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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options Executive Summary With the end of the Cold War, the Army's budget for research, development, and acquisition is being slashed, from about $28 billion in fiscal year 1985 to a projected $9 billion or less in 1999. The Army plans to meet these cuts by reducing funding for the acquisition of major new systems while maintaining stable funding of $1.2 billion per year for the technology base (the basic research, exploratory development, and nonsystem-specific advanced development that can lead to future systems and provide continuous upgrades of existing systems)1. The goal is horizontal technology integration, the simultaneous integration of technology into different systems that fight together as units or task forces, providing exponential improvements in capabilities. The U.S. Army Materiel Command's (AMC's) new Army Research Laboratory (ARL) is intended to be a major developer of the technology base. It therefore deserves priority in funding and personnel decisions, and it must have the administrative support necessary to pursue excellence in its own laboratories and through access to technology sources outside the Army. This report assesses a range of organizational and management options for ARL in seeking those goals. It focuses on four distinct options in addition to the status quo (that is, ARL as planned for 1997, when it completes its process of formation): The ARL Enhanced option, involving reforms of ARL's administrative procedures within the current legislative and regulatory setting (the baseline case for comparison of options); The National Institute of Standards and Technology (NIST) option, which builds on the ARL Enhanced reforms by further strengthening laboratory managers' discretion in personnel decisions and in forming cooperative partnerships with industry and other government agencies, based 1 Technology base funding will remain stable around $1.2 billion from fiscal year 1994 to fiscal year 1999, with $200 million for basic research, $600 million for exploratory development, and $400 million for nonsystem-specific advanced development.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options on the model of NIST, the Commerce Department's main industrial research laboratory; The ARL Multicenter option, in which most of ARL's research and development (R&D) are contracted out to several centers of excellence, overseen and guided by a strong permanent staff of government technical and management experts; and The Government-Owned, Contractor-Operated (GOCO) ARL option, in which the entire program, including management, is contracted out to a single contractor. To evaluate and compare these options and the status quo on a consistent basis, the committee used the following criteria, which represent the Army's varied requirements for ARL: linkage to Army strategies and objectives; potential to perform world-class land warfare research; diversity and quality of research sources; technology transfer to the Army; ability to leverage funds and programs of organizations outside ARL; and ability to improve productivity with respect to recurring costs. Using these criteria, this report compares the options with the baseline ARL Enhanced option. It also compares the ARL Enhanced option with the status quo. It describes the conversion issues for each option, outlines potential responses, and estimates key conversion and operating costs. To put the issues for ARL in context, the report defines the characteristics of world-class research organizations, and examines the quality and relevance of research at the federally funded research and development centers of the military services, such as Lincoln Laboratory. The committee did not assess the scientific content of ARL's research program. THE ARMY RESEARCH LABORATORY TODAY ARL and other AMC laboratories have undergone frequent major realignments. In 1985, they were consolidated in the U.S. Army Laboratory Command, with the mission of doing basic research (6.1 funding), exploratory development (6.2 funding), and nonsystem-specific advanced development (6.3A funding), as well as coordinating AMC's 6.1, 6.2, and 6.3A funds. In 1992, most of the Laboratory Command and a few other research programs became ARL, a single laboratory concentrating on 6.1 and 6.2 work, without control over funding of others.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options Primarily its efforts support long-range basic research and exploratory development. It has a civilian director, who reports to the Commander of AMC, the Army's research, development, acquisition, and logistics agency for nonmedical systems. ARL's mission is to: Provide America's soldiers the technology edge by conducting a broadly based multidisciplinary program of scientific research and advanced technology directed toward new and improved materials, components, subsystems, techniques and processes, and by performing objective analyses of combat system performance. It carries out this mission in 10 broad areas which ARL calls “business areas,” each in a separate ARL directorate: Advanced Computational and Information Sciences; Battlefield Environment; Electronics and Power Sources; Human Research and Engineering; Materials; Sensors, Signatures, Signal and Information Processing; Survivability/Lethality Analysis; Vehicle Propulsion; Vehicle Structures; and Weapons Technology. These activities fall in the Department of Defense (DOD) funding categories 6.1, 6.2, and 6.5.2 ARL employed about 3,600 people in fiscal year 1993, half of them scientists and engineers (about 400 of whom held Ph.D.s). By 1997, when formation of ARL is complete, the staff is expected to be about 3,100, including about 2,000 scientists and engineers (800 with Ph.D.s). ARL's budget for fiscal year 1993 was about $500 million, including basic research, exploratory development, nonsystem-specific advanced development, mission support, and funding from other agencies. About $32 million was available for ARL's basic research program and about $170 million for exploratory development. In funding terms, ARL cannot be said to hold a commanding position in the Army's technology base. Its $200 million of 6.1 and 6.2 funding in 1993 was only 22 percent of the Army's 6.1 and 6.2 total. Its $32 million in basic research funds were only 16 percent of the Army 's 6.1 total, and its $170 million in exploratory development funds represent only 24 percent of the Army's 6.2 total. (In comparison, the Naval Research Laboratory has 34 percent of the Navy's 6.1 and 6.2 funding, but also receives advanced engineering, development, and procurement funds.) Fifty percent of ARL's 6.1 and 6.2 program is approved by ARL's Board of Directors, half of whom are the technical directors of ARL's main customers, the eight research, development, and engineering centers (RDECs) of AMC. ARL directorates and specific RDECs formally agree on joint projects to cover this amount. The object is to ensure that ARL is responsive 2 A small amount of 6.3A (non-system-specific advanced development) funding, remaining from Laboratory Command programs, will be phased out by fiscal year 1995.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options to the RDECs and that technology transfer from ARL to the RDECs is effective. The committee's assessment of ARL, with respect to the six criteria, shows that ARL has great strengths. But it also reveals that ARL is constrained by cumbersome procurement and personnel procedures and inappropriate limitations on contracting R&D. Furthermore, it has not received relief from recent resource reductions that would be expected on the basis of the Army's policy of emphasizing the technology base. Most important, its mission statement and business areas are too broad in scope for the resources allocated to ARL. Linkage to Army Strategies and Objectives ARL must focus both on the Army's long-term requirements for technology and on the shorter-term requirements of the RDECs—its principal customers—and of soldiers in the field. In general, it has stronger connections with the Army's short- and medium-term needs than with its long-term needs. It is closely attuned to current tactical and doctrine changes, which tend to be short range, and is influenced by the RDECs' requirements for technology in the short and medium range. Connections with the Army staff and the long-range doctrine and concept developers of the Army Training and Doctrine Command are very weak. ARL reports to AMC, which is more concerned with system development and production, immediate readiness, and logistics than with the technologies of the distant future. World-Class Land Warfare Research Because ARL is still in formation, its past performance as a consolidated laboratory is not available for examination. This committee relied heavily, therefore, on assessments of its inputs: management, personnel statistics, administrative practices, and funding. ARL is hampered by cumbersome federal and military administrative procedures. It lacks a focused R&D program (too many business areas and programs for the resources available). It is not receiving sufficient support at higher levels in funding and personnel decisions, particularly in recent hiring freezes and personnel cuts. Personnel Procedures Research and development has personnel needs that are different from those of other military functions, such as logistics. ARL needs unusually high
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options concentrations of highly skilled personnel, at high pay grades. It must have the flexibility to reassign and, when necessary, promote scientists and engineers to meet changing or more challenging opportunities. It needs personal accountability, so that individual performance, rather than seniority, determines pay and other rewards. Outstanding scientists and engineers should be able to advance more quickly than their less effective colleagues. But these needs are being only partially met. In most of ARL's geographic locations, salaries are uncompetitive with the private sector. Managers have insufficient local authority to hire, fire, or reward. There are rigid limits on the numbers of high grades, and of total personnel. The hiring and termination approval process is cumbersome and slow. Promotions and merit-based pay raises are limited. These handicaps prevail despite clear directives in 1989 from DOD acquisition officials to implement the Defense Laboratory Demonstration (Lab Demo) program of reforms, which would go far toward relieving these obstacles. Despite ARL's persistent requests for permission to implement these reforms, they have been put into effect only on a limited basis. Flexibility in reassigning ARL scientists and engineers is somewhat limited by the dispersed physical locations of its directorates although they are being consolidated to some extent in Adelphi and Aberdeen Proving Ground, Maryland. ARL's flexibility is also reduced by the current limits on high grade positions (GS-14 and higher), which make it difficult to promote a scientist or engineer from a low-grade to a high-grade position. Personnel Cuts The Army's downsizing has brought hiring and pay freezes and other personnel constraints. Surprisingly, ARL has not been given a high priority in this process. It continues to experience personnel cuts that equal or exceed the percentages cut in other Army organizations, particularly those supporting system acquisition. Current plans call for additional cuts in research, exploratory development, test and evaluation, and system development organizations, with the burden falling heavily on ARL. ARL may even be forced to use a reduction in force. These personnel constraints and reductions will significantly constrain ARL's efforts to recruit and maintain the quality engineers and scientists needed to enhance its workforce, and thus, its research.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options Procurement Practices In general, the further one moves away from government contracting and procurement practices and toward those of private industry, the more efficient are the processes. Sluggish procurement slows research and hurts morale. Research may be delayed by months for want of a seemingly simple item caught in the procurement process. These problems would be substantially reduced by implementing the Lab Demo initiatives and simplifying procurement by generally increasing the decision-making authority of laboratory managers, shifting from rigid rules to guiding principles, and taking other steps to improve the responsiveness of the system. Again, as in the case of the Lab Demo personnel initiatives, ARL has not been granted permission for the most significant of these reforms. For example, at only a few ARL directorates are laboratory managers permitted to set their own levels of bench supplies. Some, but not all, use credit cards for purchases of up to $10,000 (the Lab Demo limit is $25,000). None have been granted permission for technical directors' discretionary funds of five percent of lab spending. Funding As in the case of their current personnel and procurement practices decisions, the Army, in funding ARL, has not adhered to Army policies calling for stable funding and focusing technology base resources to support upgrades of systems. Although the combination of 6.1 and 6.2 funds will remain relatively stable from fiscal year 1994 to fiscal year 1997, ARL will receive only 22 percent of the Army's total 6.1 and 6.2 funds. It will be difficult for ARL to be the flagship Army technology base laboratory it is chartered to be unless it is more generously treated. At these funding levels, ARL must compete with the RDECs—its own customers—for funds from other services, the Advanced Research Projects Agency, program executive offices, and program managers. With institutional funding of $200 million in R&D, ARL probably cannot support excellent research in its 10 broad business areas. Nor can it easily gain new competencies. The committee 's collective experience suggests that at least $40 to $50 million per year is needed to support an adequate research program in a broad and Army-unique technology area, such as those ARL should be pursuing. As a comparison, the Advanced Research Projects Agency has spent about $100 million per year on its armor and antiarmor program (mostly with 6.2 funding and some advanced development [6.3] funding). It spends about $120 to $140 million per year in its advanced materials research
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options programs (6.1 and 6.2 funding). Based on fiscal year 1993 spending, the ARL Materials Directorate will receive only $13 million of the 6.1 and 6.2 funding. ARL must focus its research on areas of unique importance to the Army's long-term technology needs and in which it has unique strengths. Any technology area in which outside organizations are more competent or cost-effective should be left to those organizations. ARL, for example, need not duplicate industrial or academic programs in areas such as electronics, materials, biotechnology, and the information sciences. Diversity and Quality of Research Sources ARL must be agile enough to exploit the best sources of research and technology, inside or outside the government. It needs diverse and flexible partnerships with industry, universities, and other government laboratories, rather than a monolithic internal capability. Today, its ability to form these relationships is limited. Some limitations are due to restrictions imposed by the Army in dividing ARL's mission from that of the other R&D organizations in AMC. Other limitations are due to the difficulties of DOD contracting mechanisms. Still others are related to ARL's overambitious program. The Army requires all of ARL's basic research to be conducted internally. AMC's Army Research Office is responsible for buying basic research from universities. The RDECs may buy basic research from industry or from ARL. In exploratory development, ARL's sources are somewhat less limited, but it cannot contract out more than 30 percent of its work. Such restrictions were established to protect and maintain an internal capability to conduct basic research and exploratory development, a commendable objective. But such restrictions might hinder ARL' s flexibility in providing its customers the best research and technology available internally or externally. Additionally, DOD persists in using traditional procurement contracts —suitable for purchases of tanks, rations, or hand grenades—in buying R&D. These highly regulated contracts, which have inflexible terms and often require layers of approval, can slow progress, limit shifts in research direction, and discourage many potential sources from participating. DOD has had statutory authority for several years to use cooperative agreements—a more flexible form of contract widely used by other federal agencies to support R&D—but has not used that authority except in the Advanced Research Projects Agency. At the time of writing this report, the Director of Defense Research and Engineering was developing guidance urging the services to start exercising cooperative agreement authority. The wide range of ARL's program, with its 10 broad business areas, may be partly a reaction to these contracting handicaps. The limits on contracting
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options encourage ARL to provide the maximum scope possible internally. Relief would let ARL focus on the Army's greatest needs with ARL's areas of greatest advantage both internally and externally. Technology Transfer to the Army ARL transfers technology to operational users indirectly, by way of the RDECs. The central transfer mechanisms are Technology Program Annexes, formal agreements defining specific joint ARL-RDEC research projects, with specified transition points from ARL to the RDEC. These agreements use the half of ARL's 6.1 and 6.2 program that is approved by the ARL Board of Directors, as explained earlier. While Technology Program Annexes are a step in the right direction, they do not go far enough. Industry and many government agencies have found the sequential approach to technology transfer used in DOD—6.1 to 6.2 to 6.3A to 6.3B, and so on—too slow and uncertain to meet the needs of users. It is similar to a relay race in which technology is passed like a baton through different agencies separated by function, time, and location. Instead, many organizations have substituted a nonlinear or systems approach, in which each stage from concept to production and marketing is guided by the needs of all the other stages. Research is conducted in parallel with development, production, and fielding, requiring researchers to be more knowledgeable of systems integration, manufacturing, and user requirements. At NIST, for example, R&D teams follow a project beyond research, through development, and possibly all the way to production, and are not circumscribed in scope as is ARL (to 6.1 and 6.2 work). ARL lacks the flexibility to be effective at technology transfer of this kind. In this context, it is difficult to see ARL, however well managed, as a successful world-class laboratory even though some world-class research might be conducted in it. Ability to Leverage Funds and Programs By strategic spending on external sources of technology, ARL could share costs with commercial firms and other government agencies, thus “leveraging” its funds through joint ventures and cooperative research and development. ARL's success has been limited, however, by the R&D contracting processes of the Defense Department, noted earlier, which discourage healthy interaction between government and contractor. As partial compensation, the recently authorized cooperative research and development agreements (CRADAs) have offered a means by which ARL may form more
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options flexible relations with the private sector (although they are no substitute for adequate contracting procedures). A related form of leverage is the sharing of costs with other government laboratories. The Tri-Service Science and Technology Reliance program is intended to help reduce redundancy by defining the divisions of labor among the various DOD research and development agencies in different areas of technology. Too new to have demonstrated its success, the program offers a high-level forum for discussions that is bound to grow in practical importance as the Department of Defense accommodates lower defense budgets. Improving Productivity Reductions in defense funding mean that the quality and productivity of ARL's work requires continuous improvement. The Army has devised a total quality management program, to which ARL is committed. But the total quality management approach must be adapted to organizations doing R&D. ARL's inputs and outputs—mainly knowledge—are difficult to measure quantitatively; its quality is assessed most accurately by expert opinion, through peer reviews and management judgment. ARL should continue to use those measurements that are best suited to R&D, such as customer satisfaction, numbers of patents and papers, and percentages of Ph.D.s among scientists and engineers. In any case, the current ARL's ability to implement total quality management is limited. ARL's administrative procedures are too rigid to permit the accountability and authority that are vital to continuous quality improvement. Decisions on detailed budgets, personnel numbers, promotion, and pay are made by higher headquarters. Incentives for performance are few. If ARL, in pursuit of total quality management, is to please its customers and build quality into every system and process in an organization, such restrictions must be loosened or removed. These problems are not insurmountable. As this report shows, there are a range of options for the Army, each of which offers important relief from these handicaps. GENERAL RECOMMENDATIONS The committee's assessment of ARL as now constituted has revealed deficiencies in ARL's program and its management. Many of these problems are due to unduly restrictive federal and DOD administrative procedures, which fail to give managers the necessary authority and accountability. Others
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options appear to reflect a confusion about ARL's priorities and its relations with its customers and its sponsor. To address these failings, the committee developed five general recommendations that apply in various ways to all four of the organizational options (indeed, to any productive future for Army R&D). Accordingly, these recommendations can be considered common assumptions of all the options (although their applicability may vary from option to option). They must be implemented if any of the recommended options are to be successful. The committee believes that implementation of the first four recommendations are possible within AMC. However, an AMC commander would find it difficult to single out ARL for elite status as long as it is closely intermeshed with the rest of his command, both organizationally and physically. Few commanders who have the responsibility of optimizing value of the entire AMC command would find it tenable to establish a differentiated, organizational entity with a separate culture and set of operating policies that is required. Streamlined Procurement Practices Procurement practices should be streamlined, based on the Defense Laboratory Demonstration initiatives. The initiatives could ride on the coat tails of the Under Secretary of Defense for Acquisition and Technology report issued on January 12, 1993, by the Acquisition Law Advisory Panel, entitled Streamlining Defense Acquisition Law. The Lab Demo procurement initiatives should be implemented. The decision-making authority of laboratory managers should be increased, and other steps taken to improve the responsiveness of the system. Generally, all procurement constraints imposed by the Army should be selectively eliminated, to free laboratories to the limits of federal law and Defense Acquisition Regulations. (This recommendation does not apply to the GOCO ARL option, which—depending on the contract—may not be subject to federal procurement practices in the same way.) Personnel Reforms A thorough reform of personnel practices for science and technology personnel at ARL should be instituted. This reform should begin with the Defense Laboratory Demonstration initiatives (which can be undertaken quickly, within existing statutes and regulations). Among the Lab Demo personnel reforms are (a) giving laboratory managers the power to classify positions, (b) establishing a separate career ladder for scientists and engineers,
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options (c) offering short-term appointments for senior retirees from universities and industry, (d) locating key support functions such as personnel management and purchasing at laboratories, and (e) other measures to increase the authority and accountability of managers and workers. ARL should go as far as possible beyond these reforms, and should consider personnel programs demonstrated in other agencies, such as NIST. Such reforms will also attract outstanding leaders. Approval by Congress, the Office of Personnel Management, DOD, and the Army may be needed. (These reforms, like the Lab Demo procurement measures, would not apply to the GOCO ARL option, which has no government employees.) A More Focused Program and a Well-Defined Mission To maintain quality in the ARL research program as budgets decline, ARL should focus its mission and program over the next three years to include only those areas of technology that promise the greatest contributions to meeting the Army's long-range, land-warfare requirements and will not be adequately supported elsewhere. ARL should make more direct use of civilian research in areas of strong civilian support and interest (e.g., electronics, materials, biotechnology, information sciences), while focusing on its own core competencies and their evolution over time. This approach should also be taken with ARL 's analytical support efforts. To direct this more focused approach, the Army must rewrite ARL's mission statement, stressing the pursuit of the best research, technology development and analytical support inside or outside the Army, to meet needs broader than the specific system technologies developed by the RDECs. The current programs seem to be too internally oriented. In developing such a statement, the challenge will be not to offer ARL sufficient scope, but rather to give it a unique and stable role among Army R&D organizations. As the program and mission are defined, the Tri-Service Science and Technology Reliance program will grow increasingly attractive as a way of sharing resources. Partnerships for Technology Transfer To facilitate technology transfer, ARL should initiate and broaden exchanges with civilian industry and universities through cost-sharing partnerships and guest researchers, and it should establish an improved process for development and technology transfer with its customers and operational users. Most important, ARL must work closely with the RDECs, avoiding duplication and competition for research funds. It should be
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options permitted to go beyond 6.1 and 6.2 work, to make cooperation with the RDECs, battle labs, and others, inside and outside the government, more fruitful. A New Reporting Channel It is the committee's judgement that ARL's reporting channel should be changed from the Commanding General of AMC to the Assistant Secretary of the Army (Research, Development and Acquisition). The committee believes that this change would better support a mission of Army-wide horizontal technology integration, make it easier for ARL to practice a nonlinear (nonsequential) approach to technology transfer, provide full-time research and technology leadership, provide more direct links to Army policy, operational, and program officials, and place ARL in a position that would reduce command concerns of giving ARL an elite status in terms of personnel, procurement, and other administrative reforms. The committee also believes that this move would enhance ARL's external status as the Army's flagship laboratory (putting it on a similar organizational level with the Naval Research Laboratory and NIST), promoting better relations with users, civilian industry and other government agencies. 3 The ARL Board of Directors should be replaced by a new Army Science and Technology Advisory Board, an external board of independent experts to review and oversee the technical quality and relevance of ARL 's work and ensure strong linkages exist. COMPARING THE FOUR OPTIONS The four organizational and management options can be seen as points along a spectrum, from rather modest administrative reforms within the current setting (the ARL Enhanced option) to the radical alternative of 3 The committee recognizes the difficulty of considering a change in the reporting relationship for ARL without similar questions arising in respect to the Army Research Office (ARO), a similar basic research organization that manages university basic research efforts. A close, seamless working relationship between ARL and ARO would enhance ARL 's diversity and quality of research sources. A common management structure would enhance this relationship. Such a working relationship has long existed between the Naval Research Laboratory and the Office of Naval Research (ARO's equivalent) under the Chief of Naval Research of the Navy, who reports to the Assistant Secretary of the Navy for Research, Development and Acquisition. However, it is beyond the charter of this study to address ARO's reporting channel. The Army should consider studying this reporting channel, ARO's relationship with ARL and the RDECs, and the Army's overall 6.1 program.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options contracting out all of ARL's management and operations (the GOCO ARL option). It is important to note that the average salaries for scientists and engineers vary from option to option. Engineers and scientists employed by private contractors are assumed to earn $70,000 per year on average, based on the committee's surveys of contract research organizations. Government-employed scientists and engineers in the ARL Enhanced and ARL Multicenter options would earn $52,700; in the NIST option, because of the various pay incentives, they would average $61,200. The average cost per scientist and engineer for each option depends on the relative proportions of contract and government employees. For the purposes of comparison, the total operating budgets of all options are assumed to be equal ($323 million, in 1993 dollars, by fiscal year 1997). The number of scientists and engineers are scaled accordingly. Thus, the GOCO ARL option, 100 percent contracted, is calculated to have only 1,357 scientists and engineers in fiscal year 1997, substantially less than the 2,021 planned by ARL (and assumed in the baseline ARL Enhanced option); the NIST option would have 1,779, and the ARL Multicenter option would have 1,604. The likely accompanying increases in productivity associated with these options—which determine whether the reduced staffs would achieve research output high enough to carry out ARL's mission with sufficient quality to warrant the conversion—are matters of judgment. This committee believes that all three of the higher cost per person options would pay for themselves, because they are most open to the efficiencies and incentives of the private sector. The Department of Energy sponsored-laboratories in universities and industry, the Jet Propulsion Laboratory sponsored by the National Aeronautics and Space Administration, and the Massachusetts Institute of Technology Lincoln Laboratory sponsored by DOD all have outstanding reputations for quality and productivity. Similarly, industrial laboratories such as Bell Laboratories, the Xerox Palo Alto Laboratories, the General Electric Laboratories, and many others also enjoy excellent reputations. Based on this experience, the committee believes that private-sector laboratories can deliver overall higher productivity for their higher per person costs. No proven quantifiable measures of research productivity are available, which might indicate that 1,357 higher paid scientists and engineers (or 1,779, or 1,604) could be as productive as 2,021 government scientists and engineers. This comparison is complicated further by federal scientists and engineers who often accept lower pay in exchange for research opportunities available only in government laboratories or to fulfill a sense of service to the nation. In general, higher salaries, if linked with updated facilities, state-of-the-art equipment, professional working environment, and good leadership, can
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options attract higher quality people, who in turn are likely to produce disproportionately more valuable research. ARL Enhanced Option The ARL Enhanced option (the baseline for comparison) involves frequently recommended changes in personnel, purchasing, and contracting arrangements, while keeping ARL a government organization. The option is based on the Lab Demo program of purchasing and personnel reforms, already mentioned, and DOD's proposed Laboratory Quality Initiatives, which build on the Lab Demo initiatives, including additional contracting reforms. Contracting activity is assumed to account for 20 percent4 of ARL's R&D (compared with the 30 percent figure found in the Army's current plans for ARL by fiscal year 1997). One-time conversion costs are estimated at $11 million (mainly severance pay for those made redundant as a result of the recommended focusing of ARL's program). 5 This option would offer a quick and substantial improvement in effectiveness, without the need for radical change or upheaval, and without the need for congressional authorization. The contracting reforms assumed in this option—including the use of cooperative agreements for R&D—would improve ARL's ability to exploit diverse sources of research and technology and to leverage funds and programs. But ARL would be limited in these respects by the assumed 20 percent ceiling on contracting R&D. In none of these areas would it have advantages over the other options. Technology transfer to the Army would improve marginally, through the focusing of ARL's program and formation of the technology transfer partnerships, both general recommendations (and both assumed for all of the committee's options). All other things being equal, one would expect an internal operation to have better technology transfer to other parts of the 4 ARL's planned fiscal year 1997 budget and internal personnel strengths cannot support more than 20 percent of its budget contracted out. 5 The committee believes that some of ARL's laboratories may need to be upgraded, regardless of the option chosen, to enhance the quality of the research environment. However, the committee could find no reason to believe that facilitation costs would differ among options. Thus, such costs would not be discriminators for choosing from among the options. Additionally, the committee adhered to the guidelines for this study that no additional capital costs be considered for any option. The committee believes, though, that such increases might improve the chances of attracting better research personnel. The Army should study the needs, if any, for laboratory improvements or changes to its current plans, and appropriately adjust the conversion costs.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options Army, because there are fewer barriers; in this respect, this option would be favored over the GOCO ARL option. Fully and properly implemented and supported, with the recommended new reporting channel and narrowed program, this option could give the Army a source of world-class science and technology. But implementation would be challenging, since the Army's past record for implementing Lab 21 initiatives has not been good. This option may not be a bold enough move to get senior leadership support for full implementation nor bold enough for meeting the Army's changing needs. NIST Option The NIST option, another option that retains most of the program within the Army (with an assumed 20 percent of R&D contracted), builds on the ARL Enhanced option by instituting more radical personnel practices, modeled on the well-known personnel demonstration program of NIST. Its other key feature is a two-tier system of independent external advisory boards, which review the quality and relevance of research programs. These advisory bodies are modeled on those of NIST. This option has a substantial advantage over the ARL Enhanced baseline in its personnel procedures. Revised procedures would give laboratory managers the ability to hire and reward technical workers to meet managers' needs in a timely way. The resulting improvements in research quality and cost-effectiveness would be important. The one-time conversion costs would be more than those of the previous option (about $17 million), representing mostly the cost of severance for employees replaced in the reformulation and focusing of the program. In all other respects, this option is identical to the ARL Enhanced baseline. It would have the same enhancements in linkage to Army strategies and objectives, the diversity and quality of research sources, technology transfer, and ability to leverage funds and programs. However, the actual NIST has an extensive program of partnerships and guest researchers from industry and universities that provides it with great leveraging capability. This program, if duplicated in ARL, would leverage its funds greatly. Thus, the committee has made the program a general recommendation. The committee views this option as the best option that still retains the bulk of ARL's work within the Army. Bold and rapid implementation by the Army and Office of the Secretary of Defense would be needed to develop and implement the demonstration personnel system. Approvals might also be needed from Congress and the Office of Personnel Management.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options ARL Multicenter Option The ARL Multicenter option involves the same administrative reforms as the ARL Enhanced option, but would contract out most of the research and development to several centers of excellence, under the supervision of a strong permanent staff. For the purposes of this assessment, it is assumed that 30 percent of ARL research would be retained in internal laboratories of excellence, and the other 70 percent would be contracted out on multiyear contracts to centers organized around specific technology areas; the internal 30 percent would include the permanent staff of about 100 technical experts and managers. The one-time conversion costs would be higher than those of the ARL Enhanced or NIST option (about $56–$70 million, 6 mostly for severance pay for the 40 percent of ARL research personnel who would be displaced). This option has the potential for dramatic improvements in the quality of ARL's R&D, its ability to leverage funds and programs, and its ability to improve its productivity and cost-effectiveness. Its use of a combination of contract and internal centers for ARL's research—government-owned and government-operated, government-owned and contractor-operated, and contractor-owned and contractor-operated—would enable it to seek the very best available sources of technology, and give it the network of contacts and partnerships through which to leverage its funds and programs. It would be well prepared to meet the changing needs of the future, by changing its research sources as needed. Its links with the RDECs (which help determine the ease of technology transfer) would not be as strong as those of the ARL Enhanced or NIST options. However, its government staff would include RDEC personnel on rotating assignments, which would improve communication. Even more interesting is the possibility of wholesale technology transfer; responsibility for centers whose technology had matured beyond ARL 's interests could be transferred as wholes to the appropriate RDECs. This option would be stronger by nearly every criterion than the ARL Enhanced baseline, and the equal of every other option (except possibly in technology transfer, where it might be arguably inferior to the internal options). Implementation would be contractually complex, because of the variety of sources, and would require effective planning and coordination by the permanent staff. The cost to obtain contractors (estimated at $7.5 to $21.5 million) would increase with the number of center contracts. Thus the cost to 6 This cost will depend on the number of independent centers of excellence which are contracted out.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options obtain contractors for this option could be more expensive than with a single GOCO contractor (estimated at $7.5 million). There could be a gradual transition from either the ARL Enhanced or NIST options to the ARL Multicenter option through a systematic increase in the contracted out/internal ratio of funding over time. GOCO ARL Option The GOCO ARL option would break dramatically with the past, by contracting out all research and development, and its management, to a single organization. A small government staff (no more than a dozen members) would provide oversight for the Army. The one-time conversion costs of this option are estimated at $85 million, mostly severance costs for people. The GOCO option would offer perhaps the best chance of all the options for ARL to do world-class technical work. Using the administrative procedures of the private sector, ARL could hire and promote, purchase, and contract more efficiently than any government organization. (In this option, the recommended government personnel and procurement reforms are irrelevant.) It could attract outstanding leaders and staff, attracted by the vital mission and the minimal administrative burdens of the laboratory. It could select its research sources with the utmost freedom and diversity. With its rich networks of contacts and its ability to exchange personnel easily with outside organizations, it would be able to form close relationships with outside entities through which to leverage ARL funds. Through incentive clauses in its management and operations contract with the Army, a GOCO ARL could have strong incentives to improve the quality and relevance of its work. This option, however, could weaken ARL's linkages to Army strategies and objectives, by placing it outside the direct control of the Army. The GOCO ARL option because it is outside the government, might also be less able than the ARL Enhanced baseline (or other internal options) to transfer technology to the Army, provide technical support to operating forces, or carry out system assessments for the Army. Nevertheless, the Department of Energy GOCOs have done effective technology transfer and assessments for the Department of Energy, for example. While none of these problems is insurmountable—many existing GOCO laboratories manage them successfully —they must be counted as potential shortcomings when compared to the internal options. These areas would require management attention at both the GOCO ARL and its Army oversight organization to ensure effective coupling to other Army laboratories, engineering centers, and operating forces. Conversion would require notification of Congress (although not legislative authorization), and might be politically contentious.
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options To capture the benefits of the GOCO option, the Army would need to resist overly restrictive management through excessive government approvals of operations. The past decade has seen a clear trend toward increased oversight at the Department of Energy's GOCO laboratories and DOD's federally funded research and development centers. The greater the degree of detailed supervision from the Army, the less attractive the GOCO ARL option is, both to the Army and to potential contractors. The Army would need to give the lab the operational freedom and flexibility of an outside organization, and at the same time the trust and access of an internal lab with regard to substantive matters. SELECTING AN OPTION The determinate issue for the Army in selecting an option, all other factors being essentially equal, is whether a significant internal capability to do research is absolutely necessary. If the judgment is strongly affirmative, then the best internal option would be selected, assuming that it meets requirements for leadership, quality of research, and technology transfer. On the other hand, many experts on research management regard contract organizations as more likely than internal DOD laboratories to achieve these goals. Thus, the choice of an ARL option is a matter of judgment about the factors most important to the Army in the particular case. The committee believes that the ARL Enhanced option may not be bold enough to meet the Army's changing needs nor to obtain strong support from senior leaders, judging from ARL's inability thus far to implement the Lab Demo initiatives that are at the option's heart. The NIST, ARL Multicenter, and GOCO ARL options would all be major improvements over the current situation, and all three have the potential to produce a world-class laboratory. The NIST option in particular is an excellent internal option. The main uncertainty about a NIST ARL is whether it could receive the necessary approvals by DOD and Congress and be accepted by the existing bureaucracies so as to be implemented successfully. The ARL Multicenter and GOCO ARL options have varying advantages and disadvantages, but the advantages far outweigh the disadvantages in terms of quality and productivity. These latter two options could be implemented by the Army without statutory changes, although they would be politically contentious. However, they face acceptance problems similar to those of the NIST option. Properly implemented, each would be an improvement over the status quo, not only in the efficiency and flexibility of ARL's personnel and purchasing systems, but also in terms of more fundamental reforms, such as a more focused program; more flexibility in conducting research across the spectrum of the 6.1, 6.2, and 6.3A funding categories; better leadership; better
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THE ARMY RESEARCH LABORATORY: Alternative Organizational and Management Options responsiveness to the Army's goals; and more fruitful relations with customers and other partners. The committee strongly recommends that the Army implement either the NIST, ARL Multicenter, or GOCO ARL option. The choice among these three depends largely on the importance to the Army of an internal research capability, and on the Army's judgment of the practical and economic obstacles to implementing particular options. Above all, the Army should incorporate all five general recommendations in any choice it makes. The Army must have the support and the commitment of its top leadership, and the patience to evolve and stabilize ARL into an organization that can have a major impact on the Army of the future. Without this, the Army will waste critical resources and not reap the benefits described in this report for its chosen option.
Representative terms from entire chapter: