Bureaucracy, budget woes muddle reformer’s bold agenda

Source: Katherine Ling, E&E reporter • Posted: Thursday, August 8, 2013

Rare is the Obama administration official who can smile after testifying before House appropriators.

But Energy and Water Development Subcommittee Republicans enjoyed hearing from the Department of Energy’s David Danielson.

The DOE assistant secretary told the Republican-led panel recently about how he was turning his Office of Energy Efficiency and Renewable Energy (EERE) into an accountable, efficient organization that would work smoothly with the private sector and protect U.S. innovation from foreign raiders. And he made music for Republican ears by promising “go, no go” project goals to protect taxpayer cash.

Subcommittee Chairman Rodney Frelinghuysen (R-N.J.) exclaimed: “We like that vigorous scrutiny. We think it is excellent.”

But Danielson has a long way to go before EERE fulfills his lofty promises.

The 37-year-old wunderkind’s resume suggests Danielson is up for the challenge. The former energy venture capitalist founded the Massachusetts Institute of Technology’s Energy Club and Conference and the New England Clean Energy Council. And he was the first program director hired at DOE’s Advanced Research Projects Agency-Energy (ARPA-E).

But EERE’s lumbering bureaucracy won’t be easily turned around. The 30-year-old agency has a $2 billion budget, more than 700 employees and hundreds more contractors, and seven far-flung field offices. Danielson must hustle but manage his implementation smartly to keep his ambitious agenda from being lost in a blizzard of blown deadlines and budget overruns.

“If you don’t hit it hard and get some of your new ideas implemented quickly, then time marches on and new people in charge might have a different idea from what you do,” a senior DOE employee said.

And the appropriators who praised Danielson haven’t been helpful.

EERE has been on a political and budget roller coaster for the past five years. The House has passed a fiscal 2014 budget that slashes about $2 billion from clean energy. That’s several hundred million dollars lower than is demanded by the across-the-board budget cuts known as sequestration. Although the Democrat-controlled Senate is likely to approve more, overall low spending levels make an agency overhaul even more difficult.

‘Fatigue’

Danielson got his first experience in federal management at ARPA-E — a quasi-independent agency under DOE that funds technologies before the private sector is ready to invest — but has a solid history of building organizations from the ground up. ARPA-E has received good bipartisan reviews for its streamlined management and Silicon Valley-like atmosphere (an open office floor plan with white spaces all around for scribbling spur-of-the-moment ideas).

But Danielson and his management team’s ill-advised comparisons of EERE and ARPA-E rankle employees at his new agency. It is unproductive to compare the two, they say. ARPA-E is small and flexible. It has a budget of a few hundred million dollars, fewer than 50 employees who rotate in and out of the agency, and freedom from some federal rules and regulations.

The differences in size and scale are taking their toll on the project. Danielson has been working on EERE reform efforts, nicknamed the SOAR Initiative, since he was nominated by President Obama in July 2011. He began with a listening tour — where he met with about 500 employees in about 30 sessions — followed by a design phase that began after his Senate confirmation in March 2012.

The implementation push has been marked by blown deadlines. The delays have frustrated staff members, who have spent thousands of hours preparing for management changes while juggling their normal workload. They’ve failed to see results.

“There is definitely a fatigue,” said another former DOE official who still works closely with EERE.

Yet Danielson’s political star still sparkles. With his technical and business experience and strong support from Energy Secretary Ernest Moniz, Danielson is seen by many as the best hope for creating a management model for changing DOE’s inefficient, Cold War-era offices and projects.

“I think [Danielson] has gone about it very logically in trying to reorganize around purposes and make it more customer-friendly with the ability to get the product out the door,” said retired Rep. Bart Gordon (D-Tenn.), key architect of the broad research and education bill that created ARPA-E in 2007.

“I think he is going to be successful. Just as ARPA-E was the model for EERE, I think EERE will be the model to the rest of DOE,” Gordon said.

Arun Majumdar, the former head of ARPA-E and acting DOE undersecretary who now directs Google.org’s energy initiatives, said Danielson played a key role in bringing together stakeholders at ARPA-E.

“Engaging the stakeholders outside of DOE with the scientific community, industry, Congress … I think that is where his leadership skills with engaging the community and explaining to people what EERE is doing, he is superb at that,” Majumdar said. “At the end of the day, it is a partnership between DOE and Congress. It is hard to find anyone better than him at this point.”

Moniz has already started some DOE-wide management and oversight changes — including a new undersecretary for management and performance and combined undersecretary for science and energy — and signaled an intention to implement more in the future (E&E Daily, July 22).

Wendolyn Holland, a former senior adviser for commercialization at EERE from 2008 through 2011, said, “It comes down to good project management. It’s the nature of managing science. It’s the nature of search and discovery.”

She added, “If this were easy, it would already be done.”

Lessons from ARPA-E

Though he acknowledges the two agencies are very different, Danielson still sees a lot that EERE can learn from ARPA-E.

For one, he’s trying to bring ARPA-E’s hands-on project management to EERE. That, he said, should help with the agency’s 10-year road maps for achieving long-term goals, such as producing cellulosic ethanol for $2.15 per gallon or getting solar to $1 per watt installed.

And Danielson has placed a former ARPA-E colleague in charge of EERE reforms. Matthew Dunne, former ARPA-E acting chief counsel and a former intellectual property and international trade litigator, is EERE’s temporary chief of operations and strategic innovations officer.

His other plans: Consolidate the agency’s databases into one Salesforce.com database, also known as IRIS; create milestones and hold more face-to-face meetings with projects; and rearrange EERE around energy sectors instead of the current 10 technology offices. The three new sectors are transportation, renewable energy and “end use” — energy efficiency, federal energy management, advanced manufacturing and weatherization.

Providing more data and communication to quickly update the road maps, dropping faltering technology faster and accommodating unexpected breakthroughs should make it easier for stakeholders to track and build on EERE’s work, Danielson said. EERE is also planning to include 5 percent of each sector’s budget as “incubators” to integrate technologies from ARPA-E and others into road maps.

“There will be corporate visibility into all the project management that’s occurring,” Danielson said. “We are going to be sure that every single project status is updated — green, yellow, red — every quarter. I am going to have visibility on that.”

EERE is also increasing its role as an “honest broker” with the private sector and other agencies to lower nontechnology market barriers and working on boosting a manufacturing sector to support them, he said.

“For many of these technologies I am getting less and less worried about whether they are going to get cost competitiveness and be deployed,” he said, “and getting more worried that there will be this multitrillion-dollar market for clean energy products, and if the U.S. doesn’t step up we won’t be manufacturing, we won’t be leading in the jobs and the value-add manufacturing.”

‘Aspirational’ deadlines?

But Danielson has a long to-do list and little time.

EERE staff members say when Danielson first started soliciting their ideas, there was broad agreement that the changes were good and necessary.

“David is very personable and sincere, and we believe that he wants to do the right thing,” said a veteran EERE employee who asked that her name not be used so she could speak frankly and not fear retaliation. “So the problem seems more that it’s a combination of ‘it’s taking quite a long time’ and it became more ‘do it my way’ than the consensus process had led us to believe

“And the other problem seems to be everything all at once, which is pretty hard on the organization.”

Agency reorganization is grueling work. It requires — among other things — writing and rewriting manuals and organization charts, revising job titles and pay grades, and holding meetings with employee unions. And everything must be done without violating strict rules governing procurement and hiring.

Most of the changes have dragged, employees say.

After Danielson and Dunne initially laid out an overly ambitious timeline in February to be done by the summer — which was already later than their initial deadlines — they quickly retreated after program directors protested it as unworkable and created a new schedule in April. Now several major changes are slated to be put in place this fall, including parts of the Salesforce.com database, but some other dates extend well into next year, according to staff members and confirmed by DOE.

The fall deadlines, while doable, are more expensive now than if they had been set much earlier and staff had longer to work on them without worrying about the other now more-delayed items, a senior EERE staff member said.

And there is a growing worry among staffers that budget cuts will make it difficult to complete the overhaul. Important projects could be sacrificed, they say, as database conversions, third-party consultants and staff hours eat into shrinking resources.

Michael Bruce, a former senior adviser for finance at EERE, said it is important for Danielson and his management leadership to listen to the staff members to keep them on board with his changes.

“If these changes move their missions closer to fruition, everyone will adopt them freely,” he said. “If, on the other hand, they are edicts coming from on high, that is often not met very well.”

Bruce added, “Sometimes you get a situation where people aren’t that excited and realize the sun will set on the current assistant secretary. It is a weird dynamic inside departments that the leadership turns over so frequently that sometimes changes can be tricky.

“The ‘we be’ complex: ‘We be here when you come, we be here when you go.’

Patrick Von Bargen, who was a longtime chief of staff for former Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.), explained it this way: “This is a department that has a history of being a punching bag from members of Congress for both research and development for over 30 years. I think it is a perfectly fair question for a person at the department to say, ‘So, David, you want to make those changes and take these risks. Does this mean that I am going to be beat up again? If things don’t go the way things are supposed to go, are we going to be in trouble?’”

When asked specifically about the deadline changes, possible budget issues and staff frustration, a DOE spokeswoman said the original deadlines were more “aspirational,” as changes cannot be accomplished without some sort of goal, but that a collaborative process usually takes longer than expected, as it has in this case.

The spokeswoman added that Danielson and his leadership team are aware of staff concerns, but they believe it is important to recognize the need for managers to balance all interests.

With the new deadlines, the budgets and cost analysis are being redone so the cost of the changes was not available at this point, she said.

Happy hours

Danielson said he knows EERE employees face “a tough environment” with sequestration and that asking them to take on these reforms after the pressure of spending $17 billion from the 2009 stimulus in less than two years is a lot to ask.

“Communication, over-communication is a good thing within a federal agency,” Danielson said. “One thing I did learn, and a lot of my mentors told me this, is whenever you are trying to do anything a little better to try to change an organization, there is an ideal speed of change. There is an optimal rate in which you want to introduce new ways of doing things and changes to an organization, and I think we are getting close to that sweet spot.”

He added, “I think one of the most important things for anyone is that you want to see some results.”

Danielson said he’s started a second employee listening tour. He also set up an internal EERE “big ideas” summit and a “new ideas” internal conference. He said he’s also created a “funding opportunity announcement fest” to encourage people “to really think big, think out of the box, really think of exciting new ideas.”

He added that he is “having fun” and is likely to stick around “until someone kicks me out.”

Danielson brought over one other trick from ARPA-E: happy hours and coffee meetings. Hosted on a rotating basis by senior leadership, the happy hours, he said, provide a “more relaxed atmosphere” and “face time.”

“Sometimes those things can sound too trivial to people, but I think they are really important,” Danielson said. “If you want to build a really productive family, they really do need to be able to debate and discuss the ideas without taking it personal.”