I want to thank NAPA for hosting this. As Dan said, these events don't happen easily, and we appreciate the effort.  But we really wanted to get out and talk about the project management report, as Dan said.  But I have to make it a little bit broader in terms of some of the things that determine how to do management and performance. 

NAPA is a great place to do that.  You know, I’m generally out talking about clean energy and climate change, or talking about nuclear security, and we don’t get out much to talk about some of the blocking and tackling in management and performance.  And we really wanted to emphasize that today.  There might not be a better place than NAPA to do so with its focus on building a more effective, efficient and accountable government. 

So again, I commend your organization for what it's done, and some of the activities, rethinking how the government evaluates cybersecurity, encouraging the use of technology to make government function better, looking at ways to improve public administration and governance in Africa.  And I want to say, all of these are aligned with what we do. 

In fact, we are leaving straight from here with the Vice President to go Norfolk to announce a human capacity building for cybersecurity activity.  The President has made huge emphasis on Power Africa, and I hosted a summit in Ethiopia last June, and those issues of transparency in government were a constant theme.  And today, I will focus on the second of those topics, the issue of management and performance in terms of government actions specifically because of DOE’s activity.

I recognize as we talk about profit management perform, it is unlikely to create a record a number of YouTube hits, but I hope you will find it quite interesting. 

NAPA issued a report about a year ago on the DOE labs and positioning in the future.  And I want to say that that report was well received.  But I want to be honest, there have been some other reports on the labs recently that I don't think quite understood how the labs work.  I think NAPA was, once again, much more really on the mark.  Unfortunately, this will not be a subject for today there is too much to say in project management.  But I think we are also focusing -- maybe we should come back and discuss looking at a strategic relationship with our laboratory leadership.  In fact, just yesterday, we had all 17 Directors in for a biannual full-day meeting.

But let me turn to the management and performance agenda.  Dan basically, said this in his introduction, I'll come back to this a bit more.  When I became Secretary in May of 2013, and I had been there before, this is my second time around the track at DOE. There's no question that, you know, our focus is on accomplishing our missions in science, in energy, in nuclear security, in environmental remediation.

I think all of you are totally convinced that if we do not up our game in terms of management and performance, we are not going to be successful in accomplishing those missions.  And I have to come back to some of the specific actions we have taken to implement that.

In October, we had a symposium that marked the passing of DOE's first Secretary, Jim Schlesinger, and we inaugurated an award in his honor celebrating the 37th birthday of the Department.

When the Department was formed by Jim and the Administration, it really brought together quite a collection of organizations from across -- across the government, more than 50 organizations brought together, creating the Department with a scope of mission that was -- that hadn't existed previously, from Agriculture, Commerce, Interior, HUD, Transportation, absorbing the Federal Energy Administration, ERDA, et cetera, et cetera -- organizations with very, very different cultures, very, very different missions.

The world has changed a lot.  Sometimes organizations don't quite change to reflect that the world looks very different.  If you look at our major mission, it's pretty clear.

In the 1970s, when DOE was stood up in '77, it was all about oil shocks.  Well today, we have oil and natural gas in abundance.  The problems today are people are worried about is the price getting too low.  We have climate change as a focus that was obviously not there in a significant way in '77.

On the nuclear side, the Cold War, building up arsenals.  Today, it's about about reducing them.  It's about controlling nuclear material.  It's about warning about terrorist organizations with international reach.

It's an entirely different world, and that has been, in many ways, our kind of motivating force.  We're looking at how the organization should be restructured to reflect today's world.

And over the next two years, the last two years of this Administration, I hope you'll pay attention, because we will continue to take a set of actions that reflect this changing world.

Let me now turn to now some of the actions that we have been taking.

I'm going to start by saying that last July, we implemented a fundamental change at the level of our Under Secretaries.

We had three Under Secretaries, one for nuclear security, one for energy and one for science.  And frankly, one of the organizations that we really need to pay attention to because of the nature of the business, is environmental remediation. And it was sort of an orphan in the organization to be perfectly honesty.

So what we've done is to keep nuclear security, but we have now one Under Secretary to take the responsibilities in energy and science.  In fact, one of his principle objectives is to unify the science and energy programs, which are fundamentally science and technology programs.

But now, for today, what's particularly relevant is then we have a third Under Secretary position, and that position is now the Under Secretary for Management and Performance.  So now we have three Under Secretaries, each of whom, in my view, is assigned clear responsibility for the three major mission areas of accomplishment: energy and science, nuclear security and management and performance.  So elevating that with an enterprise-wide view has been central.

I must say, we're disappointed that we had an outstanding nominee, who, after getting tired of waiting for the Senate, withdrew. But I want to say that we will be coming forward with another very, very well-qualified nominee for that position, because it is central to what we want to do in terms of bringing this focus on management and performance.

Now, there are other areas in which we have made organizational changes with the same general objective.  For example, we have an organization that, in my view, has combined assessment and implementation in a way that was probably not the right way to go.

So we now have an Independent Assessment Office and Environment, Safety, Security and Health organization under the Management and Performance organization.  So that's another example.

The environmental remediation program -- and we'll be coming back to that because that's an area where we know there's been big project challenges -- that's been rolled under the management and performance organization.  It's fundamentally managing large, complex contracts and projects to take very challenging, unique one-of-a-kind remediation projects in hand.

So clearly, there's also Human Capital, CIO, Economic Development and Diversity, many, many major management performance contracts -- challenges that we are bringing under that organization.

There are other challenges we've taken on, more under mission space, but I'll turn to project management specifically.

For example, you know, we've been charged by the President to be really the point of the spear in a whole new approach to energy policy development, the Quadrennial Energy Review.  That's another thing maybe we should come back and discuss.  We hope to get that out in the middle of February.

But the point is here now is a management challenge.  It is about bringing together the equities in energy from across the entire government into a coherent process.  It's been a hell of a process but one that I think is going to be produced next month.  So very interesting results on our energy infrastructure challenges.

So again, it's not only about project management; we are looking at elevating management and performance.  NAPA has told us for years that we need to do this, and we are trying to do it.

So let's just turn to the projects. We have really three major programs historically that have taken on large numbers of projects, including very large projects.  The Office of Science, the Office of Environment Management, and the National Nuclear Security Agency.

So these are different offices with very, very, frankly, different cultures and different challenges.

Historically, you know, certainly the general view, and one that I subscribe to is historically the Office of Science has probably had the most success in terms of these large -- large projects.  And I will discuss what we've done and it was a good year of hard work and hard discussion across the enterprise with, again, different responsibilities and different cultures, et cetera, trying to bring together a set of core principles that will fly across the enterprise while still allowing the flexibility of being tailored to the specific, again, culture and challenges of these -- of these different organizations.

The projects, again, you know, ranged from in the science area, the Spallation Neutron Source at Oak Ridge. In environmental remediation the Waste Treatment Plant, probably the hardest nuclear radiation project ever attempted. There are others, but that's probably a number one poster child.

Two very, very large nuclear security challenges are essentially rebuilding the nuclear security complex that has been sitting there for many, many, many decades.  And while the President has committed to continuing the reduction of our stockpile, and there are dreams of elimination of nuclear weapons, we all know that is many decades in the future. We can't go on with a 50 to 60 year old infrastructure.

So we have big challenges across the board.  The question is how are we going to address those.

Another example, is in the nonproliferation program.  One of the very tough projects is the mixed-oxide project in Savannah River, South Carolina, to dispose of weapons-grade plutonium. Shall we say, it was baselined prematurely. 

The theme I want to emphasize is we see these problems. We are attacking them head-on.  And we're going to be transparent.  We're going to recognize the problem.  And, when called for, we're going to have to have new, creative approaches to get the mission accomplished and with much more budget and schedule discipline.  I mean, that's the theme over and over again that I will talk about and I'll tell you how we are trying to do it.

There is good news.  For example, the GAO has taken us off of the high-risk list for projects below $750 million. We're quite pleased with that.  And there have been quite a few projects done in the $750 million range, that are now coming in on budget and on schedule, frankly in some cases even a bit better than that.

In terms of a major project we have the Synchrotron Light Source at Brookhaven that we will be dedicating very soon.  It's a major project, billion-dollar scale. Ahead of schedule, ahead of budget.

So there are good signs.  It doesn't change the fact that we have some very high-profile, multibillion dollar projects with a performance that none of us finds acceptable at this time.

So let's talk about some of the specific states that we have taken.  One thing we created very early in my tenure, a special working group to look at the pressing organizational issues across the Department. John Williams, one of my senior advisers chaired that group, which led to the report referenced on improving project management.  John comes from a private sector background as an investor who's had a lot of interest in seeing projects done on budget and on schedule in his time.

But this group also included -- and I see some of them here -- some of our most senior project-experienced people. What I said earlier, there's no sugarcoating it.  It's tough.  These were hard discussions because, as I said earlier, these are big projects, lots at risk, with different cultures and different objectives in a complex organization, at its core a science and technology organization.

So here's some of what we are doing, drawing from best practices and perhaps from worst practices over the last years.

It starts with, first of all, with re-establishing in many ways something called the Energy Systems Acquisition Advisory Board. This ESAAB has existed. It was there when I was there the first time in the Clinton Administration.  But frankly it was not what I would call an institutionalized organization.  It was acted on an ad hoc basis.  In fact, it had not met in I guess over two years.  It just met when there was a major milestone to be addressed for a big project.

Well, that's not the way to have situational awareness and enterprise-wide awareness about the risks that we may be facing in various projects. 

So that is now being institutionalized.  The Deputy Secretary is the chair, the Assistant Secretary for Management and Performance is the Vice Chair.  It will meet regularly, at a minimum quarterly, to look at projects in place.  The focus will be from $100 million and greater, although if there's a high-risk project that's a mere $50 million, it's going to get onto the agenda.

We are creating essentially as part of the ESAAB, a Project Management Risk Committee.  I want to say that this is part of a broader scheme across the Department in terms of there has not been enough of what I would call more the corporate style of risk evaluation and risk management.  You know, the risk officers, et cetera.

So, we're doing this in our Loan Program.  Loan Program probably brings up in your heads Solyndra. I want to just say that the Loan Program now as a portfolio is performing extremely well.  It is even financially in the black -- $30 million out of $30 billion loan guarantees.  Being in the black isn't the objective.  The main objective is getting clean energy technology that's pushing the envelope out there.  It has done that, but it is also in the black.  We have a strong risk management process in place for managing that porfolio. 

Our Office of Science -- our Under Secretary of Energy and Science has established a Risk Committee, looking at procurement, et cetera, and understanding up front the risks.

But now, here specifically the projects.  Again, we have the Project Management Risk Committee in place.  It includes senior people from my staff, from the Secretary's staff.  But again, it includes at its core the senior project people across the Department.  They will be meeting bi-weekly looking at projects across the board.  It's their job to identify risk across the board, flag those so that the Deputy Secretary and the Secretary are all in the loop in understanding where we are exposed and where we have to take action in terms of risk.

And then they'll also specifically within 60 days report on the specific actions of all the recommendations made in the Improving Project Management Report.  That's great.  So, I think we will prove to be I believe a very effective system for, again, situational awareness at the highest levels of the Department going forward, relying upon our key project people.

However, now I'm going to get into line responsibility.  And the three Under Secretaries, all of whom will be members of that ESAAB process, they have serious functions -- responsibilities.  They all have at least one of these offices with major project responsibilities.

So there -- as I alluded to earlier, we have insisted upon a few apparently simple principles.  They are very, very much aligned with what the Office of Science has been doing. Number one, a very clear project owner who has budget responsibility; a person whose budget, frankly, is going to get hammered if the project does not succeed. 

Secondly, a straight line of authority that could be in the implementation step, a clear line from our federal budget manager to our project owner. 

Third, there must be in each of these offices, each of these Under Secretaryships an independent assessment function for the project.  This follows, again, a model that the Office of Science has had in place for decades, most recently, some of you probably recognize the Danny Lehman reviews. So each of the three offices -- each of the three lines will be put that in place.

Again, with some variation in each of those three lines that fits specific kinds of contractors, projects that are genuinely different across those lines.  I mean, in the Science Office, there's typically an M&O contractor for a laboratory project, as opposed to environmental remediation project in which there are a very small number of large companies who do the work.

We're not waiting to implement these ideas, even though we are formally kind of standing up the process just now.  But over the last year, you know, a lot of these principles have been put into place.  And I think, again, we are seeing some progress.

For example, in Science, I already mentioned actually a success story in terms of the Synchrotron Light Source, for example.  But if I turn to the WTP, the Hanford project in terms of waste treatment. As I said, I think the most complicated cleanup project that anyone has tackled.  And there have been a lot of problems.  So I think the first thing was to sit down and analyze the situation.     

Once we realized that there were still unanswered technical problems that had significant safety implications, that is not a project that you want to have a budget and a schedule, when you haven't answered some of the key things.  We're not going to do that anymore.

What we did do in this case is propose a fundamental change in the structure of the project, in which we would move to start pretty much on schedule for a good chunk of the waste, while we resolved technical problems, and then baseline those parts of the project that remain. You can imagine, this was a complex discussion, when they're already sitting there with a whole bunch of milestones agreed to over decades when you really had no basis for that.

So the good news is the state has completely bought into the structure.  We have a little discussion going on in court about how some of the specific milestones will be met.  But what the message is we're just going to face this.

I'll give the last example in a weapons program.  I mentioned the rebuilding of the production complex, and in particular the uranium facility in Oak Ridge.  We were getting pretty bad signs about where the costs and the schedule was going to go.  We stopped, created a new structure, a red team that came in using our DOE brain trust, if you like, and it was chaired by one of our lab directors, not the contractor who was going to build the project.  One of our lab directors drawn from across the complex came forward with recommendations for fundamental changes in the project structure and in the Security Office's management approach.  Those were implemented by the uranium program manager in NNSA in the field. It is a modular approach in which the security and safety standards are applied to fit the purpose.

It's going to go faster.  We believe the high-risk operations that are in the current, frankly, decrepit old building will be handled by the end of this decade as the entire project is finished by 2025.

So those are the kinds of things we're doing, and it's those evaluations that our risk management team will be responsible for.

Direct access started with the independent assessment teams for the three Under Secretaries, then the risk Committee that needs to have direct access to the highest levels of the Department.  We want to know early what the good news is.  We want to know even earlier what the bad news is, and what the risks are going forward.

So that's what we are doing.  There are other pieces, such as for projects below $50 million.  We are going to be moving as rapidly as we can to full upfront funding, which, again, will be another way of providing some discipline for the project owners and those who have the budgets. 

And really again, in concluding, I'll say that I think the two main messages I want to give to you, again NAPA is the best place to give these messages -- is we have elevated management and performance as one of the major functions of the Department. I should say, that's very much in line, of course, with the President's management agenda.  And, frankly, he's made clear over the last month that these last two years have to have a strong focus on improved management for service delivery and budget performance.

And secondly, we organized to do that.  And secondly, then on the project side, we have looked enterprise-wide we're going to be having a much better risk management situation, I believe.  The proof will be in the pudding, but I think we are seeing good progress.  And I must say that when people ask the question how will these things be institutionalized, whether it's this or other reforms that we are doing, my answer is always performance.

So thank you for your attention.  And I know this wasn't maybe an inspiring climate change or security speech.  But I think it is really important, and I'm really glad to be able to find a venue to be able to emphasize what we are doing.

Thank you.

Dr. Ernest Moniz
As United States Secretary of Energy, Dr. Ernest Moniz is tasked with implementing critical Department of Energy missions in support of President Obama’s goals of growing the economy, enhancing security and protecting the environment.As United States Secretary of Energy, Dr. Ernest Moniz is tasked with implementing critical Department of Energy missions in support of President Obama’s goals of growing the economy, enhancing security and protecting the environment.
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