriptive and detailed that laboratory scientists and
engineers had to set aside a significant amount of time to
navigate and to comply with the orders, particularly those
orders relating to environmental safety and health.
Also, those orders at the time were becoming unpredictable,
partly because the machinery to create new orders was so well
oiled that it appeared accountable to no one, and it could
create conflicting orders.
Initially, there was no provision for review by the
laboratories. When the laboratories were finally allowed to
comment on new orders, the comments were largely disregarded.
By 1996, the system had steadily become worse, in spite of the
commitments of Secretaries Watkins and O'Leary to reform the
system. The Galvin Committee believed that the situation was so
out of control that they had recommended a totally different
model of governance for the laboratories. The Galvin Committee
recommendations were never adopted--and I think that is
actually appropriate--although Secretary O'Leary made a valiant
effort to bring the process under control.
Now, prior to the Galvin report, Secretary Watkins produced
the tiger teams in 1990 to bring about change in the ES&H
culture in the laboratories. At the time, Congress and the
public discovered that there were serious, well-publicized
problems in the weapons production facilities such as Rocky
Flats and Savannah River and the clean-up sites such as
Hanford.
Secretary Watkins felt the problem was endemic to all DOE
facilities, and that the tiger teams were his way to bring
about change in the culture. The tiger teams were clearly
rather controversial, but I think in the end they served a very
good purpose. The directors of the laboratories understood what
had to be done, we understood our problems, and we moved
forward.
However, the Department used the opportunity to impose
detailed, standardized, one-size-fits-all, et cetera, et
cetera. It is not surprising that the Galvin Committee was
critical of the DOE order system.
Now, in my written testimony I comment on two things:
integrated safety management, which is also the necessary
condition that gave the laboratories and the site offices in
the field some latitude to work on these problems. It restored
a bit of partnership. I also commented on something called Work
Smart standards, where again a notion of partnership was
brought back between at least the field and the site offices.
These things led to a substantial improvement in DOE safety
record. It wasn't that bad before, but there were aspects of it
that needed improvement. It is now outstanding. I have
commented on two areas of oversight and control in my written
testimony, but I would like to go to one other thing that I
think was rather important. Both Secretary Watkins and
Secretary O'Leary had promised line management. It is a very
simple concept, it is a very powerful concept. The problem with
the Department from its inception is that the business side,
the administrative side, the safety side, went up probably to
the Deputy Secretary and there it disappeared; not that the
Deputy Secretary did not work hard, but the Deputy Secretary
and Under Secretary have a lot of other very important things
to worry about.
On the program side, it went to the Director of the Office
of Science, at least in the Office of Science, so basically
there was a disconnect. We know that that is being restored.
The Office of Science seems to have the responsibility for all
parts of the program, including management. Management is very
important. I trained as an engineer, with an avocation as a
scientist, I tell people I am genetically an accountant. I find
this very interesting. I really like that part of the business,
as well as the science part. I think by concentrating on these
very different mission organizations--the ability to manage the
entire program, including the business side, is extremely
important.
Let me just close by stating I am very proud to have worked
for more than 30 years in the Department of Energy laboratory
systems. I have a very high regard for the Department and what
it can do for the Nation's research enterprise, and I have a
very high regard for the people in the Department who helped
make it happen. I am afraid that Congress has an awful lot to
do with some of the disconnects. Now, it is important to have
oversight. And I think oversight is important, and it ought to
be carried out carefully, thoughtfully. But because of the way
DOE laboratories are structured, the partnership aspect is very
important.
In my written testimony, I hope I show that that
partnership can be made to work and work for safety and work
for administrative things.
I hope that you are successful in outlining a plan, as
Martha had described, because I think the future of these
laboratories is with the GOCO concept. All other methods have
been tried in DOE and the Defense Department, and I don't think
they work very well. Contact with universities is extremely
important. As I said, that is why I wound up being a director.
Thank you for letting me speak.
[The prepared statement of Dr. Peoples follows:]
Prepared Statement of Dr. John Peoples, Jr., Director Emeritus,
Fermi National Accelerator Laboratory, Batavia, IL
Mr. Chairman thank you for giving me the opportunity to comment on
the evolution of the relationships between the Department of Energy and
the Management and Operating (M&O) contractors that operate the
national laboratories for the Department and the impact that the
changes in those relationships have had on the ability of scientists to
respond to national missions. Since I gained my knowledge of these
relationships through my work with the laboratories that are directed
by the Office of Science and its predecessor, the Office of Energy
Research, I will limit my comments to those laboratories.
When I became the Director of Fermilab in 1989, the Department was
struggling to deal with problems in the cleanup of old weapons
production facilities and the downsizing of the then existing
production facilities. The public and Congress were very critical of
the Department's management of those facilities, and in response to
these criticisms, the Department chose to address these problems with a
very proscriptive, compliance driven management system that was applied
to all Department facilities, including the National Laboratories.
Typically, a consortium of universities or a single university operated
one or more of the laboratories. The exceptions were Sandia National
Laboratory, which was operated by the American Telephone and Telegraph
Company, and Oak Ridge National Laboratory, which was operated by the
Martin-Marietta Corporation. These contractors operated the
laboratories as a service to the Nation on the principle of ``no gain-
no loss,'' which had served the Nation very well since World War II.
The universities were also motivated by the desire to give their
faculties and students access to large research facilities, such as
accelerators and reactors, that only the Federal Government could
afford. The management of these laboratories had begun as a set of
long-term partnerships between the contractors and the AEC. However, by
the mid 80's the partnerships had begun to degenerate into buyer-seller
relationships for research and the Department was seriously questioning
the value of M&O contracts. Some people in the Department looked on the
long-term partnership with universities as an unfortunate accident of
the past. The Department's governance of the laboratories was reviewed
by the Packard Panel (1983), the Grace Commission (1985), and the
Galvin Committee (1995). Since their findings were similar, I will just
comment briefly on the findings of the Galvin Committee.
The Galvin report found that the DOE oversight of the M&O
contractors that managed their laboratories had become an expensive,
compliance driven management system that brought little value for the
cost that it imposed on the laboratories. They found that the M&O
contractors were subject to excessive and unnecessary regulation and
micromanagement by many Department organizations; the field offices,
the site offices, various headquarters management and ES&H
organizations, and the program offices. They found little value in this
burden. On top of this the M&O contractors had to comply with
appropriate federal, state, and local laws and regulations. At the time
DOE orders had become so proscriptive and detailed that laboratory
scientists and engineers had to set aside a significant amount of time
to navigate and comply with DOE orders, particularly those orders
related to Environment, Safety and Health. The orders were rapidly
becoming unpredictable since the machinery to create new conflicting
orders was well oiled and appeared to be accountable to no one.
Initially there was no provision for review by the laboratories and
when laboratories were finally allowed to comment on new orders the
comments were largely disregarded. By 1996 the system had steadily
become worse in spite of commitments from Secretaries Watkins and
O'Leary to reform the system. The Galvin Committee believed that the
situation was out of control, and they recommended a totally different
model of governance for the laboratories. The Galvin Committee
recommendations were never adopted, although Secretary O'Leary made a
valiant effort to bring the process under control.
Prior to the Galvin Report Secretary Watkins introduced the Tiger
Teams in 1990 to bring about a change in the ES&H culture in the
Laboratories. At the time Congress and the public discovered that there
were serious, well publicized ES&H problems in the weapons production
facilities, such as Rocky Flats and Savannah River, and the cleanup
sites, such as Hanford. Secretary Watkins felt that the problems were
endemic to all DOE facilities and the Tiger Teams were his way to bring
about change in the culture. The value of the Tiger Teams was very
controversial among the laboratory directors because each laboratory
had to devote all of its resources to dealing with the three week sixty
to eighty-person Tiger Team visit for two months. These visits got the
attention of the directors, and in spite of the disruption that they
caused they accepted the process. After each visit each director and
his staff recognized what needed to be changed and they set about
making the necessary changes. However, DOE headquarters used the
opportunity to impose detailed and standardized ``one size fits all''
orders and this led to the aforementioned proliferation of proscriptive
orders. It is not surprising that the Galvin Committee was critical of
the system of DOE orders.
One major flaw in the Department's management was the attempt by
headquarters to craft orders that would apply uniformly to every
contractor operated facility in the system; dedicated program
laboratories, multiprogram laboratories, weapons laboratories, weapons
production facilities and so forth. The orders were issued to the field
and then to the laboratories without regard to what each facility did.
ES&H orders dealing with radiation were particularly ill suited since
they seemed to be written for reactors that produced material for
nuclear weapons, as opposed to accelerators for particle and nuclear
physics, synchrotron light sources, and research reactors. Ultimately
this bad situation was corrected when the Office of Science was allowed
to develop procedures for radiation safety and operations for these
facilities with the help of the DOE field offices. While the new
procedures are still largely compliance driven, they address issues
that are appropriate for these facilities. This has certainly helped to
ease the burden on the scientists and engineers.
I am not aware of any DOE order that has gone away, although some
may have. My ignorance about this should not be surprising since I have
worked as a scientist for the past four years. Provisions that allow
the site office and the laboratory that it oversees to determine which
of the many orders to apply have eased this very difficult situation
for some laboratories. The orders were not ignored. Specific orders
were replaced by existing industrial standards that were appropriate
for the type of work that a laboratory was performing. This made it
possible to remove DOE orders from a particular M&O contract that did
not add value. There is still plenty of oversight from the appropriate
operations office, the management offices in headquarters, and the
oversight groups in the Office of Science to ensure that each
laboratory is in compliance with the appropriate orders and external
regulations. This has allowed the Fermilab management team and the DOE
site office to work out a sensible plan for their site. I believe that
this was a consequence of Secretary O'Leary's committment. Another
consequence of the Secretary's commitment was the implementation of a
successful pilot program in management, which is called Work Smart
Standards. Several laboratories were allowed to participate in this
experiment. The process began by defining the criteria for necessary
and sufficient standards. People from the Office of Science, the field,
and the laboratory who were knowledgeable in safety and administration
developed these criteria. Subsequently each participating laboratory
defined its work processes and the appropriate regulations pertaining
to each process in writing. Before the laboratory was allowed to
implement these processes the appropriate field office and the Office
of Science reviewed them. After adjustments, they were approved and the
laboratory was allowed to implement them. In return, they were relieved
of complying with those DOE orders that had been inappropriately
applied to these work processes. The site office monitors compliance
with Work Smart Standards. I believe that this is a very successful
process that has helped to reduce the burden of compliance and that has
lead to a dramatic improvement in the safety performance.
Some time around 1997, DOE introduced the Integrated Safety
Management program. While it started out as a proscriptive process, the
field offices and the site offices gave the laboratories some latitude
to implement it. The principles were sensible and the process
straightforward. It was full of good common sense. It worked and it is
another one of the reasons that the safety performance of the Office of
Science laboratories went from average to excellent. The Department's
Integrated Safety Management program is a partnership between the field
and the laboratories. The Department defines what is expected, the
laboratories prepare a plan for their work and after the site office
approves it the laboratory implements the plan. Finally the site
office, the field office and the Office of Science oversee the
Laboratory's performance. This process works quite well and I believe
that it has been extended to other laboratories.
I have commented on two areas of oversight and control of M&O
contracts, the management practices of the contractors and DOE and the
compliance with ES&H standards and DOE orders in general, that have
improved since the Galvin report. In each case the improvement is a
consequence of a partial return to a partnership between an M&O
contractor and the Office of Science. It is also a consequence of the
creation of a clear line of authority that extends from the Secretary
to the Director of the Office of Science through the program and site
offices that report to the Director of the Office of Science and then
to the contractor responsible for operating an Office of Science
Laboratory. The oversight of the contractor's performance in
administration, safety and management as well as the contractor's
performance in fulfilling the missions of the Department is now the
responsibility of the Office of Science. This arrangement provides a
continuity of management that has been missing since the creation of
DOE. Before the introduction of line management, these functions did
not come together and as a result the functions were fragmented. It is
a fragile arrangement since there are forces in the Department that
want to return to the clearly discredited past. Line management is a
simple, but powerful concept that provides clear accountability. The
Department will have this accountability in the Office of Science if it
is able to complete the consolidation of program direction and
oversight of the Office of Science facilities and the M&O contractors
that manage them within the Office of Science.
I did not comment on the attempts to revise M&O contracts by trying
to introduce metrics for performance based management into the
contracts. As I understand the situation, very little progress was made
on this very difficult matter in the past fifteen years. However, I
have been told that there are efforts underway with several of Office
of Science laboratories to try to introduce these principles in a
meaningful way into M&O contracts again. Since most of the effort on
performance measures was introduced after my tenure as Director, I
cannot provide much first hand insight.
Let me close by stating that I am proud to have worked for more
than thirty years in the Department of Energy laboratory system. I have
a very high regard for what the Department can do for the Nation's
research enterprise, and I have a very high regard for the people in
the Department who have helped to make it happen. I hope that these
hearings can give you insight on how the Department could better manage
its programs to the benefit of the Nation.
The Chairman. Thank you very much. Thanks to each one of
you for your excellent testimony, not only here today but your
written testimony, which will be looked at carefully.
I noted that each of you in some ways are equal scientists
because you each violated the 5-minute rule about equally. I
said nothing about it, but you each took about 2\1/2\ to almost
3 minutes in excess, and that is splendid.
Our first votes will start occurring at 11 o'clock. Senator
Lamar Alexander indicated he would return after the votes, so
you are going to have to stick around for a while, even if we
are finished, for him to ask some questions.
I'm going to start first, if you are ready, with you,
Senator Craig. I yield to you.
Senator Craig. Mr. Chairman, I largely came to listen today
to this panel, and to all of you, because of your expertise and
experience. I am not going to suggest that I am an expert on
any of this, although I have spent a good deal of time over the
last number of years trying to understand and to cause by our
efforts laboratories to operate openly and to have the
flexibility to do what needs to get done, and to try to find
the right missions that really challenge us in areas where only
our laboratories--only you can do the work and the private
sector cannot; nor, in many instances, will not. I have taken
some notes today and listened. Mr. Chairman, I don't have
specific questions, except for one. The governance thing
obviously we will work on, the relationships with the
Department in ensuring the leadership and stability and talent
that is all a part of it. But tied to that, the longevity of a
good partnership and contract appears to be awfully important
to laboratories.
I believe, Dr. Postma, you mentioned contracts--and
possibly, Martha, you did, also--as it relates to the 5 and 5
versus long-term contracts with the appropriate--not harsh, but
appropriate--effective oversight.
Would any of you care--those of you who did not speak to
that issue--I think, Dr. Peoples and Dr. Hecker, you did not--
would you express the value you see in contracts? I am
suggesting maybe not a 5 and 5, maybe a 10, or maybe a 5-year
contract, obviously with the appropriate oversight that occurs
by effective mileposts and being able to, obviously, from our
standpoint, observe, as the Department would, the effectiveness
of that kind of contract.
The Chairman. Sig; and Dr. Peoples, you are second. Would
you answer his question, please?
Dr. Hecker. Yes. I would like to comment on that.
As far as the issue of continuity, of course it is
especially important in the nuclear weapons business. At Los
Alamos we have had the same contractor for 60 years, the
University of California, so we can't say that continuity has
been a problem. The bigger problem has been that every 5 years
we go through significant turmoil in looking at the basis of
the contract itself. There are changes made that in the end,
through these reactions that I have mentioned, I think have
actually degraded these relationships.
Senator Craig. Much like a rebid, then? Is that the kind of
turmoil?
Dr. Hecker. It is interesting. In the case of the
University of California at Los Alamos, it has actually never
been rebid, even. But the Government, of course, each time it
formulates the contract, can make the contract terms whatever
it wants to, so it is in that process that the relationship has
degenerated.
I would say that the 5 years have been tight. I would feel
more comfortable with, let's say, a reasonable 10-year cycle.
But the continuity aspect is important. However, more important
is the nature of the contract itself.
Senator Craig. Okay.
Dr. Peoples.
Dr. Peoples. I will make two comments. One is the one Sig
has just addressed, the rebidding contract. It is not so much
rebidding, but there is a contract renegotiation every 5 years.
The Department has used this process to introduce--or at least
to try to shift risk--to university consortia. They don't have
any particular way of handling the risk, and it seemed to me
this is just an ineffective way of proceeding.
If one wants to work with universities, and this is the
case of the very basic science laboratories, then one has to
realize what you are working with. Certainly, the trustees are
not going to allow to have their endowments set at risk. I
think the problems the laboratories run into are relatively
small.
I suppose if you wanted to you could allow insurance to be
an allowable cost. These relatively small things, which are
what the people are talking about, could be handled that way.
The other thing is, what about the length of the contract?
The 2002 names of the major contracts, CDF and the DO--one will
probably end in 2008 or 2009, and the other one started years
later--these are very long-term enterprises. The main purpose
of contractor is to provide oversight, select a director, and
to make sure that the laboratory carries out its business
properly. The Department of Energy really determines with the
scientific community what type of research projects will be
undertaken. That is through KEYPAD and whatnot.
I don't know what you would do to replace a URA. You would
still want to have this kind of influence from the
universities, but it is probably useful to at least make sure
that there is a process that would allow rebidding. But I don't
think the 10 years is particularly long for the work that has
to be done.
Senator Craig. Dr. Krebs.
Dr. Krebs. Two comments. I think what has happened--and Dr.
Hecker raised this--is if you were to look--and it might be an
interesting thing as background for part of this hearing
series--if you were to have somebody to look at how the
contract, the individual contracts for, say, one or two or
three labs, have changed over the last 20 years, it is
significant.
The character--you can actually peg them to different
things that have happened, along with different kinds of
oversight, over the last few years.
I think that the committee needs to look at that and ask
the question, does it really make for better management? The
contract also has become a vehicle for adversarial interactions
as opposed to cooperative interactions. Part of the complexity
of the negotiation is to facilitate, from the Department's
point of view, this adversarial interaction. That is mostly
driven by people outside of the programs, in DOE but outside of
the programs. That argues for Dr. Peoples' interest in seeing
the programmatic and managerial issues all given to a program
officer.
Senator Craig. Would you wish to comment on this, Dr.
Postma?
Dr. Postma. I have been involved with a number of
transitions of contracts, with Union Carbide, in which they had
indicated it was not within the corporate mission anymore and
they gave up the contract. They were not kicked out. Then
Lockheed Martin, or Martin Marietta first and then Lockheed
Martin when they merged, became the contractor. Then later the
University of Tennessee and Batelle became the contractor in
Oak Ridge.
They were not all that traumatic, actually. There were good
things that happened as a result of the change. In the
eagerness to please the Department of Energy in the contract,
each of these people made rather large concessions towards
improvement of certain capabilities. In fact, the University of
Tennessee Batelle enterprise came in and actually committed a
large amount of State funds to build buildings that should have
been built 20 years ago and leased them from third parties,
backing it up with State Government funds. Also, Batelle put
its corporate funds at risk to do this. That is tremendously
innovative. That would never have happened had the contract
remained as it had been.
There are good circumstances that result from changing
contractors, and I just didn't want it to happen too often.
When things spin around too fast, people don't really know
where they are, and nothing settles down to the point where you
really achieve things as well as if there is a view of
continuity.
Senator Craig. Thank you all.
Mr. Chairman, thank you.
The Chairman. Senator Bingaman.
Senator Bingman. Thank you very much, Mr. Chairman.
This may just be sort of paraphrasing or restating some of
what several of you have said, but when I came to the Senate 20
years ago, my strong impression was at that point the
preference within the Department of Energy was to renew
contracts, maintain the current contractors, and--at least that
was my strong sense with regard to the two laboratories we have
in New Mexico.
Now it seems as though the bias is the other way. The bias
is towards competing when contracts come up. We are going to
compete, unless someone can demonstrate a reason we shouldn't.
To me, the most obvious example of what I am talking about
is the decision the Secretary just made a month or a couple of
months ago to compete the contract at Los Alamos in 2005. I
think the contract comes up for renewal in September 2005, and
he decided 2 months ago, well over 2 years in advance of the
end of that contract, that he was going to compete it when it
comes up. He announced that. It didn't make any difference what
the current director or his management team was able to do by
way of improvements at the laboratory, he was still going to
compete the contract.
It seemed to me that is an example of the bias towards
competing these contracts, which I think strengthens the case
for going to longer contracts, for taking some other action to
reestablish the stability between the Department and the
laboratories themselves.
I do think that--I think, Dr. Krebs, you made the point
very well. You used the phrase, we need to create an
environment where creative science can happen in the
laboratories, and where we can attract the very best scientists
and engineers and retain them there to work on these important
national priorities.
But as I say, it seems to me that this change in bias
towards competing these contracts every time they come up does
cause us--cause me to think we need to rethink this whole
process.
I don't know if any of you have comments about that, as to
whether you agree or disagree.
Dr. Hecker.
Dr. Hecker. Yes, I would like to make a couple of comments.
Certainly, you know, competition is the American way, so it is
awfully difficult to just argue against competition for its
sake. But if it is the American way, competition should result
in something better. We at Los Alamos and the University of
California, of course, cannot claim that this has all worked
against us since we have been there for 60 years, which is a
long, long time. So competition by itself is not bad,
particularly the example you just brought up.
However, I think what concerns us, my colleagues and myself
at the laboratory, it was done in such a political environment
that we have no faith at all that this competition will
actually produce something that is better for the country,
rather than just taking care of the political burrs that were
there at the time.
I think it is awfully important when we structure that and
compete these contracts to make sure that not only you get the
sense that you will get something better, but that the people
at the laboratory also have some faith in the system that
competition is being conducted for the best of what is in the
national interest.
The Chairman. Dr. Hecker, how do you equate the atmosphere
going on at Los Alamos when this decision was made to a
political decision when the air was filled with accusations
regarding malfeasance? Are they the same, accusations of
malfeasance equals political?
Dr. Hecker. No. I didn't mean it in that sense, Senator
Domenici. If you look at the competition issue, I think if
sometime ago the Secretary would have said that, look, when the
next contract comes around, we are going to seriously look at
this competition issue. But instead, the decision was made,
after, indeed, some accusation, in this particular case, of
purchasing or procurement fraud, et cetera. To make at that
time a decision so momentous as the competition of the
laboratory, I personally didn't think that was commensurate
with the issue that was there.
As these issues have played out, the major accusations that
were made I think have proven not to be true. So I think if
that would have played out in the proper arena and then the
government come back and say, look, this has been done by the
same contractor for 60 years and it is time to reexamine that,
I think all of us would have to say, well, that is a reasonable
thing to do.
The Chairman. Dr. Krebs, did you have a comment?
Dr. Krebs. Yes. Reflecting on both what Sig has said and
your comment, I think that it would be worth recounting the
experience that I had when I was in the Office of Science with
the Brookhaven renewal, or competition.
Perhaps you remember that it was found that there was a
radioactive contamination that occurred as a result of the
research reactor on the Brookhaven site. It was a very minimal,
determined to be non-dangerous to either on-site personnel, and
it had not reached off-site. But there was a huge public outcry
on Long Island, and there were difficulties. That was
exacerbated by some of the management issues within the
laboratory, I would say.
But the Secretary at that time decided that not only would
they compete the contract, but they would compete it
immediately. So the length of a contract does not necessarily
preclude a Secretary from making such a decision to recompete
immediately. In fact, I think one of the good things that was
done at Los Alamos was at least to give a reasonable amount of
time and not recompete until the end of this current contract.
But it is the case that certainly, because of the character
of the infraction and the speed with which--or the timing that
the decision was made to recompete the Brookhaven contract,
there is no question that within Brookhaven and even outside of
Brookhaven it was viewed as a political decision essentially
driven by political considerations, whatever they may have
been.
That is one of the difficulties that I think--with what the
Department does and how it looks by not just the leadership of
the laboratories, but by the people who really accomplish the
work at the laboratories.
Senator Bingman. Thank you very much.
The Chairman. Thank you. We have a vote. I'm going to come
back.
Senator, before you leave, and maybe this would be of
interest to you also, I asked my staff to see if they could
acquire a copy of the Los Alamos contract. That is the Los
Alamos contract when it was first entered into. As a matter of
fact, Senator, it is marked ``secret.'' At that point it was a
secret document. I looked at it. It was 29 pages. That was the
whole document that governed the relationship with that great
laboratory. This is the most current. It makes references to
library documentation, which we cannot bring because it is so
voluminous.
I only make that point that somehow or other this Secretary
is struggling as to how he is going to--the reason for this
hearing--he has been struggling on what kind of criteria is he
going to use for the next contract. I guess this proposes a
couple of words. Can you govern it with a simple contract that
is not very lengthy, or are you supposed to have one like this
that covers, I assume--every 4 or 5 years, perhaps when
something went wrong--there are 15 or 20 pages added here; or
maybe every 5 years, I don't know.
This clearly indicates--it might look like 60 years of one
contract, but it sure looks to me like something much more than
one contract in that 60-year period. That doesn't conclude
anything except that they are having a heck of a time managing
when there are malfeasance accusations and when things don't go
right.
I am obligated to come back for a few minutes because I
have some questions. So if you will wait, we will vote and come
back.
[Recess from 11:16 a.m. to 11:45 a.m.]
The Chairman. Back on the record. Our second vote was
called off. I am not sure Senator Bingaman can return.
Nevertheless, he is on the floor.
Senator Alexander, it is your turn, if you would like to
inquire, please.
Senator Alexander. I would. First, I want to thank the
witnesses and commend the chairman. This is a subject that
interests me a lot. I know it interests Senator Domenici,
because this has been a passion of his for a long time. I look
forward to the subsequent hearings, Mr. Chairman, and being
actively involved in them, and hearing from the witnesses.
I apologize for missing your testimony, but I have read it.
And I have been hearing Herman. I am delighted to hear Dr.
Postma here, one of our distinguished Tennesseans. I just want
to say a word and then I have a question.
I come at this from this background. As a Governor, I
worked with Oak Ridge and the University of Tennessee. As
president of the University of Tennessee, I worked with the
same situation. I was also on the board of Martin Marietta. I
remember the negotiating of the contracts at that time. Then,
as Energy Secretary, I saw a chance to put in perspective the
contributions our national labs have made. This is a good time
to be thinking about that as we look to the near future.
The National Academy of Sciences says half of our new jobs
have come from our investment in the physical sciences and what
we have tried to do, our great secret weapon in the United
States, I believe, in science and technology, has been our
great research universities and our national laboratories since
World War II. No other country in the world has anything that
comes close to the combination of those resources.
Given the challenges we face in keeping good jobs in this
country over the next 10, 20, 30 years in the world
marketplace, that edge in science and technology, a significant
amount of which comes from our national labs, as well as from
the universities, is a very important part of any national
strategy.
So I have a whole lot of interest in this because of my own
background, because of the contribution--the effect it has on
Tennessee, and because of the effect it can have on our
country. Now, in the comments, I also agree with the direction
of many of the comments. I know what an academic environment
is. Academic institutions are sometimes arrogant and they are
sometimes messy, but basically they are set up to create little
areas of autonomy where very talented people can do their best
work. When government comes in too heavily on that kind of
environment, that is exactly antithetical to that sort of
environment.
When, for example, we have environmental problems and we
have to send in government teams to deal with the problems, I
guess that is something we have to do, but it takes the eye off
the ball of what most of the people are there to do and what we
most need done in this country. We want the clean-up, of
course, but we want the continued research and technology.
When micromanagement--the Federal Government, as has been
noted in some of your testimony, never undoes anything.
Whatever layer it lays on just lays on, and then here comes
another layer. There is never any consistent force up here. And
we can provide one in these hearings, one that examines all the
layers and says, let us start over, or unpeel some layers and
look at what can be done in the future.
Just the combination of the environmental clean-up efforts
and the 60 years of layers of micro-management are just bound
to be at odds with what the most effective direction of the
national labs should be, just bound to. Human nature should
tell us that.
The chairman is exactly right to take a look at this and
ask the question if we are greatly challenged for the near
future in terms of jobs and our standard of living, how can the
labs make their greatest contribution, and what should the
governance structure be?
I am very interested in this and want to be a part of it. I
have one question that I think has not been covered as much, so
I have heard. Let me ask this. Dr. Postma suggested that the
university relationship with a lab is a good thing, not a bad
thing. I used to wonder about that. Universities are not such
well-managed organizations, by and large. I didn't know a
university could be part of a partnership that met some of the
more exacting requirements of lab management.
I would gather that the other part of that, the good part
of the university involvement, goes to my question, which has
to do with continuity. The university does have a culture and
an attitude. I think of the distinguished scientists that we
have at the University of Tennessee and the Oak Ridge
Laboratory, with the State paying part and the Federal
Government paying part, that has been wonderful for both
institutions and good for the country, so you have that culture
and the attitude and the opportunity for continuity.
My question is this: Rather than come to the end of 5 years
and say, okay, this is all over, this contract, between the
private manager and the Federal Government, if someone is doing
well in managing a lab, could we not have another option? Could
we not decide just to continue the contract for 5 years with
minor adjustments, instead of going through a laborious
renegotiation? Or could we introduce other elements into the
relationship that would permit what is judged to be an
outstanding relationship to continue, rather than to say, okay,
that is done, let us throw it up in the air and start over
again?
Dr. Postma?
Dr. Postma. Currently, DOE procurement rules allow for one
extension of a 5-year extension. That doesn't mean they do it
automatically, but it is sort of understood that if things go
well, then there will be an extension of about 5 years.
One of the cases I pointed out, even though a contractor
that I know that is doing well, DOE has decided to extend it 1
year. Nobody understands that. Nobody involved really
understands why.
Senator Alexander. Which example was that, Dr. Postma?
Dr. Postma. There is one at Oak Ridge with Batelle, as a
matter of fact, in clean-up activity, a 1-year extension. It
doesn't really make sense. They have been given a lot of kudos
about how well they have done. Normally, I think----
Senator Alexander. It got an outstanding rating, I believe,
for that management, if I am not mistaken?
Dr. Postma. Yes. That is why no one understands. But the
expectation is for one renewal of 5 more years. After that, it
is almost a hard line about competition. Now, in essence, there
is nothing to say that if you do well the second 5 years, why
shouldn't you get 5 years more? Why does there have to be a
hard line? Well, in part there is the old saying about, when
you see the guillotine, it sharpens your mind a bit. If you
really want that contract, you would be quite willing to
compete for it again on that second term. A lot of contractors
have said, oh, no. If you recompete it, I'm not going to play.
They always do end up playing, but they have lost a fair amount
of activity in the process.
Some universities, to go back to that, don't pay or have
not paid as hard attention to the contract-customer relations
window as have some of the industrial contractors. I remember
Martin Marietta's theme was, you'd better please the customer.
There was always, as a laboratory director, very important
oversight by a board from the corporation that oversaw
everything we did and asked terrible questions. You were part
of those, I think. And we had to keep our guard up to make sure
that we were doing exactly the right things.
Most universities are not quite that strong in their
management of it. As a matter of fact, a few years ago the
University of California president's office did a 5-year review
of the directors of Livermore, and of Sig. I was part of that
committee, along with a number of others, in trying to help
them reach a judgment about that. That is a university way of
doing things. They should be able to do that themselves,
frankly. They should be enough on top of what goes on, on top
of the management, and asking questions and participating
enough in the key issues so they should not really require an
outside review like they do of deans and Department heads, et
cetera.
Generally, most universities don't do it. They do it the
university way, which may be all right, but it is not a way
that I personally think results automatically from some other
kinds of contracts. That is my summary.
The Chairman. Let me change subjects for a minute and ask a
couple of preliminary questions. First, are all of you familiar
with the assessment process that the DOE takes on a regular
basis and says--for instance, Sandia National Laboratories is
given a rating because they have looked at them and they are
given this evaluation. There is an evaluation that is the best
evaluation, one not quite as good, one less good, and an
evaluation that is pretty poor.
I am thinking that before we are finished with these
hearings we have to find out a little bit more about that,
because that kind of thing seems to me to create some very
false hopes and some situations that seem terribly irrelevant.
For instance, Lockheed recently was given a contract extension
again, but you might know it was in the air that all these
people were waiting to take it over. Of all the laboratories
that the DOE had, it had the highest evaluation over a 10-year
period.
Consistently, it was the best of all. Yet, it was going to
go out to bid, while the rumbles were that Los Alamos is not
going out to bid, and it wasn't the highest.
What do we do about that? Are those things of any
consequence? Should we stop them? Are they valuable? If they
are valuable, should they be used--how should they be used?
Sig? First of all, do they do it right? Do you know how they do
it? Maybe you have some observations.
Dr. Hecker. The current assessment process I believe was
brought about when one of the contract modifications that you
had indicated that has been made was a contract modification
towards what is called the performance-based contract. Then the
University of California put in place a self-evaluation process
that utilized people from across the country to evaluate those
programs. Then the Department of Energy was to make its final
evaluation, taking into account the university's self-
evaluation and then its own.
I believe that that process actually is the one that brings
some hope to doing things right, because if the contractor and
the labs understand what is expected, if that is put in the
contract, and then in the end it is essentially graded on that,
that is the best overall assessment of performance.
Now, is it being done right? I think generally any of those
things can be improved somewhat, but I think that is on the
right track. It gets you away from essentially what I would
call management by anecdote. That is that whatever the latest
problem that crops up is, that actually determines your
assessment, in the eyes of the government.
If you have an overall performance assessment, that should
come into play. In the case of Sandia National laboratories,
clearly there the records showed that it was doing what the
Government wanted it to do. I think that is very valuable.
The Chairman. Doctor, let us make sure we understand the
second part of that. At the same time you have told us today--I
think you have said that you thought it was very good that Los
Alamos was run by the University of California for 60 years,
did you not?
Dr. Hecker. That is correct.
The Chairman. I think you told us that you were not so sure
that the way it was given word that it was not going to get--
next time around it was going to have to compete--it was not a
very good process.
But you do know that for a while Lockheed was up for grabs,
and finally, with a lot of people putting their oar in the
water, it got extended, principally on the basis that they had
been number one all along. Los Alamos was not number one. That
rating system you referred to had placed Los Alamos in a less-
than-superior position vis-a-vis the performance of other labs
in their work. So why should Los Alamos should not have been
graded on the basis that they were beginning to falter in terms
of that evaluation? What is wrong with using that against Los
Alamos?
Dr. Hecker. I think that is fair enough. I did not say that
competition is a bad thing; I did say that competition is a
good thing. If one has, you know, sufficient concern about
whether the laboratory is actually doing its job, then I think
one should examine that.
My own sense is--and I think I made that clear in my
testimony--I believe we at Los Alamos are not as effective, not
as productive, as we ought to be. That it is a combination of
two things. One is, let's say, our own performance. Two is that
we have a system of governance that in the end is broken. It is
a combination of those two things.
The Chairman. Dr. Krebs.
Dr. Krebs. I agree with Dr. Hecker that the movement
towards performance-based management and the interpretation of
that in terms of the self-assessment process that DOE and the
university undertakes, or actually any contractor now
undertakes, actually has added--has improved the understanding
of how the contractor manages, especially on the business side.
I think there is a danger that it could become too
prescriptive, too detailed, and that is always something that I
think one has to be careful about. If you trust each other,
then you get to the right balance of at what level of detail
you are going to ask for accountability.
Relative to Los Alamos and the question you just asked, my
principle is this: In self-assessment, the laboratories are
asked to make a judgment about their business practice
management and their program management. As I said in my
testimony, I think technical excellence, technical judgment,
has to be primary. Without that, there is no point in having
excellent business management practices.
So the question I would ask is, you know, how is the
balance there, not just the business management?
The Chairman. I want to close by asking you to each comment
on this one observation that I have. Since I have been here,
every time we have had a crisis with reference to the
laboratories--let me just think to make sure I am saying this
right--we have never had a crisis that said they are
performing, in terms of their primary mission, poorly. The
crisis was that they weren't doing something that some people
thought they ought to be doing in exercising their mission
quite right.
The big one is since we have been engaged with Russia so
many years, the principal one has always been security. I
wonder if you might just talk with me. Is it not possible that
one could say that the laboratory's performance should be
judged differently with reference to mission accomplishment as
compared with some other aspects that are part and parcel of
managing an institution?
Would one dare give Los Alamos back to the University of
California if they are doing the absolute best work on nuclear
deterrent and are found faltering in terms of security leaks
and the like? How would you address that if you are coming up,
now, with a new way of setting the prescription for contracts
and the like? Either of you that have any feel for that, could
you discuss it?
Dr. Hecker. If you don't mind, Senator, I would like to
comment. It also makes me reflect back on your previous
question about the way that the contract is currently being
administered and judged. The performance-based contract
actually is supposed to have this mission element in it, but as
you just said, it never gets the play. If you go back and you
look at our performance ratings on mission, they have been
exceptional the whole time of the period that you discuss. So
yes, of course the mission is the important thing. My great
concern is that with the focus on these other aspects--which
have to be done well--we have to do things safely, we have to
be environmentally responsible--but we do have to conduct our
mission. We have done that well.
I am concerned that the current process has driven us in a
direction where the mission matters less and less. As you
change out the contractors, what you are going to wind up doing
is getting somebody that might be very efficient at doing the
wrong thing.
The Chairman. Dr. Krebs.
Dr. Krebs. I would say something in my testimony to this
effect. I believe that part of what has happened--first of all,
I think that the management of security, particularly in a
weapons laboratory, may not--may be more than simply business
practices; it is part and parcel of the mission. Basically, you
need--it does establish, then, a requirement on these
laboratories to think about that in an integrated fashion.
Having said that--and I don't know from my experience--I
don't know exactly what that right way to do it is. Having said
that, what I observe, I believe, is that the Department has
tended to split off judging security management at these
laboratories as a business practice, as something that is
separate and apart from the mission, that can be described and
prescribed in a way that allows you to make judgments
independently of the mission. That is my comment.
The Chairman. Dr. Postma.
Dr. Postma. I'm going to differ a bit with my colleagues.
Just as in the corporate world you don't judge a CEO purely
by how well they produce a certain product--it has to include
accounting practices, it has to include ethics, it has to
include a multitude of things--and we have known in the last
couple of years how disastrous it can be to a corporation if
not everything is attended to properly.
It is also true with a laboratory, that a really top-notch
management will pay attention to everything that is important.
Sandia is an example, in my mind, of one who has that balance
in very good order. They have to pay very good attention to the
mission, they pay very good attention to the security, to the
employer relations, to diversity, to ethics, and to everything
that is important in accomplishing a mission. So I don't see
them as being all that separate.
If you have got great management, great management will
take care of all of those things. The emphasis that the
performance appraisals put on it can be misleading, but so long
as you have got good management, they aren't going to be much
different.
The Chairman. Dr. Peoples.
Dr. Peoples. I am not really qualified to speak about
security, but let me look at a business practice, an impact
thing. One of the things that sort of came out of the mixture
of the Galvin report and what Secretary O'Leary did was
adopting credit cards, all right? What this did is it allowed
one to get rid of a large number, 95 percent, of all
procurements. These were done primarily by clerks. Costs were
saved. At Fermilab we were able to reduce the staff by 17
people.
But that process you understand introduces a risk. I am not
sure the Department understands the balance between cost and
risk. It is very important, because if you are going to do
that, you have to expect a little of that. The way to judge it
is to look at how much money was saved, how much money was
lost, and compare those things. In a business, you would do
that.
As I told you, I am genetically an accountant. I was
brought up that way by my father who was an accountant, a
famous one, and my brother. I understand that. That is what the
Department does. Unfortunately, it is embarrassment that turns
out to be the major quotient. We will get a new rule. I think
the credit card thing was enormously successful, but one has to
be prepared for something to go wrong, a little bit.
So $120 million of procurements and a few hundred thousand
dollars going wrong is not bad. Compare that to Enron, where
30,000 or 40,000 people lost their whole living. I'm going to
disagree with Mr. Postma, this was pretty substantive in Enron.
They were off-balance partnerships. That was nothing subtle,
not like keeping track of credit cards; that was fundamental to
the thing. I believe laboratories can take care of the
fundamental business performance, but the DOE has to be
prepared to work with them to do it.
The Chairman. I want to close this, unless Senator
Alexander has any more questions, by making this observation.
Frankly, every time we have run into a major scandal, that is
what we call it around here--either an accounting scandal or a
security scandal, sometimes a combination of the two--we set
about to set up a new order for things and we put in place some
new Federal bureaucracy.
We thought that it was getting so bad and so obvious that
we ought to pull the nuclear defense work out of the Department
and put it into a semi-autonomous entity which we created. I
was the lead person on it. We drew up a statute. We created it,
NNSA. It has gotten to where some people remember it now, NNSA.
We just received a criticism that is going on this morning
in the House that NNSA is not working. It was set up so we
would not be setting up a new entity each time we had a crisis
of security, but that this semi-autonomy would divest that part
of the Department from some of the dysfunctionalness that came
with the overlapping of bureaucracy that ran both parallel and
perpendicular to each other, running into each other. It has
not been implemented. Either we didn't write it right, or they
didn't implement it right.
What I have discovered, to my chagrin, is that Secretaries
really don't want to get rid of the authority. So that NNSA has
a hard time succeeding because it was intended that it be as
crazy an idea as if the Secretary has too many strings
attached, then the head of the NNSA should go rent a building
somewhere else in town and move his whole operation elsewhere.
That was said in open hearing by me that that is what the
Director of the NNMA ought to do; that if they were too
controlled by the Secretary, they ought to leave. It is not
happening. In fact, it is getting closer. The latest report is
that it is unsuccessful.
I have concluded that--Dr. Peoples summed it up. you would
be a great manager to the extent that we were looking at
anything to do with auditing, bookkeeping, credit cards, not
because the contract of agreement between the U.S. Government
and your laboratory was very much different than the contract
with Dr. Postma, but because of who you are as a manager.
As a consequence, we are going to get great-managed
laboratories if it is going to be, to a great degree, the
quality of the management and not the details of the contract.
But I am not sure that is going to be a good answer when we try
to help the Secretary with some ideas about how the next Los
Alamos contract should be entered into; although I would think
we ought to have that very, very high on the list, that it is
going to be important when you pick a company, an institution,
an entity, that you know who you are getting to be the manager
of the institution called Los Alamos.
Maybe my fond recollections of your early days and of the
days that your prior predecessor--two predecessors, including
the one I fondly remember, who was in fact only the second
laboratory director of the whole laboratory; I knew him well--
somehow it just seemed like we didn't have the problems of
today. Maybe it is just the people; maybe it is just that we
left them alone; maybe it is that we've got way too many people
that go in and look at every little detail. I don't know. But
it surely is getting more difficult.
We have a situation at Sandia, to close this hearing, where
you have just praised them heavily, and across the hall in the
House there is a subcommittee hearing saying how terrible they
have conducted their security work and how they have failed to
respond to the contentions of Senator Grassley's office, even
though an independent study by a former U.S. Attorney in New
Mexico has said everything was fine. So it is really a pretty
difficult situation with a lot of politics.
Senator Alexander, we can be assured that as we look
forward to who is going to get Los Alamos, there will be more
politics than we like in terms of how universities are going to
qualify. I hope we can at least write that out as we set some
criteria for them so that it won't--it really will be
institutions that are going to give it high caliber, as it was
when Sig joined them, or as the university was when Dr. Peoples
joined it. I hope that is what we end up doing with Los Alamos.
Having said that, we are going to convene as scheduled. We
thank you all very much for your time. We will pay close
attention to your recommendations. Thank you.
[Whereupon, at 12:17 p.m. the hearing was recessed, to be
reconvened on Tuesday, July 17.]
DEPARTMENT OF ENERGY LAB MANAGEMENT
----------
THURSDAY, JULY 17, 2003
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:34 a.m. in room
SD-366, Dirksen Senate Office Building, Hon. Pete V. Domenici,
chairman, presiding.
OPENING STATEMENT OF HON. PETE V. DOMENICI,
U.S. SENATOR FROM NEW MEXICO
The Chairman. Senator Bingaman will be right along, I
understand, and we're going to get started because there's a
lot of things going on here and I'm afraid every minute we
delay here risks our chance of hearing the witnesses today, so
let us proceed, and we're going to take the witnesses--first,
thanks to all of you, exceptional, powerful panel, great
experience. I just hope that we can benefit from your thoughts
and in turn pass on to the administration better ways to set
management of these laboratories in place in the future.
We're going to start with Vic Reis, senior vice president
of Hicks & Associates in Washington, D.C. This is the second in
a series of hearings devoted to the Department of Energy's
management of its laboratories--good morning, Senator
Bingaman--and other facilities.
I want to start by thanking the witnesses for adjusting
their schedules. For today's hearing we selected those whose
careers and knowledge encompasses both the laboratories and at
least one other major lab system. In their testimony and in our
questions we will consider whether successful laboratory
operations in another system, Federal or private, provides
useful examples for improving the management of the DOE labs.
In future hearings we will hear from the leaders of some of
the studies that have explored the productivity of the DOE
laboratories and ways to increase productivity. In addition, we
plan to hear testimony on the various contract models that are
now used in the Department in the hope of exploring best
practices that might be applicable.
Today, we have four of you, each with very important
experience. Dr. Jack Gibbons served the Nation as President
Clinton's science advisor from 1993 to 1998. Prior to his
service, he directed the Congressional Office of Technology
Assessment for over 13 years. He has also held senior positions
with the Academy of Engineering and the Department of State. He
began his distinguished career at Oak Ridge National Laboratory
in Tennessee.
Dr. Bill Spencer, I remember him when he first came as an
aide to then Senator Buckley years ago, and directed some of
the Nation's premier private technical ventures at Xerox--
correct that, sorry. Dr. Bill Spencer, I'll come back to you in
a moment.
Bill Schneider, chairman of the DOD Defense Science Board,
and many other roles, including Under Secretary of State for
President Reagan and the Associate Director for National
Security at OMB, served for 10 years as a staff member in both
the House and the Senate, and Vic Reis is currently, as I
indicated, at Hicks. He served as Assistant Secretary of Energy
for Defense Programs, Director of Defense Research and
Engineering for the DOD, and in these and many other roles he's
interacted with many other laboratories in DOD.
Bill Spencer directed some of the premier private technical
mentors at Xerox, SEMATECH, and Bell Labs, senior manager of
Sandia National Laboratory operations in both California and
New Mexico, where he directed their microelectronics and
systems development programs. He also has chaired a key part of
the Galvin Study on the National Laboratories.
All right, with that, Dr. Gibbons. Dr. Gibbons, I've
already introduced you, and indicated your background. We're
delighted to have you here. We're going to proceed now. We'll
start our testimony on this side with you Dr. Reis, and we'll
move right on through, with Bill Schneider wrapping up this
morning. Please proceed. The testimony from each of you will be
made a part of the record right now, so we don't have to worry
about it, and you abbreviate it as best you can.
Dr. Reis.
STATEMENT OF DR. VICTOR H. REIS, SENIOR VICE PRESIDENT, HICKS &
ASSOCIATES, INC.
Dr. Reis. Thank you for the opportunity to testify in this
hearing. How our national weapons laboratories are managed is a
critical national security issue. I have been involved with
every type of government research laboratory for most of my
career. I have worked in them, funded and guided them from
various government positions, and have advised them, their
parent organization, and the Government on how they should
operate, so today I will briefly discuss what I have learned
about lab management that might be useful to the current
situation in the Department of Energy weapons laboratories and
make a few specific recommendations.
I should add that the opinions I express are my own, and do
not necessarily represent my employer or any of the
organizations for which I consult.
Management begins with strategic planning, and the first
question of strategic planning is to ask, what is the specific
purpose of the organization? The purpose of any national
laboratory is to attack a vital national mission that contains
complex scientific and technical problems that can best be
solved using large, integrated experiments and associated
computations. Stockpile stewardship, the current primary
mission of the national weapons laboratories is obviously such
a mission.
Within the national lab complex, the FFRDC model of
government-owned, contractor-operated facilities has proven to
be the best operational model. FFRDC's have an inherent and
significant operational flexibility and advantage over an
equivalent government-owned, government-operated facility. The
DOE weapons laboratories are FFRDC's and should remain so.
So what is the problem with the management of the DOE
weapons laboratories, and how might they be fixed? Dr. Sig
Hecker hit the nail on the head in testimony to this committee
on June 24, when he concluded that the root cause of management
difficulties at the DOE weapons laboratories is a lack of trust
between the Department of Energy and their laboratories.
However, I do not subscribe to Sig's recommendation that a
blue ribbon panel should be created by the Congress to solve
the DOE weapons management issue. You don't establish trust by
blue ribbon panels, any more than you build trust by
inspection, security and safety rules, audits, and external
reviews, even though all these items are essential to good
management practice. We all know from a lifetime of personal
experience that trust is developed from a shared sense of
values and working together as a team toward a common goal.
Dr. Hecker points out that after the cold war ended the DOE
was not sure what they wanted the weapons laboratories to do,
other than stop testing, downsize, and help U.S. industry, but
that uncertainty ended with the creation of the stockpile
stewardship program, and while it took a few years for
stockpile stewardship to catch on, stockpile stewardship is now
a core mission for the DOE and the weapons laboratories.
Indeed, Congress recognized this by creating the National
Nuclear Security Agency, NNSA.
When I joined the DOE back in 1993, there was a deep
cultural divide between the DOE managers and their laboratory
counterparts. My approach to closing this breach of trust was
to install senior folks with extensive laboratory experience as
my operational deputies and give them the freedom to lead.
Because of their lifetime accomplishment at the labs, the labs
trusted them, and because of their obvious management expertise
they soon developed a similar trust among the key DOE staff.
Working together, the labs and defense programs collectively
developed stockpile stewardship. Since I believe DOE lab trust
will be an issue in the foreseeable future, I would recommend
this practice be continued and extended by assigning a
significant number of DOE personnel to labs to participate
directly in programs.
My second recommendation has to do with the use of boards
of directors at FFRD's. The DOE's Lincoln Laboratory provides
an example of an effective use of a board. Lincoln uses a joint
advisory council, JAC. The director of Defense Research and
Engineering, the DDR&E, who is joined by the senior managers of
the services, DARPA, NRO, and the BMDO, shares this council.
The function of JAC is to provide the strategic discipline
to ensure that the lab is working on those national problems
that fit the lab's talents and mode of operation. Every JAC
member has a critical stake in the lab's success and long-term
well-being. Trust is maintained at the executive level. One can
imagine an analogous board for DOE weapons laboratories,
including not just the defense programs, but the NNSA, the DOD,
other parts of the Department of Energy, Homeland Security, and
the National Security Council.
Finally, let me comment on the impending competition for
the Los Alamos and possibly Livermore National Laboratories.
Given all the issues whirling around the labs, I am for it. I
do not believe that new management is necessary to improve
outmoded business practices, or safety, or security. Pete Nanos
and Mike Anastasio can do that very well, thank you. But I
think this competition can be used to refocus the labs on their
mission, and to continue to sharpen their strategic vision.
If it is done effectively, it will require the DOE to
fashion a request for proposal that focuses on how well the
potential management team, their contractors, rather, can
deliver on their mission, not just how well they can count
paper clips. I would add that I believe it is vital to have a
great research university be central to the management of these
laboratories, not because of any particular management
expertise, but because only a great university creates a
culture of scientific learning, and scientific learning is
critical to science-based stockpile stewardship. If it's
location, location, location in real estate, it's mission,
mission, mission in national laboratories.
Mr. Chairman, I would be remiss if I missed an opportunity
to thank the members and staff of this committee, and you in
particular, for all your help during my stint at the Department
of Energy and, more important, for your extraordinary service
to our Nation and to the world at large.
Thank you very much.
[The prepared statement of Dr. Reis follows:]
Prepared Statement of Dr. Victor H. Reis, Senior Vice President,
Hicks & Associates, Inc.
Mr. Chairman, thank you for the opportunity to testify in these
hearings. There are few things more important to national security than
the viability of our national weapons laboratories and how they are
managed is critical to their success.
As you can see from my biography, I have been involved in
laboratories most of my career: private industrial labs, government
labs and Federally Funded Research & Development Centers (FFRDC's). I
have worked in them, funded and guided them from a variety of
government positions, and advised them, their parent organizations and
the government on how they should operate. So today I will briefly
discuss what I have learned about lab management that might be useful
to the current situation in the Department of Energy and the weapons
laboratories in particular. I should add that the opinions I shall
express are my own and do not necessarily represent my employer or any
of the organizations with whom I consult.
Management begins with strategic planning, and the first question
of strategic planning is to ask what is the specific purpose of the
organization? The purpose of any national laboratory is to attack a
vital national mission that contains complex scientific and technical
problems that can best be solved using large, integrated experiments
and associated computation. Stockpile stewardship, the current primary
mission of the national weapons labs, is obviously such a mission.
If the job to be done can be done better, or even equally well, in
academia or private industry, academia or private industry should have
preference. Government-owned laboratories should not compete with
private industry or academia.
Within the national lab complex the FFRDC model of government-
owned, contractor- operated facilities has proven to be the best
operational model primarily because of the inherent and significant
operational flexibility advantage that an FFRDC has over an equivalent
government-owned, government-operated facility. The DOE weapons labs
are FFRDC's and should remain so.
So what is the problem with the management of the DOE labs, and in
particular the DOE weapons labs? And how might they be fixed?
Dr. Sig Hecker diagnosed the DOE lab management problem in his
testimony to this committee on June 24th. Sig hit the nail on the head:
the root cause of the management difficulties (and they are real) is
the lack of trust between the Department of Energy and their
laboratories. Dr. Hecker provided numerous, poignant examples of how
that mistrust developed. But with all due respect, I believe, Sig's
recommendation that a Blue Ribbon Panel is required to solve the
management issues is not one I would subscribe to. You don't establish
trust by Blue Ribbon Panels, any more than you build trust by
inspection, security and safety rules, audits, and external reviews,
even though all these items are essential to good management practice.
We all know from personal experience that trust is developed from a
shared sense of values and a common goal, and working together to reach
that goal, no matter how difficult it is and how long it takes.
Dr. Hecker points out that after the Cold War ended, the DOE was
not sure what they wanted the weapons labs to do, other than stop
testing, downsize and help U.S. industry. But that uncertainty ended
with the creation of the stockpile stewardship program, and while it
took a few years for stockpile stewardship to catch on, there is no
doubt now as to the centrality of stockpile stewardship to the DOE or
the weapons labs. Indeed, Congress recognized this by creating the
National Nuclear Security Agency (NNSA).
I was faced with this ``trust'' problem in spades when I joined the
DOE back in 1993. There was a deep cultural divide between the DOE
managers and their laboratory counterparts. My approach to solving the
problem was to bring in senior folks with laboratory experience to
become my operational deputies. Because of their lifetimes of work
experience at the labs, the labs trusted them. And because of their
obvious management expertise, they soon developed a similar trust among
the key DOE staff. Working together through ups and downs, we
collectively developed stockpile stewardship. While this practice
raised some eyebrows within the DOE, it is my strong belief that this
step was absolutely key to getting stockpile stewardship off the
ground.
Since I believe DOE/lab trust will be an issue for the foreseeable
future, I would recommend this practice be continued and I would
further recommend extending this practice by assigning a significant
number of DOE personnel to the labs, to participate directly in
programs.
My second recommendation has to do with the use of ``Boards of
Directors'' at FFRDC's. Lincoln Laboratory provides an example of an
effective use of a ``Board.'' Lincoln uses a Joint Advisory Council
(JAC) which is chaired by the Director of Defense Research &
Engineering (DDR&E) and who is joined by the senior R&D managers of the
Services, DARPA, NRO and the BMDO. It brings real value added to the
operation goals are shared and priorities chosen. Most important, it
provides a strategic discipline ensuring the Lab is working on those
national problems that fit the lab's talents and mode of operation.
Everyone on the JAC has a critical stake in the lab's success and long-
term well being. It is not too hard to imagine an analogous board for
the DOE weapons labs, including not just Defense Programs, but the
NNSA, the DoD, other parts of the DOE, Homeland Security and the
National Security Council.
Finally, let me comment on the impending competition for the Los
Alamos and possibly Livermore National Labs. Given all the issues
whirling around the labs, the DOE and the international situation, I'm
for it. Not because I believe that new management is necessary to
improve outmoded business practices, or safety or security--Pete Nanos
and Mike Anastasio can do that very well, thank you--but because I
think this competition can be used to refocus the labs on their
mission, and continue to sharpen their strategic vision. If it is done
effectively, it will require the DOE to fashion an RFP that focuses on
how well the potential management team contractors can deliver on the
mission not just on how well they count paper clips.
I would add that I believe there is significant value in having a
great research university be integral to the management of these labs.
Not because of any particular management expertise--what university
ever built a plutonium factory--but because the university creates and
sustains a culture of scientific learning, and that is truly what
science based stockpile stewardship is all about.
Mr. Chairman, I would be remiss if I missed the opportunity to
thank the members and staff of this committee and you in particular for
all your help during my stint at DOE, and more importantly your
extraordinary service to our Nation and to the world at large.
The Chairman. Thank you very much.
Dr. Spencer, please proceed.
STATEMENT OF DR. WILLIAM J. SPENCER,
CHAIRMAN EMERITUS, INTERNATIONAL SEMATECH
Dr. Spencer. Thank you, Senator, and I appreciate you and
Senator Bingaman inviting me to participate in this and to
comment on the governance of the national laboratories. I'm
going to focus on the weapons labs. That's where I think I know
a little bit, and not a lot in the other areas.
I have the highest regard for these institutions and the
people who have been there. I think they're dedicated, and the
service they have rendered to the Nation is something we all
deserve to give them a vote of thanks for.
As you know, my career has been entirely in the entire
private sector. Even when I was at Sandia I was a Bell Labs
employee assigned to Sandia for a number of years, so the views
I'm going to give you today, the biases which you're going to
hear from me, are influenced by a career in the private sector,
things I learned at AT&T and Xerox and later at Sandia and
SEMATECH.
I read the previous testimony and your comments after that.
Some of the things I'm going to say today you've already heard.
I'm going to try and focus on those areas where I know a bit
and give you some recommendations and hopefully some ways maybe
to implement some of those recommendations.
I strongly believe that the better management of the
weapons laboratories can be done by private corporations. This
was earlier said by Herman Posner, and I agree with his
assessment on that. However, believe that the current GOCO
system is broken, and is broken, it seems to me, for two
reasons. One is changes in the Government. You've heard a lot
about that over the last sessions and I'm not going to talk
much about it today, but the other is the changes that have
occurred in industry.
Many of the problems which you've heard were identified in
the study we did in 1994 or 1995 on alternatives for the future
of the DOE national laboratories, the Galvin report. I was
chair of the national security section on that, looking at the
weapons labs, and I think the issues that were identified then
are still there today, and perhaps they're even worse, but how
about the private sector? I'd like to go back for a minute and
look at the start of the Bell System and their management of
Sandia in the late forties.
You probably remember that President Truman asked Mervin
Kelley, who was the president of Bell Labs at that time, how
the AEC facilities should be managed, and Kelley said, let's do
it with private management, but don't include AT&T. You
remember, Mr. Truman was able to convince him that it was a
good idea for the Bell System to take over the management of
Sandia, and I think that was a successful collaboration from
1949 to 1989, 5 years after the breakup of the Bell System, and
at the time that AT&T dropped out of managing Sandia. All the
reasons for their joining and then dropping out you know better
than I do.
However, if we look at companies today, AT&T doesn't exist
as it did in the late forties, and all of the companies in the
United States have changed dramatically since the late forties
and the fifties. We came out of the Second World War with
preeminent companies on a worldwide basis. We had very little
competition, and that doesn't exist today.
Companies like AT&T, which had very large in-house research
laboratories, either have closed those labs or restructured
them or redirected them so that the focus today is on much
shorter term projects. Even the laboratory which I was a
director of for many years, which has been given credit for
developing a lot of the personal computer effort, Xerox's Palo
Alto Research Center, has been spun out as a separate company.
It's no longer an internal research lab for Xerox.
Now, with these changes, how are you going to get U.S.
corporations to come in and be wiling to direct or manage
national laboratories, and especially the weapons laboratories?
I believe you're going to have to think about a whole new set
of incentives. If you look at U.S. corporations today, the
things that they compete with are getting the best talent,
intellectual property, and determining a market which they can
get into to use these capabilities for an advantage in a global
situation, competition that they didn't have in the past, so
it's essential, I think, to get these companies to tell you
what they need to get into, to get into management of the
weapons laboratories.
I agree with Vic that a board of directors as an oversight
is the right way to go for these companies. However, I would
make that a hard-nosed, knowledgeable, involved set of business
people with very few representatives from the Government or the
company that's managing a particular facility.
I think when we went back to set up SEMATECH in the mid-
eighties we had two studies. One was done by industry, led by
Charlie Spork. One was done by the Defense Science Board, led
by Norm Augustine. Those two studies looked at what it would
take for industry to help solve the semiconductor problem in
the mid-eighties. Norm Augustine looked at what the Government
wanted. After those two studies were done, they got together
and formed SEMATECH, which many of you have been involved with,
and you know as well as I do what it did and what it didn't do.
I thought it was a good model, and one we might consider as
we look at management for the weapons laboratories in the
future.
Thank you.
[The prepared statement of Dr. Spencer follows:]
Prepared Statement of Dr. William J. Spencer, Chairman Emeritus,
International SEMATECH
These notes and my comments on July 17, 2003 are focused on
governance of the three DOE Weapons Laboratories; Los Alamos National
Lab, Lawrence Livermore National Lab and Sandia National Lab. The
primary mission of the three laboratories, as I understand it, is the
maintenance of a safe, secure and reliable nuclear weapon stockpile in
the absence of testing. This mission has not changed over the last
several years and is of great importance to the nation. The performance
of these three laboratories over the previous decades was a major
factor in the successful conclusion of the cold war and the current and
former members of these organizations deserve a vote of thanks from a
grateful nation. Every effort must be made to insure the success of
their mission in the future. This is especially true in the area of
governance.
The attention of Congress to maintaining effective governance of
these key national resources is to be commended and I am appreciative
of the opportunity to comment.
These notes and my comments are certainly biased by my experience.
I had the opportunity to work at two of the world's premier research
laboratories, Bell Labs and Xerox' Palo Alto Research Center, serving
as the Director of the latter. Also, as the Director of
Microelectronics and Weapon Systems at Sandia National Lab and as the
Chief Executive of SEMATECH. In 1994-5, I was the chair of the National
Security portion of the study for the Secretary of Energy on
``Alternative Futures for the Department of Energy National
Laboratories''. Many of the recommendations of that study, chaired by
Robert Galvin of Motorola, are applicable to the governance of the
Weapons Labs today.
The recommendation that I will propose and hope to substantiate is
the three laboratories are better managed by private organizations,
with proper incentives and minimal government oversight. This was the
situation three decades ago and a return to something similar to that
mode of management is in the best interests of the country. However the
current GOCO process is broken and must be replaced.
It may be informative to look briefly at the history of the Bell
System involvement with the management of Sandia Labs as one successful
example. These are personal recollections. There is a complete history
of the establishment of Sandia Labs, the involvement of Mervin Kelley,
the President of Bell Labs in the late 40's, and the recruitment of the
Bell System to be Sandias first managers. President Truman had asked
Kelley to chair a study to determine the management of the Nuclear
Weapons program of the Atomic Energy Commission (AEC). Kelley
recommended private management (the GOCO model) and Truman convinced
AT&T to take the responsibility for Sandia over the companies early
reluctance.
This arrangement continued until 1989, five years after the break-
up of AT&T into multiple companies. The arrangement had several
advantages for Sandia and the Government. First, AT&T accepted the
responsibility for no fee and was extremely vigilant about insuring
that no government funded technology was returned to AT&T. Second, AT&T
supplied a series of excellent senior managers principally from Bell
Labs and Western Electric. Most of the individuals were on an
assignment to Sandia for a few years and returned to executive
positions within AT&T. Additionally, Sandia was able to obtain access
to new technologies from AT&T, especially from Bell Labs, of importance
to its role in the nuclear weapons program.
One example of technology acquisition occurred in the mid 70's,
when a facility for designing and producing small quantities of
radiation-hard silicon integrated circuits was established in
Albuquerque. The design software and early semiconductor processes were
based on Bell Labs technology, Sandia provide the radiation hardening
capability. The transfer of technology was enhanced by the assignment
of several key technologists from Bell Labs to Sandia. This exchange of
personnel, both management and technical, was a benefit to the
Government. The Bell System individuals were often those destined for
broader responsibility upon their return.
The importance of exchange of personnel cannot be over emphasized.
The successful realization of the mission of any organization
ultimately rests on the few key employees of that organization. It is
usually not possible for any organization, public or private, to hire
all of the talent that it needs to meet its mission. The Bell System
was rich in talent and could share personnel without jeopardizing its
own success. The choice of a future management organization should
consider the availability and willingness of that management
organization to share key personnel.
This has not been the situation in the two University of California
managed laboratories and I think to the detriment of those
laboratories. It appears to me that the exchange between Sandia and its
management partner today is lower than with the Bell System,
particularly with regard to technical talent.
Are there issues with the current situation in the management of
the three laboratories? There have certainly been many high-lighted in
the recent press. These seem to be symptoms of a major problem and not
the problem itself. The underlying problems identified by the 1994
study of the DOE National Laboratories are still there and perhaps even
more serious today than a decade ago. These are detailed in the 1995
report and deserve being reviewed. Some of the major issues raised
were: high overhead costs, too much focus on compliance, a scramble to
establish ``new mission'' areas, lack of good business practices and
one too many nuclear design facilities. Most importantly, the principal
problem identified was ``the micromanagement of the laboratories by
Congress and the excessive oversight by the Department''.
This has lead to what I would call the ``Photon Model of
Management'' of the Laboratories. You may recall that a photon is a
small packet of energy with wave-like characteristics. It is usually
formed by action within an atom or molecule, than the photon travels at
the speed of light until it is absorbed by another atom or molecule.
Traveling at the speed of light between collisions (or meetings) means
that time elapsed on the photon between these events is zero, there is
no time between collisions. The same thing is occurring with management
in the laboratories. There is zero time between meetings (or
collisions), meetings usually called by Congress or the Department and
often requiring several pre-meetings to prepare for this often
redundant review. Thus for senior management, and usually cascading
throughout the organization, there is zero time for contemplation, or
strategic thinking or long range planning. I do not believe this is in
the best interest on the nation. The problem will only be resolved with
the installation of competent management and the establishment of trust
with Congress, the Department and the Nation. This means choosing an
organization with the talent and motivation to perform this important
task. It cannot be resolved by additional Government constraints on the
laboratories.
Do such organizations exist? Are they in the private sector or
elsewhere? My bias is that the private sector is best qualified to
manage the laboratories with an involved and knowledgeable Board
oversight. Making this choice will mean private levels of salary and
other benefits for the laboratory employees. For the current mission,
the surety of the nuclear weapon stockpile, the better choice would be
a private US corporation. It might also be possible to find the right
person to head the Weapon Laboratories and to have an oversight Board
made up of representatives from several of the US's leading companies
to advise and evaluate that individual and his/her team. The particular
choice of a corporation(s) should depend on the details of the mission
of the laboratories. How important is research versus development or
production of weapons? What sort of management and technical talent are
required? Is it available and will it be shared? Answering these
questions may require an appropriate in-depth study. However, there are
some guidelines on how to identify and motivate private organizations
to take up the task. The key will to be finding the right leader,
giving that person and his/her team the freedom to manage the
laboratory for a period of five years with proper private Board
oversight and judge the success or failure by results. This might be
considered an experiment in a completely new way to manage the Weapons
Labs and ultimately other GOCO facilities.
In my view, the model of the Bell System management of Sandia is
the better of the known models for government laboratories. AT&T was a
corporation with a large and prestigious in-house research organization
and broad business experience and knowledge. There is not a counterpart
to AT&T today and other US corporations have undergone major change
since the late 1940's. Therefore the proposal to consider a consortium
of companies to be involved in the management of the Weapon Lab if a
single corporation is not found. The change in US corporations is due
in some part to government actions and in other cases loss of a
monopoly position or global competition. There is a bright side to this
global competition in that managers of global corporations develop
talent that make them better able to handle difficult and complex
situations that are inherent in the DOE labs today. Global competition
usually also leads to slimming down employment and companies with large
talent pools are rarer today. Therefore, a method must be found to
locate or expand promising corporations with the appropriate resources
that might be candidates to manage the three laboratories.
Appealing to patriotism may not have the same effect as 60 years
ago. US corporations are often in a battle for survival. Giving them
opportunities to improve their competitiveness would be a better
incentive. Access to better or more talent, new ideas, longer range
research or a level playing field with respect to their foreign
competitors would be attractive. The better incentive would depend on
the company and its market. Convincing any company that the government
can be a good partner will be difficult.
An example of a successful partnership between Government and
industry is the initial formation and operation of SEMATECH. The
funding and structure of SEMATECH was the result of independent studies
by both Industry and Government. As a result of these studies, the
Government supplied money and some minimal oversight and left the
management and direction of the consortium up to the private sector.
This cooperation lead to the consortium meeting its goals and the
ultimate withdrawal of government funds after the US industry regained
market share. The result was characterized by the GAO ``as an example
of private management of government money to the benefit of both''.
Certainly the management of the nuclear weapon stockpile is of greater
importance than national market share in a technology. A method to give
responsibility to the private sector, perhaps modeled on earlier
successes, to properly manage government funds can be found.
A summary of the recommendations;
Insure that the surety of the nation's nuclear stockpile is
the primary mission of the three laboratories;
Focus on private corporate management of the weapon
laboratories, either a single corporation or a consortium;
Completely eliminate the current management and oversight
policies;
Treat the management of LANL or the next Weapon Lab to be
competed as an experiment to be judged by agreed upon results
in five years;
Initiate discussions similar to that used to set up SEMATECH
to determine the details of Weapon Labs management; what
industry wants, what the government wants.
The Chairman. Thank you, Dr. Spencer.
Dr. Gibbons, nice to have you here.
STATEMENT OF DR. JOHN H. GIBBONS, PRESIDENT, RESOURCE
STRATEGIES
Dr. Gibbons. Senator, I appreciate it very much. I spent a
little over 3 hours this morning coming 45 miles, so I think
when I was told, why don't you retire and slow down, I did this
morning, but not of my own volition. Thank you for letting me
in the door. I'm sorry I'm late. I had intended to get here
about an hour early to prepare a timeless 2-minute summary, but
since I got here so late, it's going to be shorter and not so
timeless.
I think we all understand that scientific research and the
merging of disciplines is probably the greatest hope for the
future of any industrial country. It becomes more so with the
passing days, and the link of that process of research and
technology development to higher education is also a terribly
important activity. Both of these fit, I believe the kinds of
activities that the national laboratories and the kinds of
resources we have there which we should be constantly
moderating and changing to meet the new opportunities and
needs.
Clearly, DOE is an energy laboratory in its manifest ways,
but energy is also about as ubiquitous an issue as we can think
of in this world, so we need many disciplines, disciplines that
not only are excellent, but know how to work with each other,
speak each other's languages, focus on the same problem from
different perspectives, as was so eloquently stated by Harold
Varmus when he talked about the need for all kinds of science
and engineering in order to do medicine.
One of the things I have problems with, and you have my
vitae before you, so you know I've been in these laboratories
in a variety of ways, is that I've always been worried about
the growth of layering of administrative oversight over the
years. What began as probably a reasonable thing in the forties
and fifties, it seems to me must be seen as more than a little
anachronistic these days, and so we find an issue before us not
so much of a good science and good technology coming from these
laboratories, but the layering of administrative oversight that
can confuse the researchers and, I believe, not be the best use
of resources. I believe that needs continuing work. It's not as
though it was bad, but it's getting worse all the time, because
we're not changing with the needs.
Another need is an increasing focus on devising
partnerships in order to solve problems, partnerships that
reach between the laboratories. For example, there was an
excellent partnership developed in the DOE labs in designing
and constructing the advanced neutron source in Oak Ridge.
Several laboratories were deeply involved in that process, and
it has worked beautifully by combining those resources. The
whole is greater than the sum of the parts.
Another example is the work between the National Renewable
Energy Lab and Oak Ridge on biomass and energy from biomass
resources, whereas the best of the capabilities in these two
labs have been merged in a virtual laboratory, so the freedom
of moving between the laboratories in terms of the division of
the work, and the construction of solutions, is a very
important need.
That reflects on the way we need to think about
administering these labs and fostering this kind of
interaction, rather than the natural proclivity to move towards
relative isolation one from the other. Even within DOE I get a
sense that some parts of DOE feel that this lab is theirs, and
that lab is someone else's, and that's not good. That's not
productive.
Partnerships that go beyond the work between the
laboratories, between DOE and other Federal laboratories is
important, and also between, of course, the DOE laboratories
and industry. In the work we did in the nineties on the
partnership for a new generation of vehicles the DOE labs
formed a virtual partnership by the directors. I think it was
six of those labs. Their people began to learn much ore
intimately the language of their own counterparts in science
and technology in the automobile industry, in the automotive
industry. They began to speak each other's language and
understand the different perspectives. That led to much more
productive ways of both the industry and the laboratories
working together.
So we have an imperative for a measure of leadership and
management that understands these emerging and growing needs in
the way they not only run the laboratories and encourage these
kinds of interactions, but also in the way the laboratories'
progress is judged, and the way the capabilities and progress
of the people is judged.
I would only add that I think the national labs, the DOE's
labs are extremely important. They have been time and again
judged as being outstanding national resources, and we must be
careful not to get so overfocused on administrative problems
that we lose sight of those jewels that are out there that are
constantly in need of encouragement and support.
That means that we should hearken back to Senator Dirksen,
who once said--Senator Dirksen said, I'm a man of principle,
and my first principle is flexibility, so I think we should
face the future of these laboratories' management in the same
way. We must have principle, but also be flexible in the way we
move to the future.
Thank you, sir.
[The prepared statement of Dr. Gibbons follows:]
Prepared Statement of Dr. John H. Gibbons, President,
Resource Strategies
Mr. Chairman and Members of the Committee:
I am pleased to appear before you today and appreciate your
invitation for me to share my perspective on management and support of
science and technology in the nation's interest. It has been said that
education is the progressive discovery of one's ignorance. I've been
involved with physics, energy, and environmental studies at various
national laboratories for fifty years, so that amount of ``education''
has left me knowledgeably ignorant about the issues you are addressing.
I won't belabor my personal record but do want to be explicit about my
background and current connections. For your information I presently
serve as consultant to the Lawrence Livermore National Laboratory and
the National Renewable Energy Laboratory.
After my Ph.D. and post-doc work in physics at Duke University, I
joined the Oak Ridge National Lab (November '54) and enjoyed many years
of research in nuclear structure, including many interactions with
colleagues at Los Alamos National Laboratory, Argonne National
Laboratory, and Brookhaven National Laboratory. Other than expected
differences in security constraints I perceived little difference in
the administration, quality of work, or mode of working among these
four labs. The labs had developed a separate institutional culture that
seemed to be semi-independent of the particular contractor/operator. I
recall one incident at a social function in Oak Ridge where I
challenged an official about paucity of the contractor's attention to
the community's needs in the arts, recreation and economic
development--whereupon he responded, ``. . . if you don't like working
for `x' corporation then you can go find another job. . . .'' I
instinctively responded that ``I don't work for `x' corporation, I work
for the Oak Ridge National Laboratory.''
This incident highlights the challenge of organizational
management--how to be a part of the organization while also exercising
wise management by maintaining the critical condition of being apart
from it. Frequent change of management (philosophy, mode of
administration, . . .) can be disruptive and counterproductive, often
resulting in poorly performing service contracts. On the other hand,
without enlightened and innovative management an organization can
become stagnant and sloppy over time--especially in the absence of the
discipline of the marketplace.
A second theme I encountered was the sense of ``layering'' of
administration of the labs between Agency Headquarters, Field
Operations Offices, and lab management. I understand the original
rationale for this way of doing business, but without clear demarcation
of responsibility and authority I was persuaded many years ago that
administrative streamlining remains an important opportunity.
A third theme is that the culture of a basic research organization
can be quite different from one engaged in advanced development and
production. The profound success of AT&T Bell Laboratories reflects the
power of successfully intertwining the two, but it requires special
circumstances to enable it to work. For the U.S. Department of Energy
and other mission-oriented federal agencies, this presents a great
challenge: how to simultaneously do world class research relevant to
DOE's mission, connect effectively between research and application,
and work effectively with academia, sister labs and private industry.
The multi-agency, public-private sector work initiated in 1993 under
the Clinton-Gore Administration's Partnership for a New Generation of
Vehicles (PNGV) made important strides in learning how to effectively
address highly complex socio-technical challenges by marshalling and
integrating the collective R&D assets toward a common national purpose.
With the Department of Energy, the national laboratory directors formed
a PNGV virtual partnership to maximize their contributions rather than
focus on competing with each other for projects. Similarly, the
division of labor among the national labs in design, development, and
construction of the Advanced Neutron Source accelerator has been
sensible and highly meritorious.
A lesson from this experience is that the managers of the labs need
to treat such collaboration as vital in making the ``whole greater than
the sum of the parts.'' Measures of success of labs need to include
such activities as these in addition to more traditional measures of
efficiency and progress called for under the Government Performance and
Results Act (GPRA).
Mr. Chairman and Members of the Committee, I believe that science
and technology are absolutely essential in addressing today's needs and
providing options to enable the kind of future we seek. The various
U.S. agencies have a rich experience in organization and management
styles; so does the private sector. In the case of DOE, I believe that
the different organizational modes being used-GOGO, FFRDC, GOCO, and
Reserve Contracts to universities and industry-all have demonstrated
successes. The choice of management model should be matched to the
nature of the work intended to be carried out. Continuation of a
contractor should be judged on output performance, and this inherently
requires a long-term perspective. In all cases it is imperative to have
periodic peer reviews, not only of the quality of R&D but also of its
relevance to national interest.
Finally, there are other lessons to be learned from experiences at
government agencies such as NSF, NIH, EPA, and NASA. It is their
collective experience as well as that of research-intensive industry
that we should seek and apply. Different agencies require different R&D
management structures, but there is much in common, and there is
increasing need to integrate their work, especially in energy, health,
the environment, and national security.
It would be great if the U.S. Congressional Office of Technology
Assessment were still around to help the appropriate Congressional
committees sort this out. Sadly that is not an option. Perhaps the
National Academies or the President's Committee of Advisors on Science
and Technology could assist in devising a thoughtful and independent
assessment of science and technology management. For anyone undertaking
an assessment of this important issue, I recommend a careful reading of
John W. Gardner's monographs on Excellence (1960) and Self-Renewal: The
Individual and the Innovative Society (1964).
I would be pleased to respond to your questions.
Thank you.
The Chairman. Thank you very much.
Bill Schneider.
STATEMENT OF DR. WILLIAM SCHNEIDER, JR, CHAIRMAN,
DEFENSE SCIENCE BOARD, DEPARTMENT OF DEFENSE
Dr. Schneider. Thank you, Mr. Chairman, and it's a
privilege to have an opportunity to be here. I am Chairman of
the Defense Science Board, which was founded in 1956 as a
Federal advisory committee, and the Defense Science Board has
been particularly concerned about the health of the technology
base and the institutions that support that technology base,
and my testimony goes into some detail about some of the prior
Defense Science Board studies, and with your permission, Mr.
Chairman, I have three of these studies which I'd like to
provide to the committee for use, and I'll include them with
the full text of my testimony.
The Chairman. We'll be glad to accept them.
Dr. Schneider. Thank you.
What I will focus on is more narrowly what I believe to be
the near-term lessons from some of the DOD experience on the
management and governance of its laboratories that might be
pertinent to this committee's considerations of the governance
of the DOE national laboratories.
The cold war era division of labor between the DOD
laboratories that serve defense needs and the laboratories of
the nuclear weapons complex that uniquely serve that
specialized requirement no longer reflect the reality of the
21st century. The national security laboratory structure of the
U.S. Government, to include those that are funded within the
budget function 050, NASA, the DOE, and NSA laboratories and
DOD, need to be considered in a more holistic manner to
optimize their ability to support U.S. national security,
rather than as individual entities of these agencies. The
institutional barriers, especially between the Department of
Defense and the DOE NNSA laboratories, are a particular burden
on the ability of the national security science and technology
sector to make the best use of the aggregate resources made
available through appropriated funds throughout the Federal
Government. In the category of work for others, which is the
area where the national laboratories do work for other
agencies, including the Department of Defense, they do nearly
$1 billion worth of work for the Department of Defense, but my
testimony has a number of specific examples of how this
reflects an underutilization of the capacity of these
laboratories, and I've suggested some specific measures for
reform, which I won't go into now.
I would like, however, to draw some of the lessons DOD has
learned, particularly about laboratory governance, that may be
pertinent to modernizing the governance in the national
laboratories. The DOD provides R&D services to the military
departments and defense-wide institutions through a variety of
institutional forums, including civil service laboratories,
federally funded research and development centers, university
affiliated research centers, government-owned contractor-
operated, and many others. Many of these have been highly
successful for decades, while others have enjoyed a period of
success followed by a decline in performance over time. For
purposes of illustration, I will focus on one form of
institutional governance, FFRDC's, and some of the observations
that have emerged from the DOD's experience.
The Federal Government currently supports 36 FFRDC's in the
field of aviation, defense, energy, health, space, and tax
administration. The DOD sponsors nine of these FFRDC's. These
organizations support the DOD in scientific research, systems
development and acquisition, and related tasks. They are
organized as independent, not-for-profit entities.
A defense Science Board Study of the FFRDC's in 1997
affirmed their value to national defense, and identified four
characteristics that accounted for their success. First, they
have unique competence and quality, second, the FFRDC's are
closely integrated with their sponsor, third, they adhere to
strict constraints to minimize institutional conflicts of
interest and to promote objectivity and to ensure independence
from interests that may conflict with sponsor interests, and
fourth, the FFRDC's maintain a continuity of relationships
sufficient to establish a corporate memory in topics of
critical interest to the sponsor.
Two of the nine FFRDC's are also associated with a
university. One of these university-affiliated FFRDC's, MIT's
Lincoln Laboratory, which Vic Reis mentioned, is among the
oldest of the FFRDC's, and recently celebrated the 50th
anniversary of its founding. In this respect, it is perhaps the
closest parallel to the NNSA labs that are associated with the
university, in this case the University of California
laboratories of Los Alamos and Lawrence Livermore Laboratory.
There are two important distinctions between the DOD
experience with university-affiliated laboratory governance and
the DOE/NSA practice pertinent to this committee's inquiry. The
first pertains to the relationship between the laboratory and
the user. The linkage between Lincoln Laboratory and the user
committee is both direct and very close. Vic Reis commented on
the closeness of this in the supervision from their advisory
body.
There is very little intermediation and micromanagement by
the administrative apparatus of the Department of Defense
between the laboratory and the users of its services. The
university environment provides an environment where human
capital can be developed and accessed by the laboratory,
assuring a strong cadre of professionals conversant with the
most advanced technology in the laboratory's sphere of
responsibility as an FFRDC. A user committee, Lincoln
Laboratory's Joint Advisory Committee, provides close coupling
to the user.
The second aspect is the relationship between the
laboratory and the university itself. Lincoln Laboratory has an
extremely close relationship with the university, in this case
MIT, in physical, intellectual, financial and managerial terms.
This close relationship creates a virtuous circle that produces
a high quality professional staff and intellectual output as
well as close supervision of the laboratory by the university
on fiscal and safety matters. The DOD practice contrasts
sharply with the two DOD NNSA university-affiliated national
laboratories.
Extensive fiscal, contractual, security, and administrative
requirements of both agencies are cascaded down to the
laboratories, often overwhelming the university presence. The
relationship for the ultimate user is indirect, and filtered
through both organizations. This practice diminishes the
benefits of the university affiliation, since day-to-day
relationships with the two government agencies dominates the
process of executing the contract with the university.
Moreover, the dominant role of the two agencies and day-to-
day operations of the two laboratories prevails over their
relationship with the ultimate users of their scientific and
technical services. As a result, the national laboratories are
increasingly isolated, rather than integrated with the user.
These circumstances produce a very slow rate of adaptation by
the laboratories to the needs of the user. In an environment
where user requirements are subject to fast-breaking major
policy changes such as the implementation of the nuclear
posture review, this slow pace of adaptation is not helpful to
the national leadership.
The nature of the managerial arrangements with the
university-affiliated national laboratories is compounded by
the pricing practices of the laboratory's work for others that
limits the abilities of the laboratory users, both the
Department of Defense and the intelligence community, to
rationalize their own science and technical effort. On this
point, there is some good news. It is reported that some
significant concessions on the pricing of laboratory services
have been made to the Department of Homeland Security in its
use of the national laboratories for science and technical
research, though the relationship to the user remains indirect.
I believe in the short term there is substantial scope to
improve the management of the laboratories and yet retain their
university affiliation. In the longer term, I think we need to
consider perhaps some more sustainable relationship between the
national laboratories and the defense user, but I go into some
greater length in my testimony on that point.
Thank you, Mr. Chairman.
[The prepared statement of Dr. Schneider follows:]
Prepared Statement of Dr. William Schneider, Jr., Chairman,
Defense Science Board, Department of Defense
Mr. Chairman and Members of the Committee:
It is a privilege to have an opportunity to appear before this
subcommittee. I am William Schneider, Jr., Chairman of the Defense
Science Board (DSB) in the Department of Defense. Founded in 1956, the
DSB is a Federal advisory committee that advises the Secretary of
Defense on matters of science and technology. Issues pertaining to the
health of the technology base and the scientific and engineering
institutions that maintain that technology base have been an enduring
interest of the DSB. The ability of the nation's scientific and
engineering institutions, especially those primarily involved in
supporting the U.S. government's national security function, are
crucially dependent on the structure of governance in which they
operate. The U.S. National Laboratories operated by the National
Nuclear Security Administration (NNSA) and the Department of Energy
(DoE), and especially the two nuclear weapon design laboratories (Los
Alamos and Lawrence Livermore National Laboratories) face immediate
issues of governance as the underlying model--a university-affiliated
government-owned, contractor operated (GOCO) entity--has become a
subject of a debate. In the longer term, the question of governance of
the laboratories and the associated industrial complex supporting the
nation's nuclear weapons program may need to be considered in light of
evolving role of nuclear weapons in the U.S. national security
strategy.
In my remarks, I will address four issues pertinent to
considerations of governance both with respect to immediate as well as
long-term issues before the U.S. government derived from observation of
laboratory governance in the DoD.
Changes in the sources of science and technology for
national defense.
Recent studies by the DSB on the modernization of the DoD
laboratories.
Implications for changes in near-term NNSA laboratory
governance.
Longer term implications for governance of the nuclear
weapons complex.
CHANGES IN THE SOURCES OF SCIENCE AND TECHNOLOGY FOR NATIONAL DEFENSE
The Defense Science Board conducted a study of the impact of the
globalization of technology on national defense in 1999. A copy of this
study, Final Report of the Defense Science Board Task Force on
Globalization and Security, is provided to the Subcommittee for its
use. This study took note of changes underway for more than a decade in
the source of the technologies that produce superior military
capabilities for the Department of Defense. The technologies that
create the enabling features of advanced military capabilities are now
emerging primarily from the civil sector, especially in information
technology, materials, and software engineering. In the past,
technologies used for military applications were developed in secret,
and integrated into modern weapon systems by the defense industrial
sector. In the 1950s and '60s, the defense industrial sector was often
embedded in conglomerate industrial firms, hence contributing to a
``trickle down'' approach to the transfer of defense technology to the
civil sector.
During the 1980s and '90s, technologies developed in the civil
sector for civil applications in information technology, materials,
software engineering and other disciplines, when adapted for military
applications began to produce new and revolutionary gains in military
performance. These new capabilities in turn became the enabling factor
that permitted the use of new concepts of operation built around weapon
systems operating in a network rather than independently that became
such an important contributor to coalition success in the recent
Afghanistan and Iraq campaigns.
During the past two decades, the defense sector became of user of
diminishing economic importance to the advanced technology civil
sector, contributing to the growing divergence between the civil and
the defense sectors. The latter became increasing specialized in the
defense market, while institutional, financial, and legal barriers to
entry abetted by DoD acquisition practices discouraged direct civil
sector participation in the defense market.
The defense industry's role has become increasingly focused on
creating unique military advantages for the U.S. defense establishment
from technologies that are, with but a few exceptions, are largely
derived from a global technology base that is accessible to ally and
adversary alike. The defense industrial sector must apply its skills in
systems engineering and integration to produce superior military
capabilities.
The underlying change in the sources of technology has converged
with the need to recognize the impact of the proliferation of advanced
technology and the changes in international security affairs since the
collapse of the Soviet state in 1991. The centrifugal forces sweeping
international politics that have affected much of the world in the past
decade combined with nearly universal access to advanced technology
since the end of the Cold War have produced an environment where the
U.S. can no longer forecast who its adversaries will be. As a result,
the U.S. cannot optimize its military posture against its most likely
adversaries as it could do throughout most of its history. For the 21st
century, it must transform its military establishment to one that is
composed of highly adaptive and flexible forces able to be reconfigured
without recapitalization to meet future needs. The military
applications of science and technology will be crucial to the prospects
for our diplomatic, economic, and military future. More recently, the
role of S&T in homeland security and defense have added to the urgency
of transformation. The government's S&T infrastructure needs to be
modernized to incorporate the fundamental changes in the international
environment, particularly that portion directed primarily at the
national security function.
RECENT STUDIES BY THE DSB ON THE MODERNIZATION OF THE DOD LABORATORIES
The application of science and technology for national defense has
been a core concern of the DSB since its founding in the 1950s. During
the past decade, the DSB has conducted a number of studies concerning
various aspects of the science and technology function in the DoD. In
Section 913 of the National Defense Authorization Act for Fiscal Year
2000, the DoD was directed to conduct a study of defense laboratories
and test facilities. The DSB was involved in supporting the Department
in meeting that requirement. The DSB produced a report that assessed
and summarized its studies over the past decade on the subject. The
study was led by a senior member of the DSB, Walter Morrow of MIT's
Lincoln Laboratory. Subsequent to Dr. Morrow's report, the DSB's 2001
Summer Study addressed the need to refocus the DoD science and
technology function to meet the needs of transformation. Copies of Dr.
Morrow's Task Force report, Report of the DSB Task Force on Efficient
Utilization of Defense Laboratories (2000), and the Defense Science
Board 2001 Summer Study on Defense Science and Technology are provided
for the subcommittee's use.
I will not attempt to reproduce the DSB's observations and
recommendations here, but will take this opportunity to focus on one
aspect of the problem--human capital--that is a cross-cutting issue
between the DoD and NNSA laboratories, and goes directly to the issue
of governance. The problem of recruiting and managing scientific and
technical personnel in the Federal government is a long-term problem.
Apart from a few exceptional institutions within the DoD, maintaining
professional excellence in scientific and technical fields is difficult
because government service is not competitive with other career choices
in many circumstances. The DSB has recommended a number of reforms, but
many are difficult to implement in a governmental setting.
Some are, however, quite practical. For example, propagating the
recruitment practice of DARPA which is able to avoid most of the
bureaucratic impediments in recruiting scientists and engineers from
the private sector is a relatively simple option to implement. Among
the most successful S&T institutions in the defense establishment are
those closely affiliated with external organizations including
universities and other centers of excellence. As will be discussed
elsewhere in my testimony, such an environment can provide a
particularly supportive professional environment for S&T personnel--
even in a governmental or quasi-governmental setting.
IMPLICATIONS FOR CHANGES IN NEAR-TERM LABORATORY GOVERNANCE
The Cold War-era division of labor between DoD laboratories that
serve defense needs, and the laboratories of the nuclear weapons
complex that uniquely serve the this specialized requirement no longer
reflect the reality of 21st century national defense needs. As
previously noted, the human capital dimension of the nation's science
and technology effort is the decisive factor in its success. The
difficulties facing the U.S. government in general, and the DoD in
particular in maintaining the its scientific and technical expertise
has been a preoccupation of the DSB for many years, and proposals to
mitigate the decline in the S&T competence in the DoD have figured
prominently in DSB recommendations.
The national security laboratory structure of the U.S. government
to include those funded within Budget Function 050--NASA, DoE/NNSA, and
the DoD--need to be considered in a ``holistic'' manner to optimize
their ability to support U.S. national security rather than as entities
of individual agencies. The institutional barriers, especially between
the DoD and DoE/NNSA laboratories are a particular burden on ability of
the national security science and technology sector to make best use of
the aggregate resources made available through appropriated funds.
The DoE/NNSA national laboratories are an important, but
underutilized source of S&T competence in the national security sector.
The manner in which the laboratories are governed is an important
source of this underutilization. The national laboratories, especially
those involved in the nuclear design and weaponization functions, Los
Alamos, Lawrence Livermore, and Sandia are thought to be ``science''
laboratories when in fact they are both science and applied engineering
laboratories. This orientation reflects the fact that the ``science''
surrounding nuclear weapons is highly empirical rather than
theoretical. This characteristic has made it necessary for the three
nuclear weapon design and weaponization laboratories to develop an
extraordinary capability for applied engineering in addition to their
core competence in fundamental science. The capability of these
laboratories--both human and material--to support the Department of
Defense and the Intelligence Community, and more recently, the
Department of Homeland Security is widely recognized.
Under the category of ``work for others'' the three laboratories
perform nearly $1 billion annually in S&T services for the DoD and IC.
Nevertheless, the effective utilization of these laboratories leaves
much to be desired.
1. The manner in which ``work for others'' is procured by the
DoD and the IC is inefficient because there is no opportunity
to rationalize user requirements with the capabilities of the
NNSA laboratories. Instead, the ``work for others'' is
accomplished by episodic arrangements between the DoD/IC and
the national laboratories during the course of a given fiscal
year. In many cases these arrangements reflect emerging or
unanticipated the needs of the DoD and IC to acquire the
services of individual scientific and engineering specialists
to supplement in-house capabilities. The process is repeated
anew at the start of the fiscal year. These practices do not
permit the efficient allocation of S&T services and
establishing priorities to meet DoD and IC requirements, and
undermines effective S&T resource use in the national
laboratories.
2. The cost structure of the national laboratories does not
differ significantly from that of the DoD or Intelligence
Community. Nevertheless, interagency pricing practices created
by the intermediation of the DoE and NNSA cause services
provided to the DoD and the IC from the national laboratories
to be significantly more costly than either the DoD or the
Intelligence Community. These pricing practices governing the
acquisition of personnel and services from the national
laboratories inhibit the rational allocation of national
security resources within the Federal government.
3. In its 2001 Summer Study, the DSB identified four
transformational challenges biological warfare defense, finding
difficult targets, making timely and accurate decisions, and
enabling high-risk operations. The national laboratories are at
best, marginal participants in these programs despite their
formidable capacity to contribute to them. Similarly, other
important programs such developing effective defenses against
cruise and ballistic missiles do not have the participation
from the national laboratories proportional to their underlying
strength. This is so for institutional, not scientific or
technical reasons.
There are some lessons to be learned from DoD experience in
laboratory governance that may be pertinent to modernizing governance
in the national laboratories. The DoD provides R&D services to the
Military Departments and defense-wide institutions through a variety of
institutional forms including civil service laboratories, Federally
Funded Research and Development Centers (FFRDCs), University Affiliated
Research Centers (UARCs), Government-owned/Contractor-Operated (GOCO),
and many others. Many of these have been highly successful for decades,
while others have enjoyed a period of success followed by a decline in
performance over time. For purposes of illustration, I will focus on
one form of institutional governance--FFRDCs and some of the
observations that have emerged from DoD's experience.
The Federal government currently supports 36 FFRDCs in the fields
of aviation, defense, energy, health, space, and tax administration.
The DoD sponsors nine of these FFRDCs. These organizations support the
DoD in scientific research, systems development, and acquisition, and
related tasks. They are organized as independent non-for-profit
entities. A DSB study of the FFRDCs in 1997 affirmed their value to
national defense, and identified four characteristics that accounted
for their success:
They have unique competence and quality.
The FFRDCs are closely integrated with their sponsor.
They adhere to strict constraints to minimize institutional
conflicts of interest to promote objectivity, and to ensure
independence from interests that may conflict with sponsor
interests.
The FFRDCs maintain a continuity of relationship sufficient
to establish ``corporate memory'' in topics of critical
interest to the sponsor.
Two of the nine DoD FFRDCs are also associated with a university.
One of these university-affiliated FFRDCs, MIT's Lincoln Laboratory is
among the oldest of the FFRDCs, and recently celebrated the fiftieth
anniversary of its founding. In this respect, it is perhaps the closest
parallel to the NNSA laboratories that are associated with a university
(the University of California in the case of the Los Alamos and
Lawrence Livermore National Laboratories).
There are two important distinctions between the DoD experience
with university-affiliated laboratory governance and DoE/NNSA practice
pertinent to the committee's inquiry. The first pertains to the
relationship between the laboratory and the user. The linkage between
Lincoln Laboratory and the user committee is both direct and very
close. There is very little intermediation and micromanagement by the
administrative apparatus of the Department of Defense between the
laboratory and the users of its services. The university environment
provides an environment where human capital can be developed and
accessed by the laboratory ensuring a strong cadre of highly trained
professionals conversant with the most advanced technology in the
laboratory's areas of responsibility as an FFRDC.
A ``user committee''--Lincoln Laboratory's Joint Advisory
Committee--includes the Director of Defense Research and Engineering as
its Chairman, with membership including service Assistant Secretaries
for R&D as well as the Directors of DARPA, the NRO, and MDA. This close
coupling with the user at the leadership level provides timely insight,
guidance, and oversight to the Laboratory.
The second is the relationship with the university itself. Lincoln
Laboratory has an extremely close relationship with the University (in
this case, MIT) in physical, intellectual, financial, and managerial
terms. This close relationship creates a ``virtuous circle'' that
produces a high quality professional staff and intellectual output, as
well as close supervision of the laboratory by the University on fiscal
and safety matters.
The DoD practice contrasts sharply with the two DoE/NNSA
university-affiliated national laboratories; Los Alamos and Lawrence
Livermore. Extensive fiscal, contractual, security, and administrative
requirements of both agencies are cascaded down to the laboratories,
often overwhelming the university presence. The relationship with the
ultimate user is indirect and filtered through both organizations. This
practice diminishes the benefits of university affiliation since the
day-to-day relationship with two government agencies dominates the
process of executing the contract with the university.
Moreover, the dominant role of the two agencies in the day-to-day
operations of the two laboratories prevails over their relationship
with the ultimate users of their scientific and technical services. As
a result, the national laboratories are increasingly isolated rather
than integrated with the user. These circumstances produce a very slow
rate of adaptation by the laboratories to the needs of the user. In an
environment where user requirements are subject to fast-breaking major
policy changes (e.g. the implementation of the Nuclear Posture Review),
this slow pace of adaptation is not helpful to the national leadership.
The nature of the managerial arrangements for the university-
affiliated national laboratories is compounded by the pricing process
for laboratory ``work for others'' that limits the ability of the
laboratory users (the DoD and the IC) to rationalize their own S&T
effort. On this point there is some good news. It is reported that some
significant concessions on pricing of laboratory services have been
made to the Department of Homeland Security in its use of the national
laboratories for S&T research though the relationship with the user
remains indirect.
longer term implications for governance of the nuclear weapons complex
The governance of the nuclear weapons complex is an important long-
term issue. In my view, the current structure of a semi-autonomous
entity levitated between two cabinet departments is not a sustainable
approach to the management of the nuclear weapons function. When the
Congress created the current structure, the immediate post-Cold War
euphoria relegated the nuclear weapons responsibilities of the national
laboratories to the rather narrow preservationist role of ``stockpile
stewardship.'' The diagnostic and experimental facilities created to
support the ``stockpile stewardship'' mission have much broader
application to national security than is implied by their application
to the stewardship role.
National policy--as reflected in the President's The National
Security Strategy of the United States (September 2002), National
Strategy to Combat Weapons of Mass Destruction (December 2002)--has
been reinforced by the Nuclear Posture Review (January 2002). These
documents significant broaden the scope for the national laboratories
in support of the national security, and more recently, the homeland
security function. Although the role of nuclear weapons has changed
drastically since the end of the Cold War, a strictly preservationist
posture is insufficient to meet national needs. Two studies are
underway this summer--including one by the U.S. Strategic Command, and
a separate, but related effort by the Defense Science Board--will help
to further understanding of how the nation's nuclear weapons posture
could evolve to meet policy requirements. However, it is possible to
deduce several implications from the characteristics of the change in
national policy that are likely to require revisiting the governance of
the national laboratories, and the associated industrial complex
supporting the nation's nuclear weapons program.
1. Nuclear weapons are likely to retain a vital, but much
narrower role in U.S. national security policy than was the
case during the Cold War.
2. Cold War era concepts and metrics that supported the
calculus of deterrence in the Soviet-American competition may
not be sufficient in all cases to cope with the phenomena of
the widespread proliferation of weapons of mass destruction and
their means of delivery.
3. The instruments deterrence or dissuasion of the threat or
use of weapons of mass destruction (including both nuclear and
advanced conventional weapons) are likely to be more integrated
with other diplomatic and advanced conventional national
defense capabilities than was the case during the Cold War. The
integration of the nation's post-Cold War nuclear posture is
aimed a providing the President with a more abundant set of
responses to threats than existed in the past.
4. The legacy Cold War nuclear weapons stockpile--even if
their underlying safety and reliability can be preserved--may
be insufficient to meet 21st century policy requirements.
5. The nation's nuclear weapons complex must be no less
flexible, responsive and adaptive to unknown future threats
than is the balance of the national defense establishment.
These circumstances suggest that the nuclear weapons complex will
need to be much closely coupled and more responsive to the user (the
DoD, the Combatant Commanders, and the Military Departments) than was
the case in the past. However, it seems unlikely that the existing
institutional arrangements are unlikely to produce a national
laboratory and manufacturing complex that is responsive to the speed of
adaptation required to meet 21st century security threats. Addressing
this issue here is beyond the scope of this hearing. However I believe
it to be important that efforts to resolve near-term issues of
governance for the national laboratories be carried out with a view
toward achieving an effective and sustainable system of governance for
the laboratories in the long-term.
I will be pleased to respond to questions from the Committee.
The Chairman. Thank you very much. Senators, let's proceed
now to questions. I'll have a few and yield to Senator Bingaman
quickly.
Mr. Reis, one of the primary sources of the idea for the
creation of the NNSA, and you worked closely--in fact, it is
thought that you were removed by then-Secretary for your role
in working to create the NNSA. I have a very serious concern
now. We've been in existence for a short while, that is, NNSA,
but I recall our meeting several years ago when the National
Nuclear Security Administration was crafted. You provide
suggestions. I thought they were good.
Our goal was to improve the governance of the national
security programs by simplifying rules, simplifying regulations
and reporting structures of the Department. We tried to address
the frequent disruptions of DOE because we talked frequently
about the dysfunctional bureaucracy that was there for various
reasons by freeing the NNSA from many of these constraints. We
thought we were succeeding in creating the NNSA as a
semiautonomous entity, but I've been concerned that the
progress toward that original vision has been rather slow.
I realize that the formation of the NNSA has hastened your
departure, but I wonder if you can comment from your
perspective on the extent to which the current operations match
the vision that was crafted for it.
Dr. Reis. Thank you, Mr. Chairman.
The Chairman. Would you care to do that?
Dr. Reis. Sure. I'll give it a shot. I should say I've
enjoyed my time since I've left the Department of Energy quite
a bit, and I hope it's been fairly productive as well. You
might want to discuss that a little bit later, but these things
take a fair amount of time, and frequently they take more time
than one would hope would be.
In terms of the NNSA moving towards a vision that you and I
and, I suspect, Senator Bingaman as well, and some of the
members on the committee shared when I helped the creation of
that. As I recall, it was a 99 to 1 vote in the Senate,
creating NNSA, and thinking about that, you really have to look
at the product that's coming out at the other end.
I recently had a chance to visit, for one reason or
another, all three laboratories, Sandia, I had an opportunity
to review what they're doing in homeland security, and it
really was rather spectacular. I had an opportunity to visit
the National Ignition Facility a few months ago, and they're
just moving along just like gangbusters, and just several weeks
ago I chaired the advisory panel on weapons physics at Los
Alamos.
And Los Alamos in particular, despite the fire, and despite
the concerns about security, and despite the auditing issues,
are just moving along extremely well in really understanding
what the problems are that one has to deal with in stockpile
stewardship in terms of connecting the science, if you will, to
our understanding of nuclear weapons and moving ahead.
So from that perspective, in terms of work that's actually
getting done in the weapons program by those laboratories,
despite everything, they're doing extraordinarily well in some
very, very rocky times, which tells me that things are moving
along, perhaps if you dig down, a little better, perhaps better
than the press would necessarily have you believe.
I also felt that as we had talked, that one of the reasons
to have a semiautonomous agency is that you get the type of
leadership going into those organizations that make sense at
the top. Certainly John Gordon and now Linton Brooks I think
have provided that type of leadership. They're really first
rate, really first rate individuals, and the people right below
them. I think Edward Beckner and Paul Longsworth, I mean, these
are people who really understand what the problem is, but it
takes time.
Part of the reasons you're having these hearings, I think,
and some of the discussions I think that my fellow testifiers
have said is that you're dealing with a large, complex
organization, and it just takes longer than one would hope, I
think, so to answer your question, has the vision succeeded
yet, I'd say the part that really counts in the sense of, are
they working well, are they working better at the laboratory, I
think the answer is yes, they're doing a very, very good job.
Has the bureaucracy yet come around to it? I don't think it
has yet, but I think the vector is pointing in the right
direction, and again I've been impressed at the leadership and
what they're trying to do.
The Chairman. Well, Mr. Reis, let me just say, Dr. Gibbons
mentioned some things that just popped out in my mind that
existed when we decided to go with the NNSA, and I still see
them. He used the word, layering.
One of the problems with our laboratories is not only
layering seems to be a central consequence of arrangements we
have, but every time we've got a problem, a layer seems to me
to be created. I used to call them boxes. You know, you get
into a security issue and a new box is created, and they put it
on there on a map, and they call it the security box. We
thought we were getting rid of layering, Dr. Gibbons, when we
did the NNSA.
And so let me just close this question, Mr. Reis, and say
that my own view is that NNSA requires that: one, that the man
that heads it is extremely competent. I won't argue with you
that perhaps we have that person, but secondly, it seems to me
it requires a Secretary that is willing to cut the umbilical
cord and let the NNSA run.
I almost thought of it on some occasions as, if they can't
get it broken, where the NNSA is running on its own, they may
be ought to move out of the Department of Energy and physically
get out of there and open their own headquarters. Secretaries
don't like that. They don't even like you to think of it.
They're supposed to be right there, with their arms around
them, as they've always been.
Do you have an observation? Am I right in what we ought to
be looking for, and will that ever occur, unless and until a
Secretary is truly willing to say, it's not mine any more?
Dr. Reis. I think it's a question of what do you mean by
mine?
The Chairman. I agree.
Dr. Reis. I mean, I was the Director of the Defense
Advanced Research Project Agency, DARPA, within the Department
of Defense it's always recognized as one of the more successful
organizations. I can tell you privately, privately or now I can
tell you what my instructions were when I took over that job.
It was during a time of some controversy. At the time, Deputy
Secretary of Defense Atwood said to me, he said, Vic, you can
run it, do anything you want, just stay out of the newspapers.
Now, I tried to do that, but what it really represented was
that there was a close bond between myself and the Deputy
Secretary and then the Secretary of Defense, now our Vice
President Dick Cheney, and we would meet once a month and we'd
discuss a few things, and that was about it. There was very
little bureaucratic management. It was a very different
operation. We didn't have a lot of laboratories to run, we
didn't have to worry about a lot of safety concerns, but you
can do it.
NOAA, you know, is another example of an embedded agency
within a large organization, but it requires--and I get back to
Sig Hecker's testimony, it really requires a level of trust
that the Secretary can come in, whoever that Secretary may be,
and look to the Director of the NNSA and say, it's yours, you
run it, let me know what help I can give you, not here's how
you basically have to run it.
But you're dealing with a Department of Energy that is,
after some 30 years is still trying to basically work its
situations--I think Dr. Gibbons gave some success stories.
You know, when I was in the Department of Defense,
everybody in the Department of Defense knew what they were
doing. I mean, they knew what their mission was, whether they
were doing family medical supplies or special operations. You
don't have that yet in the Department of Energy, and when you
have that, I believe, when that's part of it, you'll start to
develop that trust within the Secretary--you know, within the
Secretaries, within the Congress that says, okay, you know, we
trust you, you're the man, the woman, as the case may be,
here's your mission, we agree with that mission, come back and
let us know what you're doing.
The two specific examples I gave, and some of the other
examples that some of the people gave, shows you how that trust
basically can be developed. If the trust is there, the
oversight melts away. I mean, it's very hard to remove all
those boxes. What it requires is people doing their job on a
day-to-day basis, and that oversight just melts away over time,
and we're just starting to move towards that.
The Chairman. Senator Bingaman.
Senator Bingaman. Let me just ask a very general question
here to start. It seems to me the focus here in Congress, and
generally in the country, to the extent people think about
management of the labs, they think of how do we effectively,
efficiently, competently be sure the labs do what they are
assigned to do, carry out their missions without any security
lapses, without losing any hard drives, without getting in the
newspaper, and that's sort of the focus of all of the
management issues.
It strikes me that the more useful focus would be, how do
you ensure that the talents and capabilities of these
laboratories are allowed to feed into and serve our national
interests most effectively, and how do we structure the rest of
government to benefit from the scientific and technological
advancements that are possible at the labs. It's sort of a
different perspective, and a very general question, but it
strikes me that all of the management oversight, and layers
upon layers of oversight, and different oversight boards, are
all intended to just be sure no one makes a mistake, and that's
the wrong focus. That's a very short-sighted focus, it seems to
me.
Dr. Gibbons, do you have any thoughts on any of that?
Dr. Gibbons. Just that I agree with you entirely, Senator,
one has to have an operation that's run without falling over
itself in terms of administrative procedures, but it seems to
me the real challenge for leadership in both the oversight from
external review committees and the like and also the internal
leadership of the labs, is to keep the work of the people in
the context of overall national interests and national
objectives. It's a little easier to do this if you have a well-
defined, sharply defined mission, as we do more so in DOD than
we do in DOE.
A lot of the work in the DOE labs has to do with trying to
understand how the world works, not how to do the sorts of
things one has to do in defense, so it seems to me that what's
imperative on top of good, traditional management procedures is
a capability of keeping the laboratories' professional workers,
all the workers fully understanding and appreciative of the
context of their work in terms of national interest, and that
will hopefully help draw these labs together so they share and
cooperative and work together, rather than tend to move off
into separate universes, and it seems to me that's the great
challenge, is leadership now within the laboratories.
Senator Bingaman. Let me bring this down to a real
specific, Dr. Gibbons.
When you were Director of the Office of Technology
Assessment's Life Sciences Division back in 1983, you directed
a study of the polygraph as a tool for the widespread screening
of employees. Last year, as a result of a congressional
request, we had the National Academy of Sciences update that
review, and look at DOE's use of the polygraph to screen about
16,000 agency and contractor employees, and as I read their
report, they concluded that although there may be some
legitimate role for polygraphs in event-specific
investigations, they could not find any justification or valid
use of the polygraph as a screening device the way it's being
used. Do you have any thoughts on that general issue?
Dr. Gibbons. Senator, I was not the Director of the Health
Division, but I was Director of the OTA at the time, and I was
pleased at the work we did, which was early on in terms of
polygraphs, mainly their applicability not so much in terms of
criminal investigations, where you know a lot about the
situation and the individual, but in terms of their
applicability to screening, and the work we did, which was a
relatively brief study, showed that we, the Nation, knew at
that point almost nothing about its viability for broad
screening, and what worried us at OTA was that there was a move
afoot to do enormously broad screening as a means of filtering
potential employees in the defense and intelligence sectors.
Indeed, our concern was that one might get fooled by this kind
of procedure, and have some undesirable people make it through
that screen and therefore give us a lot of problems.
That was in the early eighties, early eighties I believe,
that we did that study. I see nothing today that invalidates
those conclusions, and that gave me therefore great concern,
and I believe the Academy of Sciences updated study is more or
less in agreement with that early study. That's why I have a
great deal of concern about the intended use of polygraphs as a
screening thing for DOE. It honestly strikes me as more a
political response to a problem than an analytical response to
a problem.
Senator Bingaman. Thank you very much.
Dr. Spencer, your testimony seems to imply that you do not
think universities are well-suited to manage laboratories. Am I
reading that correctly and, if so, did you want to elaborate on
that view?
Dr. Spencer. I don't think the question is they're not
well-suited. I think the University of California did a good
job of managing the two weapons laboratories for several
decades after the formation of Los Alamos in the 1940's. I
think it pertains to the question you raised just a moment ago,
and that is, focusing on what these laboratories need to be
doing. I believe the mission for the three weapons laboratories
is very clear. It's the safety, security, and reliability of
our current stockpile without nuclear testing. I think that's a
very clear mission.
The problem that we're getting into is one that you raised.
We're not focusing on meeting that mission, but we're
responding to innumerable requests which often cascade down
through the organization so that the time of the individuals in
those laboratories today is taken up with audits and oversight
and other issues that are not pertaining to the management
issue.
The difference between the university or a national
laboratory focusing on those objectives in business is, in
business if you don't do it, you're out of business. If you
don't focus on what your job is, where the market is, what your
customers want, you don't exist after a short time, and in a
defense laboratory, or a DOE laboratory, or a university, that
doesn't happen, and so I think that business is better
qualified today, has the experience, and can focus on what
needs to be done to meet objectives than universities or other
management organizations would have for these laboratories.
I think that in addition, if you look at a business,
generally you've got, if it's a good business, well-managed,
it's got an independent board, and let me give you an example,
one of two which I personally was involved with, and I'm not
happy with the way it was done, but if you look at IBM in the
late eighties and early nineties, when they began to suffer
from all of the problems of focusing on central computing,
while PC's were taking over the world, the board recognized
that the management at IBM was not doing the job they were
supposed to, and they removed Mr. Akers. Now, if you had asked
me in 1990, when they brought a cookie guy in to run IBM, I
would have said, it's not going to succeed. However, it was a
major, major success for them.
On the other hand, my old company, Xerox, had a rubber
stamp board, one individual sitting in the chairman, president,
and CEO job, and so there was no one to blow the whistle on the
company when it began to get into trouble.
You can have good boards and bad boards, good business and
bad business. I think there are some simple guidelines on how
to choose ones that can do the job the way it should, and to
focus on what the objectives of the organization should be. I
would think you've got a really excellent opportunity now, as
you think about competing the management position for Los
Alamos and whatever you decide to do about Livermore to run an
experiment in exactly that.
Find a way to attract the very best corporation possible,
or perhaps a group of corporations to manage this activity,
choose a Director that--and there's some good models from early
Directors at Los Alamos, at Livermore, and at Sandia, and have
the oversight performed by an independent board with a set of
objectives that they're going to be measured against not
whether they met certain criteria each day, or each week that
an oversight board would, that currently oversight boards are
looking to.
I think you've got an opportunity to do that and see
whether you can set up an entirely new model for Government-
owned, corporate operated facilities.
Senator Bingaman. Thank you very much.
The Chairman. Thank you. Thank you very much, Doctor.
Senator Alexander.
Senator Alexander. Dr. Spencer, the oversight board would
not be the board of the corporation, it would be a new entity?
Dr. Spencer. I would think, Senator, that the oversight
board should be chosen very similar to a corporate board would
be, in which it would report either back to the Senate, back to
Congress, or to the Department.
Senator Alexander. And who would appoint it?
Dr. Spencer. Well, I think the shareholders in these
laboratories should have a responsibility for vetoing that and
perhaps for identifying that board.
Senator Alexander. And the shareholders are?
Dr. Spencer. The people of the United States, represented
by the people here in Washington who oversee that
responsibility.
Senator Alexander. I'm not sure that the political process
has distinguished itself in appointing highly qualified board
members.
Dr. Spencer. I would agree with that, and I do not believe
it should be the political process that chooses them. However--
--
Senator Alexander. But who would choose them?
Dr. Spencer. I think the management of that company----
Senator Alexander. Exactly who? Oh, the company itself
would choose them.
Dr. Spencer. Would choose them, but I believe they should
not be members of that company.
Senator Alexander. So if Lockheed Martin were running Oak
Ridge, Lockheed Martin would pick a separate oversight board?
Dr. Spencer. That's right, but if they're not independent,
I think you have the responsibility of saying, those who are
not independent directors. Somebody has to decide.
Senator Alexander. The Senate would then confirm the board,
or something that like?
Dr. Spencer. I think the board has to report back here. I
don't think the board should be a part of the management
activity, but entirely independent.
Senator Alexander. Let me continue on that. I've been a
university president on the faculty of the university and on
the board of a company that managed a laboratory, and as I look
at the list of DOE laboratories, there's one example that's a
little different. Maybe Brookhaven is also, and I wonder what--
any of you, but Dr. Spencer, you've talked about universities.
Dr. Gibbons, you've been at Oak Ridge. U.T. Betel manages Oak
Ridge. There's a combination of a business and a university
managing a laboratory.
Now, when I first herd about that, I thought that wouldn't
work, but the more I thought about that, I thought, well, that
might work, and they got a good rating the other day from the
Department.
The idea of a university managing a laboratory is almost
a--well, you don't manage a university. I remember when
President Eisenhower was the president of Columbia University
he called the faculty together for a meeting on the first day
and said, I just wanted to get together all the people who work
for me, and he went straight down after that. He had to just
slip out of Columbia University, embarrassed by having been
there.
So universities aren't managed, yet laboratories do have
two very separate sorts of things going on, both of which
you've talked about. One is this whole set of very specific
businesslike deadlines and goals and procedures, all that sort
of thing. Businesses are very good at that. Universities are
awful at doing that. The idea of a university managing that
sort of a set of responsibilities is a horrifying thought,
actually, because that's not what universities are good at.
On the other hand, universities are good at setting up
dozens of little fiefdoms which attract enormously talented
people who, if they're enormously talented then go to work and
do great things and gravitate to other interesting people and
out come these great results, so you would want that culture in
connection with a lab like Oak Ridge or many of the others, but
you have the separate set of management responsibilities, and
maybe the compromise of having a business and a university
would recognize that there are just two very different tracks
going on at many of these laboratories, and you want the
university culture, but at the same time you want somebody
there who has experience, responsibility, and a set of skills
that deal with all these almost extraneous things to that
environment, and I wondered especially what Dr. Gibbons and you
thought of that model, the U.T. Betel type model.
Dr. Spencer. Let me apologize, because I don't think I've
answered your first question very well, and then come back to
this. I agree with your assessment of universities. After I
retired for the third time and flunked third time retirement I
joined the University of California as a regents professor for
a while. I sat in the faculty meetings in both the business
school and the engineering school. It's frustrating for a
businessperson to sit in those meetings, because it is very
much like herding cats, but I think a possibility of having a
university and a company jointly responsible is a possibility.
I think right now the issues that the weapons laboratory
face would be better served over the next few years by having
that done totally by a corporate organization managing it, and
I think that corporate entity needs the oversight of an
independent board made up mostly of individuals not in that
organization.
If you look at the Sarbanes-Oxley legislation recently
they've put a great number of restrictions on what an
independent board member is in a private corporation. Those
ought to fit just as well on a corporate board or an oversight
board for the weapons laboratories. The managing organization
might identify individuals.
If the people who provide the money to that organization do
not feel those are independent directors they should have the
right to veto them, but I think you could put together outside
directors for an organization like this that would be
independent. They'd have to be knowledgeable. They'd have to be
involved. They'd have to be willing to put in the time. They
could provide an oversight in a much simpler way, getting rid
of the layering, the boxing that we currently have and provide
a much more efficient organization.
Senator Alexander. Mr. Chairman, I wonder if we could see
if Dr. Gibbons had an answer to the question about the
corporate-university model.
The Chairman. Sure.
Senator Alexander. Or anyone else.
Dr. Gibbons. Senator Alexander, I think you raise a very
important issue here, because the labs are different in their
missions and in their characterization, and I think the model
of a university or a research organization like Midwest
Research Institute and a private sector corporation are--they
each have potential roles to play here, but one of the problems
I've seen in my--I serve on the National Advisory Committee to
the NREL, the National Renewal Energy Lab, which has a similar
oversight for NREL.
There's a question that arises about who takes the lead. If
you have two entities serving, who, in fact, is the lead, and
how do these two organizations merge themselves together in
terms of an effective oversight, and I think we're in the midst
of an experiment there, and it's worth of continuing, because
having those two different perspectives can be terribly
important, especially for multipurpose laboratories like Oak
Ridge or NREL, and so I think we should watch it carefully, but
continually ask the question, is this multiplicity of groups
managing that place giving a better job than if only one were
doing it and the other were subsidiary and giving advice.
You could think of, for example, an organization having the
managing responsibility for a multipurpose lab, but committed
to having a strong academic presence in their oversight
activities, but I think who takes the lead is an important
question to ask. I don't believe there's been enough experience
yet to say whether or not this is a major improvement, but I
think it's worthy of continuing but also evaluating it.
Dr. Schneider. Mr. Chairman, if I may just add a point to
the question raised by Senator Alexander, I believe that the
university affiliation is a decisively important aspect of the
performance of the labs, especially in the case of the
laboratories we've been discussing, Los Alamos and Livermore
Labs.
The most decisive factor in the success of these labs is
the human capital, and the affiliation with the university is
perhaps the most important source of renewal and engagement of
the laboratory at the cutting edge of science.
The experience the DOD has had with, as I mentioned, in the
case of the Lincoln Laboratory, the work they do is just as
sensitive as that done at Livermore Lab and the Los Alamos Lab,
and is no less technically complex, but the intense involvement
of the university has produced a renewal and recapitalization,
so to speak, of the human capital that has been a decisive
source of their success and contrasts very sharply with the
civil service laboratories that do not have a similar mechanism
for the renewal of the human capital in these laboratories, so
while there may be a number of arrangements that can be made to
deal with areas where the university competencies are not
particularly well engaged, I think the university's affiliation
is a decisively valuable asset for these laboratories and
should not be ignored.
Thank you, Mr. Chairman.
The Chairman. Could I do this, so that we can establish a
few basic principles in any event. It would appear to me that
the question of how you formulate the management is one
question, but what should be part of it is another, and I think
we are saying, if I'm hearing you right in response to the
Senator from Tennessee, that the laboratories of the type of
Los Alamos and Livermore must have as part of its lifeblood the
university system. Is that correct, Dr. Reis?
Dr. Reis. That's correct.
The Chairman. And do you agree, Dr. Spencer?
Dr. Spencer. Senator, I agree. However, those ties with the
universities can occur in a variety of ways.
The Chairman. I didn't say that so well in my opening
remarks, but I meant that. How they are established is up for
discussion, but in the end, whatever we do they must be there.
The ties must be there with the universities. You agree with
that?
Dr. Spencer. Yes, sir.
The Chairman. And do you agree, Doctor?
Dr. Gibbons. Indeed.
The Chairman. And Bill.
Dr. Schneider. Yes.
The Chairman. Let me tell you what I think is happening
now. It is an amazing paradox that if I've heard you correctly
you've said, of late, meaning the last 7 years of the two
nuclear laboratories, Sandia, Los Alamos, and Livermore have
been doing remarkably well because they now have a very precise
mission, to wit, science-based stockpile stewardship, and I
think I heard you say they're doing that job very well, is that
correct, Dr. Schneider?
Dr. Schneider. Yes, sir.
The Chairman. And Dr. Gibbons?
Dr. Gibbons. Yes.
The Chairman. And Dr. Spencer?
Now, if you read the newspapers, and if you read the
response of the University of California to what's been going
on at the laboratories by way of scrutiny, I guess is the word,
you would conclude the opposite, and as a matter of fact, the
University of California has appeared so frantic of late
because of scrutiny that one would wonder, I would anyway, I
did, whether Los Alamos was vulnerable to an accusation that
they weren't doing their job very well at all.
What I believe we're suffering from that we'd better
address in any new model is that these laboratories are going
to live in an era of intense scrutiny that did not exist back
in the days when Ma Bell managed Sandia, or the original people
that we're so proud of that managed Los Alamos. The scrutiny,
in fact the scrutinizing institutions didn't exist. I'll just
be honest, there was no Pogo then. Have you all heard of Pogo?
There is a Pogo now.
Dr. Reis. You have met the enemy, right, Pogo?
The Chairman. Yes, that Pogo really fits that one. We've
met the enemy and it's us. As a matter of fact, it's rather
interesting, some people are trying to find out where Pogo
comes from, who pays for Pogo, where do they get their money,
and some say it's nobody's business, but I think pretty soon
it's going to be somebody's business, because they are great
scrutinizers of the laboratories, and it would seem like, in
some cases, it's being done altruistically. We have people
working for Senators around here that don't even get paid, and
they're involved in scrutinizing laboratories--did you know
that?--work for Senators for $1 a year, scrutinizing
laboratories. They're scrutinizing the Government, but of late
they've seemed to focus on the laboratories.
I guess I'm very much worried about how we make sure we
structure, if we're gong to restructure, so that there are not
over responses to scrutiny. Scrutiny is wonderful, but all
scrutiny isn't equal, and all scrutiny should not require that
you change the baby's diaper, and it would seem to me that
we've got to have a stronger system that responds to scrutiny,
and that scrutiny be scrutinized.
Would you believe that I have of late spent some time
trying to think about setting up something that would look at
those who scrutinize the laboratories and find out whether
their scrutiny is valid or not, as much as--I notice you're
laughing, but for me it was no laughing matter, it's very, very
serious, but I gave up the idea once I thought of it.
But could any of you address that? Perhaps it has no effect
on you, but I will tell you, the other day I brought for the
committee what you should be interested in, the contract that
exists between the University of California and Los Alamos when
it started, and recently, and the contract was about this thick
when they started it, and it's about that thick over the years,
while we say we've maintained the same contract, and we
understand that that one that's that thick also has a shelf
full of regulations that are related to it.
I guess I'm just going to lay that before you and tell you
that I think what I've just described is an enormous problem.
We have not much time, a couple of minutes for a few
observations. Do any of you have an observation?
Dr. Schneider.
Dr. Schneider. Thank you, Mr. Chairman. I think your
anecdote has, in fact, squarely pointed at the manifestation of
the problem of layering and of supervision that does not add
value to the process.
I would be pleased to make available the resources of the
Defense Science Board to assist the committee in working on
examining some of the successful examples of where the needs of
public policy have been achieved, that is, the expenditure of
appropriated funds is made with full compliance with the law,
compliance with the security regulations and law of the U.S.
Government, and yet the mission is successfully undertaken. I
think the staff would find it rewarding to look at some of
these successful examples and perhaps derive some of them for
the benefit of the national labs that you're dealing with.
Thank you, Mr. Chairman.
The Chairman. Thank you. Please make them available.
Dr. Gibbons, do you have any observations?
Dr. Gibbons. Shakespeare, Richard III, Act I, first we will
kill all the lawyers.
[Laughter.]
Dr. Gibbons. I think we tend to proliferate our details of
governance, especially if we have more time on our hands than
we should. That's beside the point, but I do believe that--I'm
not sure, quite honestly, that the Defense Department is a good
example for us. If DOE had the overruns that we've had in our
military systems, DOE would be out of business, quite frankly,
I believe.
I think we need to look everywhere for the best advice and
best experience we can encounter and put it all together. I'm
not sure we have the mechanism for doing that. It's conceivable
that the national academies could be a mechanism for providing
that, since they have both industry and science together, but
we lack the capability for that kind of analysis and review.
The Chairman. Dr. Spencer.
Dr. Spencer. I think you put your finger on the major issue
in this. Let me give you an example of going back to the
formation of SEMATECH in 1986 or 1987, and how that was done.
This was a small amount of money, $100 million from the
Government, another $100 million from private sources. You
know, it's not the $7 or $8 billion you're talking about in the
weapons laboratories, but that was set up, it was managed
entirely from the private side with the Government providing
money and a small amount of oversight. My friend here on the
right is going to tell me how much in just a minute----
Dr. Reis. I'll be glad to do that.
Dr. Spencer [continuing]. Since he was involved, but at the
end of 5 years, after the GAO sat in our laboratories in Austin
for 5 years and watched us on a daily basis, they wrote a
report which I thought was rather extraordinary that said,
here's an example of private management of government funds to
the benefit of both parties, and I think that's a model which
might serve as a way to get where you want to be in this
management of the laboratories.
I believe you've got to get a clear understanding from the
Government as to what they want in the management of these
laboratories. I happen to believe that we had science-based
stockpile surveillance way back in the seventies, when a few of
us pseudo-scientists worked on weapons problems, and if that's
what it is, the Government needs to clearly identify what that
is, and industry has to say, we'll be involved, but these are
things that we need, and I think if you could get those two
ideas and then negotiate something in the spirit that SEMATECH
was done in the mid-eighties, you might find something to meet
all of your requirements.
Dr. Reis. Let me come out of that, because I was the other
person in the Government who was in charge at the time. I was
Director of DARPA, who was given the responsibility of working
with SEMATECH, and it really was pretty simple. I went down and
talked to Bill, and we worked out an agreement. First my
predecessor did, who probably did most of it, Greg Fields, and
then I came along and said, what's this thing all about, and he
explained to me, and we set up a series of rules and we had a
program manager who kind of looked at what they were doing, but
it was clear they had the full responsibility of producing what
they said they were going to do, and we said this was going to
last for 5 years or something, and this was the funding
profile, and there were some bumps along the way, but because
we trusted each other, and had clear goals, we were able to get
through all those bumps, and I think it's fair to say that it
was a successful operation.
But there was a difference there, and there's a difference
that we shouldn't forget. Nuclear weapons is not a business. It
really is a sacred trust. It's what's keeping us out of World
War III, and it will keep us out of World War III hopefully for
the remainder of civilization, so it's very different.
I had quite an experience, for example, when Lockheed, an
excellent company, took over the Sandia Laboratories. When they
first came over I guess it was the Martin Corporation, and they
took over from Ma Bell. The management came in, 11 people were
sent over from the Martin Corporation to help the manager.
Within a year, 10 of them were gone. They really didn't add
very much benefit.
Why? I'll tell you why. It was because Sandia was a very
well-run organization, and it's still a very well-run
organization. I mean, Paul Robinson and that group of
management he's put together is as good as any corporation in
this country, and I'll say that flat. I mean--and they have a
very good independent board, okay, which Lou Allen, and some of
the other people who are on that are not, you know, pushy,
pushovers in any way, and that's basically run for them.
Essentially, though, they're independent, for all intents and
purposes they're really independent of Lockheed. Lockheed lets
them run it, but they run it very, very well.
We talked earlier, and Bill made it--we didn't talk ahead
of time, but our experience with Lincoln Laboratories, both
when I worked there and then when I was on the other end of
that, because we were able to focus on what that mission was,
so we got the customer, in this case, the customer is the
Government, directly involved in that board.
But the issue we come back to, Senator, and all of you
mentioned, is that we've got to work on the right end of the
problem. It's not on the laboratory end, it's on the Government
end. That's where all the oversight shows up.
The Chairman. Would you all excuse me, I have to leave, but
Senator Bingaman will close the meeting shortly. Thank you.
Dr. Reis. So it's important, and the issue really comes
back to that whole idea of who's--it's not so much who's in
charge, but how do you trust the people, who's working for
whom, and as Dr. Hecker gave in his testimony at the last
meeting, that trust essentially is broken, and the way the
Government has tried to respond to that is by more and more and
more in oversight, and more and more in layers.
So the board is helpful, but the board is not the whole
problem. You've really got to work the problem from the
Government end as well as from the laboratory end, and that's
where the trust comes in. That's where I thought my example of
trying to bring people from those laboratories who had real
experience, and they could be from the Government or whoever
your customer is as well, and from the military, into working
those positions within the Government.
They could be there for 4 or 5 years. They could be there
for several years, and vice versa, and get people from the
Government participating in the laboratories. That's the only
way you get trust, is by working together on a common goal.
What's different now than it was perhaps 10 years ago is
that there really is, for the reference laboratories at least
there's a clear mission, so everybody can work on the goal.
That's a big help and, indeed, that's why we're being
successful now, is because the people in the laboratories are
focused on that mission. They really don't care that much
about--I mean, you know, about pension systems and all the
other things. They really care, and they're devoted to making
that mission.
That becomes also an issue in terms of, when do you get
business in? You know, I'm on one of these advisory groups, and
one of these laboratories was run by a company, and I said,
what's your goal? What are you trying to do, and they said,
I've been told I've got to increase my market share by 5
percent. Now, that's not what you want in a Government
laboratory. They're not supposed to increase market share. What
they're supposed to do is go for the mission. In fact, if
they're not getting that mission they should close their market
share. They should close up business and go off and do
something else.
There's a real danger in trying to bring, if you will, a
corporate culture in. It doesn't mean the corporate people
aren't just as patriotic, or whatever, but that understanding
what the goal is and what the mission is, and believing it, and
having the passion to devote your career to those sorts of
things, that's what you have at the weapons laboratories now.
That's what's made them what they are today.
That's what you have at places like Lincoln Laboratory, is
you have sort of a different culture now, and that culture can
be combined if there is a science, with the university culture,
so it isn't really--and you don't expect to get management from
university, right? I mean, that's the last place in the world,
right, where you want, quote, management expertise, but you do
get that scientific understanding. You get that asking of
questions. You can't help it, right? They'll ask you all those
kinds of questions.
That's the thing that you don't want to lose as you think
about improving the management, if that's the problem,
particularly at the weapons laboratories.
Senator Bingaman. Did you have any additional questions?
Senator Alexander. No, I have two quick comments, Senator.
One, it sounds like, still sounds like maybe the university
culture and the corporate management, if you could borrow both
of those at the same time, might be helpful. Everett Dirksen
said that consistency is the hobgoblin of small minds, which he
stole from some Englishman who was dead at the time. I don't
know who. Do you know who it was?
Senator Bingaman. I thought that was Emerson.
Senator Alexander. No, I think--it wasn't an Englishman. He
borrowed it from someone else. It may have been Emerson.
Dr. Reis. Foolish consistency.
Senator Bingaman. Right. Thank you all very much. I think
it's very good testimony. There may be additional questions
that some members want to propound in writing by the end of the
day. If so, we'll get them to you.
Thank you very much.
[Whereupon, at 11 a.m., the hearing was adjourned.]