Federal Research
Opportunities Exist to Improve the Management and Oversight of Federally Funded Research and Development Centers Gao ID: GAO-09-15 October 8, 2008In 2006, the federal government spent $13 billion--14 percent of its research and development (R&D) expenditures--to enable 38 federally funded R&D centers (FFRDCs) to meet special research needs. FFRDCs--including laboratories, studies and analyses centers, and systems engineering centers--conduct research in military space programs, nanotechnology, microelectronics, nuclear warfare, and biodefense countermeasures, among other areas. GAO was asked to identify (1) how federal agencies contract with organizations operating FFRDCs and (2) agency oversight processes used to ensure that FFRDCs are well-managed. GAO's work is based on a review of documents and interviews with officials from eight FFRDCs sponsored by the departments of Defense (DOD), Energy (DOE), Health and Human Services (HHS), and Homeland Security (DHS). What GAO Recommends
Federal agencies GAO reviewed use cost-reimbursement contracts with the organizations that operate FFRDCs, and three of the agencies generally use full and open competition to award the contracts. Only DOD consistently awards its FFRDC contracts on a sole-source basis, as permitted by law and regulation when properly justified. FFRDCs receive funding for individual projects from customers that require the FFRDCs' specialized research capabilities. Because FFRDCs have a special relationship with their sponsoring agencies and may be given access to sensitive or proprietary data, regulations require that FFRDCs be free from organizational conflicts of interest. DOD and DOE also have policies that prescribe specific areas that FFRDC contractors must address to ensure their employees are free from personal conflicts of interest. In a May 2008 report, GAO recognized the importance of implementing such safeguards for contractor employees. Currently, although DHS and HHS have policies that require their FFRDC contractors to implement conflicts-of-interest safeguards, these policies lack the specificity needed to ensure their FFRDC contractors will consistently address employees' personal conflicts of interest. Sponsoring agencies use various approaches in their oversight of FFRDC contractors, including: (1) Review and approval of work assigned to FFRDCs, or conducted for other agencies or entities, to determine consistency with the FFRDC's purpose, capacity, and special competency. In this process, only DOD must abide by congressionally imposed annual workload limits for its FFRDCs. (2) Conduct performance reviews and audits of contractor costs, finances, and internal controls. (3) Conduct a comprehensive review before a contract is renewed to assess the continuing need for the FFRDC and if the contractor can meet that need, based on annual assessments of contractor performance. Some agencies have adopted other agencies' FFRDC oversight and management practices. For example, DHS mirrored most of DOD's FFRDC Management Plan--an internal DOD guidance document--in developing an approach to FFRDC oversight, and DHS officials told us they learned from DOE's experience in selecting and overseeing contractors for laboratory FFRDCs. In addition, HHS plans to implement certain DOE practices, including rewarding innovation and excellence in performance through various contract incentives. While agency officials have acknowledged the potential benefits from sharing best practices, there is currently no formal cross-agency forum or other established mechanism for doing so.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-09-15, Federal Research: Opportunities Exist to Improve the Management and Oversight of Federally Funded Research and Development Centers
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
October 2008:
Federal Research:
Opportunities Exist to Improve the Management and Oversight of
Federally Funded Research and Development Centers:
Federal Research:
GAO-09-15:
GAO Highlights:
Highlights of GAO-09-15, a report to congressional committees.
Why GAO Did This Study:
In 2006, the federal government spent $13 billion”14 percent of its
research and development (R&D) expenditures”to enable 38 federally
funded R&D centers (FFRDCs) to meet special research needs.
FFRDCs”including laboratories, studies and analyses centers, and
systems engineering centers”conduct research in military space
programs, nanotechnology, microelectronics, nuclear warfare, and
biodefense countermeasures, among other areas. GAO was asked to
identify (1) how federal agencies contract with organizations operating
FFRDCs and (2) agency oversight processes used to ensure that FFRDCs
are well-managed.
GAO‘s work is based on a review of documents and interviews with
officials from eight FFRDCs sponsored by the departments of Defense
(DOD), Energy (DOE), Health and Human Services (HHS), and Homeland
Security (DHS).
What GAO Found:
Federal agencies GAO reviewed use cost-reimbursement contracts with the
organizations that operate FFRDCs, and three of the agencies generally
use full and open competition to award the contracts. Only DOD
consistently awards its FFRDC contracts on a sole-source basis, as
permitted by law and regulation when properly justified. FFRDCs receive
funding for individual projects from customers that require the FFRDCs‘
specialized research capabilities. Because FFRDCs have a special
relationship with their sponsoring agencies and may be given access to
sensitive or proprietary data, regulations require that FFRDCs be free
from organizational conflicts of interest. DOD and DOE also have
policies that prescribe specific areas that FFRDC contractors must
address to ensure their employees are free from personal conflicts of
interest. In a May 2008 report, GAO recognized the importance of
implementing such safeguards for contractor employees. Currently,
although DHS and HHS have policies that require their FFRDC contractors
to implement conflicts-of-interest safeguards, these policies lack the
specificity needed to ensure their FFRDC contractors will consistently
address employees‘ personal conflicts of interest.
Sponsoring agencies use various approaches in their oversight of FFRDC
contractors, including:
* Review and approval of work assigned to FFRDCs, or conducted for
other agencies or entities, to determine consistency with the FFRDC‘s
purpose, capacity, and special competency. In this process, only DOD
must abide by congressionally imposed annual workload limits for its
FFRDCs.
* Conduct performance reviews and audits of contractor costs, finances,
and internal controls.
* Conduct a comprehensive review before a contract is renewed to assess
the continuing need for the FFRDC and if the contractor can meet that
need, based on annual assessments of contractor performance.
Some agencies have adopted other agencies‘ FFRDC oversight and
management practices. For example, DHS mirrored most of DOD‘s FFRDC
Management Plan”an internal DOD guidance document”in developing an
approach to FFRDC oversight, and DHS officials told us they learned
from DOE‘s experience in selecting and overseeing contractors for
laboratory FFRDCs. In addition, HHS plans to implement certain DOE
practices, including rewarding innovation and excellence in performance
through various contract incentives. While agency officials have
acknowledged the potential benefits from sharing best practices, there
is currently no formal cross-agency forum or other established
mechanism for doing so.
What GAO Recommends:
To improve the effectiveness of FFRDCs, GAO recommends that (1) DHS and
HHS revise their personal conflict-of-interest policies to specifically
address FFRDC contractor employees in a position to influence research
findings or agency decision making and (2) agencies create an ongoing
forum to share best practices for FFRDC oversight. DHS, DOD, and DOE
concurred with GAO‘s recommendations, while HHS concurred with the need
to revise its policies and is considering a best practices forum for
FFRDCs.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-15]. For more
information, contact William Woods, 202-512-4841 woodsw@gao.gov or
Anu Mittal, 202-512-9846, mittala@gao.gov.
Contents:
Letter:
Results in Brief:
Background:
Most Agencies Compete Cost-Reimbursement Contracts for Operating Their
FFRDCs, but Some Do Not Have Specific Personal Conflict-of-Interest
Requirements:
Agencies Vary in FFRDC Oversight Approaches and Do Not Regularly Share
Best Practices:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: List of 38 Federally Funded Research and Development
Centers:
Appendix III: Comments from the Department of Defense:
Appendix IV: Comments from the Department of Energy:
Appendix V: Comments from the Department of Health and Human Services:
Appendix VI: GAO Contact and Staff Acknowledgments:
Table:
Table 1: Funding for FFRDC "Work for Others" (Fiscal Year 2001 to
2005):
Figure:
Figure 1: Federal R&D Funding for FFRDCs:
Abbreviations:
C3I: command, control, communications, and intelligence:
DCAA: Defense Contract Audit Agency:
DHS: Department of Homeland Security:
DOD: Departments of Defense:
GAAP: generally accepted accounting principles:
GAGAS: generally accepted government auditing standards:
FAR: Federal Acquisition Regulation:
FFRDC: federally funded research and development center:
HHS: Department of Health and Human Services:
HSI: Homeland Security Institute:
IDA: Institute for Defense Analyses:
MIT: Massachusetts Institute of Technology:
M&O: management and operating:
NBACC: National Biodefense Analysis and Countermeasures Center:
NNSA: National Nuclear Security Administration:
NSF: National Science Foundation:
OMB: Office of Management and Budget:
R&D: research and development:
SEC: Securities and Exchange Commission:
STE: Staff years of Technical Effort:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
October 8, 2008:
The Honorable John D. Dingell:
Chairman:
The Honorable Joe Barton:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Bart T. Stupak:
Chairman:
The Honorable John M. Shimkus:
Ranking Member:
Subcommittee on Oversight and Investigations:
Committee on Energy and Commerce:
House of Representatives:
In fiscal year 2006, the federal government spent $13 billion[Footnote
1]--14 percent of all federal research and development expenditures--
funding work at its 38 federally funded research and development
centers (FFRDCs). These centers are agency-sponsored[Footnote 2]
entities that specialize in areas such as military space programs,
nanotechnology, advanced microelectronics and semiconductors, nuclear
warfare, biodefense countermeasures, and high-energy particle physics.
Sponsoring agencies contract with nonprofit, university-affiliated, or
private industry organizations to operate the FFRDCs. Based on your
interest in how FFRDCs are managed, we identified (1) how federal
agencies contract with organizations that operate FFRDCs and (2) the
oversight processes agencies use to ensure that FFRDCs are effectively
and efficiently managed.
We used a case study methodology to conduct our review. We chose three
agencies with a long history of sponsoring FFRDCs--the departments of
Defense (DOD), Energy[Footnote 3] (DOE), and Health and Human Services
(HHS)--as well as a fourth agency that has more recently established
FFRDCs--the Department of Homeland Security (DHS). From the 29 FFRDCs
that these four agencies sponsor, we selected a nongeneralizable sample
of eight FFRDCs for in-depth review. We made our selections to achieve
variation, both among the type of FFRDC (scientific laboratories versus
other types) and the type of operating contractor (universities,
nonprofits, and private industry). For each of the four federal
agencies, we interviewed officials at the office that sponsors FFRDCs
as well as those officials who have contract management or audit roles.
We analyzed regulations, policies, guidance, contracts, sponsoring
agreements, and other documentation. For the eight FFRDCs in our case
study, we conducted site visits, interviewed key contractor personnel,
and obtained information and documentation on how they met sponsoring
agencies' research needs and adhere to requirements. For additional
information on our scope and methodology, see appendix I.
We conducted this performance audit from October 2007 to October 2008,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Results in Brief:
The federal agencies we reviewed use cost-reimbursement contracts with
the organizations that operate their FFRDCs, and three of the four
agencies generally use full and open competition to award these
contracts. Only DOD has consistently awarded its FFRDC contracts on a
sole-source basis, a practice that federal law and regulations permit
if properly justified. The FFRDCs receive funding on a project-by-
project basis from customers requiring the FFRDCs' research and
development capabilities. In order to carry out these projects, FFRDCs
frequently are provided with access to sensitive or proprietary data.
For this reason, and because of the special relationship between
sponsoring agencies and their FFRDCs, federal regulations require that
FFRDC entities be free from organizational conflicts of interest. While
the sponsoring agreements we reviewed address FFRDCs' organizational
conflicts of interest, DOD and DOE also have policies that prescribe
specific areas that FFRDC contractors must address to ensure their
employees are free from personal conflicts of interest. In a May 2008
report, we recognized the importance of implementing such safeguards
for certain contractor employees. Currently, although DHS's FFRDC
contractors have their own internal policies that address employees'
potential conflicts of interest, DHS and HHS policies do not
specifically prescribe areas that FFRDC contractors must include to
address these conflicts.
The four sponsoring agencies use various approaches in their oversight
of FFRDC contractors. First, sponsors review and approve the work
assigned to their FFRDCs to ensure it is within their purpose, mission,
capacity, and special competency. In this process, DOD is the only
agency that operates under congressionally imposed annual workload
limits for its FFRDCs. In addition, agencies regularly assess the
performance of their FFRDCs and contractors, including in some cases,
performing audits of contractor costs, finances, and internal controls.
Finally, in accordance with federal regulations, agencies conduct
comprehensive reviews prior to renewing sponsoring agreements or
contracts to assess the continued research need and the management and
competencies of the FFRDCs. In conducting oversight, some agencies have
adopted elements of the oversight practices used by other sponsoring
agencies. For example, DHS mirrored most of DOD's FFRDC Management
Plan--an internal DOD guidance document--and DHS officials told us they
learned from DOE's experience in selecting and overseeing contractors
for laboratory FFRDCs. In addition, HHS plans to implement certain DOE
practices, including rewarding innovation and excellence in performance
through incentive fees and award terms. While agency officials have
noted potential benefits from sharing best practices, there is
currently no formal cross-agency forum or other established mechanism
for doing so.
To improve the effectiveness of FFRDC management, we are recommending
that (1) DHS and HHS review and revise personal conflict-of-interest
policies to ensure they specifically address FFRDC employees in a
position to make or influence research findings or agency decision
making and (2) the four agencies we reviewed establish an ongoing forum
to share best practices for FFRDC oversight. In commenting on a draft
of this report, DHS and HHS concurred with our recommendation that they
review and revise their conflict of interest policies. In addition,
DOD, DOE, and DHS all concurred with our recommendation to establish a
forum to share best practices, while HHS is considering participation
in such a forum.
Background:
During World War II, the U.S. government partnered with academic
scientists in ad-hoc laboratories and research groups to meet unique
research and development (R&D) needs of the war effort. These efforts
resulted in technologies such as the proximity fuse, advanced radar and
sonar, and the atomic bomb. Those relationships were later re-
structured into federal research centers to retain academic scientists
in U.S. efforts to continue advancements in technology, and by the mid-
1960's the term "federally funded research and development centers" was
applied to these entities. Since that time, the U.S. government has
continued to rely on FFRDCs to develop technologies in areas such as
combating terrorism and cancer, addressing energy challenges, and
tackling evolving challenges in air travel.[Footnote 4] For example,
one of DOE's laboratories was used to invent and develop the cyclotron,
which is a particle accelerator that produces high energy beams,
critical to the field of nuclear physics for the past several decades.
Today, FFRDCs support their sponsoring federal agencies in diverse
fields of study. For example, DOE sponsors the most FFRDCs--16 in
total--all of which are research laboratories that conduct work in such
areas as nuclear weapons, renewable energy sources, and environmental
management. DHS recently established two FFRDCs: one to develop
countermeasures for biological warfare agents and the other to provide
decision makers with advice and assistance in such areas as analysis of
the vulnerabilities of the nation's critical infrastructures, standards
for interoperability for field operators and first responders, and
evaluating developing technologies for homeland security purposes.
FFRDCs are privately owned but government-funded entities that have
long-term relationships with one or more federal agencies to perform
research and development and related tasks. Even though they may be
funded entirely, or nearly so, from the federal treasury, FFRDCs are
regarded as contractors not federal agencies. In some cases, Congress
has specifically authorized agencies to establish FFRDCs. For example,
the 1991 appropriation for the Internal Revenue Service authorized the
IRS to spend up to $15 million to establish an FFRDC as part of its tax
systems modernization program.[Footnote 5]
According to the Federal Acquisition Regulation (FAR), FFRDCs are
intended to meet special long-term research or development needs that
cannot be met as effectively by existing in-house or contractor
resources. In sponsoring an FFRDC, agencies draw on academic and
private sector resources to accomplish tasks that are integral to the
mission and operation of the sponsoring agency. In order to discharge
responsibilities to their sponsoring agencies, the FAR notes that
FFRDCs have special access, beyond that which is common for normal
contractual relationships, to government and supplier data--including
sensitive and proprietary data--and other government resources.
Furthermore, the FAR requires FFRDCs to operate in the public interest
with objectivity and independence, to be free of organizational
conflicts of interest, and to fully disclose their affairs to the
sponsoring agencies.[Footnote 6] FFRDCs may be operated by a university
or consortium of universities; other nonprofit organizations; or a
private industry contractor as an autonomous organization or a separate
unit of a parent organization.
Agencies develop sponsoring agreements with FFRDCs to establish their
research and development missions and prescribe how they will interact
with the agency; the agencies then contract with organizations to
operate the FFRDCs to accomplish those missions. At some agencies the
sponsoring agreement is a separate document that is incorporated into
the contract, and at other agencies the contract itself constitutes the
sponsoring agreement. The sponsoring agreement and contract together
identify the scope, purpose, and mission of the FFRDC and the
responsibilities of the contractor in ensuring they are accomplished by
the FFRDC.
Although the contract or sponsoring agreement may take various forms,
the FAR requires FFRDC sponsoring agreements to contain certain key
terms and conditions.[Footnote 7] For example, the agreement term may
not exceed 5 years, but can be periodically renewed in increments not
to exceed 5 years. Sponsoring agreements must also contain prohibitions
against the FFRDCs competing with non-FFRDCs in response to a federal
agency request for proposals for other than the operation of an FFRDC.
The agreement also must delineate whether and under what circumstances
the FFRDC may accept work from other agencies. In addition, these
agreements may identify cost elements requiring advance agreement if
cost-type contracts are used and include considerations affecting
negotiation of fees where fees are determined appropriate by sponsors.
The National Science Foundation (NSF), which keeps general statistics
on FFRDCs, identifies the following types of FFRDCs:
* Research and development (R&D) laboratories: fill voids where in-
house and private sector R&D centers are unable to meet core agency
needs. These FFRDCs are used to maintain long-term competency in
sophisticated technology areas and develop and transfer important new
technology to the private sector.
* Study and analysis centers: used to provide independent analyses and
advice in core areas important to their sponsors, including policy
development, support for decision making, and identifying alternative
approaches and new ideas on significant issues.
* Systems engineering and integration centers: provide support for
complex systems by assisting with the creation and choice of system
concepts and architectures, the specification of technical system and
subsystem requirements and interfaces, the development and acquisition
of system hardware and software, the testing and verification of
performance, the integration of new capabilities, and continuous
improvement of system operations and logistics.
The NSF maintains a master list[Footnote 8] of the current FFRDCs and
collects funding data from their agency sponsors on an annual basis.
According to NSF data, R&D funding for FFRDCs has risen steadily across
the federal government, increasing 40 percent from fiscal year 1996 to
2005, from $6.9 billion to $9.7 billion. (See fig. 1 below.) This does
not represent the full amount of funding provided to FFRDCs by federal
agencies, however, since it does not include non-R&D funding.
Nevertheless, it is the only centrally reported information on federal
funding for FFRDCs.
Figure 1: Federal R&D Funding for FFRDCs:
[See PDF for image]
This figure is a vertical bar graph depicting the following data:
Federal R&D Funding for FFRDCs (in fiscal year 2008 dollars in
billions):
Fiscal year: 1996; $6.92 billion;
Fiscal year: 1997: $7.2 billion;
Fiscal year: 1998; $7.16 billion;
Fiscal year: 1999; $7.63 billion;
Fiscal year: 2000; $7.78 billion;
Fiscal year: 2001; $8.42 billion;
Fiscal year: 2002; $8.64 billion;
Fiscal year: 2003; $8.72 billion;
Fiscal year: 2004; $9.36 billion;
Fiscal year: 2005; $9.67 billion.
Source: GAO analysis of National Science Foundation data.
[End of figure]
For a list of the 38 FFRDCs currently sponsored by the U.S. government,
see appendix II.
Most Agencies Compete Cost-Reimbursement Contracts for Operating Their
FFRDCs, but Some Do Not Have Specific Personal Conflict-of-Interest
Requirements:
The four agencies we reviewed use cost-reimbursement contracts with the
organizations that operate their FFRDCs, and three of these agencies
generally use full and open competition in awarding these contracts.
While the agencies require that their FFRDCs be free from
organizational conflicts of interest in accordance with federal
regulations, only DOD and DOE have agencywide requirements that
prescribe specific areas that FFRDC contractors must address to ensure
their employees are free from personal conflicts of interest. DHS and
HHS policies do not specifically prescribe areas that contractors must
include to address these conflicts.
Three Agencies Generally Compete FFRDC Contracts, While DOD Does Not:
Federal law and regulations require federal contracts to be competed
unless they fall under specific exceptions to full and open
competition. One such exception is awarding contracts to establish or
maintain an essential engineering, research, or development capability
to be provided by an FFRDC.[Footnote 9] While some agencies we reviewed
awarded FFRDC contracts through other than full and open competition in
the past, including sole-source contracts, three have generally used
full and open competition in recent years.
Starting in the mid-1990's, DOE took steps to improve FFRDC laboratory
contractors' performance with a series of contracting reforms,
including increasing the use of competition in selecting contractors
for its labs. Subsequent legislation[Footnote 10] required DOE to
compete the award and extension of contracts used at its labs, singling
out the Ames Laboratory, Argonne National Laboratory, Lawrence Berkeley
National Laboratory, Lawrence Livermore National Laboratory, and Los
Alamos National Laboratory for mandatory competition because their
contracts in effect at the time had been awarded more than 50 years
ago. In addition, according to DOE officials, the Los Alamos contract
was competed due to performance concerns with the contractor, and
Argonne West's contract was competed to combine its research mission
with that of the Idaho National Engineering and Environmental
Laboratory to form the Idaho National Laboratory. DOE now routinely
uses competitive procedures on contracts for its FFRDC laboratories
unless a justification for the use of other than competitive procedures
is approved by the Secretary of Energy. Of DOE's 16 FFRDCs, DOE has
used full and open competition in the award of 13 contracts, is in the
process of competing one contract, and plans to compete the remaining
two contracts when their terms have been completed. For the 13
contracts that have been competed, in 2 cases the incumbent contractor
received the new contract award, in 8 cases a new consortium or limited
liability corporation was formed that included the incumbent
contractor, and in 3 cases a different contractor was awarded the
contract.
Other agencies also have used competitive procedures to award FFRDC
contracts:
* HHS has conducted full and open competition on the contract for its
cancer research lab since its establishment in 1972,[Footnote 11]
resulting in some change in contractors over the years. Recently,
however, HHS noncompetitively renewed the contract with the incumbent
contractor. The last time it was competed, in 2001, HHS received no
offers other than SAIC-Frederick, which has performed the contract
satisfactorily since then. HHS publicly posted in FedBizOpps its
intention to noncompetitively renew the operations and technical
support contract with SAIC-Frederick for a potential 10-year period.
Interested parties were allowed to submit capability statements, but
despite some initial interest none were submitted.
* DHS competed the initial contract awards for the start up of its two
FFRDCs, with the award of the first contract in 2004. DHS plans to
compete the award of the next studies and analyses FFRDC contract this
year.
In contrast, DOD continues to award its FFRDC contracts on a sole-
source basis under statutory exemptions to competition. In the early
1990s, a report by a Senate subcommittee[Footnote 12] and a Defense
Science Board task force both criticized DOD's management and use of
its FFRDCs, including a lack of competition in contract award. This
criticism mirrored an earlier GAO observation.[Footnote 13] GAO
subsequently noted in a 1996 report, however, that DOD had begun to
strengthen its process for justifying its use of FFRDCs under sole-
source contracts for specific purposes.[Footnote 14] DOD plans to
continue its sole-source contracting for the three FFRDC contracts that
are due for renewal in 2008 and the six contracts to be renewed in
2010.
Agencies Use Cost-Reimbursement Contracts with Varying Types of Fee
Structures, Primarily Funded through Program Offices:
All of the FFRDC contracts we reviewed were cost-reimbursement
contracts,[Footnote 15] most of which provided for payments of fixed,
award, or incentive fees to the contractor in addition to reimbursement
of incurred costs. Fixed fees often are used when, according to the
agencies we reviewed, the FFRDC will need working capital or other
miscellaneous expense requirements that cannot be covered through
reimbursing direct and indirect costs. Fixed fees generally account for
a small percentage of the overall contract costs; for fiscal year 2007
fixed fees paid to the FFRDCs we reviewed vary from a low of about 0.1
percent to a high of 3 percent. Award or incentive fees, on the other
hand, are intended to motivate contractors toward such areas as
excellent technical performance and cost effective management.[Footnote
16] These types of performance-based fees ranged from 1 to 7 percent at
the agencies we reviewed.
Among agencies we reviewed, contract provisions on fees varied
significantly:
* Most DOD contracts are cost-plus-fixed-fee,[Footnote 17] and DOD, as
a general rule, does not provide award or incentive fees to its FFRDCs.
DOD's FFRDC management plan--its internal guidance document for DOD
entities that sponsor FFRDCs--limits fees to amounts needed to fund
ordinary and necessary business expenses that may not be otherwise
recoverable under the reimbursement rules that apply to these types of
contracts. For example, the FFRDC operator may incur a one-time expense
to buy an expensive piece of needed equipment, but the government's
reimbursement rules require that this expense be recovered over several
future years in accordance with an amortization schedule. DOD's
management plan indicates that fees are necessary in such instances to
enable the contractor to service the debt incurred to buy the equipment
and maintain the cash flow needed for the contractor's business
operations. DOD officials told us they scrutinize these fees carefully
and do not always pay them. For example, the contract between DOD and
the Massachusetts Institute of Technology (MIT), which operates the
Lincoln Laboratory FFRDC, specifies that MIT will not receive such
fees.
* DOE and DHS use fixed fees, performance-based fees, and award terms,
which can extend the length of the contract as a reward for good
performance. For example, Sandia Corporation, a private company that
operates Sandia National Laboratories, receives both a fixed fee and an
incentive fee, which for fiscal year 2007 together amounted to about
$23.2 million, an additional 1 percent beyond its estimated contract
cost. In addition, Sandia Corporation has received award terms that
have lengthened its contract by 10 years.
* HHS provides only performance-based fees to the private company that
operates its one FFRDC.
Rather than receiving direct appropriations, most FFRDCs are funded on
a project-by-project basis by the customers, either within or outside
of the sponsoring agency, that wish to use their services by using
funds allocated to a program or office. FFRDC contracts generally
specify a total estimated cost for work to be performed and provide for
the issuance of modifications or orders for the performance of specific
projects and tasks during the period of the contract.
Congressional appropriations conferees sometimes directed specific
funding for some DHS and DOD FFRDCs in conference reports accompanying
sponsoring agencies' appropriations. For example, although according to
DOD officials, 97 percent of its FFRDC funding comes from program or
office allocations to fund specific projects, half of its FFRDCs
receive some directed amounts specified in connection with DOD's annual
appropriations process. Specifically, for fiscal year 2008, the
following DOD FFRDCs received conferee-directed funding in the DOD
appropriations conference report: MIT Lincoln Laboratory Research
Program, $30 million; the Software Engineering Institute, $26 million;
the Center for Naval Analyses, $49 million; the RAND Project Air Force,
$31 million;[Footnote 18] and the Arroyo Center, $20 million. In
addition, DOD officials noted that the congressional defense committees
sometimes direct DOD's FFRDCs to perform specific studies for these
committees through legislation or in committee reports. In fiscal year
2008, two DOD FFRDCs conducted 16 congressionally requested studies.
All Four Agencies Address Organizational Conflicts of Interest but Vary
in Addressing Personal Conflicts of Interest of FFRDC Employees:
As FFRDCs may have access to sensitive and proprietary information and
because of the special relationship between sponsoring agencies and
their FFRDCs, the FAR requires that FFRDC contractors be free from
organizational conflicts of interest. In addition, we recently reported
that, given the expanding roles that contractor employees play,
government officials from the Office of Government Ethics and DOD
believe that current requirements are inadequate to address potential
personal conflicts of interest of contractor employees in positions to
influence agency decisions.[Footnote 19] While each agency we reviewed
requires FFRDC operators to be free of organizational conflicts of
interest, DOD and DOE prescribe specific areas that FFRDC contractors
must address to ensure their employees are free from personal conflicts
of interest.
The FAR states that an organizational conflict of interest exists when
because of other interests or relationships, an entity is unable or
potentially unable to render impartial assistance or advice to the
government or the entity might have an unfair competitive advantage.
Because sponsors rely on FFRDCs to give impartial, technically sound,
objective assistance or advice, FFRDCs are required to conduct their
business in a manner befitting their special relationship with the
government, to operate in the public interest with objectivity and
independence, to be free from organizational conflicts of interest, and
to fully disclose their affairs to the sponsoring agency.[Footnote 20]
Each sponsoring agency we reviewed included conflict-of-interest
clauses in its sponsoring agreements with contractors operating their
FFRDCs. For example, a DHS FFRDC contract includes a clause that
specifically prohibits contractors that have developed specifications
or statements of work for solicitations from performing the work as
either a prime or first-tier subcontractor.
In addition to organizational conflicts of interest requirements, DOD
and DOE have specific requirements for their FFRDC contractors to guard
against personal conflicts of interest of their employees. For purposes
of this report, a personal conflict of interest may occur when an
individual employed by an organization is in a position to materially
influence an agency's recommendations and/or decisions and who--because
of his or her personal activities, relationships, or financial
interests--may either lack or appear to lack objectivity or appear to
be unduly influenced by personal financial interests. In January 2007,
the Under Secretary of Defense (Acquisition, Technology, and Logistics)
implemented an updated standard conflict-of-interest policy for all of
DOD's FFRDCs that requires FFRDC contractors to establish policies to
address major areas of personal conflicts of interest such as gifts,
outside activities, and financial interests. The updated policy and
implementing procedures now are included in all DOD FFRDC sponsoring
agreements and incorporated into the DOD FFRDC operating contracts.
This action was prompted by public and congressional scrutiny of a
perceived conflict of interest by the president of a DOD FFRDC who then
voluntarily resigned.[Footnote 21] As a result, DOD's Deputy General
Counsel (Acquisition and Logistics) reviewed the conflict of interest
policies and procedures in place at each of its FFRDCs and determined
that although sponsoring agreements, contracts, and internal policies
were adequate, they should be revised to better protect DOD from
employee-related conflicts. DOD's revised policy states that conflicts
of interest could diminish an FFRDC's objectivity and capacity to give
impartial, technically sound, objective assistance or advice, which is
essential to the research, particularly with regard to FFRDCs' access
to sensitive information. Therefore, the policy provides that FFRDC
conflict of interest policies address such issues as gifts and outside
activities and requires an annual submission of statements of financial
interests from all FFRDC personnel in a position to make or materially
influence research findings or recommendations that might affect
outside interests.
DOE's FFRDCs, which operate under management and operating (M&O)
[Footnote 22] contracts--a special FAR designation for government-
owned, contractor-operated facilities such as DOE's--have additional
provisions for addressing personal conflicts of interest. The
provisions address such areas as reporting any outside employment that
may constitute a personal conflict of interest.[Footnote 23] In
addition, the National Nuclear Security Administration (NNSA), which
sponsors three of DOE's FFRDCs, is planning to implement additional
requirements in its laboratory contracts later this year requiring
contractors to disclose all employee personal conflict of interests,
not just outside employment as is currently required. An NNSA
procurement official noted that other personal conflict of interests
may include any relationship of an employee, subcontractor employee, or
consultant that may impair objectivity in performing contract work.
NNSA officials stated that it plans to share the policy with the DOE
policy office for potential application across the department.
Currently, DHS and HHS policies do not specifically prescribe areas
that contractors must include to address employees personal conflicts.
However, DHS officials stated that they provided guidance to the two
contractors that operate DHS's FFRDCs to implement requirements to
address some of their employees' personal conflicts with DHS's
interests. In addition, both DHS and HHS FFRDC contractors provide that
their staff avoid or disclose financial interests or outside activities
that may conflict with the interests of the company. For example, the
contractor operating the FFRDC for HHS requires about 20 percent of its
employees to report activities that may constitute a conflict with the
company's interests, but allows the bulk of its staff to self-determine
when they need to report.
In May 2008, we reported that officials from the Office of Government
Ethics expressed concerns that current federal requirements and
policies are inadequate to prevent certain kinds of ethical violations
on the part of contractor employees, particularly with regard to
financial conflicts of interest, impaired impartiality, and misuse of
information and authority. The acting director identified particular
concerns with such conflicts of interest in the management and
operations of large research facilities and laboratories. Our report
noted that DOD ethics officials had generally the same concerns.
Therefore, we recommended that DOD implement personal conflict-of-
interest safeguards--similar to those for federal employees--for
certain contractor employees.[Footnote 24]
Agencies Vary in FFRDC Oversight Approaches and Do Not Regularly Share
Best Practices:
Sponsoring agencies take various approaches in exercising oversight of
their FFRDCs. The agencies determine appropriateness of work conducted
by their FFRDCs; perform on-going and annual assessments of
performance, costs and internal controls; and conduct comprehensive
reviews prior to renewing sponsoring agreements. Each agency develops
its own processes in these areas, and no formal interagency mechanisms
exist to facilitate the sharing of FFRDC oversight best practices.
Agencies Approve Research Plans and Work Conducted at Their FFRDCs:
To ensure work remains within each FFRDCs purpose, mission, scope of
effort, and special competency, sponsoring agencies develop and approve
annual research plans for the FFRDCs and review and approve FFRDC work
assigned on a project-by-project basis. While the majority of each
FFRDC's work is done for its sponsoring agency, FFRDCs may perform work
for other institutions, subject to sponsoring agency approval.[Footnote
25]
Officials at DOD, DOE, and DHS identified the processes they use to
develop annual research plans that describe each FFRDC's research
agenda. For example, DHS designates an executive agent to ensure that
its FFRDC is used for the agency's intended purposes.[Footnote 26] Each
year DHS develops a research plan that is reviewed and approved by the
executive agent, including any subsequent changes. DHS also uses an
Advisory Group[Footnote 27] to ensure that its FFRDCs produce work
consistent with the sponsoring agreement. DOD has a similar mechanism
for approving the annual research plan for its Lincoln Laboratory
FFRDC. This FFRDC has a Joint Advisory Committee that annually reviews
and approves the proposed research plan. Members of this committee
include representatives from the various DOD services--e.g., Air Force,
Army, and Navy--who are the users of the laboratory's R&D capabilities.
Of the four agencies included in our review, only HHS does not create a
separate annual research plan for its FFRDC. Instead, the work at HHS'
FFRDC is guided by the National Cancer Institute's overall mission,
which is described in its annual budgetary and periodic strategic
planning documents.
In determining the proposed research plan, DOD must abide by
congressionally set workload caps. These caps were imposed in the
1990's in response to concerns that DOD was inefficiently using its
FFRDCs, and therefore, each fiscal year Congress sets an annual
limitation on the Staffyears of Technical Effort (STE) that DOD FFRDCs
can use to conduct work for the agency. The STE limitations aim to
ensure that (1) work is appropriate and (2) limited resources are used
for DOD's highest priorities. Congress also sets an additional workload
cap for DOD's FFRDCs for certain intelligence programs.[Footnote 28]
Once DOD receives from Congress the annual total for STEs, then DOD's
Office of the Undersecretary of Acquisition, Technology and Logistics
allocates them across DOD's FFRDCs based on priorities set forth in the
annual research plan developed by each FFRDC. DOD officials observed
that while the overall DOD budget has increased about 40 percent since
the early 1990s, the STE caps have remained steady, and therefore, DOD
must turn aside or defer some FFRDC-appropriate work to subsequent
years. Although the majority of work that DOD's FFRDCs conduct is
subject to these limitations, the work that DOD FFRDCs conduct for non-
DOD entities is not subject to these caps.
Each sponsoring agency also reviews and approves tasks for individual
FFRDC projects to make sure that those tasks (1) are consistent with
the core statement of the FFRDC and (2) would not constitute a
"personal service"[Footnote 29] or inherently governmental function.
[Footnote 30] Listed below are examples of procedures used by agencies
included in our review to approve tasks for individual projects:
* DOD sponsors generally incorporate in their sponsoring agreement
guidelines for performance of work by the FFRDC. The work is screened
at various levels for appropriateness, beginning with FFRDC clients who
request the work, then program and contract managers, and then it is
reviewed and approved as well by the primary sponsor. In some cases,
projects are entered into a computer-based tool, which the Air Force
has developed to determine and develop its overall requirements for
that year. The tool is intended to assist the Air Force in prioritizing
requests for its FFRDC and in ensuring that work requested is in
accordance with guidelines and that potential alternative sources have
been considered.
* DOE FFRDCs must document all DOE-funded projects using work
authorizations[Footnote 31] to help ensure that the projects are
consistent with DOE's budget execution and program evaluation
requirements.[Footnote 32] In addition, DOE uses an independent
scientific peer-review approach--including faculty members and
executives from other laboratories--at several of its FFRDC
laboratories to ensure the work performed is appropriate for the FFRDC
and scientifically sound. In some cases, DOE's Office of Science holds
scientific merit competitions between national laboratories (including
FFRDCs), universities, and other research organizations for some R&D
funding for specific projects.
* HHS uses an automated "yellow task" system to determine if work is
appropriate for its FFRDC, and several officials must approve requests
for work, including the government contracting officer and overseeing
project officer for the FFRDC, with reference to a set of criteria.
This agency requires a concept review by advisory boards for the
various HHS institutes to ensure the concept is appropriate for the
FFRDC and meets its mission or special competency.
* DHS requires certain officials at its sponsoring office to conduct a
suitability review using established procedures for reviewing and
approving DHS-sponsored tasks. This review is required under DHS's
Management Directive for FFRDCs.
FFRDCs are required to have their sponsors review and approve any work
they conduct for others, and the four agencies included in our review
have policies and procedures to do so. FFRDCs may conduct work for
others when required capabilities are not otherwise available from the
private sector. This work for others can be done for federal agencies,
private sector companies,[Footnote 33] and local and state governments.
The sponsoring agency of an FFRDC offers the work for others, with full
costs charged to the requesting entity, to provide research and
technical assistance to solve problems. At laboratory FFRDCs, work for
others can include creating working models or prototypes. All work
placed with the FFRDC must be within the purpose, mission, general
scope of effort, or special competency of the FFRDC.[Footnote 34]
Work for others is considered a technology transfer[Footnote 35]
mechanism, which helps in sharing knowledge and skills between the
government and the private sector. Under work for others, according to
DOD officials and federal regulation, the title to intellectual
property generally belongs to the FFRDC conducting the work, and the
government may obtain a nonexclusive, royalty-free license to such
intellectual property or may choose to obtain the exclusive rights.
[Footnote 36] As required by FAR, sponsoring agreements or sponsoring
agencies we reviewed identified the extent to which their FFRDCs may
perform work for other than the sponsors (other federal agencies, state
or local government, nonprofit or profit organizations, etc.) and the
procedures that must be followed by the sponsoring agency and the
FFRDC.[Footnote 37] In addition, according to agency officials FFRDCs
have a responsibility to steer inquiries about potential research for
other entities to their primary sponsor's attention for approval.
Agency officials stated that they work with their FFRDCs when such
situations arise.
DOE's Office of Science established a "Work for Others Program" for all
of its FFRDC laboratories. Under this program, the contractor of the
FFRDC must draft, implement, and maintain formal policies, practices,
and procedures, which must be submitted to the contracting officer for
review and approval.[Footnote 38] In addition, DOE may conduct periodic
appraisals of the contractor's compliance with its Work for Others
Program policies, practices, and procedures.[Footnote 39] For DOE's
National Nuclear Security Administration (NNSA), officials reported
that the work for others process at the Sandia National Laboratories
requires DOE approval before the Sandia Corporation develops the
proposed statement of work, which is then sent to DOE's site office for
review and approval.
For DHS, each FFRDC includes the work for others policy in its
management plan. For example, one management plan states that the FFRDC
may perform work for others and that such work is subject to review by
the sponsoring agency for compliance with criteria mutually agreed upon
by the sponsor and the FFRDC contractor. The DHS FFRDC laboratory
director said he routinely approves any work-for-others requests but
gives first priority to the DHS-sponsored work. The sponsor for this
FFRDC also periodically assesses whether its work for others impairs
its ability to perform work for its sponsor.
HHS and DOD also have work-for-others programs for the FFRDCs they
sponsor. For example, at HHS's FFRDC the program is conducted under a
bilateral contract between the entity that is requesting the work and
the FFRDC to perform a defined scope of work for a defined cost. This
agency developed a standard Work for Others Agreement for its FFRDC,
the terms and conditions of which help ensure that the FFRDC complies
with applicable laws, regulations, policies, and directives specified
in its contract with the HHS.
Some agency sponsors report that work for others at their FFRDCs has
grown in the past few years. For example, DOE officials said work for
others at the Sandia National Laboratories related to nanotechnologies
and cognitive sciences has grown in the last 3 years. As shown in table
1, the amount of work for others by FFRDCs since fiscal year 2001 has
increased for many of the FFRDCs included in our review.
Table 1: Funding for FFRDC "Work for Others" (Fiscal Year 2001 to 2005)
(Dollars in thousands):
Sponsoring agency and name of FFRDC: DOE, Office of Science; Ernest
Orlando Lawrence Berkeley National Laboratory;
FY 2001: $69,879;
FY 2002: $67,053;
FY 2003: $59,911;
FY 2004: $76,360;
FY 2005[A]: $71,879.
Sponsoring agency and name of FFRDC: DOE, National Nuclear Security
Administration; Sandia National Laboratories;
FY 2001: $114,390;
FY 2002: $143,798;
FY 2003: $130,614;
FY 2004: $171,492;
FY 2005[A]: $270,438.
Sponsoring agency and name of FFRDC: HHS, National Cancer Institute;
National Cancer Institute at Frederick (NCI-F);
FY 2001: $30,810;
FY 2002: $52,122;
FY 2003: $119,490;
FY 2004: $144,184;
FY 2005[A]: $105,559.
Sponsoring agency and name of FFRDC: DOD, Office of the Secretary of
Defense; C3I [Command, Control, Communications, and Intelligence]
Center;
FY 2001: $47,300;
FY 2002: $69,800;
FY 2003: $98,800;
FY 2004: $134,000;
FY 2005[A]: $163,700.
Sponsoring agency and name of FFRDC: DOD, Office of the Secretary of
Defense; Institute for Defense Analyses (IDA) Studies and Analyses
Center;
FY 2001: $2,602;
FY 2002: $5,712;
FY 2003: $7,825;
FY 2004: $22,504[B];
FY 2005[A]: $6,547.
Sponsoring agency and name of FFRDC: DOD, Department of the Air Force;
MIT Lincoln Laboratory;
FY 2001: $53,368;
FY 2002: $51,604;
FY 2003: $43,885;
FY 2004: $65,161;
FY 2005[A]: $64,408.
Sponsoring agency and name of FFRDC: DHS, Office of Science and
Technology; Homeland Security Institute[C];
FY 2001: [Empty];
FY 2002: [Empty];
FY 2003: [Empty];
FY 2004: $0;
FY 2005[A]: $0.
Sponsoring agency and name of FFRDC: DHS, Office of Science and
Technology; National Biodefense Analysis and Countermeasures Center
(NBACC)[D];
FY 2001: [Empty];
FY 2002: [Empty];
FY 2003: [Empty];
FY 2004: [Empty];
FY 2005[A]: [Empty].
Source: GAO Analysis of data provide by the National Science Foundation
(NSF) and by listed agencies (where provided).
[A] Most recently available complete data.
[B] According to DOD, the fiscal year 2004 data for IDA includes $14.3
million from DHS for work regarding implementation of the Support Anti-
terrorism by Fostering Effective Technologies Act of 2002 (the Safety
Act).
[C] Homeland Security Institute (HSI), was funded as a new FFRDC in
fiscal year 2004.
[D] National Biodefense Analysis and Countermeasures Center (NBACC),
was funded as a new FFRDC in fiscal year 2007.
[End of table]
While funding for work for others has increased, some agencies in our
review reported limiting the amount of work for others their FFRDCs
conduct. For example, DOE's Office of Science annually approves overall
work-for-others funding levels at its laboratories based on a request
from the laboratory and recommendation from the responsible site
office. Any work-for-others program that is above 20 percent of the
laboratory's operating budget, or any request that represents a
significant change from previous year's work-for-others program will be
reviewed in depth before the approval is provided. Similarly, DOE
officials limit commitments to conduct work for others at the National
Renewable Energy Laboratory's to about 10 percent of the laboratory's
total workload.
Agencies Assess FFRDCs' Performance, Costs, and Internal Controls:
In addition to ensuring work is appropriate for their FFRDCs, the four
sponsoring agencies in our case study regularly review the contractors'
performance in operating the FFRDCs, including reviewing and approving
costs incurred in operations and internal control mechanisms. Agency
performance evaluations for FFRDC contractors vary, particularly
between those that incorporate performance elements into their
contracts and those that do not. Furthermore, contracting officers at
each agency regularly review costs to ensure that they are appropriate,
in some cases relying on audits of costs and internal controls to
highlight any potential issues.
Agencies Review Performance of FFRDC and Operating Contractor:
All four agencies conduct at least annual reviews of the performance of
their FFRDCs and contractors. At three agencies, the outcomes of these
reviews provide the basis for contractors to earn performance-based
incentives or awards. Specifically, DOE, HHS, and DHS provide for award
fees[Footnote 40] to motivate contractors toward excellence in high
performance, and contractors operating FFRDCs for DOE and DHS may earn
additional contract extensions by exceeding performance expectations.
DOE uses a performance-based contracting approach with its FFRDCs,
which includes several mechanisms to assess performance. First, DOE
requires contractors to conduct annual self-assessments of their
management and operational performance. Also, contracting officers
conduct annual assessments of the performance of the FFRDC contractor,
relying in part on user satisfaction surveys. All of this input
contributes to each lab's annual assessment rating. For example, Sandia
National Laboratories, operated by Sandia Corporation (a subsidiary of
Lockheed Martin) received an overall rating of "outstanding" for fiscal
year 2007 and was awarded 91 percent of its available award fee ($7.6
million of a possible total fee of $8.4 million). DOE noted that Sandia
National Laboratories' scientific and engineering support of U.S.
national security was an exceptional performance area. DOE publishes
such "report cards" for its laboratories on the internet. DOE includes
detailed performance requirements in each contract in a Performance
Evaluation and Measurement Plan that is organized by goals, objectives,
measures, and targets. The DOE Office of Science mandates that each of
its ten FFRDC laboratories establish the same eight goals[Footnote 41]
in each FFRDC's contractual plan. For example, the Ernest Orlando
Lawrence Berkeley National Laboratory, operated by the University of
California, received high ratings in providing efficient and effective
mission accomplishment and science and technology program management.
These ratings resulted in an award of 94 percent or $4.2 million of the
total available fee of $4.5 million.
HHS, which also uses performance-based contracting, has identified
certain designated government personnel to be responsible for
evaluation of the FFRDC contractor. This review process includes
different levels of reviews, from coordinators who review performance
evaluations to an FFRDC Performance Evaluation Board, which is
responsible for assessing the contractor's overall performance. The
board rates each area of evaluation based on an established Performance
Rating System to determine the amount of the contractor's award fee. In
fiscal year 2007, the National Cancer Institute at Frederick, operated
by Science Applications International Corporation-Frederick (a
subsidiary of Science Applications International Corporation), received
92 percent of its available award fee or $6.9 million of a possible
$7.4 million.
Similar to the other agencies, DHS regularly conducts performance
reviews throughout the life cycle of its FFRDC contract. This includes
program reviews as described in the sponsoring agreement, midyear
status reviews, technical progress reports, monthly and quarterly
reports, and annual stakeholder surveys to ensure the FFRDC is meeting
customer needs. DHS also drafts a multiyear improvement plan and
collects performance metrics as evidence of the FFRDC's performance.
For fiscal year 2007, Battelle National Biodefense Institute, operating
the National Biodefense Analysis and Countermeasures Center, received
82 percent of its performance-based award fee amounting to $1.4
million. According to DHS officials, Analytic Services, Inc., which
operates the Homeland Security Institute, received a fixed fee of about
2 percent or approximately $.68 million for fiscal year 2007.
DOD conducts annual performance reviews and other internal reviews,
such as conducting periodic program management reviews and annual
customer surveys to monitor the performance of its FFRDCs in meeting
their customers' expectations. As part of this review process, major
users are asked to provide their perspectives on such factors as the
use and continuing need for the FFRDC, and how these users distinguish
work to be performed by the FFRDC from work to be performed by others.
According to DOD, these performance evaluations provide essential input
to help it assess the effectiveness and efficiency of the FFRDC's
operations. Typically the performance reviews obtain ratings from FFRDC
users and sponsors on a variety of factors including the quality and
value of the work conducted by the FFRDCs, as well as its ability to
meet technical needs, provide timely and responsive service, and manage
costs.[Footnote 42]
Agencies Review Costs and Internal Controls:
Federal regulations, policies, and contracts establish various cost,
accounting, and auditing controls that agencies use to assess the
adequacy of FFRDC management in ensuring cost-effective operations and
ensure that costs of services being provided to the government are
reasonable.[Footnote 43] Sponsors of the FFRDCs we reviewed employ a
variety of financial and auditing oversight mechanisms to review
contractors' management controls, including incurred cost audits,
general financial and operational audits, annual organizational audits,
and audited financial statements. These mechanisms differ, depending on
the agencies involved and the type of organization operating the
FFRDCs.[Footnote 44]
Under cost-reimbursement contracts, the costs incurred are subject to
cost principles applicable to the type of entity operating the FFRDC.
[Footnote 45] Most FFRDC contracts we examined include a standard
clause on allowable costs that limits contract costs to amounts that
are reasonable and in compliance with applicable provisions of the FAR.
[Footnote 46] Under the FAR, contracting officers are responsible for
authorizing cost-reimbursement payments and may request audits at their
discretion before a payment is made. In addition, when an allowable
cost clause is included in a contract, the FAR requires that an
indirect cost rate proposal be submitted annually for audit.[Footnote
47] At DOD, the Defense Contract Audit Agency (DCAA) generally performs
both annual incurred cost audits and close-out audits for completed
contracts and task orders at the end of an FFRDC's 5-year contract
term. The audit results are included in the comprehensive review of
DOD's continued need for its FFRDCs. DCAA also performs these types of
audits for DHS's FFRDCs. At DOE, the Office of the Inspector General is
responsible for incurred cost audits for major facilities contractors.
At HHS, officials stated that while the contracting officer for its
FFRDC regularly reviews the incurred costs, no audits of these costs
have been performed.
Agencies and FFRDC contractors also conduct financial and operational
audits[Footnote 48] in addition to incurred cost audits. DOE relies
primarily upon FFRDC contractors' annual internal audits[Footnote 49]
rather than on third-party monitoring through external audits. These
internal audits are designed to implement DOE's Cooperative Audit
Strategy--a program that partners DOE's Inspector General with
contractors' internal audit groups to maximize the overall audit
coverage of M&O contractors' operations and to fulfill the Inspector
General's responsibility for auditing the costs incurred by major
facilities contractors.[Footnote 50] This cooperative audit strategy
permits the Inspector General to make use of the work of contractors'
internal audit organizations to perform operational and financial
audits, including incurred cost audits, and to assess the adequacy of
contractors' management control systems. DHS and DOD generally rely on
audits performed by those agencies, a designated audit agency, or an
accounting firm, though their FFRDC contractors usually perform some
degree of internal audit or review function as part of their overall
management activity.
In addition, all nonprofits and educational institutions that annually
expend more than $500,000 in federal awards--including those that
operate FFRDCs--are subject to the Single Audit Act[Footnote 51] which
requires annual audits of: (1) financial statements, (2) internal
controls, and (3) compliance with laws and regulations. We have
previously reported these audits constitute a key accountability
mechanism for federal awards and generally are performed by independent
auditors.[Footnote 52] At DOD, for example, DCAA participates in single
audits normally on a "coordinated basis"--at the election of the
organization being audited--with the audited organization's independent
public accountant. The financial statements, schedules, corrective
action plan, and audit reports make up the single audit package, which
the audited organization is responsible for submitting to a federal
clearing house designated by OMB to receive, distribute, and retain.
DOD's Office of Inspector General, for example, as a responsible
federal agency, receives all single audit submissions for nonprofits
and educational institutions that operate DOD's FFRDCs. These audit
results are employed by DOD as partial evidence of its FFRDCs' cost-
effectiveness and incorporated in the 5-year comprehensive reviews.
These annual single audits for nonprofit and educational FFRDC
contractors are a useful adjunct to other cost, accounting, and
auditing controls discussed previously, designed to help determine
contractor effectiveness, efficiency, and accountability in the
management and operation of their FFRDCs.
Private contractors that publicly trade their securities on the
exchanges--including those that operate FFRDCs[Footnote 53]--are
registered with the Securities and Exchange Commission (SEC) and are
required to file audited financial statements with the SEC. These
audited statements must be prepared in conformity with generally
accepted accounting principles (GAAP) and securities laws and
regulations, including Sarbanes-Oxley, that address governance,
auditing, and financial reporting.[Footnote 54] These financial
statements are designed to disclose information for the benefit of the
investing public, not to meet government agencies' information needs.
Accordingly, SAIC and Lockheed--private contractors that manage
National Cancer Institute at Frederick and Sandia National Laboratories
respectively--prepare audited financial statements for their corporate
entities, but do not separately report information on their individual
FFRDCs' operations.
Finally, even though financial statements are not required by
university and nonprofit sponsored FFRDCs, some of the FFRDCs in
agencies we reviewed have audited financial statements prepared solely
for their own operations. DOD's Aerospace and DHS's HSI and NBACC are
examples. Most others' financial operations, however, are included in
the audited financial statements of their parent organizations or
operating contractor. Some, like MITRE, which manages not only DOD's
C3I FFRDC but also two others (one for the Federal Aviation
Administration and one for the Internal Revenue Service), provides
supplemental schedules, with balance sheets, revenues and expenses, and
sources and uses of funds for all three FFRDCs.[Footnote 55] Others,
like the Institute for Defense Analyses, which also operates two other
FFRDCs in addition to the Studies and Analyses Center for DOD, provide
only a consolidated corporate statement with no information on specific
FFRDCs.
Agencies Periodically Rejustify Their Sponsorship of FFRDCs:
The FAR requires that a comprehensive review be undertaken prior to
extending a sponsoring agreement for an FFRDC. We found that the four
agencies in our case study were conducting and documenting these
reviews, but noted that implementation of this requirement by each
agency is based on its own distinct management policies, procedures,
and practices.
During the reviews prior to agreement renewal, sponsoring agencies
should include the following five areas identified by the FAR:
* examination of the continued need for FFRDC to address its sponsor's
technical needs and mission requirements;
* consideration of alternative sources, if any, to meet those needs;
* assessment of the FFRDC's efficiency and effectiveness in meeting the
sponsor's needs, including objectivity, independence, quick response
capability, currency in its field(s) of expertise, and familiarity with
the sponsor;
* assessment of the adequacy of FFRDC management in ensuring a cost-
effective operation; and:
* determination that the original reason for establishing the FFRDC
still exists and that the sponsoring agreement is in compliance with
FAR requirements for such agreements.[Footnote 56]
DOD sponsoring offices begin conducting detailed analyses for each of
the five FAR review criteria approximately 1 to 2 years in advance of
the renewal date. As DOD has received criticism in the past for its
lack of competition in awarding FFRDC contracts, it now conducts
detailed and lengthy comprehensive reviews prior to renewing FFRDC
sponsoring agreements and contracts with incumbent providers. DOD's
FFRDC Management Plan lays out procedures to help provide consistency
and thoroughness in meeting FAR provisions for the comprehensive review
process. DOD procedures require, and the comprehensive reviews we
examined generally provided, detailed examinations of the mission and
technical requirements for each FFRDC user, and explanations of why
capabilities cannot be provided as effectively by other alternative
sources. For example, DOD convened a high level, independent Technical
Review Panel to review whether Lincoln Laboratory's research programs
were within its mission as well as whether the research was effective,
of high technical quality, and of critical importance to DOD. The
panel--composed of a former Assistant Secretary of the Air Force, a
former president of another FFRDC, former senior military officers, and
a high level industry representative--found that no other organizations
had the capacity to conduct a comparable research program. In addition,
DOD sponsors use information from annual surveys of FFRDC users that
address such performance areas as cost effectiveness and technical
expertise. Determinations to continue or terminate the FFRDC agreement
are made by the heads of sponsoring DOD components (e.g., the Secretary
of the Army or Air Force) with review and concurrence by the Office of
the Under Secretary of Defense for Acquisition, Technology, and
Logistics.
DOE has a documented comprehensive review process that explicitly
requires DOE sponsors to assess the use and continued need for the
FFRDC before the term of the agreement has expired. DOE's process
requires that the review be conducted at the same time as the review
regarding the decision to extend (by option) or compete its FFRDC
operating contract. According to DOE's regulation,[Footnote 57] the
option period for these contracts may not exceed 5 years and the total
term of the contract, including any options exercised, may not exceed
10 years. DOE relies on information developed as part of its annual
performance review assessments as well as information developed through
the contractor's internal audit process to make this determination. The
comprehensive review conducted prior to the most recent award of the
contract to operate Sandia National Laboratories concluded that the
FFRDC's overall performance for the preceding 6 years had been
outstanding. The Secretary of Energy determined that the criteria for
establishing the FFRDC continued to be satisfied and that the
sponsoring agreement was in compliance with FAR provisions.
At DHS, we found that its guidance and process for the comprehensive
review mirror many aspects of the DOD process. DHS has undertaken only
one such review to date, which was completed in May 2008. As of the
time we completed our work, DHS officials told us that the
documentation supporting the agency's review had not yet been approved
for release.
HHS--in contrast to the structured review processes of the other
agencies--relies on the judgment of the sponsoring office's senior
management team, which reviews the need for the continued sponsorship
of the FFRDC and determines whether it meets the FAR requirements.
Agency officials stated that this review relies on a discussion of the
FFRDC's ability to meet the agency's needs within the FAR criteria, but
noted there are no formal procedures laid out for this process. The
final determination is approved by the director of the National Cancer
Institute and then the director of the National Institutes of Health.
No Formal Interagency Mechanisms Exist for Sharing of Best Practices
for Overseeing FFRDCs:
Some agencies have used the experiences of other agencies as a model
for their own oversight of their FFRDCs. There is no formal mechanism,
however, for sharing of best practices and lessons learned among
sponsoring agencies.
DHS officials have adopted several of DOD's and DOE's policies and
procedures for managing FFRDCs to help their newly created FFRDCs gain
efficiencies. DHS mirrored most of DOD's FFRDC Management Plan, and
officials have stated that the STE limitations for DOD could be a
potentially useful tool for focusing FFRDCs on the most strategic and
critical work for the agency. Also, DHS officials stated they have made
use of DOE's experience in contracting for and overseeing the operation
of its laboratories, such as including a DOE official in the DHS
process to select a contractor to operate its laboratory FFRDC. In
addition, HHS officials said they are incorporating the DOE Blue Ribbon
Report recommendation to set aside a portion of the incentive fee paid
on their FFRDC contract to reward scientific innovations or research.
The idea for the new contract is to base 80 percent of the available
award fee in a performance period on operations and use the final 20
percent to reward innovation. HHS also may adopt the technique used by
DOE of providing for contract extensions on the basis of demonstrated
exceptional performance.
To take advantage of others' experiences, some FFRDCs sponsored by
particular agencies have formed informal groups to share information.
For example, DOD's FFRDCs have formed informal groups at the functional
level--Chief Financial Officers, Chief Technology Officers, and General
Counsels--which meet periodically to share information on issues of
common concern. In addition, the security personnel from the DOD FFRDC
contractors meet once a year to discuss security and export control
related issues. The contractor officials at Sandia National
Laboratories said they share best practices for operating DOE's
laboratory FFRDCs at forums such as the National Laboratory Improvement
Council. This Council was also mentioned in a DOE review of management
best practices for the national laboratories[Footnote 58] as one of the
few groups that deliberate a broader and more integrated agenda among
laboratories.
Despite these instances of information sharing within agencies and the
acknowledgment by some officials of potential benefits in such
knowledge sharing, no formal mechanisms exist for sharing information
across agencies that sponsor and oversee FFRDCs. We reported in 2005
that federal agencies often carry out related programs in a fragmented,
uncoordinated way, resulting in a patchwork of programs that can waste
scarce funds, confuse and frustrate program customers, and limit the
overall effectiveness of the federal effort.[Footnote 59] The report
suggested frequent communication across agency boundaries can prevent
misunderstandings, promote compatibility of standards, policies, and
procedures, and enhance collaboration. For example, the Federal
Laboratory Consortium for Technical Transfer was created to share
information across national laboratories. This includes the FFRDC
laboratories, but not the other types of FFRDCs. Some agency officials
stated that there would be benefits to sharing such best practices.
Conclusions:
All federal agencies that sponsor FFRDCs are subject to the same
federal regulations, and each agency included in our review has
developed its own processes and procedures to ensure compliance and
conduct oversight of its FFRDCs. For the most part the differences in
approaches are not of great consequence. In at least one key area,
however, the different approaches have the potential to produce
significantly different results. Specifically, while all FFRDCs are
required to address organizational conflicts of interest, only DOD and
DOE have requirements that their FFRDC contractors address specific
areas of personal conflicts of interest of their employees. In light of
the special relationship that FFRDCs have with their sponsoring
agencies, which often involves access to sensitive or confidential
information, it is critical not only that the FFRDC as an entity but
also that employees of the entity in positions to make or influence
research findings or agency decision making be free from conflicts.
Lacking such safeguards, the FFRDC's objectivity and ability to provide
impartial, technically sound, objective assistance or advice may be
diminished. The two agencies with the most experience sponsoring FFRDCs
have recognized this gap and have taken steps to address personal
conflicts of interest. These steps are consistent with our recent
recommendation to DOD that highlighted the need for personal conflicts-
of-interest safeguards for certain contractor employees. The other
agencies included in our review of FFRDCs could benefit from additional
protections in the area of personal conflicts of interest. Currently,
although DHS and HHS have policies that generally require their FFRDC
contractors to implement such safeguards, they lack the specificity
needed to ensure their FFRDC contractors will consistently address
employees' personal conflicts of interest.
Conflict-of-interest requirements is only one of several areas where
agencies that sponsor FFRDCs can learn from each other. Other areas
include the use of effective and efficient oversight mechanisms such as
incentive and award fees, obtaining competition, and conducting
comprehensive reviews. In the absence of established knowledge-sharing
mechanisms, however, agencies may be missing opportunities to enhance
their management and oversight practices. Sharing knowledge among
agencies that sponsor FFRDCs, as has been done informally in some
instances, could help to ensure that agencies are aware of all the
various tools available to enhance their ability to effectively oversee
their FFRDCs.
Recommendations for Executive Action:
To ensure that FFRDC employees operate in the government's best
interest, we recommend:
* that the Secretary of Homeland Security revise agency policies to
address specific areas for potential personal conflicts of interest for
FFRDC personnel in a position to make or materially influence research
findings or agency decision making; and:
* that the Secretary of Health and Human Services review agency policy
regarding personal conflicts of interest for its sponsored FFRDC and
revise as appropriate to ensure that this policy addresses all
personnel in a position to make or materially influence research
findings or agency decision making.
To improve the sharing of oversight best practices among agencies that
sponsor FFRDCs, we recommend that the Secretaries of Energy, Defense,
Homeland Security, and Health and Human Services, which together
sponsor the vast majority of the government's FFRDCs, take the lead in
establishing an ongoing forum for government personnel from these and
other agencies that sponsor FFRDCs to discuss their agencies' FFRDC
policies and practices. Areas for knowledge sharing could include, for
example, implementing personal conflicts of interest safeguards and
processes for completing the justification reviews prior to renewing
sponsoring agreements, among others.
Agency Comments and Our Evaluation:
The Departments of Health and Human Services and Homeland Security
concurred with our recommendation that they revise their conflict of
interest policies. In addition, the departments of Defense, Energy, and
Homeland Security all concurred with our recommendation to establish a
forum to share best practices, while HHS is considering participation
in such a forum. We received letters from Defense, Energy, and Health
and Human Services, which are reprinted in appendixes III, IV, and V,
respectively. In addition, the departments of Health and Human Services
and Homeland Security provided technical comments, which we
incorporated where appropriate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days from the date of this report. We then will provide copies of this
report to the Secretaries of Defense, Energy, Health and Human Services
and Homeland Security and other interested parties. In addition, this
report will be made available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact us at (202) 512-4841 or woodsw@gao.gov or (202) 512-9846 or
mittala@gao.gov. Key contributors to this report are acknowledged in
appendix VI.
Signed by:
William Woods:
Director Acquisition and Sourcing Management:
Anu Mittal:
Director Natural Resources and Environment:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
To conduct this review, we chose a nongeneralizable sample of four of
the nine federal agencies that sponsor FFRDCs: the departments of
Energy (DOE) and Defense (DOD) have the longest histories in sponsoring
federally funded research and development centers (FFRDCs) and sponsor
the most--16 and 10, respectively; the Department of Homeland Security
(DHS) has the 2 most recently established FFRDCs; the Department of
Health and Human Services (HHS) has 1 FFRDC laboratory. From the
collective 29 FFRDCs that those four agencies sponsor, we selected a
nongeneralizable sample of 8 FFRDCs that represented variation among
the type of operating contractor, including some operated by
universities, some by nonprofits, and some by private industry. Within
DOD and DHS, we chose FFRDCs that represent the variation among types
these two agencies sponsor, while DOE and HHS only sponsor laboratory
type FFRDCs. See appendix II for the FFRDCs included in our case study.
To identify sponsors' contracting and oversight methods at the four
agencies in our case study, we interviewed federal department officials
at each office that sponsors FFRDCs as well as offices that have
contractor management roles and audit roles: (1) DOE's Office of
Science, National Nuclear Security Administration, Office of Energy
Efficiency and Renewable Energy, Office of Environmental Management,
Office of Nuclear Energy, and Office of Inspector General; (2) DOD's
departments of the Navy, Air Force, and Army; Office of the Secretary
of Defense; Office of Acquisition, Technology, and Logistics; Defense
Contract Audit Agency; and the Defense Contract Management Agency;
[Footnote 60] (3) HHS's National Institutes of Health, National Cancer
Institute, and National Institute of Allergy and Infectious Diseases;
and (4) DHS's Directorate for Science and Technology. In addition, we
obtained and analyzed federal and agency policies and guidance,
contracts for the FFRDCs in our case studies and other supporting
documentation such as performance and award fee plans, sponsoring
agreements (when separate from contracts), and a variety of audits and
reviews. While we did not assess the effectiveness of or deficiencies
in specific agencies' controls, we reviewed agency documentation on
incurred cost audits, general auditing controls, single audits, and
audited financial statements. We also obtained and analyzed funding
data from sponsoring agencies as well as from the National Science
Foundation (NSF), which periodically collects and reports statistical
information regarding FFRDCs, such as their sponsors, category types,
contractors, and funding. While we did not independently verify the
data for reliability, we reviewed the NSF's methodology and noted that
it reports a 100 percent response rate, no item nonresponse, and no
associated sampling errors.
For FFRDCs in our case study, we conducted on-site visits, interviewed
key contractor administrative personnel, and obtained information and
documentation on how they meet sponsoring agencies' research needs and
adhere to policy guidance. We observed examples of the types of
research the FFRDCs conduct for their sponsors and obtained and
analyzed documentation such as contractor ethics guidance and policies,
performance plans, and annual reports.
To obtain the perspective of the government contracting community, we
met with high-level representatives of the Professional Services
Council, a membership association for companies that provide services
to the U.S. federal government.
[End of section]
Appendix II: List of 38 Federally Funded Research and Development
Centers:
[Italics indicates the eight FFRDC case studies included in this
review.]
Agency/dept/office of primary sponsor: Defense: Department of the Air
Force;
Name of FFRDC/location: Aerospace Center; El Segundo, Calif.;
Contractor/type of contractor: Aerospace Corporation; Nonprofit;
Type of FFRDC: Systems engineering and integration center.
Agency/dept/office of primary sponsor: Defense: Department of the Army;
Name of FFRDC/location: Arroyo Center; Santa Monica, Calif.;
Contractor/type of contractor: RAND Corp.; Nonprofit;
Type of FFRDC: Studies and analyses center.
Agency/dept/office of primary sponsor: Defense: Office of the Secretary
of Defense [Case study included in this review];
Name of FFRDC/location: C3I [Command, Control, Communications, and
Intelligence] Center; Bedford, Mass., and McLean, Va.;
Contractor/type of contractor: MITRE Corp.; Nonprofit;
Type of FFRDC: Systems engineering and integration center.
Agency/dept/office of primary sponsor: Defense: Department of the Navy;
Name of FFRDC/location: Center for Naval Analyses; Alexandria, Va.;
Contractor/type of contractor: CNA Corporation; Nonprofit;
Type of FFRDC: Studies and analyses center.
Agency/dept/office of primary sponsor: Defense: Office of the Secretary
of Defense [Case study included in this review];
Name of FFRDC/location: Institute for Defense Analyses Studies and
Analyses Center; Alexandria, Va.;
Contractor/type of contractor: Institute for Defense Analyses;
Nonprofit;
Type of FFRDC: Studies and analyses center.
Agency/dept/office of primary sponsor: Defense: National Security
Agency;
Name of FFRDC/location: Institute for Defense Analyses Communications
and Computing Center; Alexandria, Va.;
Contractor/type of contractor: Institute for Defense Analyses;
Nonprofit;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Defense: Department of the Air
Force [Case study included in this review];
Name of FFRDC/location: Lincoln Laboratory; Lexington, Mass.;
Contractor/type of contractor: Massachusetts Institute of Technology;
University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Defense: Office of the Secretary
of Defense;
Name of FFRDC/location: National Defense Research Institute; Santa
Monica, Calif.;
Contractor/type of contractor: RAND Corp.; Nonprofit;
Type of FFRDC: Studies and analyses center.
Agency/dept/office of primary sponsor: Defense: Department of the Air
Force;
Name of FFRDC/location: Project Air Force; Santa Monica, Calif.;
Contractor/type of contractor: RAND Corp.; Nonprofit;
Type of FFRDC: Studies and analyses center.
Agency/dept/office of primary sponsor: Defense: Department of the Army;
Name of FFRDC/location: Software Engineering Institute; Pittsburgh,
Penn.;
Contractor/type of contractor: Carnegie Mellon University; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Ames Laboratory; Ames, Iowa;
Contractor/type of contractor: Iowa State University of Science and
Technology; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Argonne National Laboratory; Argonne, Ill.;
Contractor/type of contractor: University of Chicago; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Brookhaven National Laboratory; Upton, N.Y.;
Contractor/type of contractor: Brookhaven Science Associates, Inc.;
Nonprofit;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science [Case
study included in this review];
Name of FFRDC/location: Ernest Orlando Lawrence Berkeley National
Laboratory; Berkeley, Calif.;
Contractor/type of contractor: University of California; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Fermi National Accelerator Laboratory; Batavia,
Ill.;
Contractor/type of contractor: Universities Research Association, Inc.;
University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Nuclear
Energy;
Name of FFRDC/location: Idaho National Laboratory; Idaho Falls, Idaho;
Contractor/type of contractor: Battelle Energy Alliance, LLC;
Nonprofit;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; National Nuclear
Security Administration;
Name of FFRDC/location: Lawrence Livermore National Laboratory;
Livermore, Calif.;
Contractor/type of contractor: University of California; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; National Nuclear
Security Administration;
Name of FFRDC/location: Los Alamos National Laboratory; Los Alamos, NM;
Contractor/type of contractor: Los Alamos National Security, LLC;
Industry;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Energy
Efficiency and Renewable Energy;
Name of FFRDC/location: National Renewable Energy Laboratory; Golden,
Colo.;
Contractor/type of contractor: Midwest Research Institute; Battelle
Memorial Institute; Bechtel National, Inc.; Nonprofit;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Oak Ridge National Laboratory; Oak Ridge,
Tenn.;
Contractor/type of contractor: UT-Battelle, LLC; Nonprofit;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Pacific Northwest National Laboratory;
Richland, Wash.;
Contractor/type of contractor: Battelle Memorial Institute; Nonprofit;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Princeton Plasma Physics Laboratory; Princeton,
N.J.;
Contractor type of contractor: Princeton University; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; National Nuclear
Security Administration [Case study included in this review];
Name of FFRDC/location: Sandia National Laboratories; Albuquerque, NM;
Contractor/type of contractor: Sandia Corporation; (subsidiary of
Lockheed Martin Corp.); Industry;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Environmental
Management;
Name of FFRDC/location: Savannah River National Laboratory; Aiken,
S.C.;
Contractor/type of contractor: Westinghouse Savannah River Co.;
Industry;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Stanford Linear Accelerator Center; Stanford,
Calif.;
Contractor/type of contractor: Leland Stanford, Jr., University;
University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Energy; Office of Science;
Name of FFRDC/location: Thomas Jefferson National Accelerator Facility;
Newport News, Va.;
Contractor/type of contractor: Jefferson Science Associates, LLC;
University/Industry Partnership;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Health and Human Services;
National Institutes of Health, National Cancer Institute [Case study
included in this review];
Name of FFRDC/location: National Cancer Institute at Frederick;
Frederick, Md.;
Contractor/type of contractor: SAIC-Frederick; (wholly owned subsidiary
of Science Applications International Corp); Industry;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Homeland Security; Under
Secretary for Science & Technology [Case study included in this
review];
Name of FFRDC/location: Homeland Security Institute; Arlington, Va.;
Contractor/type of contractor: Analytic Services, Inc.; Nonprofit;
Type of FFRDC: Studies and analyses center.
Agency/dept/office of primary sponsor: Homeland Security; Under
Secretary for Science & Technology [Case study included in this
review];
Name of FFRDC/location: National Biodefense Analysis & Countermeasures
Center; Frederick, Md.;
Contractor/type of contractor: Battelle National Biodefense Institute;
Nonprofit;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: National Aeronautics and Space
Administration;
Name of FFRDC/location: Jet Propulsion Laboratory; Pasadena, Calif.;
Contractor/type of contractor: California Institute of Technology;
University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: National Science Foundation;
Name of FFRDC/location: National Astronomy and Ionosphere Center;
Arecibo, P.R.;
Contractor/type of contractor: Cornell University; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: National Science Foundation;
Name of FFRDC/location: National Center for Atmospheric Research;
Boulder, Colo.;
Contractor/type of contractor: University Corporation for Atmospheric
Research; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: National Science Foundation;
Name of FFRDC/location: National Optical Astronomy Observatories;
Tucson, Ariz.;
Contractor/type of contractor: Association of Universities for Research
in Astronomy, Inc.; University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: National Science Foundation;
Name of FFRDC/location: National Radio Astronomy Observatory;
Charlottesville, Va.;
Contractor/type of contractor: Associated Universities, Inc.;
University;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: National Science Foundation;
Name of FFRDC/location: Science and Technology Policy Institute;
Washington, D.C.;
Contractor/type of contractor: Institute for Defense Analyses;
Nonprofit;
Type of FFRDC: Studies and analyses center.
Agency/dept/office of primary sponsor: Nuclear Regulatory Commission.
Name of FFRDC/location: Center for Nuclear Waste Regulatory Analyses;
San Antonio, Tex.;
Contractor/type of contractor: Southwest Research Institute; Nonprofit;
Type of FFRDC: Studies and analyses center.
Agency/dept/office of primary sponsor: Transportation; Federal Aviation
Administration;
Name of FFRDC/location: Center for Advanced Aviation System
Development; McLean, Va.;
Contractor/type of contractor: MITRE Corp.; Nonprofit;
Type of FFRDC: Research & development lab.
Agency/dept/office of primary sponsor: Treasury; Internal Revenue
Service;
Name of FFRDC/location: Center for Enterprise Modernization; McLean,
Va.;
Contractor type of contractor: MITRE Corp.; Nonprofit;
Type of FFRDC: Systems engineering and integration center.
Source: GAO.
[End of table]
[End of section]
Appendix III: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
Acquisition Technology And Logistics:
3000 Defense Pentagon:
Washington, DC 20301-3000:
September 29, 2008:
Mr. William Woods:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Woods:
This is the Department of Defense (DOD) response to the GAO draft
report, GAO-09-15, "Federal Research: Opportunities Exist to Improve
the Management and Oversight of Federally Funded Research and
Development Centers," dated September 9, 2008, (GAO Code 120687).
The Department's comment to the report recommendation is enclosed. The
Department appreciates the opportunity to comment on the draft report.
Sincerely,
Signed by:
Nancy Spruill:
Director, Acquisition Resources and Analysis:
Enclosure: As stated:
GAO Draft Report Dated September 9, 2008:
GAO-09-15 (GAO Code 120687):
"Federal Research: Opportunities Exist To Improve The Management And
Oversight Of Federally Funded Research And Development Centers"
Department Of Defense Comments To The GAO Recommendations:
Recommendation: The GAO recommends that the Secretaries of Energy,
Defense, Homeland Security, and Health and Human Services, take the
lead in establishing an ongoing forum for government personnel from
these and other agencies that sponsor Federally Funded Research and
Development Centers (FFRDCs) to discuss their FFRDC policies and
practices. (Page 33/GAO Draft Report)
DOD Response: Concur. The Department of Defense will work with the
other agencies to establish an ongoing forum for government personnel
from all government agencies that sponsor Federally Funded Research and
Development Centers (FFRDCs) to discuss their FFRDC policies and
practices.
[End of section]
Appendix IV: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
October 1, 2008:
William Woods:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Woods:
This is the Department of Energy (DOE) response to the Government
Accountability Office (GAO) Draft Report, GAO-09-15, "Federal Research:
Opportunities Exist to Improve the Management and Oversight of
Federally Funded Research and Development Centers," dated October 2008
(GAO-Code 120687). We appreciate the opportunity to comment.
DOE concurs with the recommendation provided in this Draft Report as it
relates to sharing best practices for Federally Funded Research and
Development Center (FFRDC) oversight and the formation of a forum with
the Department of Defense, Department of Homeland Security, and
Department of Health and Human Services. The assembly of such a forum
should be under the leadership of the Department of Defense, which
represents the largest procuring agency and whose statutory exemption
to competition is pivotal in any discussion on best practices and
lessons learned.
My point of contact for this issue is Sandra Cover, who is available at
(202) 287-1344.
Sincerely,
Signed by:
Edward R. Simpson:
Director:
Office of Procurement and Assistance Management:
[End of section]
Appendix V: Comments from the Department of Health and Human Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
October 2, 2008:
William Woods, Director:
Acquisition and Sourcing Management:
Government Accountability Office:
441 G Street NW:
Washington, DC 20548:
Dear Ms. Woods:
Enclosed are the Department's comments on the U.S. Government
Accountability Office's (GAO) draft report entitled: "Federal Research:
Opportunities Exist to Improve the Management and Oversight of
Federally Funded Research and Development Centers" (GAO-09-15).
The Department appreciates the opportunity to review and comment on
this report before its publication.
Sincerely,
Signed by:
Vincent J. Ventimiglia, Jr.
Assistant Secretary for Legislation:
Attachment:
Comments Of The National Institutes Of Health (NIH) On The Government
Accountability Office Draft Report, Opportunities Exist To Improve The
Management And Oversight Of Federally Funded Research And Development
Centers (GAO-09-15):
GAO Recommendation:
The Secretary of Health and Human Services review its policy regarding
personal conflicts of interest for its sponsored FFRDC and revise as
appropriate to ensure that it addresses all personnel in a position to
make or materially influence research findings or agency decision
making.
NIH Response:
NIH concurs with the recommendation and is currently reviewing its
options for revisions to its conflict of interest policy. Although the
GAO report states that HHS does not require FFRDC contractors to
implement personal conflict of interest policies, NIH R&D contracts
fall under the tenet of 45 CFR Part 94. NIH recently promulgated a
standard contract clause to reinforce compliance with 45 CFR Part 94,
and the clause has been included in the new FFRDC contract.
This regulation requires objectivity in research by establishing
standards to ensure that investigators (defined as the principal
investigator and any other person who is responsible for the design,
conduct, or reporting of research funded under NIH contracts and
spouses and dependents of investigators) will not be biased by any
conflicting financial interest. Prior to expenditure of funds, and on
an ongoing basis, an Institution, including the FFRDC, must report to
NIH the existence of any conflicting interests it has found and provide
assurance that the conflict has been managed, reduced, or eliminated in
accordance with the regulation. NIH is also drafting an Advance Notice
of Proposed Rulemaking (ANPRM) to seek comments from the public on
whether the regulations should be amended.
GAO Recommendation:
The Secretaries of Energy, Defense, Homeland Security, and Health and
Human Services, which together sponsor the vast majority of the
government's FFRDCs, take the lead in establishing an ongoing forum for
government personnel from these and other agencies that sponsor FFRDCs
to discuss their agencies' FFRDC policies and practices.
NIH Response:
NIH is considering this recommendation, including aspects associated
with the creation of and participation in a forum to share best
practices for FFRDC oversight.
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contacts:
William Woods (202) 512-4841 or woodsw@gao.gov Anu Mittal (202) 512-
9846 or mittala@gao.gov:
Acknowledgments:
In addition to the individuals named above, key contributors to this
report were John Neumann, Assistant Director; Cheryl Williams,
Assistant Director; Sharron Candon; Suzanne Sterling; Jacqueline Wade;
and Peter Zwanzig.
[End of section]
Footnotes:
[1] Data from the National Science Foundation, Science and Engineering
Indicators (2008)--the latest available.
[2] "Sponsor" means the executive agency that manages, administers,
monitors, funds, and is responsible for the overall use of an FFRDC.
Federal Acquisition Regulation (FAR) 35.017(b).
[3] References to DOE in this report include the National Nuclear
Security Administration, a separately organized agency within DOE that
is responsible for the management and security of the nation's nuclear
weapons, nuclear nonproliferation, and naval reactor programs.
[4] For a brief overview of the evolution and legal framework
applicable to FFRDCs, see GAO, Principles of Federal Appropriations
Law, vol. 4, 2nd ed., GAO-01-179SP (Washington, D.C.: March 2001), pp.
17-81 through 17-85.
[5] Pub. L. No. 101-509 (1990).
[6] FAR 35.017(a)(2).
[7] FAR 35.017-1, Sponsoring Agreements.
[8] [hyperlink, http://www.nsf.gov/statistics/ffrdc/] (last accessed
Oct. 3, 2008).
[9] See 10 U.S.C. § 2304(c)(3); 41 U.S.C. § 253(c)(3); FAR 6.302-3(a)
(2)(ii).
[10] The Energy and Water Development Appropriations Act, 2004 (Pub. L.
No. 108-137, § 301), requires DOE to compete its management and
operations (M&O) contracts, the contract type DOE uses at its labs,
unless the Secretary of Energy waives the requirement and notifies the
Energy and Water Subcommittees 60 days prior to contract award.
[11] The lab was subsequently designated as an FFRDC in 1975.
[12] Subcommittee on Oversight of Government Management, Committee on
Governmental Affairs, U.S. Senate. Inadequate Federal Oversight of
Federally Funded Research and Development Centers, July 1992.
[13] GAO had reported in 1988, that full and open competition between
FFRDCs and non-FFRDCs could provide some assurance that sponsors had
selected the most effective source for the work. The report also
stated, however, that exposing FFRDCs to marketplace competition could
fundamentally alter the character of the special relationship between
FFRDCs and their sponsors. GAO, Competition: Issues on Establishing and
Using Federally Funded Research and Development Centers, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-88-22] (Washington, D.C.:
March 1988).
[14] GAO, Federally Funded R&D Centers: Issues Related to the
Management of DOD-Sponsored Centers. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO/NSIAD-96-112] (Washington, D.C.: Aug. 6, 1996).
[15] Cost-reimbursement contracts--which the FAR generally considers to
be the usually appropriate contract form for R&D--provide for payment
of allowable direct and indirect incurred costs as prescribed in the
contract. These contracts establish an estimate of total cost to
obligate funds and establish a ceiling that the contractor may not
exceed without contracting officer approval.
[16] See FAR subparts 16.3 and 16.4.
[17] According to FAR subpart 16.3, a cost-plus-fixed-fee contract is a
cost-reimbursement contract that provides for payment to the contractor
of a negotiated fee that is fixed at the inception of the contract. The
fixed fee does not vary with actual cost, but may be adjusted as a
result of changes in the work to be performed under the contract.
[18] This accounts for about 75 percent of Project Air Force's annual
funding.
[19] GAO, Defense Contracting: Additional Personal Conflict of Interest
Safeguards Needed for Certain DOD Contractor Employees, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-08-169] (Washington, D.C.: Mar.
7, 2008).
[20] FAR 35.017(a)(2); 35.017-2(h).
[21] In September 2006, the president and trustee of the Institute for
Defense Analyses resigned before it was determined by DOD's Inspector
General that his position on two defense subcontractors' corporate
boards violated the FFRDC's conflicts-of-interest policy. In July 2006,
his dual roles as FFRDC president and as a member of one of the defense
subcontractor's board of directors drew public and congressional
scrutiny regarding a business case for the Air Force on a multiyear
procurement of the F-22 Raptor aircraft. Because this subcontractor
manufactures a missile launcher for the F-22 aircraft's prime
contractor, conflict of interest concerns were raised that the FFRDC
president stood to financially profit from a favorable multiyear
procurement decision for the F-22.
[22] FAR 17.601 states: "Management and operating contract" means an
agreement under which the government contracts for the operation,
maintenance, or support, on its behalf, of a government-owned or -
controlled research, development, special production, or testing
establishment wholly or principally devoted to one or more major
programs of the contracting federal agency.
[23] Department of Energy Acquisition Regulation 970.0371, Conduct of
employees of DOE management and operating contractors.
[24] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-169]. This
report identified some examples of how DOD FFRDC contractors that were
implementing the new policy.
[25] FAR 35.017-3(a); 35.017(a)(2). An FFRDC may perform for other than
the sponsoring agency (1) under the Economy Act, or other applicable
legislation, when the work is not otherwise available from the private
sector or (2) under a separate contract with the nonsponsoring agency,
when permitted by the sponsor.
[26] The Homeland Security Act of 2002 included a provision to
establish the Homeland Security Institute. Section 312 of the Act
identifies specific types of duties or capabilities that may be
requested to provide to DHS and the homeland security community.
[27] The Executive Agent designates membership and chairs the HSI
Advisory Group, and designates replacements for HSI Advisory Group
members.
[28] The National Intelligence Program and the Military Intelligence
Program.
[29] As defined in the FAR 37.104, a personal services contract is
characterized by the employer-employee relationship it creates between
the government and the contractor's personnel. The government is
normally required to obtain its employees by direct hire under
competitive appointment or other procedures required by the civil
service laws. Obtaining personal services by contract, rather than by
direct hire, circumvents those laws unless Congress has specifically
authorized acquisition of the services by contract. Agencies shall not
award personal services contracts unless specifically authorized by
statute (e.g., 5 U.S.C. 3109) to do so.
[30] FAR Part 2 definition of "inherently governmental functions": An
inherently governmental function is a function that is so intimately
related to the public interest as to mandate performance by government
employees. These functions include those activities that require either
the exercise of discretion in applying Government authority or the
making of value judgments in making decisions for the government.
Governmental functions normally fall into two categories: (1) the act
of governing, i.e., the discretionary exercise of government authority,
and (2) monetary transactions and entitlements.
[31] The decision to accept such work is to be in accordance with DOE's
Work Authorization Order 412.1A.
[32] DOE field organizations (contracting officers) must receive a work
authorization signed by the appropriate primary DOE Organization--
organizations that direct work to be performed by site and facility
management contractors and other contractors determined by the
procurement executive. Primary DOE Organizations, including National
Nuclear Security Administration (NNSA), must review and approve the
work as acceptable for the contractor before obligating funds for the
contract.
[33] DOD and DHS officials said their FFRDCs do not do "work for
others" for private sector companies, and DOE officials said their
FFRDCs generally conduct work only for federal agencies.
[34] FAR 17.504(e).
[35] Technology transfer can mean many things--technical assistance to
solve a specific problem; use of unique facilities; access to patents
and software; exchange of personnel; and cooperative research.
Technology transfer mechanisms can include Cooperative Agreements,
Cooperative Research and Development Agreements (CRADAs), Cost-Shared
Contracts/Subcontracts, Licensing, and Work for Others.
[36] See generally FAR subparts 27.3 and 27.4.
[37] FAR 35.017(a)(2); 37.017-3(b).
[38] See DOE Order 481.1B, att. 1.
[39] DOE officials said that DOE programs and work for others customers
both are charged an indirect cost rate that includes a Laboratory
Directed Research Development component.
[40] In December 2005 and January 2007, we issued reports on the use of
award and incentive fees at the Department of Defense and the National
Aeronautics and Space Administration, respectively. GAO, Defense
Acquisitions: DOD Has Paid Billions in Award and Incentive Fees
Regardless of Acquisition Outcomes, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-06-66] (Washington, D.C.: Dec. 19, 2005) and NASA
Procurement: Use of Award Fees for Achieving Program Outcomes Should Be
Improved, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-58]
(Washington, D.C.: Jan. 17, 2007).
[41] The performance-based approach focuses the evaluation of the
contractor's performance against eight goals: (1) provide for efficient
and effective mission accomplishment; (2) Provide for efficient and
effective design, fabrication, construction and operations of research
facilities; (3) provide effective and efficient science and technology
program management; (4) provide competent leadership and stewardship;
(5) sustain and enhance effectiveness of integrated safety, health, and
environmental protection; (6) deliver efficient, effective, and
responsive business systems and resources; (7) sustain excellence in
operating, maintaining, and renewing the facility and infrastructure
portfolio to meet laboratory needs; and (8) sustain and enhance the
effectiveness of integrated safeguards, security, and emergency
management systems.
[42] DOD generally does not provide award or incentive fees to its
FFRDCs, which for our case study included the Institute for Defense
Analyses, operating the Studies and Analysis Center; MITRE, operating
the C3I systems engineering and integration center; and Massachusetts
Institute of Technology operating the Lincoln Laboratory.
[43] FAR 35.017-2(e) requires that the FFRDC sponsor in establishing an
FFRDC ensure that controls are established to ensure that the costs of
the services being provided to the government are reasonable. FAR
35.017-4 requires that the review conducted prior to extending the
FFRDC contract or agreement include an assessment of the adequacy of
the FFRDC management in ensuring a cost-effective operation.
[44] Since this review of FFRDCs focuses only on broad processes
employed in the management and operation of FFRDCs, we reviewed
practices and procedures that agencies use but did not attempt to
determine either the most effective agency cost, accounting, or
auditing controls, or the effectiveness of or deficiencies in specific
agencies' cost or internal controls at the agencies and FFRDCs we
reviewed.
[45] FAR Part 31 specifies different cost principles on the
allowability of various kinds of costs for different types of
contractors: FAR 31.2 specifies allowable cost principles for
commercial organizations; FAR 31.3, which incorporates OMB Circular No.
A-21, applies to educational institutions; and FAR 31.7, which
incorporates OMB Circular No. A-122, applies to nonprofit
organizations. FAR 31.201-2(a) governing contracts with commercial
firms states, for example, that the factors to be considered in
determining whether a cost is allowable include: (1) reasonableness;
(2) allocability; (3) standards promulgated by the Cost Accounting
Standards Board, if applicable; otherwise GAAP; (4) the terms of the
contract; and (5) any limitations set fort in subpart 31.2.
[46] FAR 52.216-7 "Allowable Cost and Payment" requires the government
to pay a contractor, if requested, as work progresses, in amounts
determined to be allowable by the contracting officer in accordance
with the applicable cost principles identified above.
[47] FAR 42.705-1(b)(4); 42.705-2(b)(2).
[48] Financial audits address issues such as compliance with cost-
accounting standards, compensation and labor cost reviews, and advance
agreements on forward-pricing factors such as indirect cost rates and
labor hour rates used in repetitive-pricing formulas, among many
others. Operational audits include audits of accounting and information
technology systems' internal controls; and reviews of integrated
business processes, program administration, financial and business
operations, and project execution.
[49] DOE generally requires M&O contractors, including the contractors
for Sandia National Laboratory and the Ernest Orlando Lawrence Berkeley
National Laboratory, to perform annual internal audits, under
Department of Energy Acquisition Regulation § 970.5232-3 and standard
contract clause I.103 (Accounts, Record, and Inspection-June 2007).
[50] The Cooperative Audit Strategy was first developed and implemented
in 1992 and implemented in 2007 with respect to all M&O contractors,
including FFRDCs.
[51] 31 U.S.C. 7501-7507. Office of Management and Budget (OMB)
Circular A-133, "Audits of States, Local Governments, and Non-profit
Organizations," implements the Single Audit Act and is applicable to
all FFRDCs operated by an educational institution or non-profit
organization, but not to those operated by commercial contractors.
Audits are commonly referred to as "single audits" and are performed in
accordance with Generally Accepted Government Auditing Standards
(GAGAS). The Single Audit Act is designed to help federal agencies meet
the need for oversight and uniformly structured audits of non-profit
recipients that expend annually a total of $500,000 or more in federal
awards. Rather than being a detailed review of individual programs, the
single audit is an organization-wide financial statement audit that
includes the audit of the Schedule of Federal Awards, and also focuses
on internal control and the recipient's compliance with laws and
regulations governing the receipt of federal financial awards. The
federal agency that makes an award is responsible for overseeing
whether the single audits are completed in a timely manner, while the
award recipient is responsible for ensuring that a single audit is
performed and submitted when due and for following up and taking
corrective action on any audit findings.
[52] GAO, Single Audit Quality: Actions Needed to Address Persistent
Audit Quality Problems, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-08-213T] (Washington, D.C.: Oct. 25, 2007).
[53] According to the NSF Master List of FFRDCs, five FFRDCs (four at
DOE and one at HHS) are operated by private companies.
[54] The Securities Exchange Act of 1934 as amended, including
implementing regulations, requires publicly traded companies to make
periodic filings with the Securities and Exchange Commission that
disclose their financial status and changes in financial condition.
These publicly traded companies are also subject to the Sarbanes-Oxley
Act of 2002 requirements that include provisions for governance,
auditing, and financial reporting.
[55] The supplemental information is prepared by MITRE's independent
auditors and, while not formally audited, was subjected to the same
auditing procedures as applied to the corporation's financial
statements, and according to the auditor are "fairly stated in all
material respects in relation to the financial statements taken as a
whole."
[56] FAR 35.017-4(c).
[57] Department of Energy Acquisition Regulation § 970.1706-1.
[58] Department of Energy, Report of the External Members Best
Practices Working Group, The Laboratory Operations Board, Management
Best Practices for the National Laboratories, September 9, 2003.
[59] GAO, Results-Oriented Government: Practices That Can Help Enhance
and Sustain Collaboration among Federal Agencies, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-06-15] (Washington, D.C.: Oct.
21, 2005).
[60] We did not meet with the National Security Agency since its
FFRDC's work is classified, and it was not included in our case study.
[End of section]
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