R&D centers growing too fat on federal dole

It's time to reconsider the role of Federally Funded Research and Development Centers as the federal government enters the third millennium.

Federally Funded Research and Development Centers (FFRDC) are unique organizations invented by the federal government in the 1940s. They were intended to assist with governmental scientific research and analysis, systems development and systems acquisition.

However, FFRDCs are an icon of an extinct and very expensive paradigm, one in which the centers do not clearly earn the billions of tax dollars assigned to them and do not clearly add value to governmental functions and services. Like many institutions created by government, FFRDCs have become bureaucratically entrenched, continuing to prosper more than half a century later.

FFRDCs, which are sponsored by government agencies, have grown to at least 40. They are designated "not-for-profit" entities, producing impressive incomes for their members. The FFRDCs are given special advantages over other commercial, industrial and academic organizations because of their perceived objectivity and technical excellence. Special advantages FFRDCs enjoy include opportunities to participate in otherwise closed government meetings and participate in formulating government planning, which enables FFRDC officials to easily identify and exploit opportunities that ensure job security and to "feather their nest," while restricting opportunities of others in private enterprise.

It is not clear that in the modern Information Age the government is best served by an exclusive club of FFRDCs performing services very similar to those performed frequently and more cost-effectively by private enterprises. Though they are expected to operate in the public interest, self-interest often prevails in the activities that the FFRDCs provide government.

Mitre Corp. is one FFRDC funded by the federal government in the areas of defense, energy, aviation space, health, human services and, yes, lending support to spy operations and Internal Revenue Service tax administration. According to publicly posted information, they operate at least three separate research centers, the oldest being the company's command, control, communications and intelligence (C3I) center that prominently participates in myriad activities throughout the Defense Department and intelligence community.

Mitre has prospered since the 1940s, beginning as a quasi-public/private organization within the Air Force and extending from there to myriad connections within the federal government. Last year, its operations continued to grow at a rate of 8 percent, with the majority of its income coming from DOD. In fiscal 1998, Mitre's revenue was $526.6 million, which came from DOD ($405.3 million), the Federal Aviation Administration ($68.1 million), government classified work such as spy operations ($32.4 million), international air traffic control ($8.6 million) and other customers ($12.2 million).

Last October, Mitre signed a five-year agreement to establish a "partnership" in modernizing IRS tax administration services. In its role, Mitre supports the operation and modernization of federal tax administration systems. Though Mitre's expertise in tax administration is not totally clear, the justification given for buying Mitre services is its ability to provide "expert advice to help IRS officials determine, monitor and evaluate the technical direction of its modernization effort in an environment free from both internal constraints and external market and profit-related influences," according to a document posted on Mitre's home page.

Similarly, it is difficult to determine what knowledge, skills or abilities Mitre offers the government for its other expensive services, often appearing to be more costly than similar services easily available through competitive private enterprise sources.

The size, scope and oversight of DOD's FFRDCs have been recurring areas of concern for Congress, federal officials and the private sector throughout the past three decades.

In a General Accounting Office report of a congressionally directed study of DOD FFRDCs, GAO concluded that, although funding for FFRDCs increased by about 23 percent between fiscal 1985 and fiscal 1990, it has subsequently decreased. This was partly because Congress reduced funding and personnel ceilings and executives' salaries, as well as prohibited new FFRDCs. But in spite of those cuts and reductions, Mitre government-related operations are continuing to grow.

Up until the late 1980s, at great expense, DOD developed the majority of its communications-electronics and information technology. The DOD-developed technology generally provided the foundation for and drove the proposed systems solutions in the C3I arena. During that period, the aerospace industry was required to respond to DOD-driven specifications, which resulted from Mitre's work and organizations such as the Air Force's Electronic Systems Command. For C3I and IT systems solutions, it typically took 10 years to identify the operational need and then to deliver the systems.

Meanwhile, private enterprise was making great strides in outpacing DOD in IT development. DOD technology for many of the C3I systems often became obsolete before systems became operational. Just as important, DOD-developed technology, products and systems became extremely expensive to maintain and upgrade.

As the government begins to adopt commercial practices to comply with the Clinger-Cohen Act of 1996, DOD will try to exploit commercial technology and solutions. IT solutions and service companies in private enterprise are fully equipped to supply the government with these systems solutions.

In addition, the information systems and aerospace industries have staffs of operational and systems experts to assist government users in assessing their operational needs and providing the required architectural engineering, systems engineering, systems integration, fielding, sustainment and technology services during the life cycle of systems.

So why does our government need to continue to extend the life of the costly, obsolete FFRDC paradigm? Do we need, and can we afford, noncompetitive FFRDCs? We are entering a new Information Age, where all private and public enterprises perform services similar to DOD's C3I, which are based on information and IT management.

It's definitely time to revisit the validity of the FFRDC role in the dynamic collaborative enterprisewide management environment of the evolving modern federal government of the third millennium.

Elliott, a retired federal executive with more than 30 years' experience in national security, served as director of the Intelligence Systems Secretariat.