Brian Bradley
NS&D Monitor
09/11/2015

In the past year, the Energy Department’s Office of Science and Stanford University have completed the research phases of two contrasting pilot programs aimed at revamping the national laboratory contracting structure, and two sites will soon conduct real-life tests of the final concepts, DOE officials said this week. SLAC National Accelerator Laboratory and Fermilab in Batavia, Ill., will host the tests in an effort to down-select to one complex-wide contracting method sometime after 2017, NS&D Monitor has learned. SLAC Board of Overseers Chairman Dr. Bill Madia since May has co-chaired the “Revolutionary Working Group” (RWG), which is looking at ways to overhaul DOE’s current management and operating lab contracting model. Meanwhile, since November, Office of Science Acting Director Patricia Dehmer and Deputy Director for Field Operations Joe McBrearty have led the “Evolutionary Working Group” (EWG), which is eyeing more conservative contracting changes than RWG, including loosening fixed acquisition thresholds for labs, and simplifying oft-cited burdensome processes such as conference management approval. Creation of the working group followed recommendations of the Secretary of Energy Advisory Board’s (SEAB’s) draft contracting task force report, which is currently in its public comment period.

“We analyzed those and provided recommendations to…Secretary [of Energy Ernest Moniz], and we looked at the process in which the laboratories are assessed, and how data is acquired from the laboratories,” McBrearty said in an interview yesterday. “And so, we believe that we have recommended changes which will streamline some of the more burdensome practices that the laboratories have to go through on a routine basis.” EWG hopes to complete its real-life contracting test within two years of its start date.

Madia, who also serves on SEAB, and RWG co-chair Cherry Murray, dean of the Harvard School of Engineering and Applied Sciences, will meet next week with officials in Washington in an effort to determine whether the fundamental lab contracting structure can be “radically” changed, he said. RWG is working to describe its potential success in two ways: (1) Whether new contracts could generate more research and development per dollar spent, and (2) whether DOE can reduce administrative burdens on researchers. “It’s early in the process, but got the intent,” Madia said. RWG includes a legal and procurement team, a finance team, and an operations and safety team, which each comprise six members; he said SLAC’s test will run at least three years, and will entail modifying the facility’s existing maintenance and operations contract with DOE.

“If we come up with better ideas, we’ll run it here at Stanford and SLAC for awhile,” Madia said. “The Secretary’s been very clear he’d like to make these changes transportable to other laboratories, and so we have an eye toward how to solve an issue that’s unique to Stanford, try to identify things that are more cross-cutting, and have full wider application than one lab here at SLAC.” SLAC’s test will explore issues including project management and health and safety reform, which Madia said could include a focused examination of whether DOE could replace its existing health and safety requirements with state-level statutes at the different labs.

“Those are the questions we’re examining,” Madia said. “I want to be very clear: We don’t have any answers yet, but it gives you an example what kind of questions we’re looking at. [For instance,] should we use Stanford’s procurement policies and procedures as opposed to DOE’s?”

SLAC’s and Fermilab’s evaluations will begin after Moniz approves them, yet it is unclear exactly when that will happen. McBrearty said EWG completed most of its analysis last winter and spring, and is awaiting Moniz’s signature of the plan, as it undergoes a financial and legal review. “As you can imagine, that takes a finite amount of time,” McBrearty said. Meanwhile, EWG is considering stakeholder feedback about issues commonly cited in and around the weapons complex, such as applicability of DOE’s health and safety processes, and lengthy approval procedures for miscellaneous lab equipment and subcontracting work. While McBrearty declined to share specific focus areas of his near-future test, he said he sees a strong potential for complex-wide applications of most of its elements.

“A large portion of the items that we were initially going to introduce at just one laboratory as an experiment, we actually believe that we can introduce them across the DOE complex,” he said. “There actually has been a push to see how many of these, after we conduct the risk analysis, how many could we actually incorporate across DOE, and I would say a majority of the ones we are going to take action on can be implemented across the complex.”

Every DOE lab gave input for EWG’s study, which—unlike RWG—stopped short of addressing the current award-fee structure of DOE contracts, “because that’s a real gamechanger in the way that the department does business, in terms of the ops of science, our M&O contracts aren’t fixed-fee—they’re cost-plus awards,” McBrearty said. Released Sept. 4, Volume 1 of the Final Report of the Commission to Review the Effectiveness of the National Energy Laboratories, co-chaired by TJG Energy Associates President T.J. Glauthier, and Carnegie Mellon College of Engineering professor Jared Cohon, recommended that DOE “abandon” incentive award fees in favor of a “fixed fee set at competitive rates,” and that DOE adopt “broader and richer” incentives and consequences to drive sound lab management and enforce accountability.”

Snags

Madia said his research group hit a couple of unanticipated snags when it was considering erecting a contracting model that would blend elements of a cooperative agreement and an M&O contract. “In reality, a cooperative agreement is just a funding agreement,” Madia said. “Therefore, things like liability protection, which the contractors are interested in, isn’t available in a funding agreement.” Cooperative agreements also do not address where the baseline of control for research activities lies between government and industry, according to him. “I can tell you there are substantial challenges both ways,” he said.

But Madia vowed to complete development and application of a new contracting vehicle for DOE labs, and said RWG is formulating its experimental blueprint, which will outline the new structure, taking into account liability, risk, insurance, indemnity, control, and facilities, he said. “There is a multiplicity, a giant matrix of issues…and you try to stand back and look at the long list, and say, ‘OK. Net, what makes the most sense for us?’”