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CONCLUSIONS AND RECOMMENDATIONS 137 8 Conclusions and Recommendations While the Army's decisions about the future of the Army Research Laboratory will hinge on some matters that are beyond the scope of this committee, the primary issues are discussed in this report. The committee has made a number of important findings about the problems facing ARL in the next decade, and the sources of those problems. To help solve those problems, it offers five broad recommendations, whose implementation would improve ARL's utility to the Army regardless of the organizational option chosen. This report compares the options on a consistent basis, using a straightforward set of management criteria that reflect the Army's desires for ARL's performance. The Army itself will have to select an option on the basis of its resources and strategies. The committee can only stress that the time for substantive change has come. REVIEW OF THE ARMY RESEARCH LABORATORY In its review of ARL, this committee relied heavily on judgments of its inputs: management, personnel statistics, administrative practices, and funding. ARL is hindered by cumbersome personnel, contracting, and procurement administrative procedures, by a lack of focus in its program, and by a lack of support in funding and personnel decisions. The conclusions with respect to the assessment criteria follow. Linkage to Army Strategies and Objectives ARL is intended to be a flagship laboratory for multidisciplinary research and technology development in support of the Army's technology base. It must shape its program according to the Army's needs for technology 5 to 15 years in the future. At the same time, it has customers to serve, primarily AMC's RDECs with their short- and mid-range needs. ARL has very strong linkages to short- and mid-range Army strategies and objectives. In reporting to AMC, ARL is governed by an agency that is oriented more
CONCLUSIONS AND RECOMMENDATIONS 138 toward the short-range view of readiness and system support than with the long-range benefits of basic research and exploratory development. ARL's primary oversight body, the ARL Board of Directors, mostly has members who are primarily concerned with short- and mid-range science and technology issues. ARL has some direct links and many indirect links (through the RDECs) to the Training and Doctrine Command (TRADOC) battle labs, but these doctrine-oriented labs are mostly concerned with short-range technology issues. ARL's field assistance teams are primarily involved with resolving short-range problems. ARL has weak links to the long-range planners of the Army staff and the advanced concepts directorates of TRADOC, which could give a long-range perspective on the Army's needs. Its long-range perspective is currently supported with its seminar wargames, its participation in writing planning documents such as the Army Science and Technology Master Plan, and the direction provided by the AMC Board of Directors. World-Class Land Warfare Research To do world-class research and development, ARL needs the administrative flexibility to hire and reward the best possible technical personnel, and to buy equipment and supplies according to its needs. In today's defense environment, it must be recognized that ARL and other technology base organizations represent core competencies for the national defense, and must be protected to some extent from personnel reductions, as demanded by Army policy. In both respects, ARL's status as a world-class source of research and technology is threatened. Inappropriate Personnel Procedures. Research and development has personnel needs that are different from those of other military functions, such as logistics. ARL needs higher concentrations of highly qualified personnel, at high pay grades. It must have the flexibility to hire and reassign scientists and engineers to meet changing needs and new opportunities, and to reward outstanding personnel with pay and promotions. These needs are not being taken into account. Salaries are uncompetitive. Managers have little local authority. There are rigid limits on the numbers of high grades, and of total personnel. Promotions and merit pay raises are limited. The Defense Laboratory Demonstration program of reforms, which would correct many of these problems, has not been fully implemented. The Army's downsizing has brought hiring restrictions, personnel reductions, limits on numbers of high pay grade personnel, and other personnel constraints. These management constraints have prevented
CONCLUSIONS AND RECOMMENDATIONS 139 ARL and AMC from recruiting highly qualified personnel, and will most likely prevent ARL from achieving its goal of having 800 Ph.D. scientists and engineers by fiscal year 1997. Inefficient Procurement. Sluggish federal and Department of Defense procurement practices hinder research progress and hurt staff morale. Scientists and engineers may be delayed by months for want of a seemingly simple item caught in the highly bureaucratic procurement system. In some cases a less than desirable item is delivered, as a result of regulations governing bidder selection. Lab Demo initiatives could have resolved many problems but were never fully implemented. Inadequate Funding. The Army has not given ARL a high enough priority in funding decisions. As the Army's funding has declined, ARL has not fared well in defending its share of basic research and exploratory development funds. Increasingly, it must compete with other AMC and DOD organizations for funding in both categories. With institutional funding for $200 million in basic research and exploratory development, ARL probably cannot support excellent research in each of its 10 broad business areas. Nor can it easily gain new competencies. The committee's collective experience suggests that at least $40 to $50 million per year is needed to support an adequate research program in a broad and Army-unique technology area, such as those ARL should be pursuing. As a comparison, the Advanced Research Projects Agency has spent about $100 million per year on its armor and antiarmor program (mostly with 6.2 funding and some advanced development [6.3] funding). It spends about $120 to $140 million per year in its advanced materials research programs (6.1 and 6.2 funding). While based on fiscal year 1993 spending, ARL's Materials Directorate will receive about $13 million of ARL's institutional 6.1 and 6.2 funding. Lack of Focus. ARL's attempt to support 10 broad business areas, with inadequate resources and continuing cuts in personnel and funding, makes it impossible to conduct world-class research in a few important areas. It is becoming more and more a Jack of all trades. Quality of Research Facilities. Base closure decisions are benefitting ARL by providing construction funds for new research facilities. However, funds for maintenance and facility upgrades appear to be inadequate, especially if
CONCLUSIONS AND RECOMMENDATIONS 140 needed to make significant changes to facilities in support of new research thrusts or changes in emerging technologies. Perceived Quality. The committee believes that status of an organization influences the perception of its ability to conduct world-class research. A laboratory's status may be enhanced by its governance, including its reporting channel. Nationally recognized government laboratories like the Naval Research Laboratory and the National Institute of Standards and Technology enjoy a reporting channel directly to senior research and technology leadership within their appropriate organizations. The committee's discussion of ARL's world-class research capabilities centers mostly on many input problems that are indicators of problems in producing high-quality research. In this context, it is difficult to see ARL, however well managed, as a successful world-class laboratory even though some world-class research might be conducted in it. Diversity and Quality of Research Sources ARL must take advantage of the best sources of research and technology, no matter where they are found. It is constrained in several ways from doing so: ⢠The Army, in establishing ARL, limited it to contracting no more than 30 percent of its exploratory development, and none of its basic research. The Lab 21 study envisioned more flexibility by setting the limit at no more than 50 percent of its exploratory development. ⢠DOD R&D contracting mechanismsânotably the failure to authorize the use of cooperative agreements âare a serious obstacle to forming the truly cooperative research partnerships that are needed. The wide range of ARL's program, with its 10 broad business areas, may be partly a reaction to these handicaps or to other limitations on exploiting outside research. The contracting limits make it reasonable to provide the maximum scope possible internally. Relief would let ARL focus on its areas of greatest advantage while acquiring the best research and technology from outside.
CONCLUSIONS AND RECOMMENDATIONS 141 Technology Transfer to the Army ARL transfers technology to users via the RDECs, who in turn transfer it to program managers and program executive officers, who apply the technology in systems. ARL's main vehicles for technology transfer to the RDECs are Technology Program Annexes, formal agreements that define joint ARL-RDEC research projects. However, Technology Program Annexes alone do not produce the rich interactions of researchers, developers, systems integrators, and users that the best R&D organizations have evolved. The Defense Department's sequential approach to technology transfer is too slow, too uncertain, and too unlikely to meet the real needs of users. ARL, limited to 6.1 (basic research) and 6.2 (exploratory development) work, is particularly handicapped unnecessarily in forming the varied partnerships that are needed for success. A nonlinear or systems approach now found in industry and many government agencies promises to be more efficient and supportive of technology transfer. Ability to Leverage Funds and Programs ARL's ability to capitalize on external sources of technology by cost sharing in joint ventures and cooperative research and development is limited. The R&D contracting processes used in DOD are more suited to procurement and unduly restrict interaction between government and contractor. Cooperative research and development agreements, a contractual form authorized under the Technology Transfer Act of 1986, permit healthy collaboration, of which ARL has taken strong advantage. But they are not sufficient in themselves, because they are required to be of no cost to the Army, and are therefore unsuitable for major R&D programs. The recently established Tri-Service Science and Technology Reliance program is intended to help the Armed Services and other organizations in the Defense Department share the burdens of R&D, but the program is too new to have demonstrated its success. The Technology Program Annexes agreed between ARL and the RDECs serve a leveraging function for both parties, through the formation of ARL-RDEC teams. Improving Productivity The Army has embraced the methods of total quality management, through its Total Army Quality program, in which ARL participates. But the total quality management approach, which emphasizes repetitive quantitative
CONCLUSIONS AND RECOMMENDATIONS 142 measurements of numerous tangible inputs and outputs, is poorly suited to measuring one of a kind, mostly intangible basic research and exploratory development. Industry and government experts generally agree that the quality of research and development can be assessed most accurately by expert opinion, through peer reviews and management judgment. Regardless of this difficulty, ARL as now constituted does not present a promising field for total quality management. Its administrative procedures, as explained earlier in this chapter, are too rigid and unresponsive to permit the management and worker accountability and authority that are vital to continuous quality improvement. Budgets and personnel numbers are set in detail by higher headquarters. The promotion and pay system makes it difficult to reward exceptional effort. Hiring is slow, and requires multiple approvals. Purchasing and contracting are unresponsive. GENERAL RECOMMENDATIONS The committee's assessment of ARL as now constituted has revealed deficiencies in its program and management, due to unduly restrictive administrative procedures and apparent confusion about ARL's priorities and its relations with its customers and its sponsor. To address these failings, the committee developed five broad recommendations that apply to any of the four options for ARL (indeed, to any productive future for Army R&D). Accordingly, all of the organizational and management options considered by the committee include these measures, except where the particular features of an option precludes it. (For example, recommendations for improving government administration do not apply to the GOCO ARL option.) Streamlined Procurement Practices. Procurement practices should be streamlined and implemented, based on at least the Defense Laboratory Demonstration initiatives.1 The decision-making authority of laboratory managers should be increased, and other steps taken to improve the responsiveness of the system. Generally, all procurement constraints imposed by the Army should be selectively eliminated, to free laboratories to the limits of federal law and Defense Acquisition Regulations. Since this recommendation closely resembles the procurement practices within private organizations, it would be inherently implemented in the 1 The initiatives could ride on the coattails of the Under Secretary of Defense for Acquisition and Technology report issued on January 12, 1993, by the Acquisition Law Advisory Panel, entitled Streamlining Defense Acquisition Law.
CONCLUSIONS AND RECOMMENDATIONS 143 GOCO ARL option and the contracted centers of the ARL Multicenter option. However, if the language of a contract makes the contractor subject to federal procurement practices, then the language should also reflect the implementation of this recommendation. Personnel Reforms. A thorough reform of personnel practices for science and technology personnel at ARL should be instituted. This reform should begin with the Lab Demo initiatives (which can be undertaken quickly, within existing statutes and regulations). Among the Lab Demo personnel reforms are (a) giving laboratory managers the power to classify positions, (b) establishing a separate career ladder for scientists and engineers, (c) offering short-term appointments for senior retirees from universities and industry, (d) locating key support functions such as personnel management and purchasing at laboratories, and (e) other measures to increase the authority and accountability of managers and workers. ARL should go as far as possible beyond even the Lab Demo reforms. Such reforms will also help attract outstanding leaders. Approval by Congress, the Office of Personnel Management, and the Department of Defense may be needed. As a government-operated laboratory, the goal for ARL should be to create a personnel demonstration project like that established for NIST by an act of Congress in 1988, with such features as a more flexible pay system, decentralized hiring authority, no limits on the number of higher grade positions, rank order evaluation of staff, extra tenure credit for high performance, and three-year probation periods for new hires (see Chapter 4). This demonstration will have benefits and costs. The benefit or value side of the equation is extremely difficult to assess. ARL has announced its vision of becoming a world-class laboratory. There is general agreement that a pay structure, for instance, that would help attract and retain world-class scientists and engineers would bring the laboratories closer to this vision. It is less clear what the additional costs implied by a richer and more flexible pay plan would yield, quantitatively, in research output. It is also likely that additional capital investment will be required to maintain world-class scientists. These costs cannot be estimated without a clearer definition of the laboratory's mission in the new environment. Innovative recruiting and training programs are also needed. ARL should be enabled to hire outside the government (using a simple waiver of the restrictions due to the current hiring freeze). It is necessary to increase the academic qualifications of the ARL staff, and thereby approach its goal of having 800 Ph.D.s on its staff by fiscal year 1997. Some mechanisms have been used by ARL, but more can be utilized including the financing of on-campus graduate training for qualified government employees, cooperative research
CONCLUSIONS AND RECOMMENDATIONS 144 with academic institutions that allows government employees to do degree-qualifying work at their own benches, and postdoctoral fellowships like those offered by the Applied Physics Laboratory at Johns Hopkins University (which is relatively close to ARL). Since all personnel in the GOCO ARL option and the contracted centers of the ARL Multicenter option would be in the private sector, these reforms would be inherently implemented. However, if the language of a contract makes the contractor subject to federal personnel practices, then the language should also reflect the implementation of this recommendation. A More Focused Program and a Well Defined Mission. To maintain quality in the ARL research and systems analysis program as budgets decline, the Army should focus the ARL program and mission over the next three years to include only those areas that are unique to Army land-warfare science and analytical support needs and are not adequately supported elsewhere. ARL should make more direct use of commercial research in areas of strong commercial interest and support (e.g., electronics, biotechnology, information sciences, etc.), while focusing on its own core competencies and their evolution over time. Neither DOD nor the Army can afford to pursue all technologies. ARL must select specific high-priority areas appropriate to its core competencies, and manage the rest by contracts and cooperative agreements with industry, and by cost-sharing arrangements to encourage commercial industry to pursue technologies of interest to the Army. Any technology area in which an outside organization is more competent or more cost-effective as a source of technology should be left to that organization. These efforts should be made, wherever possible, in partnership with the RDECs and other laboratories, services, and agencies. ARL's program must be tailored to its budget and to the Army's unique needs. The mission should be more focused towards the identification and exploitation of science and technology that offers potential leaps ahead in Army capabilities, rather than striving for excellence in areas in which ARL has no unique role. Many of these areas involve ARL in direct competition with RDECs and other government agencies. In others, industry or universities may be the strongest. ARL should identify perhaps four or five key areas, where it has or should develop unique strengths (i.e., core competencies), which should be funded to the fullest extent possible. The committee believes that one definition of a key area may be an area that will give the Army the greatest force enhancement (i.e., an enhancement of many different systems) through horizontal technology integration. As the program and mission are defined, the Tri-Service Science and Technology Reliance
CONCLUSIONS AND RECOMMENDATIONS 145 program will grow increasingly attractive as a way of sharing resources with other DOD organizations. The mission should also concisely state the analytical support efforts of ARL. The analyses efforts of the Survivability and Lethality Analyses Directorate and the Human Research and Engineering Directorate are clearly different from the research and exploitation of science and technology. Inherent in the description of ARL's mission should be an understanding of its linkages to Army strategies and objectives. With this definition, ARL should be able to establish the proper balance of long-range links with TRADOC advanced concepts directorates, short-range links with field assistance teams, short- and mid-range links with TRADOC battle labs, and other links with Army staff and agencies. This reexamination of the overall mission and program should be undertaken on an Army-wide basis, including the ASA(RDA), Deputy Chief of Staff for Operations, TRADOC, RDECs, and others. ARL must remain flexible enough to pass responsibility for mature technology areas to appropriate customers while focusing its own efforts on emerging technologies with military implications. This technology transfer will recognize more rapid implementation in the future. To direct this more focused approach, ARL's mission statement must be rewritten to stress the pursuit of the best research, technology development, and analytical support inside or outside the Army, to meet needs broader than the specific system technologies developed by the RDECs. The current programs seem to be too internally oriented. In developing such a statement, the challenge will be not to offer ARL sufficient scope, but rather to give it a unique and stable role among Army R&D organizations. Partnerships for Technology Transfer. To facilitate technology transfer, ARL should initiate and broaden exchanges with civilian industry and universities through cost-sharing partnerships and guest researchers, and it should establish an improved process for technology development and transfer with its customers and operational users. Most important, ARL must work closely with the RDECs, avoiding duplication and competition for research funds. ARL should be permitted to go beyond 6.1 and 6.2 work, to make cooperation with the RDECs, battle labs, program managers, and others, inside and outside the government, more fruitful by using modern industrial R&D practices. Going beyond 6.1 and 6.2 work will also support the rapid exploitation of technologies, which is the key to Army modernization in the future.
CONCLUSIONS AND RECOMMENDATIONS 146 A New Reporting Channel. It is the committee's judgement that to provide a central focus for the Army's recently strengthened policy to encourage innovation and Army-wide horizontal technology integration, to accommodate a nonlinear approach in research and development, and to make it easier to establish ARL as an elite R&D organization, the Army should change ARL's reporting channel to the ASA(RDA). The ASA(RDA) can provide full-time research and technology leadership and direct links to the Army program officials. The committee also believes that this move would enhance ARL's external status as the Army's flagship laboratory (putting it on a similar level with the Naval Research Laboratory and NIST); thus improving ARL's relations with users, civilian industry, and other government agencies. The recognition of ARL's new status by those inside and outside the Army should also help ARL recruit the best possible talent. As a comparison, the Naval Research Laboratory reports directly to the Chief of Naval Research, who does not report to the Chief of Staff of the Navy, but rather to the Assistant Secretary of the Navy for Research, Development and Acquisition. It shares this reporting channel with the Office of Naval Research, which is responsible for all basic research (funding level 6.1). Similar to the reporting channels of the Naval Research Laboratory and NIST, ARL would have a unique status among all other Army laboratories and engineering centers, which are assigned at lower levels, to AMC, the Surgeon General, or the Army Corps of Engineers. ARL, in this position, could act as an immediate advisor to the ASA(RDA) in the execution of his research and technology responsibilities. The Director of ARL and his staff could assist the ASA(RDA) in joint planning, dual-use, and commercialization activities. ARL could help the ASA(RDA) look across equipment mission areas and ensure horizontal integration of technologies in all Army materiel and information systems. The ARL Director could more easily advise the Deputy Chief of Staff for Operations and the Chief of Staff of the Army on technologies that might influence future doctrine or satisfy current and future needs. This higher reporting authority would better facilitate implementation of needed changes in procurement, contracting, and personnel policies. Implementation within AMC is possible. However, an AMC commander would find it difficult to single out ARL for elite status as long as it is closely intermeshed with the rest of his command, both organizationally and physically. No commander who has the responsibility of optimizing value of the entire AMC command would find it tenable to establish a differentiated, organizational entity with a separate culture and set of operating policies. Although it is also possible in the current reporting channel, the new reporting relationship could further reinforce ARL's role in developing technologies and providing system analyses that cross AMC commodity
CONCLUSIONS AND RECOMMENDATIONS 147 (RDEC) boundaries, such as in areas of advanced materials, electronic components, lethality, vulnerability, and phenomenology. Coupling the reporting channel to the ASA(RDA) with a more focused ARL mission, that includes horizontal technology integration, could reduce the overlap between ARL and the RDECs. ARL and the RDECs should continue to have their programs reviewed, synchronized, and approved at the ASA(RDA) level, to maximize return on the science and technology and R&D investments. Greater stress could be placed on the use of a variety of technology sources in academia, industry, other government agencies, domestic and foreign. The committee also recommends that this change in reporting channel should also remove ARL from the direct influence of the ARL Board of Directors. In place of the ARL Board of Directors, the Army should establish a new external board of independent experts to review and oversee the technical quality and relevance of ARL's work. It should continue to use agencies like the Army Science Board and the Board on Army Science and Technology to review its efforts, and it should continue to participate in all Army R&D reviews. To ensure a continuing focus on Army needs and maintain its supplier-customer relationship with the AMC RDECs, the Director of ARL should remain a member of the AMC Board of Directors. The ASA(RDA), unlike AMC, would not be as reluctant to allow ARL, where feasible and practical, to take technologies that do not logically fall in the purview of any one RDEC beyond the 6.2 level and even to integrate them into systems, if that were the most economical and sensible course. There are occasions when it will be more logical, less expensive, and more timely to have ARL take the technology to maturity and integrate it in a multiplicity of systems. This would not be very likely within AMC, owing to the responsibility of the Commander to maintain the division of labor within his command and to pressures from the RDECs (ARL and AMC Boards of Directors). Relations with customers other than the RDECs would improve. Industry, academia, and other agencies would quickly recognize ARL's increased status and importance. The Director of ARL could assume the role as the Army member of the Joint Directors of Laboratories, currently held by the Deputy Assistant Secretary of the Army for Research and Technology, making him the Army's focal point for the Tri-Service Reliance program. These relationships would be enhanced by ARL's new participation in strategic planning. The new reporting channel would separate ARL from its current primary customers, the RDECs. As a result, technology transfer to the RDECs would become a greater challenge, but with care and attention, this challenge could be met. As the new reporting channel becomes better understood, and missions and programs better defined and aligned, ARL's relationship with the RDECs should improve. They would not compete within the same
CONCLUSIONS AND RECOMMENDATIONS 148 command for the same resources. Participation of the Director of ARL within the AMC Board of Directors would also help maintain the linkage between ARL and the RDECs. Based on current AMC headquarters administrative demands, the administrative burden on the ASA(RDA) would be minimal, and could be less if ARL was established as a self-supporting Field Operating Agency. The administrative demands at the AMC headquarters of managing policy and providing personnel and procurement support for ARL requires only four to five people. Most of the effort is in interpreting or implementing decisions made at the Department of Defense or Department of the Army level. The Army's recent plans to establish regional administrative support centers suggests that, in any case, AMC headquarters may have less administrative workload as time goes on anyway. Additionally, since ARL already controls so much of its personnel, budget, and procurement activities, it could easily become totally self-sufficient as a Field Operating Agency, similar to the Army Research Institute (for the Behavioral and Social Sciences) which reports to the Deputy Chief of Staff for Personnel, and others like the Army's Strategic Defense Command, the Concepts Analysis Agency, the Commercial Activities Management Agency, and the Health Professional Support Agency. Such a realignment addresses most of the issues of status, stability, linkage to Army strategy and objectives, diversity and quality of research sources, leveraging of funds and programs, and customer relations. The realignment would place ARL in the forefront of the Army's science and technology planning, help concentrate its efforts on the most critical technologies needed for future systems, and help ensure these technologies are funded. The committee recognizes the difficulty of considering a change in the reporting relationship for ARL without similar questions arising in respect to the Army Research Office (ARO), a similar basic research organization. The 6.1 program for ARL must take advantage of university research efforts to enhance ARL's diversity and quality of resource sources. Therefore, a close, seamless working relationship is necessary between ARL and the ARO. A common management structure would enhance this relationship. Such a working relationship has long existed between the Naval Research Laboratory and the Office of Naval Research (ARO's equivalent) under the Chief of Naval Research of the Navy. Additionally, similar arguments for changing the reporting channel for ARL could be used for moving ARO under the ASA(RDA). However, it is beyond the charter of this study to address ARO's reporting channel. The Army should consider studying this reporting channel, ARO's relationship with ARL and the RDECs, and the Army's overall 6.1 program.
CONCLUSIONS AND RECOMMENDATIONS 149 COMPARING THE FOUR OPTIONS In assessing the range of opportunities available to ARL, the committee defined four organizational and management options. All embody the changes in the five general recommendations above (except where the particular features of an option make one or another recommendation irrelevant). The options can be seen as points along a spectrum: ⢠The ARL Enhanced option (the baseline for comparison) involves conservative changes in personnel, purchasing, and contracting arrangements, while retaining government operation. For comparison's sake, 20 percent of ARL's R&D is assumed to be contracted out. ⢠The NIST option, another option internal to the Army (with contracting assumed to cover 20 percent of ARL's program) builds on the ARL Enhanced option by instituting more radical personnel practices, modeled on the successful personnel demonstration program of NIST. The option also includes a two-tier technical advisory system, with an external oversight board for ARL itself, and specialized boards for the ARL directorates. ⢠The ARL Multicenter option involves the same administrative reforms as the ARL Enhanced option, but would contract out most (perhaps 70 percent) of the research and development to several centers of excellence, under the supervision of a strong core staff. This option provides flexibility to the Army to vary ARL's operations from the current government-operated laboratory to a GOCO-like laboratory by adjusting the percentage of R&D contracted out. ⢠The GOCO ARL option would break dramatically with the past, by contracting out all research and development, with oversight by a small government staff. (The recommended administrative reforms would be generally irrelevant to this option.) Table 8-1 provides a matrix comparison of the options. As seen in the matrix, the options are points along a spectrum, especially with respect to the amount of ARL contracted out, average salaries, the numbers of government scientists and engineers, and conversion costs. The total operating budgets of all options are assumed to be equal ($323 million, in 1993 dollars, by fiscal year 1997). It is important to note that the average salaries for scientists and engineers vary from option to option. Contractors' scientists and engineers, on average, are assumed to make $70,000 per year, based on the committee's cost studies. Government employees in the ARL Enhanced and ARL Multicenter options would make $52,700; in the NIST option, because of the various pay incentives, they would average $61,200. The average personnel cost for each option depends on the
TABLE 8-1 Summary of Options Assessed by the Committee, with Comparative Data on ARL for Fiscal Year 1997 Characteristic ARL, 1997* ARL Enhanced Option** NIST Option ARL Multicenter Option GOCO ARL Option Main features ARL as planned by Modest administrative Personnel procedures and Several centers of Single operation and Army for fiscal year reforms technical oversight boards excellence, contract and management contract 1997 based on NIST practices in-house (assumed 70 percent contract) Administrative reforms Not applicable Lab Demo, Lab Quality Lab Demo and Lab Quality Lab Demo and Lab Administrative policies of initiatives; New reporting initiatives, personnel Quality initiatives; New industry; New reporting channel to ASA(RDA) demonstration project reporting channel to channel to ASA(RDA) modeled on NISTâs; New ASA(RDA) reporting channel to ASA (RDA) Oversight ARL Board of Science and Technology Two-tier external technical Science and Technology External board of directors CONCLUSIONS AND RECOMMENDATIONS Directors, dominated by Advisory Board, AMC oversight board, AMC Advisory Board, AMC RDECs, AMC Board of Board of Directors Board of Directors Board of Directors Directors Operation budget, millions $323 $323 $323 $323 $323 150
Contracted percentage (assumed) 20 percent 20 percent 20 percent 70 percent 100 percent Average salary, scientists and engineers (in-house and contract), thousands $56.2 $56.2 $63.0 $64.8 $70.0 number of scientists and engineers: In-house 1,744 1,744 1,502 654 0 Contract 277 277 277 950 1,357 Total 2,021 2,021 1,779 1,604 1,357 One-time conversion cost, millions Not applicable $10.8 $16.9 $56.0-70.0 $85.1 * Committee's estimates, based on ARL plans. ** Baseline for comparison of options. CONCLUSIONS AND RECOMMENDATIONS 151
CONCLUSIONS AND RECOMMENDATIONS 152 ratio between contract and government employees. Thus, the GOCO ARL option, 100 percent contracted, is calculated to have only 1,357 scientists and engineers in fiscal year 1997, substantially less than the 2,021 planned by ARL (and assumed in the baseline ARL Enhanced option); the NIST option would have 1,779, and the ARL Multicenter option would have 1,604. The increases in productivity associated with these optionsâthat is, whether the reduced staffs could achieve research output high enough to carry out ARL's missionâare matters of judgment. This committee believes that they could; the higher cost options are those most open to the efficiencies and incentives of the private sector. The Department of Energy laboratories sponsored in universities and industry, the Jet Propulsion Laboratory sponsored by the National Aeronautics and Space Administration, and the Massachusetts Institute of Technology Lincoln Laboratory sponsored by DOD all have outstanding reputations for quality and productivity. Similarly, industrial laboratories such as Bell Laboratories, the Xerox Palo Alto Laboratories, the General Electric Laboratories, and many others also enjoy excellent reputations. Based on this experience, the committee believes that private-sector laboratories can deliver higher productivity for their higher per person costs. The committee also recognizes that there are no proven quantifiable measurements of research productivity available which would allow the committee to verify that 1,357 higher paid scientists and engineers (or 1,779 or 1,604) could be as productive as 2,021 government scientists and engineers. This comparison is complicated further by federal scientists and engineers who often accept lower pay in exchange for research opportunities available only in government laboratories to fulfill a sense of service to the nation. In general, however, higher salaries can attract higher quality people if linked with updated facilities, state-of-the-art equipment, professional working environment, and good leadership. ARL Enhanced Option This option would offer a quick and substantial improvement in effectiveness, without the need for radical change or upheaval, and without the need for congressional authorization. One-time conversion costs are estimated at $11 million (mainly severance pay for those made redundant as a result of the recommended narrowing of ARL's program). The contracting reforms assumed in this optionâincluding the use of cooperative agreements for research and developmentâwould improve ARL's ability to exploit diverse sources of research and technology and to leverage funds and programs. But ARL would be limited in these respects by the
CONCLUSIONS AND RECOMMENDATIONS 153 20-percent ceiling on contracting R&D. In none of these areas would it have advantages over the other options. Technology transfer to the Army would improve marginally, by the narrowing of its program and the formation of the technology transfer partnerships, both general recommendations. All other things being equal, one would expect an internal operation to have better transfer to other parts of the Army, because there are fewer barriers; in this respect, this option would be favored over the GOCO ARL option. Fully and properly implemented and supported, with the general recommendations, this option could give the Army a source of world-class science and technology. But the committee believes that implementation of this option could be very challenging, since the Army's past record for implementing Lab 21 initiatives is not very convincing. This option may not be a bold enough move to get the attention needed to fully implement a new management and organizational structure for ARL, nor meet the Army's changing needs. NIST Option This option has a substantial advantage over the ARL Enhanced baseline in its personnel procedures, which would give laboratory managers the ability to hire and reward technical workers to meet their needs in a timely way, rather than accepting detailed and time-consuming direction from above. It also would benefit from the advice of the two-tiered advisory system. The resulting improvements in research quality and cost-effectiveness would be important. The one-time conversion costs would be more than those of the previous option (about $17 million), representing mostly the cost of severance for employees replaced in the reformulation and narrowing of the program. In all other respects, this option is identical to the ARL Enhanced baseline. It would have the same enhancements in linkage to Army strategies and objectives, the diversity and quality of research sources, technology transfer to the Army, or ability to leverage funds and programs. However, the actual NIST has an extensive program of partnerships and guest researchers from industry and universities that provides it with great leveraging capability. This program, if duplicated in ARL, would leverage its funds greatly. Thus, the committee made it a general recommendation. The committee views this option as the best âinternalâ version of ARL and recommends it if the Army chooses not to contract out large portions of ARL's research. Strong support from the Army and the Office of the Secretary of Defense would be needed to obtain the necessary approvals from Congress and the Office of Personnel Management for the demonstration personnel system.
CONCLUSIONS AND RECOMMENDATIONS 154 ARL Multicenter Option This option has the potential for dramatic improvements in the quality of ARL's research and development, its ability to leverage funds and programs, and its ability to improve its productivity and cost-effectiveness. Its use of a combination of contract and internal centers of excellence for ARL's researchâgovernment-owned and government-operated, government-owned and contractor-operated, and contractor-owned and contractor-operated âwould enable it to seek the very best available sources of technology, and give it the network of contacts and partnerships through which to leverage its funds and programs. It would be well prepared to meet the changing needs of the future, by changing its research sources as needed. Contracted centers may not have the tight connections with the RDECs that would make for excellent technology transfer to the Army, compared with the government-operated ARL Enhanced or NIST options. However, ARL's government staff would include RDEC personnel on rotating assignments, which would improve communication. Even more interesting is the possibility of wholesale technology transfer; responsibility for centers whose technology had matured beyond ARL's interests could be transferred as wholes to RDECs. The one-time conversion costs would be high (about $56 to $70 million,2 mostly for severance pay for the 40 percent of ARL research personnel who would be displaced). But this option would be stronger by nearly every criterion than the ARL Enhanced baseline, and the equal of every other option (except possibly in technology transfer to the Army, where it might be arguably inferior to the internal options). Implementation would be complex contractually, because of the variety of sources, and would require effective planning and coordination by the permanent staff. GOCO ARL Option The GOCO ARL option would offer perhaps the best chance of all the ARL conversion options to do world- class technical work. Using the administrative procedures of the private sector, ARL could hire and promote, purchase, and contract more efficiently than any government organization. The recommended government personnel and procurement reforms would be an inherent part of the option. It could attract outstanding leaders and staff on the basis of competition, minimal administrative burden, and the 2 This cost depends on the number of contracts that must be established for independent centers of excellence.
CONCLUSIONS AND RECOMMENDATIONS 155 vital mission of the laboratory. It could select its research sources with the utmost freedom and diversity. With its rich networks of contacts and its ability to exchange personnel easily with outside organizations, it would be able to form the close relationships with outside entities through which to leverage ARL funds. Through its management and operation contract with the Army, a GOCO ARL could have strong incentives to improve the quality and relevance of its work. This option, however, could weaken ARL's linkages to Army strategies and objectives, by placing it outside the direct control of the Army. The contractor's concern for its customer and future contracts could lessen this problem. The GOCO ARL option would also be less able than the ARL Enhanced baseline (or other internal options) to transfer technology to Army users, provide technical support to operating forces, or carry out technology assessments for the Army. While none of these problems is insurmountableâmany existing GOCO laboratories manage them successfullyâthey must be counted as inherent deficiencies compared to internal options. The one-time conversion costs of this option are estimated at $85 million, mostly severance costs for people. Conversion would require notification of Congress (although not legislative authorization), and might be politically contentious. To capture the benefits of the GOCO option, the Army would need to resist overly restricting management caused by requiring excessive government approvals of operations. The past decade has seen a clear trend toward increased oversight at the Department of Energy's GOCO laboratories and the Defense Department's federally funded research and development centers. The Army would need to give the laboratory the operational freedom and flexibility of an outside organization, and at the same time the trust and access of an internal lab with regard to substantive matters. Comparing the Options Table 8-2 provides a comparison of each of the options with respect to each of the committee's evaluation criteria, as well as an overall committee evaluation (last row). SELECTING AN OPTION The determinate issue for the Army in selecting an option, all other factors being essentially equal, is whether a significant internal capability to do research is absolutely necessary. If the judgment is strongly affirmative,
TABLE 8-2 Summary Comparison of Options with Respect to the Committee's Evaluation Criteria Evaluation Criteria ARL Enhanced Option NIST Option ARL Multicenter Option GOCO ARL Option Linkage to Army strategies Improved by change in reporting Same as ARL Enhanced. Possibly weaker than ARL Possibly weaker than ARL and objectives channel (common to all options). Enhanced, because of heavy Enhanced, because of heavy emphasis on contract research. emphasis on contract research. World-class land warfare Modest improvement, would Substantial improvement, owing Dramatic improvement, owing to Dramatic improvement, owing to research require strong leadership to to NIST-style personnel policies, emphasis on procuring the best freedom from govemment implement. oversight by independent available research and administrative restrictions, technology review boards. technology, inside and outside emphasis on high-quality the Army. personnel. Diversity and quality of Improved by contracting Same as ARL Enhanced. Dramatic improvement, owing to Substantial improvements, but research sources improvement, but limited by 20 use of multiple emphasis on less than ARL Multicenter. percent ceiling on contracting. contracting centers of excellence, CONCLUSIONS AND RECOMMENDATIONS of research. Ability to leverage funds and Improved by contracting Same as ARL Enhanced. Dramatic improvement, owing to Dramatic improvement, owing to programs improvements, but limited by 20 varied relations with contractors freedom to contract for research. percent ceiling on contracting. and military organizations. 156
Improving productivity Modest improvement, owing to Substantial improvement, owing Dramatic improvement, owing to Dramatic improvement, with properly greater management to NIST-style personnel policies. contract incentives and drawn incentive clause in contract. accountability, competition among centers. Committee's evaluation Not bold enough. Best option that keeps bulk of The equal of any of the options in Potential for excellent laboratory, but program inside Army. May be quality, except possibly for vulnerable to government difficult to obtain approval and technology transfer and micromanagement, and could be implement. complexity of management by the politically contentious. Army. CONCLUSIONS AND RECOMMENDATIONS 157
CONCLUSIONS AND RECOMMENDATIONS 158 then the best internal option would be selected, assuming that it meets requirements for leadership, quality of research, and technology transfer. On the other hand, members of this committee believe that contract organizations are more likely than internal DOD laboratories to achieve these goals. Thus, the choice of an ARL option is a matter of judgment about the factors most important to the Army in the particular case. The committee believes that the ARL Enhanced option may not be a bold enough move to get the attention needed to fully implement a new management and organizational structure for ARL, nor meet the Army's changing needs. The ARL Enhanced option itself would require extraordinarily strong support, judging from ARL's inability thus far to implement the Lab Demo initiatives that are at the option's heart. The NIST ARL, ARL Multicenter, and GOCO ARL options would all be major improvements over the current situation, and all three have the potential to produce a world-class laboratory. The NIST option in particular is an excellent internal option; the other two have varying advantages and disadvantages, but the advantages far outweigh the disadvantages in terms of quality and productivity. The main uncertainty about a NIST-like ARL is whether it could be approved by DOD and the Congress and be accepted by the existing bureaucracies so as to be implemented successfully. The ARL Multicenter and GOCO ARL options could be implemented by the Army without statutory changes, although they would be politically contentious. The committee strongly recommends that the Army implement either the NIST, ARL Multicenter, or GOCO ARL option. The choice among these three depends largely on the importance to the Army of an internal research capability, and on the Army's judgment of the practical and economic obstacles to implementing particular options. The Army must have the support and the commitment of its top leadership, and the patience to evolve and stabilize ARL into an organization that can have a major impact on the Army of the future. Without this, the Army will waste critical resources and not reap the benefits described in this report for its chosen option.