Alvin Trivelpiece tells ORNL employees what the Laboratory needs to do to ensure its survival. Photograph by Curtis Boles.
|Editor's note: ORNL Director Alvin W. Trivelpiece delivered his annual State of the Laboratory address to employees and visitors on April 26, 1996, in Eugene P. Wigner Auditorium, Oak Ridge National Laboratory.|
In previous years, I have talked about some of the comings and goings of a few people in various positions around the Laboratory. I have also talked about prizes and awards that have been received by various members of the scientific and technical staff, and I have tried to explain some of the interesting research and development (R&D) work that has been done around the Laboratory during the past year.
This year, I will instead outline important events that have shaped our institution during the past year and I will discuss what I believe they mean in terms of the health and well-being of Oak Ridge National Laboratory.
I am also going to outline some of the actions that I believe we must take to survive and prosper as an institution. There are many forces at work over which we have little or no control. Such forces may have profound effects on our future.
I have one piece of good news. The President has signed the '96 budget into law. I hope that this action spurs the Congress to pass a '97 budget before October 1.
I gave last year's State of the Laboratory address on March 3. Nothing in that talk predicts anything that actually happened to us since then. So in giving this State of the Lab talk, I want to make it clear that my ability to predict the future is bad.
I don't need to tell most of you that a lot has happened at ORNL this past year. Even so, I suspect that many of you haven't thought about what it all means to us as an institution. Some of these events have already changed us a great deal. Some of the forces that led to these events will continue to be imposed on us. How we respond to these forces will determine how well Oak Ridge National Laboratory continues to survive and prosper as a leading research and development (R&D) institution. I am going to divide my remarks into three parts. First, the way we were; second, the way we are; and third, the way we need to be.
The Way We Were
In 1993 we celebrated the 50th anniversary of the events that began what is now known as Oak Ridge National Laboratory. This celebration provided a great occasion for us to reflect on the way we were. Several books have described the birth of the Laboratory during World War II and the activities here as part of the war effort. Then all of a sudden the war was over, and the question was, "What next?"
Major General Leslie R. Groves' Advisory Committee on Research and Development met on March 8 and 9, 1946, in the New War Department Building, Washington, D.C., to consider the future. Because the new commission could not be formed in time for the fiscal year 19461947, it was assumed that the Manhattan District would continue in existence temporarily and that it would request funds for certain R&D programs. One of the subjects of this advisory committee meeting was "national laboratories."
|Lockheed Martin Corporation's Dan Tellep (left), chief executive officer, and Norm Augustine, president, visit with ORNL employees in March 1995. Photograph by Jim Mottern.|
No precise definition of what a national laboratory should be was made by this advisory committee, or by anybody else since then for that matter. The conditions laid out in the minutes of the Groves Advisory Committee meeting indicate that the R&D work undertaken in national laboratories should be primarily fundamental research of an unclassified nature requiring the use of piles and equipment of too great a cost for a university or private laboratory to underwrite. They recommended that the work at the Clinton Laboratories be continued.
In 1947, the scientists and engineers here at the Clinton Laboratories were pleased to learn that the University of Chicago would most likely succeed Monsanto as the contractor. However, after Christmas of 1947, they were then disappointed to learn that, instead of the University of Chicago, the contractor was going to be a subsidiary of Union Carbide and that reactor development was going to be centralized at the Argonne National Laboratory instead of at Oak Ridge. Even so, there were forces at work that would change this situation very quickly. In January 1948, the Atomic Energy Commission (AEC) changed the name of our institution from Clinton Laboratories to Oak Ridge National Laboratory.
In March 1949, Alvin Weinberg wrote a then classified report, Research Program at ORNL. The leading line of that report says, "The activities of Oak Ridge National Laboratory fall into six large categories: chemical technology, reactor technology, basic research, isotope production, radiation protection, and education." We are still doing some of these things. However, it is a later section of the report that reveals for the first time some clue about how frustrating it can be to deal with the problems of running a national laboratory. Weinberg wrote, "ORNL continues to produce important work for the AEC, in spite of a combination of circumstances which included two changes of contractor, a drastic change in directive (sic), and 14 months during which there was no research director." From this I conclude that it must have been nice to be able to keep material classified until after you could retire.
Over the years since then, the fortunes of ORNL changed with the times, and the thrust of its programs changed as a result. The 1973 oil embargo gave impetus to work in areas of energy research other than nuclear energy. National concerns over the environment led to opportunities for new areas of research at ORNL. The Calvert Cliffs decision spawned considerable work in preparing environmental impact statements that comply with the National Environ-mental Policy Act. Ecological sciences here got a boost.
|Former ORNL Director Alvin Weinberg (left), who celebrated his 80th birthday in 1995, meets with Clifford Shull, who spoke at ORNL shortly after winning the Nobel Prize in physics for his neutron scattering research more than 40 years ago at the Laboratory's Graphite Reactor. Photograph by Curtis Boles.|
In 1975, the AEC was replaced by the Energy Research and Development Administration, which in turn was replaced by the Department of Energy in 1977. With the establishment of the Department of Energy, management attention was now directed to how national laboratories were operated, as well as to what they did. This scrutiny resulted in a management structure that was not as lean as the AEC.
There were also changes in DOE-supported scientific and technical programs and in the manner in which they were funded. Programs in various areas of conservation and renewables were expanding. The controlled thermonuclear fusion program grew for a while. Fossil energy research was increased greatly. The Three Mile Island nuclear plant accident occurred. Support for development of nuclear power expanded and then began to diminish.
Even though these changes in directions in our technical programs were substantial, they were normal in the sense that an R&D institution should expect to be doing new and different things. But in looking back, probably the biggest change in the operation of Oak Ridge National Laboratory during this 40-year period occurred not as a result of routine changes in technical direction. Rather, the biggest change was the transition from a fixed-fee contract to an award-fee contract. This change occurred when Martin Marietta won the competition for operation of the Oak Ridge facilities, effective April 1, 1984. At the time this did not seem like a big change. The award fee levels were not substantially different from the previous fixed fees, and the primary criterion by which the Lab's performance was judged was scientific excellence.
DOE Secretary Hazel O'Leary visited Oak Ridge during the Oak Ridge Summit on June 1 and 2, 1995. During the Summit, the Basic Research Subcommittee of the House Committee on Science heard testimony on the challenges facing scientists in Oak Ridge, Tennessee, and the nation. Photograph by Lynn Freeny.
However, in the late 1980s, concerns over management issues grew. As a result, award fee performance measures were changed to give greater emphasis to management concerns instead of scientific performance. Also, certain functions were centralized and managed by individuals no longer accountable to Laboratory management. At one point, it was estimated that more than 90% of the Lab's award fee performance was based on its adherence to management directives rather than on the excellence of its scientific and engineering work. After some negotiations, this balance was changed so that it was based only 60% on management performance. In any event, I did not believe that such a focus on management performance was a proper way to run a national laboratory, any national laboratory.
As a result of this situation, morale suffered, scientific productivity dropped, costs soared, and our program sponsors were becoming dissatisfied with us to the point of threatening to shut down funding for several key programs. All of these happy events occurred within the first couple of years after I was named Laboratory Director. There were probably a few things that my predecessor, Herman Postma, meant to tell me about the Lab before I came here, but they probably just slipped his mind.
What was obvious in early 1992 was that this process had caused our overhead costs to get out of control; thus, the only way we were going to stay in business was to bring them under control. The first difficult step in this process was to establish Project 45, which sought to bring our projected overhead rate of 54% down to 45%. It was a critical and painful first step. The process continues and has a way to go.
Later in that same year on November 12, the Lab's executive committee was at an offsite meeting in Townsend, Tennessee. We took time out from our discussion to listen to President-elect Clinton's first press conference after his election. He introduced some of his early appointments and then made the following remarks at the Old State House in Little Rock, Arkansas.
"I have read at least in my history books that some cabinet appointments are considered major and others are considered minor. I don't know how you would consider the Departments of Commerce and Energy in that regard, but from the kind of economic policy I have laid out, and the things that I think we have to do to change this country economically, those are very major appointments. And how they pursue the missions of those departments will affect the success or failure of this administration's economic efforts, as well as what is done by the other major economic players."
Fantastic! What could go wrong after the president-elect said that the Department of Energy was critical to his administration's success?
Well, neither we nor President Clinton had yet to observe the character of the 103rd Congress that was to be sworn in in January 1993. Their logic seemed simple enough. The Cold War is over. We don't need to make any more nuclear weapons. The DOE labs make nuclear weapons, so they should be shut down. Which ones? Why not use the base closing commission approach? Several bills were introduced that proposed this course of action. Others called for the examination of the roles and missions of the national laboratories. None of these bills was introduced with the notion that the roles and missions should be expanded. Other proposed legislation focused on the concern over the way that our Laboratory Directed Research and Development activities were carried out. There was also concern over whether our work for other federal agencies shouldn't be done by the private sector. There was concern that the expected technology transfer from the labs wasn't occurring fast enough and that, if it was, it was benefiting other countries.
To her credit, Secretary of Energy Hazel O'Leary recognized these and other forces that were threatening the Department and its laboratories. In response to these threats, she asked Bob Galvin, chairman of the board of directors at Motorola, to lead a Task Force on Alternative Futures for the DOE Laboratories. The Task Force began its work in February 1994 and presented its findings and recommendations in February 1995. The Galvin Task Force report gave a good analysis of the situation regarding the operation of the labs and of the Department. It was done in a fair and objective manner and there was no basis for objection to its conclusions and findings.
|Ribbon cutting for the new Solid State Division building. From left are physicist Doug Lowndes, ORNL Associate Director Bill Appleton, ORNL Director Alvin Trivelpiece, Ron Hultgren (DOE site manager at ORNL), Solid State Division Director Jim Roberto, and crystallographer Lynn Boatner. Photograph by Curtis Boles.|
After receiving the Galvin Task Force report, Secretary O'Leary set out to implement most of its recommendations. In spite of her actions, there were still strong forces that wanted to abolish the Department of Energy. In response to these continuing threats to the Department, Secretary O'Leary announced in late 1994 that she was going to have a strategic realignment program for the Department. This realignment would involve a 25% reduction in federal employees over five years. The Department is now down to 13,000 employees from over 19,000 just a few years ago. The realignment would also require a reduction in the cost of operations at the Department's national laboratories by about $1.4 billion over the same five-year period. ORNL's fair share amounts to reducing our costs of operation by about $18 million each year for a period of five years. This is not an easy target for us and we could not meet it without the firm commitment by Secretary O'Leary to push the "necessary and sufficient" approach to regulatory reform.
I believe that if Secretary O'Leary had not proposed her strategic realignment, the Department of Energy might well have been abolished by now. But we should keep in mind, the forces that led her to carry out this strategic realignment have not gone away. There are still several pending bills in the Congress that propose to abolish the Department of Energy.
The Way We Are
All of this was very dramatic. Working with the Galvin Task Force was a very time-consuming but worthwhile effort. A lot of you had a chance to participate. However, there are several other entities that also have great influence on what we do besides the Department of Energy. These other entities have also been undergoing profound changes as a result of the cessation of the Cold War. In particular, the Department of Defense. There have been major reductions in the armed forces and a corresponding reduction in the procurements of items that companies like Martin Marietta supplied. Norm Augustine, then chairman and chief executive officer of Martin Marietta, decided that merging with another company was a superior strategy for the future instead of going out of business. This approach led to the acquisition of GE Aerospace. Martin Marietta was now a $10 billion company.
Then, Mr. Tellup, chairman of Lockheed, also a $10 billion company, and Mr. Augustine agreed that a $20 billion company was better than two $10 billion companies. The complementary nature of the activities of the two organizations made this a very strategic merger. This merger did leave a few areas where neither company had strengths that would be desirable for a full service defense and aerospace contractor. This need will be met by the recently approved integration with Loral Corporation. We will now be part of a $35 billion corporation when you take into account the $5 billion in equivalent sales represented by the various DOE facilities such as ORNL.
|Tennessee Representative Zach Wamp and Martha Krebs, director of DOE's Office of Energy Research, played prominent roles during the Oak Ridge Summit. Photograph by Lynn Freeny.|
Most of these changes occurred after the last State of the Laboratory Address on March 3, 1995. March 15 was the day that Lockheed Martin Corporation was born. The way by which a $20 billion corporation is managed is substantially different from the way a $5 billion corporation is managed. Lockheed Martin established four sectors, each with its own president to manage most elements of the company. The elements of the company that were not part of one of the four sectors included Sandia National Laboratories, Idaho National Engineering Laboratory, Lockheed Martin Energy Systems, and others that had not been assigned to a sector. It was decided that there should be a fifth sector and that Al Narath would be its president. On August 15, 1995, Al Narath announced that Oak Ridge National Laboratory would be separated from Lockheed Martin Energy Systems and that a new subsidiary company would be established to manage ORNL on a fixed-fee basis. On Friday, October 13, 1995, at 3:15 p.m., the Lockheed Martin Energy Research Corporation was chartered in the state of Delaware. On December 6, a new contract with the Department of Energy was signed. We started operation of the Lab under the new company on January 1, 1996. Between August 15 and December 31, a lot of hard work was done by a lot of people to make the new arrangement possible.
Prior to the proposal to establish a new company to manage ORNL, the Office of Energy Research in the Department of Energy was planning to have the Laboratory put out for bid, with only not-for-profit organizations such as universities being allowed to compete. I am glad that an alternative was found that allowed the contract with Lockheed Martin to be extended so that the Laboratory was not competed. I believe that our present arrangement is much better than being put out for bid. But make no mistake, we are on probation with the Department. Unless we perform up to the expectations of the Office of Energy Research and the other elements of the Department that have a say in our future, we might yet end up being put out for bid. I remain concerned that if we are to be competed, then we might just be shut down instead.
|Neal Lane (right), director of the National Science Foundation, delivered a lecture in 1995 at ORNL. Here he autographs a poster announcing his visit in the presence of Nancy Gray, ORNL protocol officer, and Ed Oliver, an ORNL associate director. Photograph by Curtis Boles.|
But even though we are not out of danger yet, we must also keep in mind that this transition to Lockheed Martin Energy Research had the firm and unwavering support of Dr. Martha Krebs, director of the Office of Energy Research at the Department of Energy. Without her support none of this would have happened. Many of you had the chance to hear her, when she visited us on January 11, 1996. She told us how pleased she was that the transition had occurred, and she congratulated us on what we had accomplished. You also heard Al Narath, president of the Lockheed Martin Energy and Environment Sector, express his commitment to help us succeed. Jim Hall, manager of the Oak Ridge Operations Office, and I signed an agreement that pledged us to work together in ways that improve the management and operations of both institutions.
Given this support and good will, I am optimistic about the future of Oak Ridge National Laboratory. We still have a lot of hard work yet to do to complete certain elements of the transition and find our own ways to do things in some areas of management. We have to get better in several areas in order to be able to compete in the current environment. That leads me into some comments on what we need to do to succeed.
|Linda Horton explains a materials research advance at ORNL to Joseph Stauch, counsel general of South Africa, who visited the Laboratory in May 1995. Photograph by Curtis Boles.|
The Way We Need To Be
January 3, 1996, was the first time I had the opportunity to tell you about events surrounding the formation of and transition to the new company. At that meeting, I told you about my expectations based on what I knew at the time. Since then, we have heard from Martha Krebs, Al Narath, and Jim Hall about their expectations. We have started a process of reengineering to determine how we can reduce costs and remain competitive in our principal lines of business. We have debated among ourselves about what we should do. We have sought advice from a lot of our friends about what we might do to improve ourselves. This is not an easy process. What follows is a list of what I believe to be the ten most important things we need to do. I have no illusion that this list will be accepted without challenge or question. It is the nature of this institution to challenge everything.
This list of 10 is not unique. I hope that it leads to debate and discussion on what needs to be done. I expect it to be improved, modified, and acted on in many areas by this time next year.
I would like to close by paraphrasing a remark that Sir Isaac Newton made in a letter to Robert Hooke in 1675. In this letter he is speaking to both Hooke and René Descartes and is explaining to them why he had been able to do the remarkable things that he did when others like them had not. Newton wrote, "If I have seen further it is by standing on the shoulders of giants."
If Oak Ridge National Laboratory has seen further, it is because it stands firmly on the shoulders of the talented people who make up this outstanding institution.