Dr. John W. Lyons
Director, Army Research Laboratory
Subcommittee on Acquisition and Technology
Committee on Armed Services
COMMITTEE ON ARMED SERVICES
United States SENATE
FIRST SESSION, 105TH CONGRESS
ON THE FISCAL YEAR 1999 BUDGET REQUEST
SCIENCE AND TECHNOLOGY INFRASTRUCTURE
24 MARCH 1998
Mr. Chairman, Members of the Committee,
I am John Lyons, the Director of the Army Research Laboratory. Previous to holding this position I was the Director of the National Institutes of Standards and Technology (NIST). I have attached a copy of my biography to this statement.
I am very pleased to be here today to discuss with you some of the innovations that the Army Research Laboratory (ARL) has made in the management of research programs and research organizations. In recent years ARL has been subject to significant cuts in our research budget, and we have, of necessity, had to find better and more efficient ways to run our business.
I am sure that you are aware that the management of R&D in a business-like manner has been a holy grail that we have all sought for many years. There are whole organizations and learned journals devoted to the topic, and yet progress has been slow, for the most part because of the very nature of research itself. However, I feel that we at ARL have broken some new ground in this area, partly as a result of our being a GPRA pilot project – and may I add, the only pilot project to represent a working research laboratory – and partly through other initiatives. It is these which I wish to discuss with you today. However, first let me give you a brief introduction to ARL.
The Army Research Laboratory is the corporate laboratory reporting to the Army Materiel Command. In that role we function in a manner very similar to a central laboratory that one would find in a large, multi-product corporation by providing the science and technology underpinning to the various product divisions. In our case, our specific mission is to "Execute fundamental and applied research to provide the Army key technologies and analytical support necessary to assure supremacy in future land warfare." Our primary customers are the Army’s Research, Development and Engineering Centers (RDECs), in addition to which we also service a wide variety of other customers on a reimbursable basis. I report directly to General Johnnie E. Wilson, the Commander of AMC, and through him, I take guidance in the performance of our mission from the Office of the Assistant Secretary of the Army (Research, Development, and Acquisition.)
ARL was created at the beginning of FY93, principally by consolidating a number of previously independent Army laboratories and other research elements, many of whom had a long and proud heritage, some going back over 175 years. There were many steps taken along the way to creating ARL, not the least of which was the Congressionally mandated Federal Advisory Commission on Consolidation and Conversion of DOD R&D Laboratories. The Commission recognized the need to have such a corporate lab as I have described and set the wheels in motion to create a "world class" laboratory focused on Army needs.. However, the vehicle which truly enabled the creation of ARL was BRAC-91 through which we closed two sites, withdrew our presence from three others, and then consolidated most of our assets at two main campuses, Adelphi, MD just outside the Capitol Beltway, and Aberdeen Proving Ground just north of Baltimore. We also have smaller contingents at the White Sands Missile Range in New Mexico, and long-standing relationships at NASA’s Langley and Lewis Research Centers in Hampton, Virginia and Cleveland, Ohio respectively. There was an ambitious military construction program undertaken to allow this consolidation, which has resulted in two of the finest laboratory facilities in the DOD, if not indeed in the Nation. I invite the Members to visit these facilities at any time.
I would now like to describe some of the reinvention initiatives we have undertaken in order to enable us, not only to survive in these difficult budgetary times, but actually to improve our products and services to the DOD.
During the cold war era, most DOD labs were mainly in-house organizations, usually sequestered behind barbed wire and isolated from the greater technology community, and for the most part, well funded. All that has changed and changed dramatically. Since the end of the cold war ARL alone has drawn down 50% in budget and 45% in personnel. We have seen a dramatic change in the role of the private sector with respect to the development of new technologies, especially in the areas of multi-media and computer technologies. Finally, there has been a globalization of technologies that is unprecedented. It is no longer possible to claim that the Army, or even the United States, dominates in every science and technology area of interest to us. And at the same time we have been given additional missions by the Army leadership focused on the development of the scientific underpinnings of the future digitized battlefield. We recognized that we had to do business very differently. Not only do we now have to "do more with less", but we can’t do it alone anymore. We must reach out to our counterparts in industry and academia, as well as to our allies, to leverage their expertise. We have instituted an "open lab" policy to maximize the flow of researchers, both into and out from our lab on various forms of temporary details and guest assignments. This will enhance the power of collaboration and help assure that we have access to the best and the brightest individuals available. My goal is to make ARL a true technological crossroads.
This brings me to our first initiative which I believe is a true paradigm shift in the management of R&D. We call it the Federated Laboratory, or FedLab. The basis of FedLab is the so-called "cooperative agreement" authorized by the Congress which allows closer collaboration between the public and private sectors. Cooperative agreements have been used for some time by DARPA, but not,as far as we know, by a government laboratory for the conduct of their principal mission. Cooperative agreements overcome the traditional problem with contracts and grants which are meant to be arm’s length instruments. In a cooperative agreement we are able to jointly plan, execute, assess, and report on research programs. In addition, we have the flexibility to change the direction of the work as the research results dictate. We are not locked in to a single course of work as we would be in a contract. What ARL did was issue a broad agency announcement for organizations in the private sector to form consortia and bid in one of three technical areas: advanced sensors, advanced displays, and telecommunications and information distribution. We required that a consortium was to consist of at least one industrial partner which would be the consortium lead, one major research university, and one Historically Black College or University or Other Minority Institution (HBCU/MI) which would receive at least 10% of the consortium’s budget. We were very pleased with the number and quality of the private sector organizations that bid, and after a rigorous evaluation process, we selected the best consortia. By so doing, we have almost overnight acquired a competence within ARL that would have been otherwise impossible to do. For example, we now work intimately with, among others, Lockheed-Sanders, Bell Labs, and M.I.T., just to name a few. What we have done, in effect, is to create a virtual and geographically dispersed laboratory of much greater capability. By this approach to partnering, we are also able to retain our in-house technical competence so we can continue to function as the "smart buyer" in order to make such an arrangement continue to work over the long term. And what makes this all the more effective is a condition placed on the consortia was that 20% of our partners’ professionals working on the FedLab programs would be on long term rotational assignment in our ARL labs and an equal number of ARL scientists and engineers would be resident at our partners’ facilities. This is true technology transfer and serves as a way to intellectually refresh and reinvigorate our own staff during a period when we are experiencing personnel cuts and are unable to hire new scientists and engineers. We have also adopted a policy to supplement government employees with IPAs, term and part time appointments, guest researchers, and post-doctoral fellows.
We are now two and a half years into FedLab and I am pleased to report that it is working well. Aside from the hundreds of papers and reports that have been generated, and the dozens of staff members on rotational assignment, we are accomplishing the development of the technology to push us into the digitized battlefield of the future which, quite frankly, ARL could not have done on its own. Our leveraging of our private sector partners has been all the more impressive because of their investment of $5.3 million in new equipment and facilities and $5.9 million in internal coinvestment, neither of which was required by the terms of the cooperative agreements.
As we approach the half way point in the five year agreements we are beginning to think about how we will continue this innovation; whether we will renew these existing partnerships, or extend the concept to other areas of technology where the Army has requirements and the private sector has answers that ARL can exploit and adapt to the Army’s unique needs. Possible areas include defensive information warfare, and intelligent agents and autonomous systems. However, we must be very careful not to create such new relationships at the expense of our in-house core capabilities.
I firmly believe that partnerships in R&D is the wave of the future and ARL is utilizing a growing variety of arrangements to utilize the best of the private sector to include CRDAs, dual use programs, centers of excellence, etc. At this time we have such agreements in the areas of hypervelocity physics, advanced materials, microelectronics, and others. A complete list of our FedLabs and other partners is attached.
However, I must point out that there are some niche areas in which the Army must maintain the lead such as armor, armaments, ground-based sensors, soldier-specific technologies, and survivability/lethality analysis. ARL has the responsibility to assure that this expertise remains available to the Army and to the Nation.
Let me now describe our experiences as a GPRA pilot project. We volunteered to become a GPRA pilot because we had undertaken, on our own, initiatives in business planning and performance evaluation which well positioned us to participate in this experiment. In addition, frankly, we were interested in some of the waiver provisions of the Act, of which I will have more to say later.
Taking business planning first, we devised a four step business planning process that was directly coupled to the budget cycle. Our four volume plan begins with the ARL Strategic Plan which lays out the specific management and technical directions for the laboratory over the next ten or so years. For example, our strategic plan defines five Grand Challenges for the laboratory:
Strategic goals are specified for each of these challenges and, to the extent possible, are couched in quantitative terms. The strategic plan is reviewed and updated as necessary with my senior management, and forms the basis for subsequent program and budget decisions. The second volume is the Long Range Plan which applies resources to the strategic initiatives described earlier. It coincides with the Army’s POM-building process. The third volume, the Annual Performance Plan, establishes specific objectives for the year of execution. Finally, Volume IV is the Annual Performance Report which reports on our progress on each of the technical and managerial goals stated in the performance plan. By rigorously planning and reporting our performance against these goals, we provide critical feedback and accountability to both ARL managers and our stakeholders. We have posted several of our planning documents on our web site at www.arl.mil. I have a set of these documents for inspection by the subcommittee.
The other innovation which prepared us to be a GPRA pilot project was a construct we devised to evaluate our performance, both on a program basis and as an organization. As I indicated earlier, evaluating R&D has been an elusive goal. Our approach was to attempt to answer three fundamental questions: Is the work we are doing relevant to our stakeholders? Are we being productive and delivering products to our customers in a timely fashion? And are we doing research of world class quality? We benchmarked dozens of world class R&D organizations, performed literature searches, etc. to identify the tools that were available to answer these questions.
To answer the question of quality, we realized that the traditional way that the world of research evaluates itself is by peer review. Based on my experiences while I was the Director of NIST, we contracted with the National Research Council to establish and administer the ARL Technical Assessment Board. This Board consists of 14 world renowned scientists and engineers from the private sector, plus six panels, one in each of our main business areas, of about ten members each. The panels perform annual on-site reviews of our labs and then write reports which the Board edits into a public document which assesses our performance. And let me emphasize that the Board is specifically constrained to comment only on the scientific quality of our work, not on any programmatic issues. I believe that this process gives me valuable information on our technical work that I cannot get anywhere else. And having the imprimatur of the National Academies of Science and Engineering assures that the review is independent and above reproach. We have already completed two cycles of review. The Board has acknowledged the fine work of our scientists, recognized those areas where we are performing at a world class level, and identified a few areas where we need improvement.
To respond to the questions of relevancy and productivity we go to our customers and stakeholders. For those customers to whom we provide a specific product, be it a report or a prototype or a software package, we send a targeted survey form at the end of the year asking a few simple questions. By targeted survey I mean that it is sent directly to the individual in the customer organization who requested the work that we did. This assures us that we are getting meaningful responses. We send out about 400 surveys a year and we have about a 50-60% return rate. On a 1-to-5 scale, ARL has been continuously progressing from an overall average of 3.8 when we started this four years ago, to about 4.3 last year. I make this process more directly relevant to our managers by requiring that for any survey score below a 3, or any negative comment written on a survey by a customer, the SES-level manager in charge of the work being reported has five working days to contact the customer and fix the problem. I have written this condition into the performance standards of my senior managers.
For our other two groups of stakeholders – the end users, i.e. the soldiers in the field, and the senior leadership of the Army – a survey would not be appropriate. To assure that we are serving them well we have worked with our Commanding General at the Army Materiel Command, General Johnnie Wilson, to create a Stakeholders’ Advisory Board. General Wilson chairs this Board whose members consist of nine members of the Army Staff at the three-star (or civilian equivalent) level, plus the Deputy Commanding General of the Training and Doctrine Command. The Board meets at ARL once a year to listen to reports on progress made on major programs, to debate issues facing the lab, and to provide strategic level guidance to me and my staff. The Board has met twice and a third meeting will occur this summer. We have found this a very valuable mechanism for assuring that we are closely coupled to the Army’s vision.
I have not mentioned metrics since they have only limited use in the evaluation of research. They can measure inputs and levels of activity, and in a limited sense, outputs. They cannot measure outcomes as perhaps they can in other areas of the government. We do use metrics, many of them in fact, but only to assure the operational health of the lab, such as: Are we managing our money correctly? and: Is our personnel system performing appropriately? However, I have found it also useful to use a small set of metrics as a tool to adjust the research environment of the laboratory, the thought being that if we have various parameters that are comparable to other world class labs, it is fair to assume that we have established the environment in which world class research can be done. It does not guarantee that it will be done, or that it has been done, only that it can be done. Such measures include things like the number of refereed journal articles, numbers of Ph.D.s on staff, etc. I determine the goals for these dozen or so metrics based on benchmarking against the acknowledged best labs in the country, and then I set these goals in the performance standards of my senior managers. This is how we use metrics at ARL.
As I mentioned earlier, we had hoped to use the provisions of GPRA which were to allow waivers of certain regulations which constrained our ability to operate more effectively and in a business-like manner. The principal waiver I was interested in was for the establishment of an alternative personnel system similar to the ones at China Lake and NIST. The quality of a laboratory is a direct function of the quality of its people, and the current civil service system can be improved to better attract, retain, and motivate such high quality scientists and engineers. Unfortunately, the waivers that I requested were considered by OPM to be outside the bounds of the Act.
Fortunately, the Congress gave us the authority in the 1995 Defense Authorization Act to undertake such a demonstration since by that time we had been designated as a NPR Science and Technology Reinvention Laboratory. I won’t spend time going into all the details of the demo here since it has just been published in the Federal Register notice (Vol. 63, No. 42, Wednesday, March 4, 1998, p. 10680.). However, suffice it to say, when we activate the new system on June 7th, I will now have some more flexibility to hire the specific talents that a research laboratory needs, and to incentivize the staff and reward my star performers. We are looking forward with great anticipation to this new, and greatly needed, system. As an aside, I might note that ARL staff were members of the Army team that was just presented with the Vice President’s Hammer Award for the work we did in establishing the personnel demo.
I mentioned that ARL was designated as a National Reinvention Laboratory by the National Performance Review. Through this designation, we were also eligible to request waivers of regulations and policies that were, in one way or another, constraining our ability to operate in the most efficient and effective manner. Beginning in 1995 we began requesting waivers in many areas including logistics, facilities management, procurement, etc. As of now, we have received 41 waivers in a wide variety of subjects. One particularly successful set of waivers allowed us to approach our property books more rationally, thereby enabling us to reduce the number of items by 25%; that’s 100,000 less low value or low risk of loss items to count in the annual inventory which translates into time saved, not only by our support staff, but also by our technical staff.
However, I must note that the whole area of waivers has turned out to be less beneficial than I had hoped. While I believe that the accumulated effects of the waivers has reduced our workload and shortened process times somewhat (we have actually conducted an internal audit to verify this), I am disappointed that the waiver process has not led to greater efficiencies as I had hoped.
Let me now turn to the issue of reducing the cost of operation. When ARL was created in 1992 by the consolidation discussed earlier, we knew that we had to consolidate our operations and reduce our infrastructure. Thanks to the relocation efforts and construction of new facilities as a result of BRAC-91, we have reduced our overhead expenses by 30% and halved the number of support employees. I am pleased to report that ARL has an overhead structure that is less than the average in academia, industry, or other government laboratories. This was the finding of an independent study conducted for the National Academy of Science by Arthur Andersen & Co. in March 1996 ("The Costs of Research: Examining Patterns of Expenditures Across Research Sectors", Report by Arthur Anderson & Co. for the Government-University-Industry Research Roundtable.).
We realized that we had more work to do. In 1993 AMC asked the National Research Counsel to study ARL and recommend additional steps that it could take to increase its effectiveness and reduce its costs. Specifically, the NRC looked at a variety of operational constructs including the potential savings and practicalities associated with converting ARL into a GOCO (Government Owned and Contractor Operated) laboratory. They found this not to be beneficial to the Government and ended up recommending other steps to achieve benefits such as improving our personnel system and partnering with the private sector, both of which we have accomplished.
In August 1997, AMC convened a group of the Board of Army Science and Technology, a subgroup of the National Research Council, and asked them to take a look at the specific issue of privatizing ARL. For a second time, a different group of non-Army senior government and industrial managers found that it was not beneficial to the Army to privatize the laboratory. These beliefs were based on two different premises. First, they did not believe that it was possible to reduce further our costs through privatizing, and second they felt that the lab would lose a degree of intimacy that it now has with the Army which is crucial to the Army and the industrial partners working with ARL. They did find that the FedLab was an effective means of accomplishing this mission.
The fact remains that since 1993 our budget has declined by over $150 million in real terms. A large part of this decrement is associated with the operations and maintenance of our facilities, the so-called Base-Ops accounts. We have had two major RIFs and associated early-outs. We think that we have done everything we can within our current structure to reduce our operating costs without sacrificing quality support to our scientific and engineering mission. Therefore, we are now investigating the advantages and methodologies of competitively sourcing all of our supporting staffs, that is, all of the non-scientists and engineers as a way of achieving further cost savings. In addition to a conventional A-76 study, we are exploring other innovative approaches including employee stock option plans, partial privatization, and other legislative proposals now pending in Congress. We are looking at the way other organizations are dealing with this problem including the U.K.’s Defence Evaluation and Research Agency which has gone through a similar process. While I do not expect that outsourcing will result in dramatic savings, I do believe that it is critically important that we thoroughly examine all the available options. We plan to have our initial study finished by July, and then to proceed with a conventional A-76 study or some other approach. I will be happy to report back to you when we have finished our studies and see how they turn out.
There are yet other areas of reinvention and innovation that ARL has been involved in, or is now working on. ARL has made significant accomplishments in applying innovative techniques to the management of R&D. My staff has gone to great lengths to share the experiences we have gained to other research organizations, not only within DOD, but throughout the government. Our Performance Evaluation Construct has been adopted by the Research Roundtable as a model for all R&D organizations within the government to use. I’m proud of what we’ve done but I know that we still have a way to go. Obviously, continued drawdowns of people and budget still challenge us. It has been said that "you can’t shrink yourself to greatness," but with no relief in sight I am committed to making ARL even better as we get smaller.
I thank you for this opportunity to speak to you today, and I would be happy to answer any questions that you might have.