In Wake of NEON Turmoil, NSF Rethinking Its Approach to Large Facility Management

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Publication date: 
1 September 2016

This week, the National Science Foundation issued a progress update on facility management reforms that were spurred by deficiencies revealed through turmoil at the National Ecological Observatory Network.

The National Science Foundation issued a Dear Colleague Letter this week to update the research community on its progress in addressing facility management reforms recommended by the National Academy of Public Administration (NAPA) in a December 2015 report. In the letter, NSF notes that it has completely implemented four of the thirteen recommendations, and plans to address all of the remaining recommendations “in whole or in part” by the end of the calendar year.

In response to the NAPA report, NSF has already hired two additional staff for its Large Facilities Office, made significant revisions to its “Large Facility Manual,” and engaged with the National Science Board over the course of multiple board meetings to better delineate their respective roles and responsibilities related to facilities funded through the Major Research Equipment and Facilities Construction (MREFC) account.

NSF is still studying the NAPA recommendations that pertain to elimination of management fees in cooperative agreements, expansion of the MREFC Panel’s oversight role to the construction phase, and creation of a new facilities-specific advisory committee. (The MREFC Panel consists of senior representatives from NSF’s directorates and is responsible for reviewing MREFC projects in their design phase and making recommendations to the NSF Director on how to prioritize MREFC projects.) 

NSF MREFC Lifecycle ChartNSF has tasked a subcommittee of NSF’s Business and Operations Advisory Committee with studying the latter two items and issuing a final report by April 2017. NSF has also asked this subcommittee to assess the value of creating a new facilities-centric position within the Office of the Director and expanding the MREFC Panel’s oversight to encompass the full facility lifecycle, including divestment.

Reforms spurred by NEON troubles

These actions make clear that NSF and NSB are committed to using lessons learned from the troubled National Ecological Observatory Network (NEON) project to reform how they manage and oversee large facilities.

In May 2010, NSB authorized NSF to award NEON Inc. up to $434 million to construct the continental-scale network of data collection sites. As construction advanced, warning signs began to emerge, although the true scope of the problems remained unclear. In June 2015, NSF learned that NEON was on course to incur an $86 million cost overrun. Ultimately, NSF fired NEON Inc. and selected the Battelle Memorial Institute to take over the project this March.

Over this period, NEON and NSF’s overall management of large facilities has been subject to increasing scrutiny from NSF itself, NSF’s Inspector General, and Congress, leading to a flurry of audits, analyses, and even legislation (see FYI #74). Although the NAPA report was not specific to the NEON project, NSF and NSB also commissioned two additional studies to assess the causes of management failures at NEON and distill takeaways applicable to other facilities.

NEON reports focus on root causes and lessons learned

“Human problems and failures of leadership, inherent in both small and major entities and institutions, are most often the real root cause of project failures, and this author believes this thesis applies to this NEON project.”

That is the first sentence of the root-cause analysis of NEON’s problems conducted by James Abrahamson, a retired Air Force General who managed the Strategic Defense Initiative under President Reagan. Abrahamson concluded that there were “two connected and mutually negatively reinforcing root causes.”

The primary of the two was a lack of strong and experienced leadership within NEON Inc., which Abrahamson likened to a start-up company being put in charge of a billion-dollar project. The second was that, aside from “heroic efforts” by a few staff, NSF supervisors were generally not experienced enough initially and overly relied on “assistive management” practices as opposed to making more direct interventions.

“Excessive limits on direct management control may be voluntarily giving up the agency’s control of its project destiny,” Abrahamson stressed, later adding that NSF’s removal of NEON Inc. was an important step to building management credibility. “It should be stated without equivocation that the recent NSF action terminating NEON Inc.’s role in the NEON project was bold, currently appears to be successful, and certainly enhances NSF and NSB credibility as an activist management agency team.”

Abrahamson also applauded the improvements to NSF’s Large Facilities Office. “NSF has now progressed from its early partial large facility management support team, to one of the best this author has ever seen in action in other government agencies.”

Alongside this root-cause analysis, NSB established an Ad Hoc Task Force on NEON Performance and Plans led by former NSB vice-chair Kelvin Droegemeier to assess the board’s role in overseeing NEON throughout its history. In its final report, the task force made the following conclusions:

  • NSB needs more “timely, decision quality information” related to facilities;
  • NSF should “promote a culture where sharing of bad news is seen as important”;
  • NSB must “attend to both the science and management aspects of facility projects when making award decisions”;
  • NSB would benefit from a greater understanding of NSF’s use of cooperative agreements; and
  • NSB and NSF need greater continuity in large facility oversight and management, as NSB members are on six-year terms and many senior NSF managers serve four-year terms as rotators yet some facilities have lifecycles of over 40 years.

The report concludes with seven recommendations, four of which are specific to NEON. The three others are (1) to explore ways to create a “culture of information sharing” and provide NSB with more timely and actionable information, (2) to create and periodically update a “précis” for each large facility that summarizes past board discussions and decisions; and (3) to continue moving toward a “risk-based approach” to facility management.

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