oversight

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)

                         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