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Summary The three National Security Laboratories-- Los Alamos National Laboratory, Sandia National Laboratories, and Lawrence Livermore National Laboratory-- are managed by private sector entities under contract to the National Nuclear Security Administration (NNSA). The FY2010 Defense Authorization Act mandated that NNSA task the National Research Council (NRC) to study the quality and management of Science and Engineering (S&E) at these Laboratories. Specifically, NRC was tasked to address for each Laboratory: (1) The quality of the scientific research being conducted at the Laboratory, including research with respect to weapons science, nonproliferation, energy, and basic science. (2) The quality of the engineering being conducted at the Laboratory. (3) The criteria used to assess the quality of scientific research and engineering being conducted at the Laboratory. (4) The relationship between the quality of the science and engineering at the Laboratory and the contract for managing and operating the Laboratory. (5) The management of work conducted by the Laboratory for entities other than the Department of Energy, including academic institutions and other Federal agencies, and interactions between the Laboratory and such entities. This study is being conducted in two phases. This report covers the first phase, which addresses tasks (4) and (5) and partially addresses task (3): roughly speaking, how management at all levels affects the quality of the science and engineering (S&E) at the three Laboratories. The study’s second phase will evaluate the actual quality of S&E in key subject areas. “Quality of S&E” measures the expertise and accomplishments in those areas of science and engineering that are necessary to accomplish the Laboratories’ missions. “Quality of the management of S&E” measures management’s capability to build, maintain and nurture S&E expertise for current and future mission needs. The S&E performed by any Laboratory can only be as good as the people employed. Thus, ensuring that high-quality people are attracted to the NNSA National Security Laboratories, and that they are retained, is a necessary condition for the Laboratories to carry out high-quality S&E. Assuming that foundation is available, high-quality S&E then requires good facilities and adequate resources, and operating processes that do not impede the ability of those scientists and engineers to perform at their highest levels. Management controls these conditions, and this report evaluates the quality of the Laboratories’ management, at all levels, by its success in providing these prerequisites for high-quality S&E. Management includes government (primarily NNSA and its three site offices), the management and operations (M&O) contractors, and on-site Laboratory management. Because of this high-level view of management’s role with respect to the quality of S&E, the study committee saw no distinction between management of the Laboratories’ work for NNSA (roughly, Task 4) and their work for other entities (Task 5). Therefore, the discussion and recommendations in this report generally apply to the Laboratories’ S&E work across the board. 1 PREPUBLICATION COPY—SUBJECT TO FURTHER EDITORIAL CORRECTION
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Each of these Laboratories is a Federally Funded Research and Development Center (FFRDC) operated for NNSA under a Government-Owned/Contractor-Operated (GOCO) relationship. This contracting mechanism allows the government access to the capabilities and knowledge of industry and universities to manage these technically complex institutions. Contracting relationships for some FFRDCs—in particular LLNL and LANL—have endured for many decades. In 2004, Congress mandated that the long-standing contracts with the University of California to manage Lawrence Livermore and Los Alamos national Laboratories (LLNL and LANL) be re-competed.2 As a result, these two M&O contracts were awarded to two independent LLCs that both include Bechtel Corporation and the University of California.3 Subsequently, a number of current and former employees of these Laboratories have expressed concerns about deterioration of morale at the Laboratories along with ongoing or potential declines in the quality of science and engineering. Many of those employees attributed those inferred trends to the new M&O contracts and contractors. To carry out this study, the study committee met with Congressional staffers, senior leadership of NNSA and the Department of Energy, staff from the NNSA site offices that serve as a vital link between NNSA and day-to-day Laboratory management, and a wide variety of former and current employees of the three Laboratories. It held site visits at each of the Laboratories, organized around panel discussions with a large number of employees at different levels, from bench scientists to senior management. The study committee controlled the agendas for all of its meetings and had final say on the list of speakers. At LANL and LLNL, the study committee also held well-advertised public sessions at which anyone was invited to speak and management was voluntarily absent. The study committee also examined past reports on the Laboratories and the language of the current contracts. Details of the study processes are included in Chapter 1 of this report. While the new contracts at LANL and LLNL clearly produced a noticeable level of staff frustration, staff members with whom the study committee interacted continued to show a strong commitment to their work. Those who testified to the study committee about morale problems spoke primarily of the situation as it existed at the time of the contract transitions, or of the subsequent layoffs at LLNL. When the study committee examined the M&O contracts, it found very little that prescribes the management of S&E. Many of the bureaucratic frustrations raised at all levels appear to be either within the power of the Laboratories to address or driven by governance strategies above the Laboratory level: they are not traceable to the M&O contractor or the contracts themselves. It is indeed true that all three Labs have been under cost and funding pressure. In the case of LANL and LLNL that pressure is connected with the contract change; the costs of their re-competed contracts are significantly greater than the previous contracting arrangements. But this is due to the combined effect of increased contractor fees, pension obligations, and, in the case of LANL, a need to now pay New Mexico state taxes. Accounts that attribute the increased cost simply to award fees are not accurate. Some employees and stakeholders have been concerned that 2 U. S. Congress, H. Rpt. 108-292, Division C-Energy and Water Appropriations Act, 2005, Sec. 301, p.151, Nov. 2004. The new M&O contractor for LANL took over in 2006, and the new contractor for LLNL began work in 2007. 3 The parent organizations of Los Alamos National Security (LANS) are The University of California, Bechtel, Babcock and Wilcox, and URS. For Lawrence Livermore National Security (LLNS) the parent organizations consist of the same four plus Battelle. 2 PREPUBLICATION COPY—SUBJECT TO FURTHER EDITORIAL CORRECTION
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M&O contractors pursuing a fee might not act in the public interest, and this is an important issue. Therefore, the study committee discussed incentives with the three Laboratory directors and was convinced that their primary objective remains to manage the Laboratories in the public interest. An evolution of the Laboratory missions to “National Security Laboratories” is well underway. The absence of nuclear testing means that experimental validation of much of the S&E performed by the Laboratories is not possible, and thereby lessening the intellectual attractiveness of the work for at least some prospective employees. The expansion of the Laboratories’ mission into new non-nuclear areas offers the prospect of increasing the Laboratories’ appeal to top-quality scientists and engineers while also serving important national security missions. Thus, the quality of S&E, being preconditioned on attracting high-quality people, depends in the long run on successfully making this transition to National Security Laboratories. It is for this reason that the study committee was pleased to see that, a governance charter has been established among the Departments of Energy, Homeland Security, and Defense, plus the Office of the Director of National Intelligence 4 Many of the challenges facing these agencies are synergistic with the capabilities of these NNSA Laboratories, and they can, and do, benefit from the large investments that NNSA and its predecessors have made in S&E capabilities. In a time of constrained budgets, broadening the mandate to a national security mission helps preserve S&E expertise by providing opportunities to work on problems posed by partner agencies. However, while such Work for Others (WFO) is very important for the future of S&E at the Laboratories, all three of the Laboratory directors were very clear that maintenance of the nuclear weapons stockpile remains the core mission of the Labs. Recommendation 3-15: The study committee recommends that Congress recognize that maintenance of the stockpile remains the core mission of the Labs, and in that context consider endorsing and supporting in some way the evolution of the NNSA Laboratories to National Security Laboratories as described in the July 2010 four-agency Governance Charter for an Interagency Council on the Strategic Capability of DOE National Laboratories. A crucial part of the Laboratories’ ability to conduct their missions is derived from Laboratory Directed Research and Development (LDRD), the primary source for internally directed R&D funding. Among its other benefits, LDRD provides a major resource for supporting and training staff at each Laboratory. 4 See Appendix 1 “Governance Charter for an Interagency Council on the Strategic Capability of DOE National Laboratories as National Security Assets.” 5 The first number refers to the chapter of the report in which the recommendation appears. 3 PREPUBLICATION COPY—SUBJECT TO FURTHER EDITORIAL CORRECTION
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Recommendation 3-2: The study committee recommends that Congress and NNSA maintain strong support of the LDRD program as it is an essential component of enabling the long-term viability of the Laboratories. Historically, Laboratories had another source of discretionary research spending. The weapons program (at each Laboratory) had the flexibility to use part of its budget to fund a robust research program, in support of the core weapons mission. Currently, the weapons program budget is subdivided into so many categories with so many restrictions that this important flexibility is effectively lost. This loss in funding flexibility has significantly reduced the amount of core program research being performed at the Laboratories. This lessens the appeal of the Laboratories when recruiting scientists and engineers. Recommendation 3-3: The study committee recommends that Congress reduce the number of restrictive budget reporting categories in the Nuclear Weapons Program and permit the use of such funds to support a robust core weapons research program and further develop necessary S&E capability. In the view of this committee, the relationship between NNSA and its National Security Laboratories is broken to an extent that very seriously affects the Labs’ capability to manage for quality S&E. There has been a breakdown of trust and an erosion of the partnering between the Laboratories and NNSA to solve complex S&E problems; there is conflict and confusion over management roles and responsibilities of organizations and individuals. For example, the study committee heard reports of mid-level issues being elevated to the Laboratory director level because there was no clarity about how to resolve disputes between a Laboratory and an NNSA Site Office. Another example was a recent instance in which NNSA HQ tried to overrule a Laboratory’s best scientific judgment about how to carry out a scientific task. Subsequently, language appeared in a Congressional report opposing that NNSA order. A better mechanism could be established for resolving technical disputes, without elevating them to top NNSA management and congressional levels. A technical advisory committee, established at the NNSA level, would be a helpful mechanism for filling this gap in S&E management. More generally, such an advisory committee could monitor progress on other aspects of roles and responsibilities, as described next. Erosion of trust on both sides of the relationship shapes the oversight and operation of the Laboratories, resulting in excessive bureaucracy governing Laboratory activities at a deep level of detail, including the conduct of S&E. The study committee observed widespread perception among Laboratory S&E staff and some managers that NNSA oversight activities were inconsistent with statements by NNSA that oversight is accomplished without being intrusive; i.e., “eyes on, hands off”. The study committee was repeatedly told that oversight officials frequently blur the line between oversight and evaluation and insert themselves in an operational role. This problem was reported to occur in many aspects of Laboratory activities. 4 PREPUBLICATION COPY—SUBJECT TO FURTHER EDITORIAL CORRECTION
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This erosion of the trust relationship is prominent with respect to LANL, where past failures in safety, security, and business practices attracted much national attention and public criticism. But it has also spilled over to LLNL and SNL. The loss of trust in the ability of the Laboratories to maintain operational goals such as safety, security, environmental responsibility and fiscal integrity has produced detailed scrutiny by NNSA HQ and site offices and increased aversion to risk. A major byproduct of this has been to create a bias against experimental work, because of the onerous processes sometimes required before running an experiment. The bias is problematic because experimental science is at the very heart of the scientific method. The FFRDC relationship is based on a partnership between the Federal government and a Laboratory in which the government decides what problems need to be addressed and the contractor determines how best to address those problems. There is a perception among S&E staff and managers at the three Laboratories that NNSA has moved from partnering with the Laboratories to solve scientific and engineering problems, to assigning tasks and specific S&E solutions with detailed implementation instructions. This approach precludes taking full advantage of the intellectual and management skills that taxpayer dollars have purchased. The study committee found similar issues in transactional oversight of safety, business, security and operations. Science and engineering quality is at risk when Laboratory scientists and engineers are not encouraged to bring forth their creative ideas in partnership with NNSA to solve problems vital to our national security. Recommendation 4-1: The study committee recommends that NNSA and each of the Laboratories commit to the goal of rebalancing the managerial and governance relationship to build in a higher level of trust in program execution and Laboratory operations in general. Recommendation 4-2: The study committee recommends that NNSA and the Laboratories agree on a set of principles that clearly lay out the boundaries and roles of each management structure, and also that program managers at headquarters, the Site Offices, and in the Laboratories be directed to abide by these principles. For example, the Site Manager and the Director and/or Deputy Director of each Laboratory could establish, in consultation with other Lab staff, a process to identify and agree on eliminating certain oversight procedures that are not necessary or related to the overall goals of the Laboratory. Similarly, some mechanism could be established to filter program taskings at both the headquarters level and at the Laboratory senior management level to assure that each tasking is necessary and consistent with the agreed management principles. Recommendation 4-3: The study committee recommends that the goal of rebalancing the relationship and 5 PREPUBLICATION COPY—SUBJECT TO FURTHER EDITORIAL CORRECTION
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the set of principles laying out the boundaries and roles of each management structure be memorialized in memoranda of understanding between NNSA and its Laboratories. NNSA should assess performance against these understandings on an annual basis over a five-year period and report these assessments to Congress.6 A key to ongoing Laboratory success has been a strong focus on the long term and on maintaining deep technical capability. Under the new management structure of the Laboratories, industrial and other private sector partners can help assure that this long-term focus is maintained. Recommendation 5-1: The study committee recommends that the NNSA, Congress, and top management of the Laboratories recognize that safety and security systems at the Laboratories have been strengthened to the point where they no longer need special attention. NNSA and Laboratory management should explore ways by which the administrative, safety, and security costs can be reduced, so that they not impose an excessive burden on essential S&E activities. Recommendation 5-2: The study committee recommends that NNSA reduce reporting and administrative burdens on the Lab directors, and purposely free directors to establish strategic science and engineering direction at the Laboratories. Among other benefits, this may encourage Lab directors to serve longer terms with the organization. 6 The committee observes that it is important to design this approach to be self-correcting and to avoid problems such as: (1) adding to a check-list approach to management; (2) enforcing measures that annual assessment shows to be unworkable; and (3) requiring Congressional intervention when not needed. 6 PREPUBLICATION COPY—SUBJECT TO FURTHER EDITORIAL CORRECTION