Intelligent Sustainment and Renewal of Department of Energy Facilities and Infrastructure (2004)

Congress, the U.S. Government Accountability Office (GAO), and DOE have long been aware of DOE’s aging and deteriorating facilities and infrastructure and of their threat to the department’s ability to successfully complete its missions (DOE, 2003a; GAO, 2003a, 2003b, 2003c, 2001; U.S. Congress, 2001). DOE’s real property assets are extensive, diverse, and dispersed across the nation and among the department’s program secretarial offices (PSOs). The consequences of years of failed F&I stewardship of the DOE complex cannot be quickly reversed. Dedicated leadership and committed federal managers and contractors at all levels, as well as the continuing support of Congress, will be required to effectively sustain and recapitalize the department’s real property assets. Long-term improvement will also require cultural and organizational changes, improved planning and budgeting procedures, and the development of improved performance measures. The process has begun with the promulgation of departmental policy Real Property Asset Management (O 430.1B) (RPAM) (DOE, 2003b), but much remains to be accomplished if DOE is to fully implement the RPAM approach to asset management and achieve the ultimate objective of having effective and efficient facilities and infrastructure that support the department’s missions.

Improvement of F&I stewardship at DOE needs to begin with the recognition in the department’s strategic plan of the importance of facilities and infrastructure. The strategic plan should include a definitive statement recognizing the critical role of facilities and infrastructure in mission accomplishment as well as prioritized goals and the time frame and actions needed to accomplish these goals. When considering the life cycle of facilities that span decades and transcend

administrations, policies and procedures for managing facilities and infrastructure need to be developed and maintained with a long-term outlook and resilient process.

The stewardship of DOE F&I is inconsistent across program secretarial offices and from site to site. In order to eliminate this inconsistency, the committee believes that DOE needs strong and involved senior leaders, beginning with the deputy secretary; well-defined authority, responsibility, and accountability at all levels of DOE staff and M&O contractors; and a strong central F&I authority to lead the implementation of RPAM, transfer best practices across the department, and ensure consistent, disciplined planning and budgeting for life-cycle stewardship of facilities and infrastructure.

RPAM was issued September 24, 2003, but full compliance was not required until September 30, 2004. Implementation of RPAM has been delegated to the PSOs with OECM in an advisory role, resulting both in an inconsistent interpretation of the order and in the development and application of diverse procedures to achieve the RPAM objectives. The committee believes that the size and diversity of DOE’s missions should not be used as an excuse for not having consistent, disciplined processes. The best-performing large and diverse organizations manage facilities at the corporate level to ensure that assets support their mission and provide an appropriate return on annual expenditures. Private industry uses profitability as the key outcome, but government agencies are faced with the more difficult task of measuring how well facilities support their intended mission. When best-performing organizations allow field organizations the flexibility to develop the most effective procedures for implementing policies, they also have procedures to identify the best approaches and implement them throughout the enterprise.

DOE facilities are government-owned, contractor-operated complexes; DOE’s role is thus that of a contract manager. The department manages contractor performance through performance-based incentive fees and ensures efficiency through periodic competition of management and operations (M&O) contracts and market competition of subcontracted services. The result of using market competition is an environment that discourages both the transfer of lessons learned and the diffusion of best practices for managing facilities and infrastructure across the department. The committee has observed that this impediment has been diminished in addressing environmental safety and health issues and believes that a similar philosophy should be applied to the management of facilities and infrastructure. The committee has also observed the success of the Financial Management Systems Improvement Council (FMSIC), which has brought contractors together to help improve variety of financial management systems across the department. The council encourages the free exchange of ideas and the transfer of best practices among DOE and contractor management and professionals. A similar council for facilities management systems, working in conjunction with FMSIC, could be effective in improving F&I stewardship practices.

The committee believes that benchmarking activities, such as the study undertaken by Ernst and Young for Sandia National Laboratories, should be regularly applied throughout the department. The committee believes that all contracts should include significant incentive fees that are tied to the stewardship of facilities using metrics that target the condition of F&I and F&I support of the site’s mission. DOE’s goal should be for all contractors to earn their full incentive fee for facility stewardship.

The performance measures currently used by DOE are consistent with industry practices, but the size and complexity of DOE’s F&I require a more complete set of robust measures. The development of effective performance measures is a difficult task. There is a tendency to use input and process measures because these data are easier to obtain; however, accurate output measures are needed to guide management decisions. There are no simple, easily adaptable measures that fill DOE’s needs. The complexity of F&I management decisions requires the use of multiple metrics to support decisions that address immediate needs, long-term requirements, and continuous process improvement. Development of effective performance measures will require the department’s ongoing effort.

The committee recognizes that some significant issues that affect the quality of DOE F&I are outside the purview of this committee. These issues include the selection of appropriate capital asset acquisition strategies, the balancing of program priorities with the availability of resources to sustain, recapitalize, and demolish facilities and infrastructure, and the question of whether DOE facilities and infrastructure are configured appropriately to achieve current and anticipated future missions. The committee has been able to address the core issues that determine DOE’s ability to plan, budget, and manage its F&I now and in the future.

The committee provided, in its February 2004 letter report (NRC, 2004), an assessment of DOE’s F&I programs based on seven attributes that characterize the maturity of such programs. The committee noted that:

The seven attributes of successful F&I programs are:

1. Cultural realization and communication of the strategic role that facilities and infrastructure play in achieving site missions and program objectives.

2. Shared understanding between headquarters and field operations that facility and infrastructure management and renewal are linked with site missions in ways that are clear both to headquarters and to field operations.

3. Clear operational guidance for field sites that links facility management and infrastructure renewal actions to management’s expectations for achieving program objectives.

4. Consistent integration across programs and sites of corporate goals, site activities, and the budget process in a manner that balances maintenance and renewal of facilities and infrastructure with the programmatic mission.

5. Formal structures to develop and implement corporate best practices in facility management and to facilitate the transfer of lessons learned among programs and sites.

6. Performance metrics and indicators that use consistent and accurate data to measure meaningful outcomes department-wide.

7. Open communication channels, both vertical and horizontal, to convey guidance and reduce feedback time.

The committee confirms its initial assessment that “DOE has issued policies that if adequately and consistently supported by meaningful practices and procedures will improve the quality of facility management and will lead to better allocation of resources for the effective support of DOE’s missions. Successful implementation will require timely and effective leadership, communication, and guidance from headquarters, site offices, and management and operations contractors to ensure consistent stewardship of facilities in DOE” (NRC, 2004). The committee expects that the recent planning guidance issued by the deputy secretary, establishing a minimum target for spending on F&I sustainment, will help reverse the increasing trend of deferred maintenance and that DOE, with the help of Congress, can establish a program of full sustainment and recapitalization to make DOE facilities effective and efficient now and in the future. However, DOE needs to develop a more rigorous and consistent F&I management system in order to plan and develop departmental sustainment and recapitalization budgets and to ensure the quality of planning decisions and their implementation. The committee has noted examples of procedures and processes used both within DOE and in other federal agencies that, if adapted and adopted for department-wide use, can provide effective life-cycle stewardship of DOE’s facilities and infrastructure.

DOE (U.S. Department of Energy). 2003a. Performance and Accountability Report; Fiscal Year 2003. Washington, D.C.: U.S. Department of Energy.

DOE. 2003b. Real Property Asset Management (Order O 430.1B). Washington, D.C.: U.S. Department of Energy.

GAO (General Accounting Office). 2001. Department of Energy Status of Achieving Key Outcomes and Addressing Major Management Challenges (GAO-01-823). Washington, D.C.: U.S. General Accounting Office.

GAO. 2003a. Major Management Challenges and Program Risks at the Department of Energy (GAO-03-100). Washington, D.C.: U.S. General Accounting Office.

GAO. 2003b. Federal Real Property; Executive and Legislative Actions Needed to Address Long-standing and Complex Problems; Testimony June 5 (GAO 03-839T). Washington, D.C.: U.S. General Accounting Office.

GAO. 2003c. High-Risk Series; Federal Real Property (GAO 03-122). Washington, D.C.: U.S. General Accounting Office.

NRC (National Research Council). 2004. Preliminary Assessment of DOE Facility Management and Infrastructure Renewal. Letter report. February. Washington, D.C.: National Academies Press.

U.S. Congress, House of Representatives, Committee on Appropriations. 2001. Energy and Water Development Appropriations Bill, 2002. House Report 107-112. Washington, D.C.: U.S. Congress.

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