[Senate Hearing 114-]
[From the U.S. Government Publishing Office]



 
SECURING AMERICA'S FUTURE: REALIZING THE POTENTIAL OF THE DEPARTMENT OF 
                      ENERGY NATIONAL LABORATORIES

                              ----------                              


                      WEDNESDAY, OCTOBER 28, 2015

                               U.S. Senate,
      Subcommittee on Energy and Water Development,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:33 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Lamar Alexander (chairman) 
presiding.
    Present: Senators Alexander, Hoeven, Lankford, Feinstein, 
Durbin, Udall, and Coons.


              opening statement of senator lamar alexander


    Senator Alexander. The Subcommittee on Energy and Water 
Development will please come to order.
    This afternoon we are having a hearing, which we have 
looked forward to, to discuss the findings and recommendations 
and the hard work and the final report of the Commission to 
Review the Effectiveness of the National Energy Laboratories.
    Senator Feinstein and I will each have an opening 
statement, and then I will recognize each Senator for an 
opening statement if they would like to do that, in the order 
in which they arrived. And then we will hear from the 
witnesses, and then we will proceed into a conversation.
    I would first like to thank our witnesses for being here 
today and also Senator Feinstein. This is Senator Feinstein's 
idea. When the Democrats were in the majority, she was the 
chairman of this committee, and she was as we considered the 
2014 Appropriations Act, which was 2 years ago. And she thought 
it would be--and I agreed with her--a good idea to have an 
independent commission take a look at the effectiveness of our 
national laboratories. We have 17 of these laboratories. Ten 
included are Office of Science laboratories. Three are weapons 
labs managed by the National Nuclear Security Administration, 
and four applied energy laboratories--one each that does work 
for the Office of Energy Efficiency and Renewable Energy, the 
Office of Environmental Management, the Office of Fossil 
Energy, the Office of Nuclear Energy. All that is under the 
Department of Energy.
    The national laboratories employ about 55,000 people. They 
received approximately $11.7 billion in new funding from the 
Department of Energy in fiscal year 2014.
    Our national laboratory system is critical to our Nation's 
competitiveness, national security and way of life. They are 
the engines that help create new cutting-edge technologies that 
can transform our economy.
    For example, the development of unconventional gas was 
enabled in part by 3-D mapping at Sandia National Laboratory in 
New Mexico and the Department of Energy's large-scale 
demonstration project, which proved that the technology worked. 
Then our free enterprise system and our private system of 
ownership of mineral rights capitalized on this basic energy 
research by the Federal Government and created a natural gas 
boom that is shaping America's energy policy and reshaping as 
it appears it will do so for decades.
    Another example: I was recently at the Oak Ridge National 
Laboratory, which is supported, in this case, by the Office of 
Energy Efficiency and Renewable Energy. Additive manufacturing. 
This is 3-D printing. In this case, they are printing 
everything from tooling machines to robotic arms, as well as 
airplane parts. I saw a whole car that had been printed by a 3-
D printer. It is hard to imagine that.
    Monday I was in Memphis at a medical device company, and 
they are using the 3-D printers to print the tools that are 
used for knee replacements. In other words, a physician needs a 
certain cut, so they were telling me, to be able to replace 
your knee. So if I were to have my knee replaced, they would 
use a 3-D printer and make the cut that fit exactly my knee. It 
is precision medicine using devices, apparently. And according 
to this medical device manufacturer, all our knee replacements 
could be done that way if doctors wished to do that. The 
advantage of it, of course, is it means the doctor does not 
make any kind of mistake in making the cut because the cut is 
tailored exactly to the needs of the patient.
    So 3-D printing has a way of transforming our manufacturing 
in this country and around the world in the same way that 
unconventional gas has our energy policy. In both cases, this 
sort of basic research and development is done at our national 
laboratories.
    The national laboratories develop and maintain our 
supercomputers, and one day, hopefully soon, we will achieve 
breakthroughs in exascale computing. Those computers will be 
capable of a thousand-fold increase in today's petascale 
computers, which have been operating since 2008.
    The Commission has done a good job. Senator Feinstein and I 
had an interim report, which we appreciated, from the chairman. 
You did what we asked in that you made specific 
recommendations, 36 of them, for Congress, some for the 
Department of Energy and the administration to consider that 
could maximize the potential of our national laboratory system.
    If we can ensure the labs are running as effectively as 
possible, then more money can be spent on research and 
development, and the national labs can work more easily with 
private industries to support our 21st century economy and 
create jobs.
    I agree with a number of the recommendations in the report 
such as our laboratories should be provided the necessary 
resources to maintain their capabilities and facilities. Both 
Senator Feinstein and I, regardless of which one of us was 
chairman of this committee, have supported strong funding for 
the Office of Science and for basic research. In the Senate 
Energy and Water appropriations bill that she and I reported 
out this year in a bipartisan way, we funded the Office of 
Science at the highest level ever.
    Third party financing you suggested should be utilized for 
appropriate situations. I would like to talk more about that. I 
agree with it. At Oak Ridge National Laboratory, the 
Computational Sciences Building, the Energy Science Building, 
the Research Office Building, the Multi-program Research 
Facility are four examples of such success. In our experience, 
it saved money, it saved time, and it helped us move ahead more 
effectively.
    Maintaining the facilities at the laboratories that are 
used by scientists, researchers, and manufacturers is also of 
critical importance for executing the science mission. For 
example, in fiscal year 2015 alone, the Spallation Neutron 
Source had 800 users. The High Flux Isotope Reactor had 450. 
The Oak Ridge Leadership Computing Facility had 1,000 
scientists from all over the world use the supercomputing 
facilities, which is home to the Titan Supercomputer and 
several other advanced computing systems. Since approximately 
2006, these user facilities at Oak Ridge have been host to 
24,000 users, and that is just at one national laboratory.
    These facilities turn research and development into jobs 
that support a 21st century economy.
    The report highlights the importance of maintaining 
separate and independent facilities for our weapons labs.
    I was also pleased to see a strong endorsement of 
laboratory-directed research and development programs. These 
give the directors in the laboratories some discretion in 
making decisions about how to spend the basic research money.
    Ben Bernanke, our former Fed Chairman, wrote an op-ed in 
``The Wall Street Journal,'' October 4th. He warned--he said 
monetary policy can be important in creating a stronger economy 
but monetary policy, the business of the Fed, certainly cannot 
do that alone. As a country, we need to do more to improve 
worker skills, he said, foster capital investment, and support 
research and development.
    Supporting governmental sponsored basic research is one of 
the most important things our country can do to encourage 
innovation, help the free enterprise system create good jobs, 
and make America competitive in a global economy.
    I look forward to discussing the commission's 
recommendations on how to maximize the potential of our 17 
national laboratories.
    With that, I would like to recognize Senator Feinstein for 
her statement and thank her for her leadership and good idea of 
inviting and chartering this commission. Senator Feinstein.
    [The statement follows:]
             Prepared Statement of Senator Lamar Alexander
    The Subcommittee on Energy and Water Development will please come 
to order.
    This afternoon we are having a hearing to discuss the findings and 
recommendations in the final report of the Commission to Review the 
Effectiveness of the National Energy Laboratories.
    Ranking Member Feinstein and I will each have an opening statement.
    I will then recognize each senator for up to five minutes for an 
opening statement, alternating between the majority and minority, in 
the order in which they arrived.
    We will then turn to the co-chairs of the commission to present the 
final report and their recommendations.
    Our witnesses today include the two Commission Co-Chairs, Mr. TJ 
Glauthier and Dr. Jared Cohon.
    I will then recognize senators for five minutes of questions each, 
alternating between the majority and minority in the order in which 
they arrived.
    First, I would like to thank our witnesses for being here today, 
and also Senator Feinstein.
    Under her leadership in the Consolidated Appropriations Act of 
2014, she charged the Secretary of Energy with establishing an 
independent advisory commission to examine the effectiveness of the 
national laboratories, known as the Commission to Review the 
Effectiveness of the National Energy Laboratories.
    We're here today to receive the commission's findings and discuss 
its recommendations. Its final report was approved on Friday after much 
discussion and public comment.
    The 17 national laboratories include 10 Office of Science 
laboratories, three weapons labs managed by the National Nuclear 
Security Administration, and four applied energy laboratories--one each 
that does work for the Office of Energy Efficiency and Renewable 
Energy, the Office of Environmental Management, the Office of Fossil 
Energy, and the Office of Nuclear Energy.
    The National Laboratories employ more than 55,000 people and 
received approximately $11.7 billion in funding from the Department of 
Energy in fiscal year 2014.
    Our national laboratory system is critical to our Nation's 
competitiveness, national security, and way of life. National 
laboratories are the engines that help create new, cutting-edge 
technologies that can transform our economy.
    For example, the development of unconventional gas was enabled in 
part by 3-D mapping at Sandia National Laboratory in New Mexico, and 
the Department of Energy's large-scale demonstration project which 
proved the technology worked.
    Then our free-enterprise system capitalized on the basic energy 
research supported by the Federal Government and created a natural gas 
boom that will shape America's energy policy for decades.
    Another example is the Manufacturing Demonstration Facility at the 
Oak Ridge National Laboratory, which is supported by the Office of 
Energy Efficiency and Renewable Energy.
    Additive manufacturing technologies have the opportunity to change 
manufacturing in the way that the discovery of unconventional ways to 
find oil and gas has changed our energy future.
    They are 3-D printing everything from tooling machines to robotic 
arms, as well as airplane parts, whole cars and buildings. This 
technology is already transforming the auto industry and has the 
potential to do much more.
    National laboratories also develop and maintain our Nation's 
advanced supercomputers, and one-day--hopefully soon--will achieve 
breakthroughs in exascale computing.
    Exascale computers will be capable of a thousand-fold increase in 
sustained performance over today's petascale computers--which have been 
operating since 2008.
    The commission has done a fine job and outlined 36 recommendations 
for Congress, the Department of Energy, and the administration to 
consider that could maximize the potential of the national laboratory 
system.
    If we can ensure the labs are running as efficiently and 
effectively as possible, then more money can be spent on research and 
development and the national laboratories can work more easily with 
private industries to support our 21st century economy and create jobs.
    I agree with a number of the recommendations included in this 
report, such as:

  --Our laboratories should be provided the necessary resources to 
        maintain their capabilities and facilities.
  --Senator Feinstein and I both support robust funding for research 
        and development.
  --In the Senate Energy and Water Appropriations bill, we funded the 
        Office of Science at the highest level ever in our 
        appropriations bill.
  --Third-party financing should be utilized for appropriate 
        situations.
  --At Oak Ridge National Laboratory, the Computational Sciences 
        Building, Energy Science Building, Research Office Building, 
        and the Multi-program Research Facility are four examples of 
        such successes.
  --Maintaining the facilities at the laboratories that are used by 
        scientists, researchers, and manufacturers is also of critical 
        importance for executing the science mission.
    --For example, in fiscal year 2015 alone, the Spallation Neutron 
            Source had 800 users, the High Flux Isotope Reactor had 
            450, and the Oak Ridge Leadership Computing facility had 
            1000 scientists from all over the world use the 
            supercomputing facilities, which is home to the Titan 
            supercomputer and several other advanced computing systems. 
            Since approximately 2006, those user facilities at Oak 
            Ridge have been host to 24,000 users.
    --These facilities turn research and development into jobs that 
            support a 21st century economy.
  --The report also highlights the importance of maintaining separate 
        and independent facilities for our weapons labs.
  --I also was pleased to see a strong endorsement of laboratory 
        directed research and development programs.

    In an October 4th Wall Street Journal op-ed, Ben Bernanke wrote, 
``As a country, we need to do more to improve worker skills, foster 
capital investment and support research and development.''
    Supporting government-sponsored basic research is one of the most 
important things our country can do to encourage innovation, help our 
free-enterprise system create good jobs, and make America competitive 
in a global economy.
    I look forward to discussing the commission's recommendations to 
maximize the potential of our 17 national laboratories.
    With that, I'd like to recognize Senator Feinstein, our 
subcommittee's ranking member, for her opening statement.

                 STATEMENT OF SENATOR DIANNE FEINSTEIN

    Senator Feinstein. Well, thank you very much, Mr. Chairman. 
I think you know how much I really enjoy the relationship that 
we have and the comradery, the friendship, and also the 
diligence of both of our staffs. Hopefully, we will have this 
continuing in this new allocation that our committee will 
receive. It would be nice to have a few more dollars, and I 
look forward to working with you in that regard as well.
    I would like to put my formal statement, if I may, 
gentlemen and Mr. Chairman, in the record.
    And I would like to go right to a part of your report that 
I am most interested in, and it is chapter 3 in rebuilding 
trust. And let me just quickly read the top paragraph. 
Government and the contractor should work together as partners 
in a relationship with clearly understood roles. The Government 
is responsible for setting the ``what'' of strategic and 
program direction to meet the Nation's needs, while contracted 
university and industry partners are responsible for 
determining precisely ``how'' to meet the technical and 
scientific challenges to carry out the programs.
    However, over the years, the relationship between DOE and 
the labs has eroded. There is fault on both sides. The national 
laboratories, for their part, do not fully trust DOE and 
therefore maintain secrecy about some of their actions, 
including contacts with Congress and other agencies, not 
informing DOE of emerging problems in a timely manner and 
taking some actions below the radar to create new programs and 
compete for turf in new and emerging areas.
    DOE, for its part, does not trust the laboratories to keep 
them fully informed about technical and financial progress or 
safety and security issues. As a result, DOE micromanages work 
at the labs with excessive milestones and budget limitations 
and other requirements about how work should be done. This 
chapter is focused on steps that could be taken to rebuild 
trust. And the chapter goes on.
    And, Mr. Chairman, the thought occurs to me that this is an 
area where both of us might be able to be helpful. We both have 
great respect for Dr. Moniz, and we both have great respect for 
the labs. I had the privilege this past week in Intelligence of 
having a classified session with the lab directors, and I 
thought that was really very, very useful. But I think what is 
lacking is any kind of ongoing communication with us so that 
when we see a project that comes in at $400 million originally 
and ends up at $4 billion--I pointed this out in Intelligence--
it necessarily is deeply concerning to us.
    So I would hope--this would just be an idea off the top of 
my head--that we could have some regular meetings with lab 
directors. I was very impressed when I heard some of the 
directors who are new and when I heard them give this 
classified briefing in the Intelligence Committee. And I really 
think there is a lot of it that could be in the public arena 
and that we in working could really benefit from.
    So I will just put my set remarks in the record.
    But I would hope that our two witnesses today would be able 
to comment on that and see whether they believe that would be 
helpful or not. I have not discussed this with them beforehand.
    [The statement follows:]
             Prepared Statement of Senator Dianne Feinstein
    Thank you, Mr. Chairman, for holding this hearing on the value of 
our Nation's laboratories.
    Welcome Mr. Glauthier and Dr. Cohon. Thank you for your service 
leading the Commission to Review the Effectiveness of the National 
Energy Laboratories.
    While not with us today, I'd also like to thank the other members 
of the Commission for their service.
    The fundamental conclusion of your report is, and I quote, ``The 
National Energy Laboratories provide great value to the Nation in their 
service to DOE's mission, the needs of the broader national science and 
technology community, and the security needs of the Nation as a 
whole.''
    I agree with you that the national laboratories present a ``unique 
venue for the conduct of major, long-term, high-payoff/high-risk 
research.''
    However, you also note a number of challenges facing our laboratory 
system. These can be grouped around certain themes, including:
  --Rebuilding the trust between the labs and the Department of Energy;
  --Maintaining the quality of scientific research; and
  --Improving the efficiency and effectiveness of laboratory management 
        practices.
    You make a number of recommendations for this Subcommittee, for the 
Department of Energy, and the national laboratories about how to make 
current system work better.
    In the coming months, we will be looking closely at those 
recommendations to see how Chairman Alexander and I can implement them. 
We look forward to your continued support as we do that.
    Mr. Chairman, I'd like to take just a few minutes to talk about 
some of the good work happening at the national labs in California.
    Stanford University--my alma mater--is home to the world's most 
powerful X-ray laser. The Linac Coherent Light Source (the LCLS) is 
used to see matter at the atomic level. This facility hosts 500 to 600 
outside users annually who have published hundreds of peer-reviewed 
papers.
    The laser literally shines a bright light on the molecular 
structure of metals and the chemical reactions in photosynthesis.
    This facility can look inside a human cell and see how proteins 
directly interact with cell structures.
    LCLS has been used to reveal the detailed structure of an enzyme 
associated with transmission of African sleeping sickness, which is 
responsible for tens of thousands of deaths each year.
    The disease is caused by a parasite carried by tsetse flies, and 
this parasite uses the enzyme to break down the tissues of its victims. 
Researchers used LCLS to determine the molecular structure of the 
enzyme--a step toward developing a new drug.
    Scientists at the Lawrence Livermore National Laboratory, another 
national security laboratories, are conducting cutting-edge research in 
3-D printing in order to improve the materials in our advanced 
munitions and the gear our warfighters use and wear.
    As part of this effort, Livermore has designed and printed a soft 
plastic structure that acts as a cushioning material capable of better 
absorbing impacts in helmets, and thereby potentially reducing 
traumatic brain injuries in our servicemen and women.
    These are just a few examples of the great work our labs are doing, 
Mr. Chairman.
    Mr. Glauthier and Dr. Cohon, I look forward to discussing with you 
how we can strengthen the laboratory system to ensure we continue to 
enjoy the scientific and technical accomplishments we need to drive our 
economy and safeguard our national security.

    Senator Alexander. Thanks, Senator Feinstein.
    I think Senator Feinstein and I have worked pretty hard to 
try to help the Energy Department take their big construction 
projects and get them under control. I think the Office of 
Science would want to point out that they do a pretty good job 
of that with the Office of Spallation, for example. But it is 
the NNSA that has been the bigger offender of the two.
    But that is a very interesting idea about having more 
meetings with the lab directors.
    Before we go to Mr. Glauthier, let us go to Senator Hoeven 
and then to Senator Coons and see if either of them have 
anything they would like to say before we hear from the 
commission members.
    Senator Hoeven. No. I would just like to thank the chairman 
for holding this hearing, and I look forward to the comments 
from our esteemed guests.
    Senator Alexander. Thanks, Senator Hoeven.
    Senator Coons.

               STATEMENT OF SENATOR CHRISTOPHER A. COONS

    Senator Coons. I too would like to thank the chairman and 
ranking member for your foresight in putting in place this 
commission. I am eager to hear the recommendations, and I think 
we have already begun to get into the challenges that their 
recommendations will present to us in terms of follow-through 
and implementation. So I am excited to find ways to take these 
recommendations and support your continuing leadership, Mr. 
Chairman.
    Senator Alexander. Senator Hoeven and Senator Coons have 
both followed former Senator Baker's suggestion that Senators 
should occasionally enjoy the luxury of an unexpressed thought.
    And I thank them for their succinctness.
    Mr. Glauthier, who is Co-Chair of the commission, will be 
doing the reporting today. And instead of just taking the 
normal 5 minutes and summarizing, why do you not take 8 or 10 
minutes because we would like for you to have enough time to 
tell us what you would like to tell us before we start asking 
you questions.
    He has a distinguished background, two presidential 
appointments in the Clinton administration from the Office of 
Management and Budget, Deputy Secretary and COO of the 
Department of Energy. He was on the President's transition team 
in 2008, a member of the Congressional Advisory Panel on the 
Governance of Nuclear Security Enterprises, as well as a number 
of other things. So he knows his way around the Department of 
Energy and the Government very well.
    Dr. Cohon is President Emeritus and university professor at 
Carnegie Mellon University. He was president there for 16 
years, and he came there from Yale. He has a distinguished 
academic background of publishing on a whole variety of things. 
He was named a distinguished member of the American Society of 
Civil Engineers and elected to the National Academy of 
Engineering, as well as his other honors.
    So we are fortunate to have had such distinguished 
commission co-chairs, and we thank you for spending your time. 
And, Mr. Glauthier, why don't we turn to you.
STATEMENT OF T.J. GLAUTHIER, CO-CHAIRMAN, COMMISSION TO 
            REVIEW THE EFFECTIVENESS OF THE NATIONAL 
            ENERGY LABORATORIES
ACCOMPANIED BY DR. JARED L. COHON, CO-CHAIRMAN, COMMISSION TO REVIEW 
            THE EFFECTIVENESS OF THE NATIONAL ENERGY LABORATORIES

    Mr. Glauthier. Thank you very much, Mr. Chairman, and thank 
you, Ranking Member Feinstein, Senators Coons and Hoeven. It is 
good to be here. We appreciate your opening statements and look 
forward to discussing those points further. I think you have 
got some very good ideas. You are on the track there. So we 
would like to pursue that.
    Let me make our opening statement, if I can, to put things 
in perspective and then we will go on into these other areas.
    We are pleased to be here today to present the final report 
of the commission. This was a commission that your subcommittee 
created in the Appropriations Act of 2014, as you noted. And we 
are pleased to have been able to work through this process over 
about the last 18 months.
    Dr. Cohon and I have served as the co-chairs of the 
commission and have been privileged to serve with an 
outstanding group of seven other commissioners who have strong 
backgrounds in science and technology enterprise of the Nation. 
We are pleased that this is a consensus report of all nine of 
the commissioners. And we received excellent cooperation and 
support from the Department of Energy, all the relevant 
congressional committees, the White House, the national 
laboratories themselves, and many others.
    During the course of our work, we did visit all 17 of the 
national laboratories. We heard from 85 witnesses in monthly 
public hearings that we had here and in the field, and we 
reviewed over 50 previous reports on this topic from the past 4 
decades.
    We have titled our report ``Securing America's Future, 
Realizing the Potential of the National Laboratories.''
    Our overall finding is that the national laboratory system 
is a unique resource that brings great value to the country in 
the four mission areas of the Department of Energy: nuclear 
security, basic science R&D, energy technology R&D, and 
environmental management.
    For example, the national labs, as you cited, have 
tremendous resources. They have four of the world's fastest 
supercomputers, which are helping keep the Nation--enabling the 
Nation to extend the lifetimes and safety of our nuclear 
warheads without nuclear testing. In basic science, the world-
class particle accelerators, light sources, and other user 
facilities host over 30,000 researchers every year from our 
universities and industrial partners. And in energy technology 
R&D, the labs have played an important role in helping to 
develop innovations that have led to the Nation's shale gas 
revolution, as the chairman mentioned, and the surge in wind 
and solar energy.
    However, the national lab systems is not realizing its full 
potential. Our commission believes that can be changed. We 
provide 36 recommendations that we believe, if adopted, will 
help the labs to become more efficient and effective and have 
even greater impact, thereby helping to secure America's future 
in the four mission areas of the Department.
    We would like to highlight a few of those major findings 
and recommendations and then to address other topics of 
interest to you.
    Our most fundamental conclusion does come from the 
paragraph that Senator Feinstein read. It deals with the 
relationship between the Department of Energy and the national 
labs. We find that that trusted relationship that is supposed 
to exist between the Federal Government and the national labs 
is broken and is inhibiting performance. We note that the 
problems come from both sides, from the labs and from DOE.
    We want to be clear that the situation is not uniform 
across all the labs. In particular, the labs that are overseen 
by the Office of Science generally have much better 
relationships with DOE than do those in the other program 
offices.
    Many of our recommendations address the fundamental problem 
that I have just mentioned. We conclude that the roles need to 
be clarified and reinforced, going back to the formal role of 
the labs as federally funded research and development centers 
for the Department of Energy. Under this model, the two parties 
are supposed to operate as trusted partners in a special 
relationship with open communication.
    DOE should be directing and overseeing its programs at a 
policy level, specifying what its programs should achieve. The 
labs, for their part, should be responsible for determining how 
to carry that out and then executing those plans. In doing so, 
the labs should have more flexibility than they do now to 
implement those programs without needing as many approvals from 
DOE along the way. In return, of course, the labs must operate 
with transparency and be fully accountable for their actions 
and results.
    This flexibility in our view should be expanded 
significantly in areas such as the ability to manage budgets 
with fewer approval checkpoints; managing personnel 
compensation and benefits; entering into collaborations with 
private companies, including small businesses, without having 
each agreement individually approved and written into the lab's 
M&O contract; building office buildings on sites that are not 
nuclear, not high hazard, and not classified; conducting site 
assessments that are relied upon by the Department of Energy 
and others to minimize redundant assessments; and sending key 
personnel to professional conferences to maintain DOE's work in 
leading-edge science and for their professional development.
    In your charge to us, you asked us to examine whether there 
was too much duplication among the national labs. We looked 
into this in detail and have included two recommendations in 
this area.
    The first regards NNSA laboratories where, as you pointed 
out, we conclude that it is important to the Nation's nuclear 
security that the two design laboratories' capabilities 
continue to be maintained in separate and independent 
facilities.
    The second recommendation in this area regards the way the 
Department manages through life cycle of R&D topics. In our 
view, they do a good job at encouraging multiple lines of 
inquiry in the early discovery stages of new subjects, and they 
are good at using expert panels and strategic reviews to manage 
mature programs. However, at the in-between stages, the 
Department needs to assert its strategic oversight role earlier 
and more forcefully to manage the laboratories as a system in 
order to achieve the most effective and efficient overall 
results.
    We want to acknowledge the progress currently being made in 
some of these and other areas by the current Secretary of 
Energy and the current directors of the national laboratories. 
We encourage them to continue their efforts, and we encourage 
your subcommittee and others in Congress to support them and to 
support future administrations in this direction.
    Let us turn to our recommendations for how we believe 
Congress can help improve the performance of the national labs. 
We would like to cite three specifically here in our opening 
statement.
    First, we conclude that laboratory-directed research and 
development, or LDRD, is vitally important to the labs' ability 
to carry out their missions successfully, and we recommend that 
Congress restore the cap on LDRD funding to the functional 
level that it was historically up until 2006.
    Second, there does seem to be a serious shortfall in 
funding for facilities and infrastructure at the national 
laboratories. However, the scope and severity of that shortfall 
are not well defined. We recommend that the Congress work 
closely with DOE and OMB to agree, first, upon the size and 
nature of this problem and then upon a long-term plan to 
resolve it, we think through a combination of additional 
funding, policy changes, and innovative financing.
    And third, since continuing resolutions have become more 
frequent, although maybe there is going to be a return to 
regular order there--we will see--we recommend dropping 
provision 301(d) from your appropriations bill and returning to 
the restrictions that were in place prior to 2012 for operating 
under CR's. The previous requirements were already stringent, 
and the new ones have made operations at DOE and the national 
labs much more restrictive and inefficient.
    In the interest of time, let us finish by highlighting our 
final recommendation. We found that in the past 4 decades there 
have been over 50 previous commissions, panels, and studies of 
the national laboratories. It is our view that Congress and the 
administration would be better served by some sort of standing 
body of experienced people who could provide perspective and 
advice on issues related to the national labs without having to 
create new commissions or studies every time. Such a group 
could potentially be housed at the National Academies or report 
to the President's Council of Advisors on Science and 
Technology or be somewhere else that would provide the 
independence that Congress requires.
    On behalf of our nine commissioners, we want to thank you 
for this opportunity to serve the country on this important 
commission. We hope that our work will be helpful, and we are 
happy to answer questions and discuss our findings and 
recommendations.
    [The statement follows:]
       Prepared Statement of TJ Glauthier and Dr. Jared L. Cohon
    Good afternoon, Chairman Alexander, Ranking Member Feinstein, other 
Senators and staff of the subcommittee, and others interested in the 
National Energy Laboratories. We are pleased to be here to present the 
final report of the Commission to Review the Effectiveness of the 
National Energy Laboratories. Your subcommittee created the Commission 
in January of 2014, in the fiscal year 2014 Omnibus Appropriations Act.
    The two of us have served as the co-chairs of the Commission for 
almost 18 months. We were privileged to serve with an outstanding group 
of seven other commissioners with strong backgrounds in the science and 
technology enterprise of the Nation. We are pleased that this is a 
consensus report. We received excellent cooperation and support from 
the Department of Energy, all the relevant Congressional committees, 
the White House, the National Laboratories themselves, and many others.
    During the course of our work, we visited all 17 of the National 
Laboratories, heard from 85 witnesses in monthly public hearings in the 
field and here in Washington, DC, and reviewed over 50 previous reports 
on this topic from the past four decades.
    We have titled our report, ``Securing America's Future, Realizing 
the Potential of the National Energy Laboratories.'' Our overall 
finding is that the national laboratory system is a unique resource 
that brings great value to the country in the four mission areas of the 
Department of Energy: nuclear security, basic science R&D, energy 
technology R&D, and environmental management.
    For example, the National Labs have four of the world's fastest 
supercomputers, which are helping the Nation extend the lifetimes and 
safety of our nuclear warheads without nuclear testing. In basic 
science, their world-class particle accelerators, light sources and 
other user facilities host over 30,000 researchers every year from our 
universities and industrial partners. And in energy technology R&D, the 
labs have played an important role in helping to develop the 
innovations that have led to the Nation's shale gas revolution and 
surge in wind and solar energy.
    However, our National Lab system is not realizing its full 
potential. Our commission believes that can be changed. We provide 36 
recommendations that we believe, if adopted, will help the labs to 
become more efficient and effective and have even greater impact, 
thereby helping secure America's future in the four mission areas of 
the Department of Energy.
    We'd like to highlight a few of our major findings and 
recommendations, and then would be happy to address any others of 
particular interest to you.
    Our most fundamental conclusions deal with the relationship between 
the Department of Energy and the National Labs. We find that the 
trusted relationship that is supposed to exist between the Federal 
Government and its National Labs is broken and is inhibiting 
performance. We note that the problems come from both sides, the Labs 
and DOE.
    We want to be clear that this situation is not uniform across all 
of the Labs. In particular, the Labs that are overseen by the Office of 
Science generally have much better relationships with the DOE than do 
those in the other program offices.
    Many of our recommendations address this fundamental problem. We 
conclude that the roles need to be clarified and reinforced, going back 
to the formal role of the labs as federally Funded Research and 
Development Centers for the Department of Energy. Under this model, the 
two parties are supposed to operate as trusted partners in a special 
relationship with open communication.
    DOE should be directing and overseeing its programs at a policy 
level, specifying ``what'' its programs should achieve. The Labs, for 
their part, should be responsible for determining ``how'' to carry them 
out, and then executing those plans. In doing so, the Labs should have 
more flexibility than they do now to implement those programs, without 
needing as many approvals from DOE along the way. In return, of course, 
the Labs must operate with transparency, and be fully accountable for 
their actions and results.
    This flexibility, in our view, should be expanded significantly in 
areas such as:

  --The ability to manage budgets with fewer approval checkpoints,
  --Managing personnel compensation and benefits,
  --Entering into collaborations with private companies, including 
        small businesses, without having each agreement individually 
        approved and written into the lab's M&O contract with DOE,
  --Building office buildings on sites that are not nuclear, not high 
        hazard, and not classified,
  --Conducting site assessments that are relied upon by DOE and others 
        to minimize redundant assessments, and
  --Sending key personnel to professional conferences to maintain DOE's 
        work in leading edge science and for their professional 
        development.

    In your charge to us, you asked us to examine whether there is too 
much duplication among the National Labs. We looked into this in 
detail, and have included two recommendations in this area. The first 
regards the NNSA laboratories, where we conclude that it is important 
to the Nation's nuclear security that the two design laboratories' 
capabilities continue to be maintained in separate and independent 
facilities.
    The second recommendation in this area regards the way the 
Department manages through the life cycle of R&D topics. In our view, 
they do a good job at encouraging multiple lines of inquiry in the 
early, discovery stages of new subjects. And they are good at using 
expert panels and strategic reviews to manage mature programs. However, 
at the in-between stages, the Department needs to assert its strategic 
oversight role earlier and more forcefully to manage the laboratories 
as a system in order to achieve the most effective and efficient 
overall results.
    We want to acknowledge the progress currently being made in some of 
these and other areas by the current Secretary of Energy and the 
current Directors of the National Laboratories. We encourage them to 
continue their efforts, and we encourage your Subcommittee and others 
in Congress to support them and future Administrations in this 
direction.
    Let us turn to our recommendations for how we believe Congress can 
help to improve the performance of the National Labs. We would like to 
cite three here in our opening statement:

  --First, we conclude that Laboratory-Directed Research and 
        Development, LDRD, is vitally important to the labs' ability to 
        carry out their missions successfully, and we recommend that 
        Congress restore the cap on LDRD funding to the functional 
        level that it was historically, up until 2006.
  --Second, there does seem to be a serious shortfall in funding for 
        facilities and infrastructure at the National Labs. However, 
        the scope and severity of that shortfall are not well defined. 
        We recommend that the Congress work closely with DOE and OMB to 
        agree, first, upon the size and nature of this problem, and 
        then, upon a long-term plan to resolve it, through a 
        combination of additional funding, policy changes, and 
        innovative financing.
  --Third, since Continuing Resolutions have become more frequent, we 
        recommend dropping provision 301(d) from your appropriations 
        bill and returning to the restrictions that were in place prior 
        to 2012 for operating under CRs. The previous requirements were 
        already stringent, and the new ones have made operations at DOE 
        and the National Labs much more restrictive and inefficient.

    In the interest of time, let us finish by highlighting our final 
recommendation. We found that in the past four decades there have been 
over 50 previous commissions, panels, and studies on the National Labs. 
It is our view that Congress and the Administration would be better 
served by some sort of standing body of experienced people who could 
provide perspective and advice on issues relating to the National 
Laboratories, without having to create new commissions or studies every 
time. Such a group could potentially be housed at the National 
Academies, or report to the President's Council of Advisors on Science 
and Technology (PCAST), or be somewhere else that would provide the 
independence that Congress requires.
    On behalf of our nine commissioners, we want to thank you for this 
opportunity to serve the country on this important commission. We hope 
our work will be helpful and we are happy to answer questions and to 
discuss our findings and recommendations.

    Senator Alexander. Thanks, Mr. Glauthier.
    Dr. Cohon, do you want to add anything before we begin 
questions?
    Dr. Cohon. No, Mr. Chairman. Mr. Glauthier did a great job.

                         LABORATORY MANAGEMENT

    Senator Alexander. Thank you very much.
    Thank you, Mr. Glauthier.
    At the beginning of your comments, you mentioned the 
management relationships are better in the Office of Science--
those 10 labs--you said than the others. Does that require some 
act of Congress to change that? Or is that something the 
Department can itself change?
    Mr. Glauthier. Most of the things we recommend are actually 
within the authority of the Department now. Certainly in these 
management areas, almost all of them--they have the authority 
to implement. It is just a question of willpower and actually 
going ahead and doing it.
    Senator Alexander. I mean, you are an experienced person in 
Government, as well as outside Government. Does it depend on 
the personality of the Secretary or are there changes that 
Secretary Moniz could make during his last year here that would 
likely carry over for other Secretaries? Well, maybe it is not 
his last year, but let us say in the remaining part of the 
Obama administration.
    Mr. Glauthier. That is right. Exactly.
    Senator Alexander. We like him.
    Mr. Glauthier. He is doing a good job and I think the 
relationship that he is establishing with the laboratories is 
healthier, and many of the things that he is doing now are 
consistent with the recommendations we are making. Some of 
those things he may be able to try to institutionalize or to 
put in place in a way that continues. But a lot of it depends 
upon the culture at the Department and between the Department 
and the labs. And that culture change is not something that can 
be legislated or can be changed overnight, and it requires work 
on both sides, at the laboratories and the Department. It is 
moving in the right direction. I think if it gets the 
reinforcement that your committee can provide, that will help a 
lot.
    Senator Alexander. You have made this report to him or will 
give it to him?
    Mr. Glauthier. We have. We have delivered it to him. We 
will be meeting with him in the coming weeks. We have met with 
him during the course of this work as well.

                         THIRD PARTY FINANCING

    Senator Alexander. Let me ask you about third party 
financing. You have been in the Department of Energy. You have 
been in the Office of Management and Budget. And I will just 
use the experience I know best. At the Oak Ridge National 
Laboratory, I mentioned earlier there are four major buildings 
there that have been done by what we call third party 
financing. And our experience was--I believe one of them was it 
made it possible for us to move on into supercomputing much 
more rapidly than we otherwise would have been able to as a 
Government. The cost of the buildings was roughly half of what 
it cost to build federally financed facilities, and the 
facilities were completed in about half the time.
    Now, since 2007, there have been no approvals by the Office 
of Management and Budget of third party financing at our 
national laboratories. What is going on? You used to be in the 
Office of Management and Budget. Why are they not doing that?
    Mr. Glauthier. Mr. Chairman, I think your example is a very 
good one. There are three different forms of financing that 
were used in those buildings. Those three do illustrate the 
differences that you just cited. One of them was funded 
completely by Department of Energy funding. One was funded by 
the State, and one was funded by private sector funding. And 
the results were that the alternative financing approaches were 
much better.
    The reason it is not being done right now is partly a set 
of rules that the Office of Management and Budget has adopted 
in the interest of trying to protect the Federal Treasury. It 
is true that the borrowing rates for the Federal Government are 
lower than they are for the private sector, but if that is all 
you look at, then you are missing the bigger part of the 
picture. If you can build a building overall for less cost, 
then the borrowing costs are also going to be substantially 
lower, and the net overall----
    Senator Alexander. Some people think that every time the 
private sector gets involved, that is a bad thing. I am on the 
other side of that argument. I mean, we had three or four 
examples down there, and generally speaking, the savings was 
half the time and half the cost. So one would think that 
protects the taxpayers' pocketbook.
    Mr. Glauthier. And our recommendation in the report is that 
OMB ought to--and everyone in Government ought to be able to do 
a straightforward cash flow comparison of building a project 
one way, building it the opposite way, and look at that and be 
able to make a decision that is in the best interest of the 
Government but not to have, what we see in some cases, sort of 
arbitrary rules.
    Now, there are some of the rules that we do not understand 
the rationale for them. Our recommendation is that your 
committee, its staff, the Department of Energy, and OMB ought 
to work together and see if we can agree upon what the 
situations ought to be in which innovative financing would be 
appropriate and what the procedures or what the rules would be 
for how you do that.
    Senator Alexander. Well, Senator Feinstein, I think we 
ought to follow up on that recommendation and see if there are 
appropriate instances where we can save the taxpayers money--I 
mean, half the time and half the dollars--then we ought to 
consider that.
    I had a meeting with the Office of Management and Budget 
the other day on another matter. I found Shaun Donovan to be 
very open and receptive. Are you planning to give your 
recommendations to the Office of Management and Budget?
    Mr. Glauthier. Yes, we are. We have met with them during 
the course of this, and we will be meeting with them again. We 
are trying to get them to understand the rationale for our 
recommendations so that they, we would hope, would adopt them 
and look into them more deeply.
    Senator Alexander. Well, I would appreciate your doing 
that, and after you do that, perhaps we can follow up.
    Senator Feinstein.

                         LABORATORY MANAGEMENT

    Senator Feinstein. I wanted to ask you a question about the 
oversight part of your report. You called for streamlined 
oversight of the labs by DOE, and you say ``DOE should give the 
laboratories and management and operating contractors the 
authority to operate with more discretion whenever possible.''
    Well, that is the way it has been. At UAP uranium lab, we 
have gone from $4.2 billion to $6.5 billion and completion in 
2025. So, none of the dates have been met. And I mentioned the 
plutonium building at Los Alamos, and it is kind of the same 
thing. In this case, the roof was initially too low and had to 
be changed so that the original estimate and the year complete 
went from $3.7 billion to $5.9 billion, completion in 2024. And 
then, of course, a big problem with the MOX 
facility. The original estimate, $4.8 billion and completion in 
2016. It is $10 billion to $13 billion, completion in 2027 and 
2031.
    And I will give you a specific, and the distinguished 
Senator from New Mexico is in the room. But I know when I heard 
this, I was very concerned. When you talk about use a risk-
based model ensuring the level of control is commensurate with 
the potential risk, I think of the incident 18 months ago at 
WIPP. Here was a case of the best and the brightest at Los 
Alamos contracting out to a contractor who made a basic 
chemistry error by packaging a drum using the wrong absorbent, 
organic versus inorganic kitty litter. The result was an 
exploding drum of waste, contamination of WIPP, release of 
radioactive material, and hundreds of millions in recovery 
costs.
    So when we saw all these estimates that start out rather 
low for various things and end up very high, what we did is 
asked the Department of Energy to put somebody in charge from 
the very beginning and before construction, to also extend the 
period for consideration up front of costs so that you had as 
robust an estimate of cost as one can. Then we began to hold--I 
do not know. I guess every 6 months, every year Department of 
Energy came in and brought in the person that was in charge of 
the facility. And in a way what it did was kind of cement a 
relationship that you knew who was overseeing the project and 
the Secretary knew. So there was closer oversight.
    If I read this report right, you are asking for less 
oversight. And that is a problem when you have billions in 
estimates that are underestimated.
    Mr. Glauthier. You have identified two sets of problems 
that are very serious problems there.
    And the construction projects that lead to these very big 
costs are a whole topic that we addressed in one chapter of the 
report, and we went through a lot of examination there. And our 
feeling is that the Department has a lot of rules on the books 
for the way you manage these projects that are not being 
followed or they are being followed in form and not in 
substance.
    For example, these big projects should have all the 
engineering design work done before they actually begin to 
start implementing these things and start to build things. And 
that is where you start to incur the big costs. And they do not 
do that adequately enough. They do not have enough red team 
reviews. They do not have enough of the real rigorous peer 
review of the design and engineering work up front before they 
get to their CD-2 decision in their vernacular.
    And so the recommendations of this commission and of the 
Augustine-Mies commission are to strengthen that kind of 
capability in the program offices and overall to the 
Department. I think there needs to be a stronger capability of 
people who report directly to the Secretary in their oversight 
role, as well as in the program offices.
    The Office of Science, as I think you cited earlier, has 
done a better job building the Spallation Neutron Source or 
some of the other facilities, and that is partly because they 
had a much stronger program office managing that process, the 
engineering work, the design work before they would give you an 
estimate, and that they were able to hold people accountable 
for those things. The periodic reviews are an important part of 
that. So I think of the whole big project cost, there are 
solutions in place that actually do not need any new 
authorities, but they do need the discipline to put in place 
and have the Secretary and the other management team with the 
Department pay attention to it and really enforce that.
    Senator Feinstein. Thank you. That is what we tried to do. 
You might want to make a comment.
    Senator Alexander. Dr. Cohon, I think wanted to add. Dr. 
Cohon.
    Dr. Cohon. Yes, if I could just add to that. TJ gave a very 
good response.
    And I think that the process you describe, Senator, and the 
relationship that evolved that you described between the 
Congress, the Senate in this case, and the lab and DOE is just 
right. I think that is the right level of oversight on such an 
important aspect.
    When we talk about building trust and having less 
oversight, what we are reacting to is an overall tendency for 
the relationship between DOE and the labs to become compliance-
focused. The question becomes are you complying with our 
requirements as opposed to whether you are accomplishing your 
mission. This has not happened across the entire Department, as 
TJ mentioned in our opening statement, but it does happen 
within some labs. And that is not healthy. The exclusively 
compliance-oriented relationship breeds a bad kind of behavior 
in my view. Trust, on the other hand, I think breeds the kind 
of behavior you want.
    You cite the WIPP incident, which is a very regrettable and 
important one. Things will go wrong. Fifty-five thousand people 
in 17 laboratories spread across the country--things will go 
wrong. I think, though, that things will go wrong with lower 
probability if there is this sense of trust and people are 
brought into the mission of the laboratory and they understand 
what the mission is, that they are not simply checking a box or 
responding to some kind of compliance requirement. That is what 
we are talking about.
    The other aspect of this--and this involves Congress, a 
sensitive topic I think. Things have gone wrong and will go 
wrong. And I think it is very important that we all respond 
appropriately when they do. There has been a tendency, when if 
something goes wrong in one place, to apply the solution across 
all 17 labs, and sometimes those solutions are very strict and 
it is probably an overreaction to the incident that occurred. 
So it is complicated. It depends, I think, on what we are 
talking about. But trust I think will take us a long way.
    Senator Feinstein. Thank you, Mr. Chairman.
    Senator Alexander. Thank you, Senator Feinstein.
    Thank you, Dr. Cohon.
    Senator Feinstein asked me to comment on what she said. I 
will do it very quickly.
    We applied a very simple principle of oversight on those 
big construction projects, starting with the uranium facility, 
and did, Mr. Glauthier, really what you suggested. We insisted 
that there be a budget number, which is $6.5 billion, that 
there be a date for completion, which is 2025, and that 90 
percent of the design work be completed before it was done. And 
then we asked that there be a red team appointed, which in this 
case was headed by Dr. Mason, head of the laboratory, and in a 
few weeks, they came back with some recommendations that 
produced that result with some very commonsense suggestions, 
and they are on that path now. In the meantime, we are meeting 
at least every 6 months giving them a chance to say we are on 
course or we are not on course and here is why and here is what 
we can do about it. We know they may run into some problems, 
but so far, so good.
    And we have done the same thing with the MOX 
facility and a second red team has come back with a set of 
recommendations to us.
    So that is the kind of oversight this subcommittee has been 
exercising, and so far it has been helpful.
    Senator Hoeven.

                         COOPERATIVE AGREEMENTS

    Senator Hoeven. Thank you, Mr. Chairman.
    I would like to explore the topic of cooperative agreements 
with both of you gentlemen and get your recommendations on how 
we can do more with cooperative agreements.
    In North Dakota, we have at the University of North Dakota 
the EERC, Energy and Environmental Research Center, and we have 
a cooperative agreement with the National Energy Technology 
Laboratory. And what we are really focused on is how do we make 
carbon capture and storage commercially viable because people 
like to talk all the time about capturing and storing 
CO2 from coal-fired electric plants and the 
technology is there to do it. It is just doing it in a 
commercially viable way. And the EERC is doing some amazing 
things. That is a partnership that we need to build with DOE's 
National Energy Technology Laboratory.
    Another example is at North Dakota State University, we 
have supercomputing, and we have a partnership with Lawrence 
Livermore, our national laboratory, to use supercomputing to 
come up with new ways to develop energy, to drill more cost 
effectively in shale formations, to do things with battery 
storage and advanced technologies related unmanned aircraft, 
those kinds of things.
    So I think these are a very productive way to take 
technology from the laboratory and out to commercial 
development.
    So we need to do more with these cooperative agreements. 
And I worked with our chairman and ranking member to put more 
funding in the energy and water appropriations bill for 
cooperative agreements.
    But how do we build those cooperative agreements. You know, 
people talk about these technologies they want out in the 
field, and they know they are technically viable but we have 
got to make them commercially viable. So, talk about what we 
can do with cooperative agreements, how we really build on that 
relationship between the national labs and the universities 
that are leading the charge in all of these different areas.
    Mr. Glauthier. Good, Senator. That is very important, and I 
will make a couple comments, and then Dr. Cohon I think will 
want to add to that as well.
    The cooperative agreements I think are a great vehicle for 
work with the university community and the Department of 
Energy's laboratories and programs, and those are I think very 
successful and they are relatively easy to get underway. We 
would like to encourage the Department to do everything they 
can to make them even easier.
    The more complicated area is with the private sector. The 
agreements where industry is working, whether it is a big 
company or small businesses--it requires every time to be 
reviewed and approved by the Department of Energy and 
incorporated as an amendment into their contract at the 
laboratory. Now, that seems to be unnecessarily complicated to 
us. If there is an understanding that the laboratory is going 
to be doing work in this area, that is with the scope and 
nature of work with the private sector is a certain amount, 
then they should be able to go ahead and carry that out and do 
that unless it is something really new. And that area is one 
that we do think can be improved substantially, and there may 
be some area where legislation is helpful in the future.
    Senator Hoeven. Dr. Cohon.
    Dr. Cohon. I would just add to what Mr. Glauthier said. I 
think laboratory leadership added towards technology 
commercialization matters greatly. I think at those 
laboratories where the leadership really is committed to it, I 
think it happens more easily and in greater quantity. But it 
does take commitment. It is not easy. I speak from the 
perspective of a former university leader, and I know what the 
barriers are culturally, et cetera. But it can be done, but it 
takes commitment.
    This Secretary has indicated his support for technology 
commercialization system-wide, but the actual commitment I 
think varies greatly from lab to lab. So having the commitment 
joined with a less bureaucratic approach to issuing agreements, 
I think progress could be made.
    Senator Hoeven. Well, one of the challenges we have is the 
regulatory environment is always trying to push these issues. 
We have funding in DOE for things like CCS, but we still have 
not brought it together in a way that makes it commercially 
viable. So it seems to me the universities, because they have 
partners--for example, EERC with their Northern Plains 
CO2 Sequestration Project has 80 partners. A lot of 
those are the private sector companies you are talking about. 
So how do we really drive that and bring some of the other 
funding into the equation and put it on top of those 
cooperative agreements and actually get something done?
    Dr. Cohon. So you have put your finger what I think is a 
great model or potentially great model, which is, as you point 
out, universities already work with a lot of companies, and 
here we have an excellent example in the EERC with many 
companies involved. That could act as a great sort of go-
between for the laboratories, which find it more difficult for 
a variety of reasons to work directly with the companies. They 
do but there is more process involved. If they worked with and 
through universities more, I think they could get a lot more 
done.
    I will just say commercializing technology is hard because 
it starts with an idea and even when it is well developed in a 
laboratory or university, it still has a long way to go to get 
to the market. Let us not make it harder by weighting it down 
with the kind of bureaucratic issues we have.
    Senator Hoeven. Thank you.
    Senator Alexander. Thank you, Senator Hoeven.
    Senator Coons.

                 COMMERCIALIZATION OF NEW TECHNOLOGIES

    Senator Coons. Thank you, Senator Alexander. And I would 
like to thank you, Mr. Chairman and Ranking Member Feinstein, 
again for convening this great hearing, and both of our 
witnesses today for your leadership of this important 
commission to review more thoroughly some vital issues. And you 
have a rich menu of 36 different recommendations. A number of 
the important ones have already been addressed.
    But I would like to turn to your recommendation, I believe, 
number 25, that DOE give the labs more authority and 
flexibility to decide how they will achieve their overall 
program goals.
    I have introduced earlier in this Congress bipartisan 
legislation with Senator Durbin, as well as Senators Rubio and 
Kirk. It is called the America INNOVATES Act. It is S. 1187 
that would specifically delegate more authority to the labs to 
enter into agreements with the private sector to facilitate 
commercialization of new technologies. These ideas, which are 
hardly groundbreaking--they have been brought up in previous 
studies. They have been discussed previously. They have been 
endorsed by a group that ranges from the Heritage Foundation to 
the Bipartisan Policy Center to ITIF to the Center for American 
Progress.
    Do you believe Congress can play a helpful role in 
facilitating ideas getting to market through more specific 
legislative direction that implements some of your 
recommendations? And what are your specific thoughts about how 
we can give the labs more tools to meaningfully improve 
opportunities for tech transfer in public-private partnerships?
    Mr. Glauthier. Yes. I think your legislation is very much 
in the direction that we endorse. We refrained from endorsing 
any specific bills in our report. But the changes that you have 
in that legislation are exactly the right sorts of things. 
Laboratories ought to be freer to enter into agreements with 
private industry. Especially small businesses are really 
hampered by not being able to do that easily. And to have a set 
of criteria which make it easy to be able to say for contracts 
or projects of less than $1 million, for ones that are involved 
with U.S. companies--we are not dealing with foreign 
companies--it ought to be straightforward and be able to do it. 
So I think that is the kind of thing that is very helpful, very 
powerful.
    There are lots of companies out there who want to work with 
the laboratories, but it is time-consuming and cumbersome.
    Dr. Cohon. I would like to add just two thoughts, Senator. 
And thank you for your bill. I think it is excellent leadership 
and it is very much in line with the views of our commission.
    We observe in our report that over the years, over the 
decades, the pendulum has swung back and forth with regard to 
the attitude towards commercialization. It is viewed variously 
as essential and that the labs are not doing enough or as 
corporate welfare and they are doing too much. So they have 
gotten mixed messages and they have changed over time. So a 
consistent message strongly in favor of it I think is very 
important. It would go a long way towards moving it forward.
    The other thing is I know again from my own experience that 
university researchers in this respect are a lot like lab 
researchers. Their job is not commercialization per se, and we 
do not want it to be because we want them to discover the next 
great idea. But we need to make it easier--and universities 
have largely figured out a way to do that--for faculty 
researchers to be involved in the commercialization process 
without giving up their birthright or in some way destroying 
their role as a faculty member. We have not overcome that in 
the labs at all. It is a very difficult thing for a lab 
researcher to do. And people experienced in technology transfer 
will often say--they use various phrases, but usually they will 
say it is a contact sport, that it is about people, and people 
have to be involved in the commercialization and transfer of 
technology. It is still too difficult for lab researchers to be 
involved in that process.

                      PROPOSED TRAVEL RESTRICTIONS

    Senator Coons. Well, thank you. I appreciate both of your 
kind comments on the legislation. And I hope to have a chance 
to work with my colleagues. I strongly feel that we need to 
strengthen the tech transfer and commercialization function of 
our national labs. These are unique national treasures. And I 
do think that clear, consistent signals from Congress, from the 
administration will help strengthen it. I agree that discovery 
science requires scientists who are focused on fundamental 
science, not on commercialization, but we should not make 
commercialization difficult. It should be easy. Tech transfer, 
spinning out some of the amazing inventions and innovations at 
the labs should be easy.
    Let me just briefly ask you about recommendation 18, which 
is that we reduce some of the travel restrictions to enable 
conference participation. I fully understand why there was 
travel restrictions put on, given a scandal in a Federal 
agency, a different function. But I view the ability to travel 
and participate in scientific conferences as absolutely 
essential both to the advancement of the careers of research 
scientists and also the advancement of the work of science.
    Tell us a little bit more, if you would, about how you 
think this travel restriction has been affecting the labs and 
whether labs are able to perform their cutting-edge research 
mission while their leading scientists are barred from 
traveling to meaningful conferences and participating in them.
    Dr. Cohon. I would be happy to.
    As we note in our report, we visited all 17 labs. In every 
laboratory in our meetings with especially younger scientists, 
this issue came up and came up as number one. It is a very 
serious constraint on their ability to be effective, as you 
point out, Senator.
    Being effective when you are involved in research means 
interacting with people who are at the frontiers of your area 
of science. If you cannot go to conferences, to meetings of 
such people, you are really deprived.
    Now, they often could go but the delays in getting 
approval, the steps they had to go through really were a very 
big burden.
    I will say this is a great example of a bad thing happening 
someplace in Government and the reaction being to penalize 
everybody.
    Mr. Glauthier. If I could add to that. I think this is also 
an example where people were beginning to figure out a way to 
make the system work, figure out a way to get approvals and 
all, when the fundamental question ought to be asked, why do 
you have the approvals in the first place? The laboratories 
ought to be given the responsibility to carry this out in an 
appropriate way. They are responsible and accountable for how 
well they do both support their researchers and make sure that 
the program is in balance with the other priorities that they 
have.
    So the Department has recently made some changes. The 
Secretary has made changes to improve this. We are hopeful that 
that is going to be effective in making this work, but we also 
think it needs to be watched continually and to make sure that 
right balance exists. I think it is a very good example of the 
sort of thing that Senator Feinstein was referring to earlier 
about how much flexibility or independence do you give the 
laboratory. This is an area that we ought to be able to make 
those decisions and then be held accountable for how well they 
do it.
    Senator Coons. Well, I appreciate both your strong 
statements on this. In visiting national labs, I have heard 
exactly the same thing, particularly for sort of early or mid-
career scientists. They feel they are being treated like 
children in terms of the hoops they have to jump through, the 
forms they have to fill, the restrictions on their careers. And 
I think this is being pennywise and pound foolish. It is a 
significant barrier to successful careers in science to put 
these shackles on participation in scientific conferences. I 
know this is a very small budgetary issue, but I am concerned 
about its big impact on careers.
    Thank you for tolerating my long second question, Mr. 
Chairman.
    Senator Alexander. Thank you, Senator Coons.
    Senator Lankford.

                     THEFT & LABORATORY MANAGEMENT

    Senator Lankford. Thank you.
    Gentlemen, thank you for all your work and the research 
that goes into this. Just going back through 50 different 
reports over 4 decades alone, much less getting all the labs 
and all the interviews and everything, I appreciate all the 
work and research that went into it.
    Let me give you the flip side of this, and it is the 
challenge that we face on this dais on accountability and 
trust. It is entirely appropriate to pour trust out and to 
allow people to be able to run and be able to hold people 
accountable in it.
    Last week, as you know, the FBI reported the theft of tools 
that had radioactive materials from Los Alamos on them. In that 
search warrant that came out, it was discovered that there had 
been 76 times this year that there has been a report of theft 
by employees at Los Alamos of some type of materials or 
products.
    How do we handle and how do we balance the ``I trust you, I 
want you to run with this'' and dealing with something as big 
as tools that were stolen with radioactive material and being 
able to monitor and understanding this has happened 76 times 
just this year in some level? Help us to balance that because 
you want to instill trust with people that are doing an 
excellent job, but the administration has got to actually carry 
the ball.
    Mr. Glauthier. Senator, I think that is a good example of a 
complex situation where the consequences can be serious, but 
the Department of Energy--the Federal employees are not going 
to be there to check people's toolboxes every day to see what 
goes out of the facility. So the key is holding the 
accountability at the right level. The laboratory management 
has to be accountable for how well this is carried out and then 
has to push that down through the organization. And there needs 
to be a way to hold them accountable and have some consequences 
when things do not go right.
    Senator Lankford. So saying that, is it your perception 
that DOE is trying to do all of that accountability from D.C. 
for lack of a better term and there is not enough 
accountability that is applied to individuals or they do not 
have the authority to apply the accountability at the lab 
level?
    Mr. Glauthier. I think there is the site office in between. 
I think the problem is that a lot of people at the site office 
are following a checklist approach to compliance or to how they 
are overseeing the laboratory. So they will do their 
inspections. They will check things that are--do they have 
their plan in place? Have they carried out an inspection of 
this site or that site in the last week? And check the box 
rather than stepping back and looking at what are we really 
trying to accomplish here.
    We talked about making the requirements risk-based. I think 
that it is a very good example here when the risks could be 
serious so that there needs to be more dialogue really of, 
okay, how is the laboratory managing this kind of risk. And it 
ought to be at that level rather than, oh, we have got a 
prescription. We have got a set of things you have to do, and 
as long as you do those, you will be okay.
    What has happened when there are too many requirements, 
people get relaxed and they think, well, if I met all those 
requirements, it is all going to be okay. I think that is 
somewhat like the problem that happened at Y12 a couple years 
ago where we had the security incident where people had been 
checking the box on things and not stepping back and looking at 
what is the need here to make sure that this is a secure 
facility and that people are doing it right.
    Senator Lankford. So ultimately, accountability needs to 
lie as close as it can to have direct oversight. Is your 
recommendation, your sense at this point, that the oversight is 
too far away and that the people that are there do not have the 
authority, as well as the responsibility? They may have the 
responsibility but not the authority to actually do real 
oversight. They need to have both closer.
    Mr. Glauthier. I am not sure I understand exactly the----
    Senator Lankford. If the sense is, for instance, this tool 
illustration--when it is radioactive tools, that is a different 
level I understand, whether it is other things. But when you 
have got that much theft and that many reports in one location, 
obviously, we are not checking inventory. Something is not 
being managed well. We do not see that in other locations 
everywhere.
    So the question is do the people on site have both the 
authority and the responsibility to carry out, or do you feel 
like they have the responsibility but the authority for 
oversight is somewhere far away?
    Mr. Glauthier. I think that authority and responsibility is 
mixed up right now. It is not clear enough. These roles and 
responsibilities need to be clarified and that people at the 
laboratory need to understand exactly that they are responsible 
for that and then they are accountable for it.
    Senator Lankford. Right, because the accountability has to 
fall there.
    Mr. Glauthier. Absolutely.

                              DUPLICATION

    Senator Lankford. Let me ask for clarification as well on 
the duplication side that this committee asked you to do on 
that--you had two recommendations. One recommendation is you 
looked at NNSA and you basically determined, no, it is 
duplication, but we should have duplication. It is redundancy 
and it is right.
    The second one seemed to be a very carefully worded 
statement of, yes, when these projects are getting started, we 
are seeing duplication, but eventually it works out. As they 
progress, somebody takes it, but at the beginning we all seem 
to be working on similar things at the beginning. We need 
greater sense of accountability. You have got this lane. You 
have got this lane. Am I reading that correctly?
    Mr. Glauthier. Yes, but we are also saying the Department 
is not stepping in early enough in these programs to assert 
that responsibility and to work out in a systematic way--and I 
use the word ``system'' very, very carefully--look at the 
system of labs, where should the leadership or the centers of 
excellence be on the----
    Senator Lankford. Is that because the labs do not have a 
clearly defined ``this is your lane,'' and there is enough 
overlap where there are three labs that have a little bit of 
overlap and they are all competing in that one space? And so 
DOE or the labs need to work out who has got what lane and to 
run it well. Is that your recommendation?
    Mr. Glauthier. Yes, that that needs to happen sooner, and 
at the very early stage where something new is being explored, 
it is a really good idea. And I would not call it duplication 
as much as exploring a lot of different avenues.
    Senator Lankford. Sure. It is the competition of a 
different angle to the same goal. I get that.
    Mr. Glauthier. That is right. And then at some stage, it 
really is important for the Department to say, all right, we 
have got a bunch of people looking at this. Let us come 
together, get the experts in our labs and in the universities 
and industry to sit down together and agree what is the Federal 
role here.
    Senator Lankford. But that should be at DOE level.
    Mr. Glauthier. Yes.
    Senator Lankford. That is at a larger level.
    So greater accountability and responsibility and authority 
at the local level for carrying out the task. We are back to 
your earlier statement of the ``what'' and the ``when'' from 
the larger level, the ``how'' at the local level, but also the 
accountability there. But somebody has got to manage, no, you 
cannot do that project. They are working on it. They are 
farther along than we are and they are being successful. Lay 
off of that one and go to this.
    Mr. Glauthier. And there we think the process the Office of 
Science is using is the best one that does bring together the 
experts in that subject area to have that discussion and help 
inform that so it is not just a more arbitrary decision.
    Senator Lankford. Thank you.
    Senator Alexander. Thank you, Senator Lankford.
    Senator Udall.

               LABORATORY DIRECTED RESEARCH & DEVELOPMENT

    Senator Udall. Thank you, Senator Alexander, and thank you 
for having these witnesses in. I think these are very important 
reports that you have made, and the Augustine report I guess 
was done first. But I think they really help our national 
laboratories focus on what is important.
    I wanted to focus again on some of the questions that were 
asked about LDRD. You know, while most people know the history 
of nuclear weapons work at these labs, many do not realize this 
work is supported by research into basic science. Professionals 
at the labs have made substantial progress to solve some of the 
world's most vexing problems. Fortunately, lab directors have 
been able to leverage cooperative research and development 
agreements, laboratory-directed research and development, LDRD, 
and other methods to spearhead projects that may be outside the 
normal weapons or national security research which directly 
supports scientific progress and retention of top researchers.
    As this report concluded, many laboratories also depend on 
LDRD to support the recruitment and retention of qualified 
staff. It is no secret that the LDRD program has been under 
attack in some quarters. The commission recommended the 
unburdened cap of 6 percent and noted this would primarily 
impact the NNSA labs.
    Why is this important for recruitment and retention, and 
how in your opinion does the LDRD program benefit the overall 
mission of the NNSA labs. And what unique achievements in your 
opinion are directly related to the LDRD program?
    Dr. Cohon. I will take that one, Senator.
    Senator Udall. Thank you.
    Dr. Cohon. Thank you for the question. It is a very 
important topic, and we agree with your characterization of it.
    LDRD is especially important for the weapons labs for the 
reasons you said. They depend very much on basic science, and 
it is the LDRD funding that allows them to explore new areas. 
It is especially important for the weapons labs in the 
recruitment and retention of leading scientists. As you know 
well, Senator, we do not teach weapons science in universities. 
There is only three places where weapons science is developed 
and taught, and that is at the three weapons labs, as it must 
be. It is very important, therefore, that these laboratories 
have a way to bring in, on board, if you will, Ph.D.-level 
scientists who come without that kind of weapons background.
    The LDRD funding is often the way they do this. They are 
very dependent on postdoctoral workers. I have forgotten the 
percentages. They are in our report. But it is well over half 
of their post docs come in with this kind of funding and well 
over half of those post docs are retained as new Ph.D. 
scientists for the laboratories. Without that funding, I do not 
think they could sustain the workforce that they must have.
    And the reductions or the effective reduction, because of 
the burdening and then the lowering of the cap, has had an 
impact on those three laboratories in their ability in the 
numbers and their ability to recruit and retain these 
scientists. So it is very important.
    Senator Udall. One of the things that I have noticed that 
happens is many times, even at the National Security labs, the 
NNSA labs, if they diversify some into other areas, which they 
have, non-weapons work, they are able with these post docs to 
be able to attract them to the laboratory and have them work in 
both areas, both weapons and non-weapons. And it provides, I 
think, a very fertile ground for basic scientific research. I 
think you were going to comment on that, Mr. Glauthier.
    Mr. Glauthier. Yes. I agree with that. And I think that one 
of challenges for the recruiting of really strong people into 
these weapons labs is that weapons research is not as 
attractive an area for a lot of people. So having the fastest 
supercomputers in the country at these labs, having other areas 
of basic science and exploration available to them is really 
helpful.
    One of the interesting things, in addition to how many of 
the post docs are supported by LDRD, is the percentage of them 
that decide to stay at the labs. And it is around 70 percent, 
something like that, of those who come. But they are not sure, 
when they first sign up, whether they are going to or not. And 
having this richer set of work to do is a very important 
element of that.
    Dr. Cohon. There is also a practical consideration that we 
have not mentioned, which is that these scientists must receive 
clearances, of course, before they can do their weapons work. 
This often takes many months, a year, and being able to support 
them with LDRD funds on this more basic research until they get 
their clearances is also important for these laboratories.
    Senator Udall. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Alexander. Thanks, Senator Udall.
    Senator Durbin.

                         LABORATORY MANAGEMENT

    Senator Durbin. Thanks, Mr. Chairman, and thank you for 
your testimony here today.
    It was just last week when Senator Risch and I, who co-
chair a labs caucus, were able to walk through a room in this 
building and see some of the exhibits of the work that is being 
done at the national labs. What struck me, following up on 
Senator Udall's line of questioning, was the important role 
which the Department of Energy and these labs play when it came 
to this nuclear agreement with Iran. They were an essential 
part of it and I think brought more credibility, scientific 
credibility, to this process than we otherwise could have 
achieved. So I would hope that that is an incentive for us to 
explore use of the labs, to verify our political aims in a 
scientific manner in the future.
    As I read this, I was struck by several things. The first 
three recommendations: the labs need more money, more 
authority, more freedom. Those are the first three things that 
you recommended. And more and more the recommendations came 
down to analyzing the relationship between the labs and the 
Department of Energy.
    And I guess I read near the end of this report, quote, ``In 
the past 4 decades, over 50 commissions, panels were used and 
studies of the national labs have been conducted.'' That is 
more than one per year by my rough liberal arts math 
calculation. The basic question is can this marriage be saved. 
I mean, if we have to go to counseling so often with the same 
basic conclusions, then we ought to raise some basic questions. 
So I want to get down to something that is even more basic. You 
alluded to it, but I would like to hear your comments.
    How many of these problems associated with this 
relationship between the labs and DOE are the result of statute 
or regulation? How much is the fault of an ongoing--I will use 
``bureaucracy'' in a positive way--bureaucracy? How much is the 
result of political change, different administrations coming 
in, different goals, different people? How would you assess 
that in terms of the current situation between the labs and the 
DOE?
    Dr. Cohon. We agreed that TJ would take all the hardest 
questions.
    I think he wants to answer this one.
    Mr. Glauthier. Senator, I am not sure that is the hardest, 
but I think it is a very good question.
    I guess I would start with the fact that we do not see this 
as a partisan issue at all. This is not a Republican or 
Democratic set of issues. It is more a function in some cases 
maybe the individual who is the Secretary of Energy, but it is 
not because one party or the other. It is this relationship 
that I think has grown up over time.
    And the way that we described it earlier, the section that 
Senator Feinstein read from our report earlier--and I think it 
might have been before you arrived--had to do with the fact 
that the laboratories and the Department both are responsible 
for this. The laboratories operate often in some degree of 
secrecy. They are trying to establish their role in different 
areas. They come up and talk to Members here on this side and 
the other side of the Hill as well, trying to get support for 
their programs. And they are not sharing as openly with the 
Department what they are doing in those cases until they can 
secure some support. And that behavior then elicits a behavior 
on the Department side who want to know more about what they 
are doing and start to impose more requirements. That is kind 
of a cycle that reinforces itself and just gets worse so that 
the Department does not trust the labs totally, and they are 
asking for more information, and the labs do not trust what the 
Department will do with the information, and so they hold it 
back a little.
    We think this Secretary and this set of directors of the 
labs are actually making good progress in restoring that and 
rebuilding that trust and confidence. So our recommendations 
are very much in the direction of trying to take some steps to 
give the laboratories some more flexibility but hold them 
accountable. And the accountability side is crucial. This is 
not just to give them more flexibility to go off and do things 
on their own, but to try to do that in some of these areas.
    We talked about some areas, for example, the whole human 
resources area, just compensation and benefits. We think that 
the laboratories and their M&O contractors have been hired to 
manage these facilities because they are institutions that have 
solid backgrounds and reputations. They ought to be free to go 
ahead and carry that out, consistent with requirements for what 
compensation and benefits you expect in a laboratory. But right 
now there is an awful lot of approval process negotiating it 
out ahead of time every year. And that is sort of a simple 
area. But every company, every university, every other 
organization in the country goes through a compensation and 
benefits analysis every year. They ought to be able to just 
sort of define what we expect of that, have them do it, and 
have them continue to report and be accountable.
    Senator Durbin. I am over by a couple seconds here, but I 
just close by saying I encouraged our scientific research 
community through our Government to tell their stories. I do 
not believe they do enough. I do not think the average person, 
average voter, average taxpayer, average Congressman, or 
average Senator know what is going on. And when we are asked to 
fund many of these projects, there is skepticism. What is the 
difference? Who cares? And they should care because important 
things are happening. I think those who are in the scientific 
field need to have some friends in the marketing field.
    Thank you, Mr. Chairman.
    Mr. Glauthier. If I could, Mr. Chairman, can I just add one 
more?
    Senator Alexander. Sure.
    Mr. Glauthier. I think that there is a really important 
role for the laboratories that we see in this, and that is from 
universities doing a lot of exploring of ideas and the like, 
but sort of individual project people running projects and then 
the commercial sector when things really become well developed 
and are able to be commercialized, there is a whole in-between 
area where projects are complex, require multidisciplinary 
inputs, large numbers of people participating in them, and that 
is an area that the labs can play a very unique role. But the 
public and Members of these bodies do not understand that very 
well.
    Senator Durbin. Mr. Chairman, if I could have 20 seconds. I 
beg your indulgence.
    Senator Alexander. Whatever.
    Senator Durbin. A classic example. I spoke to Secretary 
Moniz about the need for more money in biomedical research, and 
I mentioned Alzheimer's, one diagnosis every 67 seconds, a 
recent ``Fortune'' magazine article that showed some imaging 
finally of the progress of Alzheimer's that used to only be 
determined by a postmortem. Now they can determine--and he said 
to me, where do you think that came from? Well, it came from 
the Office of Science in the Department of Energy. They were 
developing this technology. There is a story every American 
family understands.

                 NATIONAL ENERGY TECHNOLOGY LABORATORY

    Senator Alexander. Thanks, Senator Durbin.
    Would you like to say anything about your recommendations 
about reorganizing the National Energy Technology Laboratory in 
West Virginia?
    Dr. Cohon. Yes, I would on behalf of TJ and the commission.
    It is very important for people to recognize at least a 
couple things with regard to this recommendation.
    First of all, the National Energy Technology Laboratory is 
a very important resource for the Department and for the 
Nation. It is the Fossil Energy Laboratory, and fossil fuels 
will be with us, must be with us for many decades to come. And 
to continue to do research on that, what we heard about from 
Senator Hoeven, is really very important.
    The other thing is we have two recommendations, and they 
are separable and it is important to recognize that.
    The first one that we offered was to reorganize the 
National Energy Technology Laboratory. The National Energy 
Technology Laboratory is unique among the 17 labs not only 
because it is a GOGO, Government-owned/Government-operated, but 
also because it has, in effect, a large service center which 
operates on behalf of the fossil energy program of DOE 
collocated with the laboratory but actually inside the 
laboratory. So the director of NETL is responsible for this 
large service center as well as the research and development 
function. In fact, the research and development function is 
only about $50 million or so out of an annual expenditure of 
$600 million to $800 million. So in a way it is the tail 
wagging the dog.
    What we have recommended is that the resource function be 
pulled out separately, that that be the National Energy 
Technology Laboratory, giving that function the focus and 
attention we think it deserves.
    That is quite separate from the other part of our 
recommendation, which is to study the potential conversion of 
the NETL to being a GOCO, a Government-owned/contractor-
operated, like the other 16 laboratories.
    We should not confuse the two. We think that the first one 
could be pursued without, we believe, a great deal of cost or 
impact on the operations of that laboratory.
    The second one, the conversion to being an FFRDC--that may 
be more expensive and more difficult, but that is a separate 
issue.
    Mr. Glauthier. May I add one note?
    Senator Alexander. Sure.
    Mr. Glauthier. We know that the unions and others in the 
regional governments are quite concerned about this. I want to 
make it clear that that first recommendation that Jerry just 
described would still have all those people be Federal 
employees. They would still be located in the same places. They 
would not change any of that. What it would change is 
organizationally just this very clear focus and attention on 
the research functions versus the others that are a service 
center and other sorts of functions.
    Senator Alexander. I am correct, am I not, that of the 17 
laboratories, it is the only one that is not run by the model 
of hiring a company who is a contractor to manage the 
laboratory? That is the way 16 of them are run. Right?
    Dr. Cohon. That is correct, Mr. Chairman.
    Senator Alexander. And this one is run just by the 
Government.
    Dr. Cohon. That is right. Everybody there is a Government 
employee.
    Senator Alexander. And generally speaking, do you think the 
model of hiring a company to provide the management for the 
national laboratories at those 16 laboratories is a good one?
    Dr. Cohon. We support that model. This Congress created 
many decades ago this unusual and unique model of an FFRDC, and 
I think it has served us extremely well and I think these other 
16 labs are the examples of that.
    Mr. Glauthier. We said in the report we think that there is 
a greater degree of consistently high quality research at those 
other laboratories and that the research at NETL does have some 
very good research but it is not consistently as high quality 
as the other labs.

                            CLOSING REMARKS

    Senator Alexander. Well, what I have heard today is a 
number of interesting recommendations, and we will certainly 
take them into account. I hope you will pursue the 
recommendations with the Secretary because he is a good 
Secretary and I think he is interested in these 
recommendations, as we will be. I hope you will pursue them 
with the Office of Management and Budget because, for example, 
with the third party financing and maybe you can remind them of 
some things that they overlooked on this. They may have not 
thought it all the way through and may welcome that.
    I would like for us to pursue the third party management. I 
would like for us to pursue the point that Senator Udall talked 
about, which is the full use of the 6 percent, especially by 
the weapons laboratories where it seems to be more valuable.
    I thought it was interesting--Senator Coons' comments. And 
perhaps one of you said--I guess you did, Dr. Cohon--that what 
the laboratories need on commercialization is just a clear 
statement from us about whether it is corporate welfare or 
something they ought to be doing because I know from my own 
background, I have tried it as a university president, as a 
Governor. I have tried it from every angle. It is not easy to 
do.
    And one of the things that I have noticed--I was talking to 
the former chief of staff of our State's Department of Economic 
Development. He thinks the private companies are not very 
aggressive in trying to dredge out ideas from the laboratories. 
He puts the fault there. One company moved into Tennessee and 
was particularly aggressive and went over to Oak Ridge and 
found a lot of materials research that is interesting.
    I suggested to Fred Smith, the founder and CEO of FedEx, he 
ought to spend a day at Oak Ridge, and he wandered through and 
was looking for one thing and he found something in the 
materials research they were doing he thinks will save hundreds 
of millions of dollars in the weight of his containers that 
FedEx flies all over the world.
    I was at a medical device company on Monday, and they are 
using, as I mentioned earlier, 3-D printing on the tools for 
knee replacements. Someone from that company had visited the 
additive manufacturing at Oak Ridge, but what we are finding is 
at Oak Ridge, that now a manufacturer in Indiana might be 
putting an employee or two in Oak Ridge to keep up with the 
research and development so that they can transfer it to their 
manufacturing plant in Indiana.
    And another interesting idea was that the Governor of our 
State has created State vouchers which he will give to 
companies that they can spend at the laboratory. In other 
words, if the medical device company wants to go to the Oak 
Ridge Lab and look at their computers or their additive 
manufacturing, the State will provide an incentive for that.
    So I guess one thing we need to think about is whether we 
have enough of a consensus here to send a clear message to the 
various labs that it is important for them to try to move the 
technology out of the lab and into the private sector. Sandia, 
in my experience, I think had done a pretty good job of that, 
better than some other laboratories have. But it is not easy. 
It is pretty complicated. And that is an area that we can focus 
on.
    So I do not have any further comment. I will ask Senator 
Feinstein if she has a further comment, and then I will ask 
each of you if you have a final word you would like to say to 
us and we will conclude the hearing. Senator Feinstein.
    Senator Feinstein. No further comment. I think I made my 
concerns known.
    I do want to thank you both, and I want to thank everybody 
that participated in making this report. I think it is up to us 
that we make the most of it, and we will try to do so.
    The question of trust that you raise is one that is very 
interesting to me, and I am not quite satisfied by that because 
particularly with the nuclear part of this, it is so expensive 
and it takes up so much of our budgets, that you really cannot 
afford to have waste in it because the numbers are so big.
    We have a unique problem because for many--and I am one of 
them--the Army Corps of Engineers is the only infrastructure 
program we really have in this country. And so you have these 
competing forces, the Army Corps, the DOE, and then you have 
half of the assignment which is the nuclear stuff, and that is 
huge and costly.
    I am one that would like to see the world without nuclear 
weapons. I was a small child when Hiroshima and Nagasaki 
happened, and I have never gotten over it in my lifetime. And 
the pictures and people burning in the streets, just horrible. 
Yet, we make these huge nuclear weapons, and it is a problem. 
So I do not want to see any waste. I am one that supports the 
downsizing of them and one that supports START II and the 
Comprehensive Test Ban Treaty and all of those things that 
become so controversial in the world we live in.
    And I would like to see the labs do more in areas of human 
endeavor. We have got so many people that need help and 
opportunity and all of those things, that it is very hard.
    And the Senator and I--and I could not have a better 
partner, incidentally--have been trying for 4 years to get a 
nuclear policy for this country. We have none. And we spent 4 
years and the chairmanship of the authorizing committee has 
changed, and we are hopeful we will be able to move a bill. But 
it takes time.
    I am just sort of going on, but I want to say this. I have 
two big nuclear reactors in southern California in Southern 
California Edison, 2,200 megawatts that are being 
decommissioned. They are on a cliff on a beach, 3,300 very hot 
plutonium rods and a spent fuel pool and 6 million people 
living just across the freeway and reading in the newspaper 
about updates of high probability of an earthquake in the area 
of southern California. So I think to some extent the world I 
guess directs some of these priorities, but we ought to be able 
from our history to direct others. I do not know why I am 
getting into all of this.
    But I do want to thank you. You came in. You gave us some 
very good ideas. It is really up to us to follow up and we 
will. I hope you will make yourselves available for questions 
or to sit down with us in the future.
    Senator Alexander. Mr. Glauthier, Dr. Cohon, any final 
words?
    Mr. Glauthier. Yes. I would like to add a couple of 
thoughts. One is that whatever the missions are the Department 
of Energy has been given, which is another set of people beyond 
us, our recommendations are focused on how to make sure those 
are effectively carried out and efficient. And we hope that you 
will be able to work with the Department of Energy and the labs 
to do that.
    One part of this that we think will be very important and 
how you can help is to make it clear what your expectations are 
of the Department and the labs and to follow up. As you 
described earlier, your follow-up on these new facilities is a 
very good example of where twice a year you are asking them to 
come in and explain how they are doing. I think that is really 
important that they understand you are watching and that you 
care.
    We would hope that you would think about that in terms of 
our final recommendation, which was trying to create some sort 
of standing body where it might be small--it might be three or 
five people that you appoint to this thing on a temporary 
basis, sort of like our commissioners who only serve for a 
while, but that you would have experienced people that you 
could turn to when you have questions like this. And maybe 
twice a year you ask them to come in and tell you how are these 
changes going. Are people in fact making these changes, or are 
they just going through the motions and they are not really 
doing it? If you get people who have served in the laboratories 
and in the Department of Energy, or whatever, they could do 
that without a great amount of effort, whatnot, but give you an 
insight into how well this is all being carried out.
    Senator Feinstein. Thank you.
    Senator Alexander. Dr. Cohon.
    Dr. Cohon. I would like to thank you both for creating this 
commission, giving us the opportunity to serve the Congress and 
the Nation and DOE in this way.
    I would also like to acknowledge the outstanding support 
this commission received from our staff affiliated with the 
Science Technology Policy Institute of the Institute for 
Defense Analyses. And we have the two senior leaders sitting 
behind us here, Mark Taylor and Susannah Howieson, and I would 
like to acknowledge them for the record. They did a wonderful 
job as did the rest of their colleagues. So thank you, 
colleagues. And thank you.
    Senator Alexander. Thank you for the suggestions. I think a 
good way to end the hearing might be I was visited by Bill 
Gates the other day. He would not mind me saying this, I am 
sure, because he said publicly his passion for energy research. 
And while he is spending a lot of his own money investing in a 
variety of things, he is also interested in doubling energy 
research, a goal that I would like to support. And one reason 
he is willing to do it is because he thinks the national labs 
would spend it pretty well in terms of their management by the 
Office of Science.
    So while we are looking for ways to improve the 
laboratories, I think it is important to acknowledge that every 
other country in the world would give their right arm to have 
these 17 labs as an engine of economic growth and national 
defense and ways of improving the quality of life and health 
for the people in their countries. In many ways they are our 
secret weapon in a world that is increasingly competitive.

                     ADDITIONAL COMMITTEE QUESTIONS

    So the hearing record will remain open for 10 days. Members 
may submit additional information for the record within that 
time, if they would like, or questions. The subcommittee 
requests all responses to questions for the record be provided 
within 30 days of receipt.
    [The following questions were submitted to the Department, 
but the questions were not answered by press time:]
                Questions Submitted to Mr. TJ Glauthier
          Questions Submitted by Senator Shelley Moore Capito
    Question. As a strong supporter of our national labs, particularly 
the National Energy Technology Lab, NETL, which has a major location in 
Morgantown, West Virginia, I would like to request clarification on 
Recommendation Five of your report, which seems to contradict previous 
statements by Secretary Moniz that the current model of operation for 
the facility is acceptable. Will you shed some light on the Committee's 
intentions in drafting Recommendation Five, and any additional details 
that can give us insight into this recommendation?
    Question. Was a cost benefit analysis of government versus 
contractor operated labs completed and considered by the commission?
    Question. What is the estimated cost of implementation of this 
recommendation #5? Where will the funding come from?
                                 ______
                                 
               Questions Submitted to Dr. Jared L. Cohon
    Question. As a strong supporter of our national labs, particularly 
the National Energy Technology Lab, NETL, which has a major location in 
Morgantown, West Virginia, I would like to request clarification on 
Recommendation Five of your report, which seems to contradict previous 
statements by Secretary Moniz that the current model of operation for 
the facility is acceptable. Will you shed some light on the Committee's 
intentions in drafting Recommendation Five, and any additional details 
that can give us insight into this recommendation?
    Question. Was a cost benefit analysis of government versus 
contractor operated labs completed and considered by the commission?
    Question. What is the estimated cost of implementation of this 
recommendation #5? Where will the funding come from?

                          ADDITIONAL STATEMENT

    The following statement was received subsequent to the 
hearing for inclusion in the record.
    [The statement follows:]
  Prepared Statement of Professor Venkatesh Narayanamurti, Professor 
  Laura Diaz Anadon, Professor Gabriel Chan, and Dr. Amitai Y. Bin-Nun
    Dear Chairman Alexander, Ranking Member Feinstein, and 
distinguished Members of the Subcommittee: Thank you for offering us 
the opportunity to submit testimony to the subcommittee. We would also 
like to thank Senator Coons for his continued leadership in the area of 
National Lab policy and for engaging our group.
    It is an honor to be able to offer our perspective on a topic that 
is of great importance to the national interest; the topic of 
``realizing the potential of the Department of Energy National 
Laboratories'' is of enormous professional and personal significance to 
me.
    My name is Venkatesh Narayanamurti. I am currently the Benjamin 
Peirce Research Professor of Technology and Public Policy and Research 
Professor of Physics at Harvard University. I was formerly the Dean of 
the Harvard John A. Paulson School of Engineering and Applied Sciences 
and Dean of Physical Sciences at Harvard.
    Previously, I served as the head of the Semiconductor Electronics 
Research Department and then as Director of the Solid State Electronics 
Research Laboratory at AT&T's Bell Laboratories. From 1987 to 1992, I 
was Vice President of Research at Sandia National Laboratories.
    It was in these roles that I came to understand some of the key 
principles that underlie my testimony. Namely, that innovation is 
fostered when control over the research agenda resides as close as 
possible to the researchers in the lab. Management should support the 
judgment of scientists to the greatest extent possible. Additionally, 
it has become very clear to me that the traditional ``linear model'' of 
innovation that bifurcates research into ``basic'' and ``applied'' 
varieties hinders innovation.
    My testimony stems from research I led as the Co-Principal 
Investigator of the Energy Technology Innovation Project (ETIP) at the 
Harvard Kennedy School (HKS) with Professor Laura Diaz Anadon (also at 
HKS). Our group has led research on supporting decisions about the 
optimal levels of DOE R&D investments in various energy technologies 
considering technology uncertainty, the structure and management of 
research institutions, and the linkage between DOE and the private 
sector. As part of the research at HKS in energy innovation over the 
past 7 years, together with Professor Gabriel Chan and Dr. Amitai Bin-
Nun, we have investigated management issues at the National Labs in 
detail. We have a manuscript under consideration on this topic at an 
academic journal and will soon be releasing a report containing our 
findings. This testimony outlines some of our most important findings 
and recommendations.
    I would also like to thank TJ Glauthier and Jared Cohon for their 
testimony and service to the Nation by leading the Commission to Review 
the Effectiveness of the National Energy Laboratories (CRENEL). Their 
report has done an excellent job of highlighting the vital role of the 
Labs and has captured the importance of shifting investment controls 
from DOE, where much of current authority currently lies, to scientific 
management at the Labs.
    What follows is the testimony of my own experience, research, and 
personal views and that of my colleagues Professor Laura Diaz Anadon, 
Professor Gabriel Chan, and Dr. Amitai Bin-Nun. Our research contrasts 
with that of CRENEL in that we specifically focus on DOE's energy 
transformation mission. While the DOE's nuclear security, environmental 
management, and fundamental science missions are also worthy of 
independent study, we feel that focusing on one particular mission and 
integrating academic scholarship brings forth recommendations 
additional to those in CRENEL, which we largely support. We are also 
able to bring to bear our collective decades of research experience in 
the process of energy technology innovation and innovation systems and 
policy, a perspective that has been missing from the debate around the 
future of the National Labs. In this way, our testimony complements the 
CRENEL report by extending some of their recommendations as well as 
offering several new ideas and perspectives.
A Holistic View of the National Lab System
    We would like to briefly address the question of whether the size 
of the Lab system is appropriate for its energy technology mission. 
This mission is crucial for the long-term fortune of our Nation; energy 
innovation has the potential to reduce national expenditures on energy 
and related trade deficits, reduce the threat and impact of climate 
change, and contribute to economic growth and national security through 
the development of new technologies.
    The Federal Government has many tools at its disposal to advance 
energy technology innovation. It can signal markets, for example, 
through energy tax and regulatory policy (``market pull''), and it can 
advance research, development, and deployment of energy technologies 
(``technology push''). Both of these kinds of tools can be effective, 
but the most effective policy portfolio balances a combination of these 
policies.
    According to the Congressional Research Service, Federal tax-
related support for the energy sector was $23.3 billion in 2013. For 
the same year, our group at Harvard calculated that DOE invested $5.3 
billion in energy technology research, development and demonstration. 
DOE's R&D investments are key to achieving the Nation's long-term goals 
of reducing carbon emissions, enhancing energy security, and growing 
the U.S. economy, but our research finds that current levels of Federal 
energy R&D support are insufficient to reach those goals. We argue that 
greater investment in energy R&D through the Labs and other programs 
could help meet long-term national energy goals. Further, variability 
and unpredictability in DOE energy research budgets from year to year 
erode the effectiveness of Federal R&D investments and should be 
minimized to the greatest extent possible. Reducing volatility in 
funding could be achieved by following a multi-year high-level 
strategy, along the lines of those suggested by the recent Quadrennial 
Technology Review. This does not mean that programs should continue 
indefinitely in the name of stability: it should be possible to cut 
non-performing programs after careful deliberation as new information 
becomes available, as is currently the norm in agencies such as ARPA-E.
    We recommend expanding Federal investment in energy R&D through a 
gradual increase in funds targeted to technology areas through a 
process informed by external experts and guided by a long-term focus on 
energy system transformation.
    The National Labs serve as a key anchor in the national innovation 
system with their $14 billion budget (which covers several missions, 
including advancing fundamental science, stewarding the nuclear 
stockpile, and energy innovation), 50,000+ staff, and 17 Labs. 
Structurally, the Labs are unique in that Federal ownership can 
insulate the R&D mission of the Labs from the short-term pressures 
faced by R&D organizations in the private sector. Industrial R&D, 
shaped by short-term pressures, is heavily focused on creating 
commercializable inventions, whereas the Labs can have a longer 
horizon.
    Reforming key areas of National Lab operations and interaction with 
DOE is necessary to improve the capability of the Labs to deliver on 
DOE's energy innovation mission. However, reforms should be mindful of 
protecting the unique role that the Labs play in the national 
innovation system.
    We recommend that the outcome of any reform process should preserve 
the current high-level framework for Lab management, including DOE 
stewardship and the government-owned, contractor-operated (GOCO) model.
Role of Private Sector Engagement
    Contemporary research into technological innovation has moved past 
the once dominant ``linear model'' of innovation, in which basic 
research is thought to lead to applied research, which in turn creates 
opportunities for new invention. Contemporary research into 
technological innovation favors a ``connected R&D'' model, where 
innovation is not separated into ``basic'' and ``applied'' activities, 
but rather is one continuous activity-space, where activities normally 
classified as ``applied'' and ``basic'' are mutually reinforcing and 
chronologically sequenced in a variety of ways. This connected model 
emphasizes the knowledge feedback that develops when technologies are 
put into practical application. Under this new paradigm, new inventions 
in the domain of Engineering enable deeper understanding in the domain 
of Science with a comparable frequency to the reverse direction of 
influence.
    In our view, the boundary between ``basic'' and ``applied'' 
research is usually arbitrary and counterproductive to research 
management. For this reason, the Labs' ability to innovate is likely 
degraded by the ``stovepiping'' of basic and applied research funding 
streams separately administered by the Office of Science and the 
``applied energy'' offices. Congress should encourage DOE to support 
energy research efforts that engage a broad scope of innovation-related 
activities (e.g., exploration, device design, simulations, etc.) 
without regard to whether the project is at an ``applied energy'' or 
``science'' Lab. This requires seamless integration of the basic and 
applied research funding streams aimed at energy innovation.
    We strongly support the appointment of a single Under Secretary for 
Energy and Science. Congress should make this position permanent.
    One manifestation of the linear model view has been an effort to 
focus greater government involvement in the research enterprise on 
``basic'' research activities, with the idea that the private sector is 
better positioned to pick up at the ``applied'' stage or that Lab 
activities in ``basic'' research should be kept separate from more 
``applied'' projects. However, this separation of activities across 
institutions into basic and applied research have led to ``siloes'' 
where there should instead be greater integration. In the context of 
the Labs, this has resulted in an important disconnect between the Labs 
and the private sector. Some view this as intentional element of the 
Lab system resulting from the linear model view. Instead, we view 
engagement between the Labs and the ultimate users of technology as an 
essential component of DOE's mission of transforming the Nation's 
energy system. As an example, DARPA has applied the ``connected R&D'' 
model and has benefited from interacting with the users of its 
technology output.
    In the energy context, the private sector holds the majority of the 
Nation's energy infrastructure and conducts the majority of R&D, as is 
the case for many non-defense technology areas. Therefore transforming 
the energy system implies that the Labs must support the private 
acquisition of technology alternatives developed by the Labs. We find 
it difficult to imagine how this acquisition from the public Labs to 
the private sector can be accomplished without the Labs closely working 
with private firms in some capacity. In fact, correctly done, 
engagement with the private sector is also beneficial in advancing the 
fundamental science mission of the Labs. The connected R&D model 
implies that both the Labs and private firms have much to gain from the 
cross-fertilization of their ``invention'' and ``discovery'' 
activities.
    Accordingly, Congress has charged the Labs with a technology 
transfer mission. This mission does not imply that Labs should conduct 
R&D that exclusively meets private sector needs. Labs should work to 
meet government missions, but when those missions have direct 
implications for private sector activity, Labs should embrace private 
sector engagement to the extent necessary to cost-effectively fulfill 
those government missions.
    Our research indicates that since 1997, there has been a consistent 
downward trend in the technology transfer metrics used by DOE to assess 
Lab-private sector engagement. Our view is that the Labs are responding 
to mixed policy messages from DOE and Congress. Reduced engagement with 
the private sector represents not just missed opportunities to advance 
the mission the Labs have been charged with, but it also degrades the 
ability of the Labs to spur technological innovation. In fact, our 
research demonstrates that technology licenses that transfer 
technologies from the Labs to the private sector result in 
significantly increased follow-on innovation in private firms, acting 
as an impact-multiplier for Federal R&D funds and for private R&D.
    DOE should design technology licensing agreements and collaborative 
R&D agreements to best leverage DOE funding into follow-on innovation 
in the private sector.
Laboratory-Directed Research and Development (LDRD)
    We recognize that the appropriate utilization of Laboratory-
directed research and development (LDRD) has been addressed by this 
committee in the recent past. We understand the need to balance the 
positive impacts of LDRD on Lab culture with the need for Labs to 
fulfill their core mission efficiently and with proper Federal 
oversight. In our studies of the Lab system, however, we have uncovered 
new information that we hope the Committee will use to recalibrate 
what, in its judgment, is the optimal level of LDRD at the Labs.
    LDRD is often seen as a personnel recruitment and retention tool, 
particularly at the NNSA Labs. Indeed, delivering on the Labs' missions 
is dependent on the retention of quality scientific personnel. However, 
our studies of measurable innovation output from the Labs find that 
LDRD plays a key role in driving new patent filings and invention 
disclosures at the Labs. From 2007-2012, DOE disclosed a new invention 
for approximately every $5 million in R&D invested at the Labs. Yet, 
for Lab investment allocated under LDRD, inventions were reported at 
nearly four times this rate. Similarly, on a dollar to dollar basis, 
more than two times as many patents resulted from LDRD relative to the 
broader pool of DOE funding. While a number of assumptions are embedded 
in our calculations, these results show that, on average, LDRD funds 
result in a greater rate of new inventions and patents than DOE-
allocated funds. Congress should assist DOE in moving towards a view 
that holds LDRD as a key part of the Lab innovation portfolio.
    This finding parallels the increasing recognition of the power of 
``bottom-up'' innovation, which supports using ideas stemming directly 
from researchers to complement a research agenda driven by centralized 
management. Some private firms have created programs that solicit input 
from researchers and employees at the front lines of innovation, often 
dedicating considerable funds and/or personnel time to these ideas.
    We argue that LDRD should be seen as the National Lab equivalent of 
these private sector programs. In our view, LDRD funds are not a 
diversion from the Labs' core mission, but an integral element of the 
Labs' research portfolio and a way to more effectively capitalize on 
the investment the Labs have already made in attracting some of the 
world's best scientific talent to the National Labs.
    We recommend that approval for LDRD projects should be limited to 
Lab directorates without need for prior approval by DOE Site Offices, a 
recommendation also suggested by CRENEL as a pilot initiative.
    Congress should also encourage the increased utilization of LDRD at 
the Labs with an energy mission to reach the existing statutory limits.

                         CONCLUSION OF HEARING

    Senator Alexander. Thank you for being here.
    The subcommittee will stand adjourned.
    [Whereupon, at 4:04 p.m., Wednesday, October 28, the 
hearing was concluded, and the subcommittee was recessed, to 
reconvene subject to the call of the Chair.]

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