Department of Energy

Hazel R. O'Leary, Secretary

Mission Statement The Department of Energy (DOE), in partnership with our customers, provides effective leadership -- for this country and internationally -- in promoting efficient energy use, diversity in energy sources, a more productive and competitive economy, improved environmental quality, and national security.

The Department has established four clear business lines to accomplish this mission:

Summary Budget Information

FY 1993 (Actual) FY 1996 (Budgeted)
Budget Staff Budget Staff
$19.341 billion 20,410 $16.189 billion 19,762

Reinvention Highlights

I became Secretary in 1993, more than three years after the fall of the Berlin Wall and the end of the Cold War. The Department that I inherited was struggling to define its new role in the post-Cold War world.

The past three-and-a-half years have been a time of aggressive internal reform, organizational change, and fundamental rethinking at the Department of Energy. More than ever before, the entire DOE family -- which includes both federal and contractor employees -- has accepted the premise of change and continuous improvement as the only course to a successful future. We are taking the risks that change requires.

Defining Purpose. In 1993, we found an agency beset with uncertainty about its fundamental purpose, responsibilities, and missions. By early 1994, with the input of hundreds of our own employees, we developed and released the first strategic plan for the Department of Energy. This document clarified our core missions and set our priorities. By defining who we were, our outlook, and strategies and measures by which to evaluate our accomplishments, we put into place a new cornerstone of support -- a prerequisite for the success of any business.

Reforming Contract Management. We found a contracting system plagued with problems, including inadequate oversight and management controls. In February 1994, after months of intensive effort, our contract reform team issued a report that set the stage for enhanced competition for contracts and a shift to performance-based contracting, which ties payment to performance and specific accomplishments rather than to a contractor's level of effort. During the past two years, we incorporated provisions into 11 of our largest contracts related to greater financial accountability, cost reductions, and performance-based incentives. We are continuing to incorporate these reforms into other contracts as they come up for extension or competition. These fundamental changes will result in significant savings in the coming years.

Reassessing the Role of Laboratories. In February 1995, the Task Force on Alternative Futures for the Department of Energy Laboratories, acting under the leadership of Robert Galvin, Chairman of the Executive Committee of Motorola, Inc., produced the first post-Cold War assessment of our defense laboratories. We are now well under way in implementing most of the report's recommendations to reduce the cost of doing business, redefine the mission of the laboratories, and further advance the impressive record of the laboratories' scientific achievements. Our newly established Laboratory Operations Board will ensure dedicated management attention on a continuing basis.

Reassessing Applied Energy Programs. We committed ourselves to substantial savings for the taxpayers by assessing our $ 1.8 billion portfolio of applied energy programs. In June of 1995, a task force led by Daniel Yergin, the Pulitzer Prize-winning author and President of Cambridge Energy Research Associates, Inc., completed this review. We are implementing the recommendations of the report and will save $1.2 billion over the next five years.

Reinventing Internal Management Practices. After reviewing the Department's management and administrative practices, we realized that we needed to take a hard look at ourselves and how we were operating. In the fall of 1994, we launched the Strategic Alignment Initiative, an intense four-month, no-holds-barred self-examination by 37 of our most seasoned and enthusiastic career employees. Collectively, this group knew more about who we were and how we could improve than any other group that could be assembled.

The issue papers prepared by the alignment team reflected interviews, reviews of work documentation, and collaboration with the political leadership of the agency, stakeholders, customers, contractors and others. Every idea that had ever been advanced for the Department to work smarter or better was filtered through this group for analysis. During the course of this review, every process was touched, every office was scrutinized, and virtually every departmental product and service was tested for value.

We announced the results of the Strategic Alignment initiative in May 1995. The plan represented a major package of organizational, legislative, and cost-cutting actions to drive down costs and at the same time enhance the performance of our missions -- $1.7 billion will be saved over five years.

This employee-driven initiative will result in downsizing the workforce of the Department by 27 percent over the next five years -- almost 5,000 employees. We also promised that more than 65 percent of the reductions would occur in the first two years, and we are right on track. We project to exceed the fiscal year 1996 target by 22 percent, saving $10 million more of the taxpayers' dollars this year than was projected.

After reviewing the management of the Department's national defense complex, comprising dozens of industrial facilities and laboratories across the country, we promised to cut our travel costs by $35 million annually and sell $75 million of precious metals and other assets in our inventory. We also committed to save $450 million through reductions in our use of support service contractors, and $245 million by restructuring information management systems over a five-year period.

We are now delivering on those commitments. We expect to exceed the 1996 projected savings in travel costs by $5 million because of particular diligence by our contractors. We have already sold more than $4 million from our inventory of precious metals and other assets. We expect to save $30 million more than promised this year in expenses for support service contractors because our managers have agreed to ceilings that are lower than the original targets. We also project to save $11 million more this year than targeted in restructuring information systems because of aggressive efforts by our Information Resource Management team.

Our first year savings of $221 million have already been confirmed by a General Accounting Office review.

What is the bottom line on all these initiatives and efforts? The Department of Energy is really improving and changing for the better. During the past three-and-one-half years, we have redefined a critical national and international mission, streamlined and downsized, and reengineered many of our key processes -- which will culminate in savings to the taxpayer of more than $10.5 billion over a five-year period. This is what reinventing government is all about.


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