Academy urges major management reform at Energy

While the Obama administration is counting on the Energy Department to play a key role in addressing a host of national priorities, including energy independence and economic recovery, a new study by the National Academy of Public Administration raises serious questions about the department's ability to manage existing responsibilities.

In a highly critical report released on Tuesday, the expert panel conducting the study found that the department's mission-support functions, including human resources, contracting and financial management, need urgent attention from Energy Secretary Steven Chu.

"Without mission support, work in the program offices grinds to a halt," the report said.

The panel was especially critical of staff in the Office of the Chief Human Capital Officer, citing poor leadership, inadequate customer support and a lack of strategic vision. It described the office as an "inwardly focused, regulation-based, transactional organization" that has not "demonstrated the agility/adaptability or analytic capacity to improve its operations to adapt to the needs of its customers or develop proactive [human capital] solutions."

"At the very outset of this study, the panel identified two major [human resources/human capital] challenges that had not been adequately addressed for several years -- the lack of a strategic vision and problems with the quality of operational staffing services performed by [the] Office of Human Resource Services. … Underlying both issues is a lack of strong leadership," the report said.

The relationship between the Office of the Chief Human Capital Officer and other entities within the department was so strained that line organizations attempted "to fill what they perceived to be an HR vacuum," the report said, noting that the Office of the Chief Financial Officer recently has begun outsourcing hiring to fill critical vacancies to the Treasury Department's Bureau of Public Debt.

"The problems in [the HR office] dictate that DOE take immediate action," the report said.

The panel also found significant problems in contracting and financial management, but said the department had made important strides in addressing them over the course of the study, which began in early 2008.

Contracting and acquisition functions are critical at Energy, because the department's mission is performed almost entirely by contractors. The panel found the department hasn't focused enough attention on developing the acquisition capabilities of field offices, where most contracting activity takes place.

"Those offices should be afforded much greater discretion in performing their responsibilities and be held accountable for the results," the report said.

In terms of financial management, the panel noted that the Office of the Chief Financial Officer had developed a more strategic approach to guiding operations than either the human resources or contracting offices. But the department is unique among federal agencies in that it allots appropriated funds to field office managers and field financial officers rather than the assistant secretaries that Congress, the Energy secretary and the public hold accountable for achieving program results.

The panel recommended that Energy change its budget process by distributing appropriated funds to program assistant secretaries and holding those executives responsible for allocating resources to the field.

Because the department operations are central to a number of urgent national priorities, "now, more than ever, accomplishing [Energy's] mission must be the mission-support offices' No. 1 priority," the report said. To improve management across the support functions, the panel recommended creating an undersecretary for management, as well as two executive councils focused on operations and mission support.

Reforming the department's management took on greater urgency in February, when Congress passed the American Recovery and Reinvestment Act, which more than doubled Energy's budget and gave it tens of billions of dollars in additional loan guarantee authority. The additional responsibility imposed by the economic stimulus "makes it even more imperative that these critical mission-support functions are positioned to handle the work ahead," NAPA noted in a summary of the report.

Ingrid Kolb, director of the Office of Management at Energy, said in a written statement to GovernmentExecutive.com, "The report contains thoughtful observations and recommendations which senior leadership is now reviewing."

NAPA conducted the study at the request of the House and Senate Energy and Water Development Appropriations Subcommittees, whose members were concerned about Energy's ability to adequately perform key management functions.