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Cover
================================================================ COVER


Report to Congressional Requesters

September 1998

DEPARTMENT OF ENERGY - UNCERTAIN
PROGRESS IN IMPLEMENTING NATIONAL
LABORATORY REFORMS

GAO/RCED-98-197

Uncertain Progress in Implementing Reforms

(141136)


Abbreviations
=============================================================== ABBREV

  DOE - Department of Energy
  GAO - General Accounting Office
  DOD - Department of Defense
  IDA - Institute for Defense Analyses
  NASA - National Aeronautics and Space Administration
  NSTC - National Science and Technology Council
  R&D - research and development

Letter
=============================================================== LETTER


B-280451

September 10, 1998

The Honorable F.  James Sensenbrenner, Jr.
Chairman
The Honorable George E.  Brown, Jr.
Ranking Minority Member
Committee on Science
House of Representatives

The Department of Energy (DOE) manages the largest laboratory system
of its kind in the world.  Since the early days of the World War II
Manhattan Project, DOE's laboratories have played a major role in
maintaining U.S.  leadership in research and development (R&D).  With
23 laboratories in 14 states, a combined budget of over $10 billion a
year, and a staff of about 60,000, DOE is responsible for ensuring
that the laboratory system is managed in an effective, efficient, and
economical manner. 

DOE's stewardship of the laboratory complex has been questioned over
the past 20 years by various advisory groups.  These groups have
identified management weaknesses in the way DOE manages its
laboratory system.  In recent years, the Congress has held several
hearings on various aspects of the future of the national
laboratories.  Since 1994, we have testified three times on the
missions and management of the national laboratories. 

Concerned about DOE's progress in making needed management reforms,
you asked us to

  -- identify the recommendations by various advisory groups for
     addressing management weaknesses at DOE and the laboratories and

  -- evaluate how DOE and its laboratories have responded to these
     recommendations. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

For nearly 20 years, many advisory groups have found that while DOE's
national laboratories do impressive research and development, they
are unfocused, are micromanaged by DOE, and do not function as an
integrated national research and development system.  Weaknesses in
DOE's leadership and accountability are often cited as factors
hindering fundamental reform of the laboratories' management.  As a
result, advisory groups have made dozens of recommendations ranging
from improving strategic planning to streamlining internal processes. 
Several past advisory groups have also suggested major organizational
changes in the way the laboratories are directed. 

To address past recommendations by advisory groups, DOE, at our
request, documented the actions it has taken, from creating new task
forces to developing strategic laboratory plans.  While DOE has made
some progress--principally by reducing paperwork burdens on its
laboratories--most of its actions are still under way or have unclear
outcomes.  Furthermore, these actions lack the objectives,
performance measures, and milestones needed to effectively track
progress and account for results.  Consequently, the Department
cannot show how its actions have resulted, or may result, in
fundamental change.  For example, its Strategic Laboratory Missions
Plan, which was developed to give more focus and direction to the
national laboratories, does not set priorities and is not tied to the
annual budget process.  Few experts and officials we consulted could
show how the plan is used to focus missions or integrate the
laboratory system.  DOE's latest technique for focusing the
laboratories' missions is the "technology roadmap." Roadmaps are
plans that show how specific DOE activities relate to missions,
goals, and performers.  Roadmaps are a promising step but have been
used in only a few mission areas and are not directly tied to DOE's
budget process.  Moreover, several laboratory directors questioned
both the accuracy of the actions DOE has reported taking and their
applicability at the laboratory level.  DOE's organizational
weaknesses, which include unclear lines of authority, are a major
reason why the Department has been unable to develop long-term
solutions to the recurring problems reported by advisory groups. 
Although DOE created the Laboratory Operations Board to help oversee
laboratory management reform, it is only an advisory body within
DOE's complex organizational structure and lacks the authority to
direct change. 


   BACKGROUND
------------------------------------------------------------ Letter :2

The missions of DOE's 23 laboratories have evolved over the last 55
years.  Originally created to design and build atomic bombs under the
Manhattan Project, these laboratories have since expanded to conduct
research in many disciplines--from high-energy physics to advanced
computing at facilities throughout the nation.  DOE's goal is to use
the laboratories for developing clean energy sources and
pollution-prevention technologies, for ensuring enhanced security
through reductions in the nuclear threat, and for continuing
leadership in the acquisition of scientific knowledge.  The
Department considers the laboratories a key to a growing economy
fueled by technological innovations that increase U.S.  industrial
competitiveness and create new high-skill jobs for American workers. 
Missions have expanded in the laboratories for many reasons,
including changes in the world's political environment. 

Nine of DOE's 23 laboratories are multiprogram national laboratories;
they account for about 70 percent of the total laboratory budget and
about 80 percent of all laboratory personnel.  Three of these
multiprogram national laboratories (Lawrence Livermore, Los Alamos,
and Sandia) conduct the majority of DOE's nuclear weapons defense
activities.  Facing reduced funding for nuclear weapons as a result
of the Cold War's end and the signing of the comprehensive nuclear
test ban treaty, these three laboratories have substantially
diversified to maintain their preeminent talent and facilities.  The
remaining laboratories in DOE's system are program- and
mission-dedicated facilities.  (See app.  I for a list of all DOE
laboratories.) DOE owns the laboratories and contracts with
universities and private-sector organizations for the management and
operation of 19, while providing federal staff for the remaining 4. 

The Congress is taking a growing interest in how the national
laboratories are being managed.  Recently introduced legislation
would restructure the missions of the laboratories or manage them in
new ways.  Some previously proposed organizational options include
converting the laboratories that are working closely with the private
sector into independent entities or transferring the responsibility
for one or more laboratories to other federal agencies whose missions
are closely aligned with those of particular DOE laboratories.  We
have reported to the Congress that DOE's efforts to sharpen the focus
and improve the management of its laboratories have been elusive and
that the challenges facing the Department raise concerns about how
effectively it can manage reform initiatives.\1


--------------------
\1 Department of Energy:  National Laboratories Need Clearer Missions
and Better Management (GAO/RCED-95-10, Jan.  27, 1995). 


   ADVISORY GROUPS CITE CONTINUING
   MISSION AND MANAGEMENT CONCERNS
   AT THE NATIONAL LABORATORIES
------------------------------------------------------------ Letter :3

Over the past several years, many government advisory groups have
raised concerns about how DOE manages its national laboratory system. 
Major concerns centered on three issues: 

  -- The laboratories' missions are unfocused. 

  -- DOE micromanages the laboratories. 

  -- The laboratories are not operating as an integrated system. 

More recent advisory groups have reported similar weaknesses,
prompting the Congress to take a close look at how the national
laboratory system is meeting its objectives. 


      CONCERNS RAISED BY ADVISORY
      GROUPS
---------------------------------------------------------- Letter :3.1

We identified nearly 30 reports by a wide variety of advisory groups
on various aspects of the national laboratories' management and
missions.  (See app.  II for a list of past reports.) Most of these
reports have been prepared since the early 1980s.  The reports
include the following: 

  -- In 1982, DOE's Energy Research Advisory Board reported that the
     national laboratories duplicate private-sector research and that
     while DOE could take better advantage of the national
     laboratories' capabilities, it needed to address its own
     management and organizational inefficiencies, which hamper the
     achievement of a more effective laboratory system.\2

  -- In 1983, a White House Science Council Panel found that while
     DOE's laboratories had well-defined missions for part of their
     work, most activities were fragmented and unrelated to the
     laboratories' main responsibilities.\3

  -- In 1992, DOE's Secretary of Energy Advisory Board found that the
     laboratories' broad missions, coupled with rapidly changing
     world events, had "caused a loss of coherence and focus at the
     laboratories, thereby reducing their overall effectiveness in
     responding to their traditional missions as well as new national
     initiatives.  .  .  ."\4

  -- A 1993 report by an internal DOE task force reported that
     missions "must be updated to support DOE's new directions and to
     respond to new national imperatives.  .  .  ."\5

The most recent extensive review of DOE's national laboratories was
performed by a task force chaired by Robert Galvin, former Chairman
of the Motorola Corporation.  Consisting of distinguished leaders
from government, academia, and industry, the Galvin Task Force was
established to examine alternatives for directing the laboratories'
scientific and engineering resources to meet the economic,
environmental, defense, scientific, and energy needs of the nation. 
Its 1995 report identified many of the problems noted in earlier
studies and called for a more disciplined focus for the national
laboratories, also reporting that the laboratories may be oversized
for their role.\6

The Galvin Task Force reported that the traditional government
ownership and contractor operation of the laboratories has not worked
well.  According to its report, increasing DOE's administration and
oversight transformed the laboratories from traditional
contractor-operated systems into a virtual government-operated
system.  The report noted that many past studies of DOE's
laboratories had resulted in efforts to fine-tune the system but led
to little fundamental improvement.  Regarding the management
structure of DOE's non-weapons-oriented laboratories, the task force
recommended a major change in the organization and governance of the
laboratory system.  The task force envisioned a not-for-profit
corporation governed by a board of trustees, consisting primarily of
distinguished scientists and engineers and experienced senior
executives from U.S.  industry.  Such a change in governance, the
task force reported, would improve the standards and quality of work
and at the same time generate over 20 percent in cost savings. 

Other findings by the task force and subsequent reports by other
advisory groups have focused on the need for DOE to integrate R&D
programs across the Department and among the laboratories to increase
management efficiencies, reduce administrative burdens, and better
define the laboratories' missions. 

In June 1995, DOE's Task Force on Strategic Energy Research and
Development, chaired by energy analyst Daniel Yergin, issued a report
on DOE's energy R&D programs.\7 The report assessed the rationale for
the federal government's support of energy R&D, reviewed the
priorities and management of the overall program, and recommended
ways of making it more efficient and effective.  The task force
recommended that DOE streamline its R&D management, develop a
strategic plan for energy R&D, eliminate duplicative laboratory
programs and research projects, and reorganize and consolidate
dispersed R&D programs at DOE laboratories. 

In August 1995, the National Science and Technology Council examined
laboratories in DOE, the Department of Defense (DOD), and the
National Aeronautics and Space Administration (NASA).\8 The Council
reported that DOE's existing system of laboratory governance needs
fundamental repair, stating that DOE's laboratory system is bigger
and more expensive than is needed to meet essential missions in
energy, the environment, national security, and fundamental science. 
The Council recommended that DOE develop ways to eliminate apparent
overlap and unnecessary redundancy between its laboratory system and
DOD's and NASA's. 

DOE's Laboratory Operations Board was created in 1995 to focus the
laboratories' missions and reduce DOE's micromanagement.  Members
serving on the Board from outside DOE have issued four different
reports, which have noted the need to

  -- focus and define the laboratories' missions in relation to the
     Department's missions,

  -- integrate the laboratories' programmatic work, and

  -- streamline operations, including the elimination or reduction of
     administrative burdens. 

In March 1997, the Office of Science and Technology Policy reported
on laboratories managed by DOE, DOD, and NASA.\9 The Office cited
efforts by the three agencies to improve their laboratory management
but found that DOE was still micro-managing its laboratories and had
made little progress toward reducing the administrative burdens it
imposes on its laboratories.  The Office recommended a variety of
improvements in performance measures, incentives, and productivity
and urged more streamlined management. 

In March 1997, a report by the Institute for Defense Analyses (IDA)
found that DOE's processes for managing environment, safety, and
health activities were impeding effective management.\10 According to
IDA, DOE's onerous review processes undermined accountability and
prevented timely decisions from being made and implemented throughout
the entire nuclear weapons complex, including the national
laboratories.  IDA specifically noted that DOE's Defense Programs had
confusing line and staff relationships, inadequately defined roles
and responsibilities, and poorly integrated programs and functions. 
IDA concluded that DOE needed to strengthen its line accountability
and reorganize its structure in several areas. 


--------------------
\2 The Department of Energy Multiprogram Laboratories:  A Report of
the Energy Research Advisory Board to the United States Department of
Energy (Sept.  1982). 

\3 Report of the White House Science Council, Federal Laboratory
Review Panel, Office of Science and Technology Policy, Executive
Office of the President (May 20, 1983). 

\4 Final Report, Secretary of Energy Advisory Board (1992). 

\5 Changes and Challenges at the Department of Energy Laboratories: 
Final Draft Report of the Missions of the Laboratories Priority Team
(1993). 

\6 Alternative Futures for the Department of Energy National
Laboratories, Secretary of Energy Advisory Board Task Force on
Alternative Futures for the Department of Energy National
Laboratories, DOE (Feb.  1995). 

\7 Energy R&D:  Shaping our Nation's Future in a Competitive World. 
Final Report, Final Report of the Task Force on Strategic Energy
Research and Development, Secretary of Energy Advisory Board, DOE
(June 1995). 

\8 Future of Major Federal Laboratories, National Science and
Technology Council (Aug.  1995). 

\9 Status of Federal Laboratory Reforms.  The Report of the Executive
Office of the President Working Group on the Implementation of
Presidential Decision Directive PDD/NSTC-5, Office of Science and
Technology Policy, Executive Office of the President (Mar.  1997). 

\10 The Organization and Management of the Nuclear Weapons Program,
Institute for Defense Analyses (Mar.  1997). 


   DOE LACKS AN EFFECTIVE STRATEGY
   FOR ADDRESSING ADVISORY GROUPS'
   RECOMMENDATIONS
------------------------------------------------------------ Letter :4

At our request, DOE provided us with a listing of the actions it took
in response to repeated calls for more focused laboratory missions
and improved management.  But while DOE has made
progress--principally by reducing paperwork burdens on its
laboratories--most of its actions are still in process or have
unclear expectations and deadlines.  Furthermore, the Department
cannot demonstrate how its actions have resulted, or may result, in
fundamental change. 

To analyze progress in laboratory management reform, we talked to DOE
and laboratory officials and asked DOE to document the actions it has
taken, is taking, or has planned to address the recommendations from
several advisory groups.\11 We used DOE's responses, which are
reprinted in appendix III, as a basis for discussions with laboratory
and DOE officials and with 18 experts familiar with national
laboratory issues.  We asked these experts to examine DOE's
responses.  Several of these experts had served on the Galvin Task
Force and are currently serving on DOE's Laboratory Operations Board
(app.  IV lists the experts we interviewed).  The actions DOE said it
is taking include

  -- creating various internal working groups;

  -- strengthening the Energy R&D Council to facilitate more
     effective planning, budgeting, management, and evaluation of the
     Department's R&D programs and to improve the linkage between
     research and technology development;

  -- increasing the use of private-sector management practices;

  -- adopting performance-based contracting and continuous
     improvement concepts;

  -- improving the oversight of efforts to enhance productivity and
     reduce overhead costs at the laboratories;

  -- expanding the laboratories' work for other federal agencies;

  -- evaluating the proper balance between laboratories and
     universities for basic research;

  -- improving science and technology partnerships with industry;

  -- reducing unnecessary oversight burdens on laboratories;

  -- developing the Strategic Laboratory Missions Plan in July 1996
     that identified laboratory activities in mission areas;

  -- creating the Laboratory Operations Board, which includes DOE
     officials and experts from industry and academia, to provide
     guidance and direction to the laboratories; and

  -- developing "technology roadmaps," a strategic planning technique
     to focus the laboratories' roles. 


--------------------
\11 DOE agreed with GAO to document only those actions taken in
response to advisory groups' recommendations published since the 1995
Galvin Task Force report.  These reports are listed in DOE's response
in app.  III. 


      DOE'S ACTIONS OFFER
      UNCERTAIN PROGRESS
---------------------------------------------------------- Letter :4.1

Most of the actions DOE reported to us are process oriented,
incomplete, or only marginally related to past recommendations for
change.  For example, creating new task forces and strengthening old
ones may be good for defining problems, but these measures cannot
force decisions or effect change. 

DOE's major effort to give more focus to laboratory missions was a
Strategic Laboratory Missions Plan, published in July 1996.  The plan
describes the laboratories' capabilities in the context of DOE's
missions and, according to the plan, will form the basis for defining
the laboratories' missions in the future.  However, the plan is
essentially a descriptive document that does not direct change.  Nor
does the plan tie DOE's or the laboratories' missions to the annual
budget process.  When we asked laboratory officials about strategic
planning, most discussed their own planning capabilities, and some
laboratories provided us with their own self-generated strategic
planning documents.  None of the officials at the six laboratories we
visited mentioned DOE's Strategic Laboratory Missions Plan as an
essential document for their strategic planning. 

A second action that DOE officials reported as a major step toward
focusing the laboratories' missions is the introduction of its
"technology roadmaps." These are described by DOE as planning tools
that define the missions, goals, and requirements of research on a
program-by-program basis.  Officials told us that the roadmaps are