Report Released on Improving Department of Energy National Laboratories

“The institutional management structures that govern the labs have not advanced far beyond the Cold War, and [are] outdated, inflexible, and weakly connected to the marketplace, inhibiting US innovation,” notes a recently released report , Turning the Page: Reimagining the National Labs in the 21st Century Innovation Economy.

The Information Technology and Innovation Foundation, The Center for American Progress, and The Heritage Foundation jointly released this report addressing efficiency and effectiveness concerns at the Department of Energy (DOE) laboratories and providing recommendations that would allow those labs to increase their production of relevant research and increase the transfer of this research into the private sector. The report authors were Matthew Stepp, Sean Pool, Nick Loris, and Jack Spencer. The report “aims to re-envision the lab system with an eye toward saving taxpayer money, reducing inefficient bureaucracy, increasing research competition, ensuring contractor accountability, and ultimately boosting the flow of high-quality research and technology out of labs and into the market.” Recommendations from the report propose “a more flexible lab-management model that strengthens the labs’ ability to address national needs and produce a consistent flow of innovative ideas and technologies.”

Government support for research has complemented the innovation stemming from private industry investment. While the three think tanks have different ideological perspectives on the highly politicized topics of funding priorities and the role of government in technological innovation, the recommendations are “as relevant to a large, highly funded research agency as they are to a much more limited one.” The notion that basic research conducted at the labs should have the opportunity to become a commercial application and should be transferred efficiently to the marketplace is shared by all three think tanks. Other areas of consensus include that research should not be driven by special interest politics and that federally funded research “should not replace or crowd out private-sector and university-based research.” Furthermore, the authors agree that “the current system needs substantial reform.”

The policy recommendations address challenges faced by the labs fall into three categories: “transforming lab management from DOE micromanagement to contractor accountability;” “unifying lab stewardship, funding, and management stovepipes with innovation goals;” and “moving technology to market with better incentives and more flexibility.” These recommendations are intended to better position the labs to address current innovation challenges and to be competitive in the 21st century globally-competitive economy.

Regarding the issue of transforming lab management, the report recommends the “creation of a high-level task force to develop DOE-actionable reforms on lab effectiveness and accountability.” The expansion of the Performance Evaluation Management Plan process under a unified review process and the transition to a “performance-based contractor accountability model” were also suggested. The aim of these recommendations is to shift the decision-making closer to those actually conducting the research. The report concludes that “DOE micromanagement of nearly every significant decision and transaction undermines the GOCO [government-owned contractor operated] system” which in turn, costs taxpayers and stifles innovation. Originally the GOCO model was meant to provide the benefits from government-based and private-sector-based research systems but over time, the report notes that the relationship between government and private industry has diverged and has led to inefficiencies.

Concerning lab stewardship, funding and management issues, the report recommends merging “the existing under secretaries of science and energy into a new Office of Science and Technology,” which would require congressional action. The report also recommends “coordinating the research functions of the Office of Science and those of the under secretary for energy under the new Office of Science and Technology” and removing “top-down overhead accounting rules,” both of which would also require congressional action.

As to improving incentives and flexibility for technology transfer, the authors recommend expanding Agreements for Commercializing Technology to increase the potential partnerships and allowing “labs to use flexible pricing for user facilities and special capabilities.” This second recommendation would require congressional action but the expansion of the ACT agreements could also be implemented through actions by DOE, the Office of Management and Budget, or the Administration. It would affect the labs ability to “charge market rate for proprietary research and technology” and to operate facilities according to market demand. Moreover, the report recommends that labs be granted the authority to implement non-federal funding partnership agreements. Other recommendations include the creation of a new category within the performance evaluation and measurement plan process and the issuance of consistent guidelines on conflicts of interests.

While research conducted at the national labs has very long time horizons and the time required for that research to reach commercial application is undetermined, the labs have the ability to advance scientific understanding that supports the public good. National labs serve to address national imperatives and the research performed there advances national, social, economic, and environmental issues. According to the report, these centers of multidisciplinary research are shifting to a research landscape where science and technology are intertwined and traditional separation of basic and applied research is diminishing. The authors seek to demonstrate that there are ways to improve management, strengthen accountability and improve technology transfer.

The Energy Subcommittee of the House Science, Space and Technology Committee held a hearing yesterday on this issue. That hearing will be reviewed in a future issue of FYI.