DCCUMENT RESUlE 03408 - A25736943 [Review of Some Aspects of the Authorization and Creation of the Solar Energy Research Institute]. EMD-?7-67; B-186105. September 9, 1977. 11 p. Report to Rep. Mike McCormack, Chairman, House Committee on Science and Technology: Advanced Energy Technologies and Energy Conservation Research, Development and Demonstration Subcommittee; by Elmer B. Staats, Comptroller General. Issue Area: Energy: Executive ranch Organization and Processes for Dealing with Energy Problems (1611); Science and Technology: Federal Laboratories and Federally Supported Crganizations Performing Research and Development 2003). Contact: Energy and Minerals Div. Budget Function: atural Resources, Environent, and Energy: Energy (305). Organizaticn Concerned: Energy Rsearch and Development Administration. Congressional Relevance: House Committee on Science and Technology; House Committee on Science and Technology: Advanced Energy Technologies and Energy Conservation Research, Development and Demonstration Subcommittee; Senate Committee on Interior and Insular Affairs. Authority: Sclar Energy Research, Development, and Demonstration Act (P.L. 93-473). Energy Reorganization Act of 1974 (P.L. 93-438). Federal onnuclear Energy Research and Development Act of 1974 (.L. 93-577). Solar Heating and Cooling Cemonstration Act of 1574 (P.L. 93-409). Geothermal Energy Research, Development, and Demonstration Act. P.L. 93-410. H.R. 6756 95th Cong.). The substantial changes in the organization, management, and content of the solar and other energy research, 2evelopment, and demonstration programs that have occurred since the Solar Energy Fesearch Institute's (SERI's) authorization in late 1974 call into question the need for establishing SERI. There are a number of actions which the Congress may wish to consider during its deliberaticns on the Energy Research and Develorment Administration (EREA) authorization bill for fiscal year 1978 and amendments affecting the authorization and funping of the SERI effort. Recommendations: The Congress should evaluate the impact of the changes in solar and other energy research programs which have occurred since 1974 on the need for SERI prior to making any major financial commitment to its establishment. Since there may not be time for making this evaluation prior to consideration of the ERDA authorization bill, the Cngress may wish to consider funding SERI at a ,.educed level until such an evaluation can be made. Should the need for SEBI be cleazly demonstrated, ERDA or the Department of Energy shculd be required to give greater consideration to placing SERI at an existing laboratory. The Congress should reject any aendment or proposal that would have the effect of authorizing or funding a regional SERI network until the need for and composition of such a network is adequately demonstrated. (SC) COMPTROLLER GENERAL OF THE UNITED STATES W^AGHIINGTON D.C. " ot j B-186105 September 9, 1977 ed0 The Honorable Mike McCormack (:°O Chairmarn, Subcommittee on 4 Advanced Energy Technologies and Energy Conservation Research, Development, ad Demonstration Committee on Science and Technology House of Representatives Dear Mr. Chairman: By letter dated August 2, 1977, you referred to our recently initiated review of the solar energy development program at the Energy Research and Development Administration (ERDA) and requested that we include, as part of that review, an examination into selecteC aspects surrounding the authori- zation and creation of a Solar Eergy Research Institute (SERI). The specific areas of interest mentioned in your request were the congressional mandate for SERI, its proposed management structure, and the relationship between SERI and the regional SERI network. Your letter also pointed out that the ERDA authorization bill for fiscal year 1978 (H.R. 6796) is scheduled to go to the House floor in early September, and that an amendment is expected to be introduced at that time that would require that $25 million of ERDA's solar program funding be spent through SERI, with 80 percent going to the regional SERI net- work. Accordingly, you asked for our comments on the amend- ment by early September, including any questions or problems we may see in it based on our review work up to that point. As you know, an amendment similar to the one mentioned in your letter was adopted by the Senate last June during its deliberations on the Senate version of the ERDA authorization bill. Based on a limited review of circumstances surrounding the authorization and creation of SERI, we have identified a number of areas of concern that we believe the Subcommittee, and the Congress as a whole, may wish to consider prior to final passage of any ERDA authorization bill containing such EMD-77-67 (990515) B-186105 an amendment or the one contemplated in your request. Tese areas of concern are as follows: -- Changed circumstances call into question the need for SERI. -- ERDA did not give adequate consideration to placing SERI at an existing laboratory. -- ERDA's decision to create a regional SERI net- woik appears to have been rather arbitrary and may dilute the intended role for SERI. ---Many important factors, such as the total cost for SERI and the regional SERI network, their respective work assignments and program respon- sibilities, organizational structure, and man- agement interrelationships, esz:ntially remain unknown. In our opinion, these concerns aze of sufficient magnitude to warrant the Subcommittee's deferral of he amendment in ques- tion until such concerns are resolved. The following sections provide a perspective needed for an understanding of the concerns raised during our review as well as dditional details on each specific area of concern. As agreed with your off ce, we did not obtain agency comments on this report because of the extremely tight reporting dead- line established by the Subcommittee. PERSPECTIVE X The creation of SERI was authorized on October 26, 1974, by the Solar Energy Research, Development, and Demonstration Act of 1974 (Public Law 93-473). The act was, in part, to establish a vigorous Federal pogram of research, development, and demonstration (RD&D) to ensure the utilization of solar energy as a viable source for our national energy needs. The act emphasized the urgency for such a program and the need for better coordination and management of the various solar energy RD&D activities which, at that time, were scattered among several Federal agencies, such as the former Atomic Energy Commission, National Science Foundation, and the National Aeronautics and Space AdminiStration. Accordingly, the act established a'Solar Energy Coordination and Management Project, headed by a Project Chairman, having overall responsibility for providing effective management and coordination of the national solar energy RD&D program. 2 B-1861C5 The Project Chairman's responsibilities included bringing SERI into being. The act and the associated legislative history show that SERI was to be a facility available to the Project Chairman for performing those research and development functions deemed necessary for carrying out the Project's responsibilities. In this connection, section 10(a) of the act provides that SER: "* * * shall perform such research, development, and related functions as the Chairman may determine to be necessary or appropriate in connection with the Project's activities under this Act or to be otherwise in furtherance of the purpose and ubjec- tives of this Act." Section 16 of the act provided for the transfer of all Project functions and responsibilities to a new permanent agency for energy RD&D, should the creation of such an agency be enacted into law. Such a transfer appeared highly probable, because at the time of congressional deliberations on this act, the Congress was also considering legislation creating such an energy agency. Accordingly, with the creation of ERDA in January 1975, pursuant to the Energy Reorganization Act of 1974 (Public Law 93-438, dated October 11, 1974), all Project responsibilities were transferred to ERDA, including responsibility for bringing SERI into being. ERDA's efforts to establish SERI began soon after ERDA's creation. In February 1975 ERDA requested that the National Academy of Sciences (NAS) make an indepth study to determine the optimal role and desirable characteristics for SERI. In August 1975, ERDA also contracted with the MITRE Corporation to solicit industry's opinions and recommendations on the proper role and organizational structure for SERI. ERDA also asked the general public, as well as State Governors, legis- lators, and other persons and institutions known to be con- cerned with the use of solar energy, to express their opinions on SERI. After considering the results of the NAS and MITRE studies and the input from others, including recommendations made by ERDA's internal management, he then-ERDA Administrator decided in October 1975 that SERI should be a single, medium-sized research and development laboratory to be operated and managed by a responsible organization, which could be a nonprofit, commercial, or State or local government entity. Accordingly, on March 12, 1976, ERDA issued a request for proposals (RFP) from organizations interested in entering into a contract with RDA for this purpose. The RFP stated 3 B-186105 that SERI's initial role would include such functions as program and resource assessments, information gathering and dissemination, as well as research activities in specific aspects of ERDA's solar energy program, and that this role could possibly expand at a future date to include solar energy development and related activities. Following a comprehensive evaluation of 20 proposals submitted by organizations responding to the RFP, the ERDA Acting Administrator announced on March 24, 1977, the selec- tion of the Midwest Research Institute--a not-for-profit research organization--as the managing/operating contractor for SERI. The announcement stated that SERI would be located in Golden, Colorado. ERDA also announced its plans to estab- lish additional components into a regional SERI network. These components consist of regions for the Northeast, North Central, Southeast, and West. To date, ERDA has issued planning grants to designated organizations representating three of these regions, as shown below. Grant Grant Region Organization Amount Duration Northeast Northern Energy $498,755 5/10/77 to Corporation 11/10/77 North Central Midwest Regional $799,326 7/1/77 to Solar Energy 12/31/77 Planning Venture West Western Interstate $697,500 7/1/77 to Nuclear Board 3/31/78 These grants are to determine the appropriate roles and organ- izational structures for each component of the regional SERI network. The Southeast region is currently preparing the grant application that will be submitted to ERDA for approval and award. As of July 31, 1977, less than $400,000 had been spent on SERI. The first major financial expenditures for SERI, however, are expected during the upcoming fiscal year. In this regard, the amounts requested in the ERDA authorization bill for fiscal year 1978 provide a level of funding for SERI of between $8 million and 10 million for the fiscal year and, as previously mentioned, atempts to raise this funding level to $25 million may occur via amendment to the bill. 4 B-186105 The concerns discussed below, however, could affect the desirability of embarking on a more substantial investment in the SERI effort. The fact that SERI has yet to become a viable operating entity should present an opportunity for the Congress to rethink its position on SERI in light of these concerns. CHANGED CIRCUMSTANCES CALL INTO QUESTION THE NEED FOR SERI At the time of congressional deliberations leading to passage of the Solar Energy Research, Development, and Demon- stration Act of 1974, there were many unresolved issues affecting this Nation's ability to meet its energy needs. Energy RD&D programs were scattered among several Federal agencies, there was no comprehensive program for nonnucleac energy RD&D, and the level of federally supported RD&D for certain technologies such as solar and geothermal energy, was comparatively small. Thus, SERI's creation was author- ized during a period of substantial uncertainty. Many significant changes, however, have occurred since that time, resulting from aggressive congressional involvement in dealing with the issues. In late 1974, for example, the Congress enacted several pieces of energy legislation designed to coisolidate many of the energy RD&D functions into a single Federal agency and to establish vigorous RD&D programs for various nonnuclear energy sources. This legislation included the following: Legislation Date Enacted Solar Heating and Cooling September 3, 1974 Demonstration Act of 1974 (Public Law 93-409) Geothermal Energy Research, September 3, 1974 Development, and Demonstration Act of 1974 (Public Law 93-410) The Energy Reorganization October 11, 1974 Act of 1974 (Public Ldw 93-438) Solar Energy Research, Devel- October 26, 1974 opment, and Demonstration Act of 1974 (Public Law 93-473) Federal Nonnuclear Energy December 31, 1974 Research and Development Act of 1974 (Public Law 93-577) 5 B-186105 Much of this legislation esulted in changing Federal solar energy efforts into a major RD&D program. Federal funding for solar energy RD&D increased from about $11 mil- lion in fiscal year 1974 to about $290 million in fiscal year 1977. Also, instead of being scattered among several agencies, the responsibility for the program is now centered in ERDA. In addition, further consolidation of Federal energy functions is presently taking place as a result of recently passed legis- lation creating the Department of Energy. The new Department, which will be the successor Lo ERDA, is scheduled to be in operation on or about October i, 1977. Upon ERDA's creation in January 19 5, a large number of Government-owned RD&D facilities, which previously had been under the sponsorsh.p of other agencies, were transferred to ERDA. These facilities included 17 nuclear materials and weapons production acilities; 32 laboratories specializing in such fields as nuclear engineering and physical, biomedi- cal, and fossil energy research; and 8 multiprogram RD&D laboratories. The capital investment in these facilities as of September 1976 amounted to more than $12 billion, which included nearly $3 billion for the multiprogram laboratories. During late 1974, however, there was some uncertainty about the fate of certain multiprogram laboratories--Sandia Laboratories, Los Alamos Scientific Laboratory, and Lawrence Livermore Laboratory--that were principally involved in nuclear weapons work for the former Atomic Energy Commiss on. Sandia Laboratories at that time also had significant ongoing efforts in solar energy RD&D. The Energy Reorganization Act of 1974 required the ERDA Administrator t conduct a review of the desirability and feasibility of transferring this work and other military applications functions to the Department of Defense or other Federal agencies. Under certain possii e transfer scenarios, therefore, Sandia Laboratories' involve- ment in solar energy RD&D could have been seriously disrupted. The ERDA Administrator, upon completion of the required review in January 1976, recommended that the nuclear weapons work and other military applications functions be retained in ERDA. Currently, Sandia Laboratories has viable ongoing efforts in solar energy RD&D and responsibility for a large segment of the program. In light of the substantial changes in the organization, management, and content of energy RD&D programs that have occurred since late 1974, the need for creating SERI may be called into question. Accordingly, this need should be reexamined before SERI becomes a viable operating entity. 6 B-186105 ERDA DID NOT GIVE ADEQUATE CONSIDERATION TO PLACING SERI AT AN EXISTING LABORATORY From our review of ERDA's efforts to bring SERI into being, it appeared that ERDA did not give adequate consider- ation to placing SERI at an existing Federal laboratory. Although the Solar Energy Research, Development, and Demon- stration Act of 1974 provided that SERI may be located at such an existing laboratory, ERDA decided that the Federal laboratories would not be allowed to submit proposals in response to ERDA's March 1976 RFP. ERDA officials stated that numerous State and private organizations had expressed interest in beccming the manager/ operator for SERI and that the restriction was placed on the laboratories to ensure that all organizations ubmitting proposals for SERI were treated equally and fairly. They explained that some of these laboratories were heavily involved in federally funded solar energy RD&D and this could have given them a preferred position, or at least an appear- ance of having knowledge which would have given them an unfair advantage, over other organizations. We believe, however, that ERDA overlooked some of the obvious benefits of placing SERI at one of the existing Fed- eral laboratories. Over the years, some of these laboratories have developed considerable scientific, technical, and manage- ment expertise in solar energy RD&D and have acquired a signifi- cant share of the Federal funding or solar work. We have determined that these laboratories are expected to have out- lays of more than 75 million for this work in fiscal year 1977. Two of the laboratories, the National Aeronautics and Space Administration's Jet Propulsion Laboratory ($33 mil- lion) and ERDA's Sandia Laboratories $30 million), account for nearly 85 percent of these outlays. We believe that, by placing SERI at one of these labora- tories, ERDA could have brought SERI into being at an earlier date. This would have also provided more opportunities for utilizing the existing laboratories and capitalizing on a source of experienced researchers with some of the needed prerequisites already in place, i.e., computer capabilities, hardware, and management structure. 7 B-186105 ERDA'S DECISION TO CREATE A REGIONAL SERI NETWORK APPEARS TO HAVE BEEN RATHER ARBITRARY AND MAY DILUTE THE INTENDED ROLE FOR SERI Our review indicated that ERDA's decision regional SERI network was somewhat arbitrary andto create a may dilute the intended role for SERI. The initial decision made by the previous ERDA Adminis- trator to have a single SERI was based on a number sources including the NAS and MITRE studies, that of input that approach. We found no support, however, for supported decision to create the regional network. AccordingERDA's officials, that decision was made at a meeting between to ERDA Acting Administrator and the then-President's the i These officials stated.that in making the decision Advisor. to have regional SERI's, no new indepth study was done. These cials also were not able to provide an adequate rationale offi- the decision. They did point out, however, that for program's rapid growth and the growing interest in the solar energy throughout the country had to be considered solar the decision. Tnus, the decision appeared to have in making rather arbitrary basis. been on a Our examination of the legislative history of the Energy Research, Development, and Demonstration Solar Act discloses that the nature of solar energy research of 1974 required the close integration of a substantial number of competent scientists and a large amount of specifically designed ment. It pointed out that SERI would necessitate equip- a laboratory with a large number of such scientiststhe use of ment to effectively concentrate on complex solar and equip- research and development problems. SERI then couldenergy provide the needed focal point and organizational framework energy research and development, and ensure rapid for solar commercial utilization of solar energy. Whether the Congress intended this focal point to single facility, however, is not clear from the be a history. The extent to which such a focal point legislative is estab- lished will depend on how the regional network is and controlled. If ERDA or its successor--the new structured of Energy--structures the regional network as an Department extension SERI, and the four regions are subordinate to SERI, of could be contended that this comes sufficiently closethen it establishing such a focal point. On the other hand, to focal point would be lacking if the regional network such a struc- ture is independent of SERI and is controlled directly through ERDA or the Department of Energy headquarters. ERDA, 8 B-186105 however, has nt yet decided how the regional network will interface with SERI, the other laboratories, quarters organization. and the heae- MANY IMPORTANT FACTORS ABOUT SERI AND THE REGIONAL NETWORK REMAIN UNKNOWN To effectively exercise its oversight responsibilities, the Congress must be provided with sufficient keeping fully and currently informed. information for regional SERI network, such information Regarding SERI and the should include a full range of cost estimates, scope of work, ture, and management interrelationships. organizational struc- However, much of this information is still not available. Cost of the SERI effort unknown Our review has shown that, for the not thave cost estimates for establishing most part, ERDA does nd operating SERI and the regional SERI network. Although been developed, they did not appear some estimates have to be useful. SERI's cost for its first 3 years of estimated by ERDA as follows: operation has been $4 million to $6 million for the first year; $7 million to $13 million and $10 million to $20 million for the for the second year; third year. The wide range by which these co£'s apparently can vary during these first 3 years raises a quection about example, costs for the first year of their usefulness. For operation could vary from $4 million to S6 million--a variance the third ye;. of SERI's operation, of 50 percent. During this variance could be as much as 100 percent. Costs beyond the available because, according to ERDA third year are not yet to redefine the scope of work for SERIofficials, they expect by that time. In addition, there are no cost estimates the regional SERI network. According available for estimates will not be known until the to ERDA officials such work programs have been specifically respective regional net- defined. Work assignments and program resposibilities not yet defined As presented in the RFP, SERI's functions progr.-m and resource assessments, information would include dissemination, as well as research activities gathering and aspects of ERDA's solar energy program. in specific Bowever, the RFP was 9 B-186105 prepared for a single SERI approach--not with a regional SERI network in mind. It is not yet clear what ultimate impact the regional network will have on SERI functions, and this will not be known until the results of the regional planning grants are available, which may not occur until March or April of 1978. Organizational structure and management nterreationships SERI's internal mana_,nent and organizational structure is evolving as personnel come on board. Currently, SERI reports to, and is under the direction of, ERDA's Division of Solar Energy. ERDA, however, has not yet determined what the control structure will be for the regional network. The regional SERI network could report to, and be controlled by, either ERDA's Solar Enq-gy Division or SERI. There are a number of important implicl :ions associated with the ultimate decision on organizational .nd anagement control. For exam- ple, if ERDA or the Department of Energy decides that the control will be through its headquarters organization, it may be viewed that, in fact, there are five new laboratories, thereby diluting SERI's role, as a fccal point for solar energy RD&D. In light of the concerns discussed in this report, we believe there are a number of actions which the Congress may wish to consider during its deliberations on the ERDA author- ization bill for fiscal year 1978 and any amendments that would affect the authorization and funding of the SERI effort. The substantial changes in the organization, management, and content of the solar and other energy RD&D programs that have occurred since SERI's authorization in late 1974 call into question the need for establishing SERI. Because of this concern, we believe the Congre3. should evaluate the impact of these changes on the need for SERI prior to making a major financial commitment to its establishment. We recog- nize that the ERDA authorization bill for fiscal year 1978 will go to the House floor in early September and there may not be sufficient time to make this evaluation. Accordingly, the Congress may wish to consider funding ERI at a reduced level until such an evaluation can be made. Should the need for SERI be clearly demonstrated, ERDA or the Department of Energy should be required to give greater consideration to placing SERI at an existing laboratory. 10 B-186105 We further believe that, because of the current unavailability of information about the regional SERI net- work and the rather arbitrary justification for establishing such a network, the Congress should reject any amendment or proposal that would have the effect of authorizing and funding a regional SERI network urtil the need for and composition of such a network is adequately demonstrated. In this regard, we believe the Congress should require ERDA or the Department of Energy to conduct a study examining into the desirability of creating a regional SERI network and, to the extent war- ranted, the feasibility of using existing laboratories for this purpose. In addition, the Congress should request ERDA or the Department of Energy to submit to the appropriate legislative committees of the Congress, a comprehensive report setting forth the total estimated cost, organizational structure, management interrelationships, and scope of work for both SERI and, to the extent warranted, the regional SERI network. We appreciate the opportunity to assist you in this matter. As agreed with your office, copies of this letter are being sent to appropriate committee chairmen and will be available to the public. Sin y your Comptroller General of the United States 11
Review of Some Aspects of the Authorization and Creation of the Solar Energy Research Institute
Published by the Government Accountability Office on 1977-09-09.
Below is a raw (and likely hideous) rendition of the original report. (PDF)