Hearings on DOE Supplemental Appropriations and Contractor Management

President Clinton has kicked off his plan for the US economy with a $16.3 billion package of supplemental spending for fiscal year 1993, and the House Appropriations Committee has begun hearings on Clinton’s program. Secretary of Energy Hazel O’Leary appeared at a standing-room-only hearing of the House Energy and Water Development Appropriations Subcommittee on February 24, to testify on DOE initiatives in the plan.

Congress appropriated less than allowed under the budget caps for fiscal year 1993, and it is from this difference that Clinton plans to get the funds for his economic stimulus package. The package is intended to create 500,000 new jobs and begin a longer-term stimulation of the nation’s economy. However, in order to shift funds between defense and domestic programs as his plan requires, Clinton will have to declare an economic emergency.

DOE’s portion of the package is a combination of low-tech, job-creating programs and investments in high-tech R&D. Programs for weatherization of low-income housing, schools, and hospitals, improving the energy efficiency of federal buildings, and converting more of the federal auto fleet to alternative fuels are intended to achieve energy savings and create near-term jobs. In addition, the plan would supply $47 million, beyond the $10 million appropriated in fiscal 1993, for Cooperative Research and Development Agreements (CRADAs) between DOE’s national labs and industry. Another $47 million would be reprogrammed within the Weapons Activities account for dual-use technology transfer. O’Leary said that while “the focus of the stimulus is on near-term, job-related benefits,” it was also an attempt to “invest today for jobs tomorrow.”

In her testimony, O’Leary discussed some of the problems the labs have had in reaching agreements with industry. She listed several issues she called “dealkillers:" specifications to manufacture in the US, the government’s refusal to assume product liability, and the sharing of intellectual property rights, all of which she said the department had made progress towards resolving. Asked about the success of technology transfer at the labs, O’Leary said, “I don’t think it’s a failed program; I think it’s an almost embryonic program that we expect a lot from.”

Subcommittee Republicans challenged the use of emergency supplemental appropriations for the national labs. According to Hal Rogers (R-Kentucky), “we may agree with the need for economic stimulus, but that’s different in definition from an emergency.” Pete Peterson (D-Florida) countered that “it’s the economy that’s the emergency.” O’Leary urged them to “take a walk of faith” and interpret the law “in a way that lets us cut the deficit and provide a stimulus.” Chairman Tom Bevill (D-Alabama) announced, “we don’t have an alternative that I’ve seen, so I’ll be supporting it.”

Recent reports indicate that Congress will approve the President’s stimulus package by early April. Clinton is now expected to release a detailed fiscal year 1994 budget request on April 5, several weeks later than his previously-announced date.

Even if the stimulus package is passed, the new Secretary of Energy has plenty of issues to contend with at DOE. In a February 17 hearing of the House Energy Subcommittee on Oversight and Investigations, chairman John Dingell (D-Michigan) conducted a critical examination of the department’s contractor management practices. DOE spends over 70% of its budget on contractors, who run most of its defense and non-defense facilities. Officials of both DOE and the General Accounting Office testified that the contracting system, a relic of the Manhattan Project in the 1940’s, protects contractors from loss and provides little incentive for them to reduce costs.

Recent changes to the system force contractors to take some accountability for costs that could have been avoided, as well as environmental, safety and health problems. However, to soften the blow, base fees and performance awards were increased. According to Dingell, a contractor “gets more money out of the contract whether he does a better, equal, or worse job than before. . . The contractor gets two bites of the apple; I guess that leaves the taxpayer with the core.”