TO:               THE VICE PRESIDENT
                     THE SECRETARY OF STATE
                     THE SECRETARY OF DEFENSETHE SECRETARY OF INTERIOR
                     THE SECRETARY OF AGRICULTURE
                     THE SECRETARY OF COMMERCE
                     THE SECRETARY OF LABOR
                     THE SECRETARY OF HEALTH AND HUMAN SERVICES
                     THE SECRETARY OF TRANSPORTATION
                     THE SECRETARY OF ENERGY
                     THE SECRETARY OF EDUCATION
                     THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
                     THE DIRECTOR OF CENTRAL INTELLIGENCE
                     THE NATIONAL SECURITY ADVISOR
                     THE ASSISTANT TO THE PRESIDENT FOR ECONOMIC POLICY
                     THE ASSISTANT TO THE PRESIDENT FOR DOMESTIC POLICY
                     THE CHAIR OF THE COUNCIL OF ECONOMIC ADVISORS
                     THE DIRECTOR OF THE ARMS CONTROL AND DISARMAMENT
                            AGENCY
                    THE ASSISTANT TO THE PRESIDENT FOR SCIENCE ANDTECHNOLOGY
                    THE ADMINISTRATOR OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
                    THE ADMINISTRATOR OF THE ENVIRONMENTAL PROTECTION
                            AGENCY
                    THE DIRECTOR OF NATIONAL SCIENCE FOUNDATION
                    THE DIRECTOR OF THE NATIONAL INSTITUTES OF HEALTH

SUBJECT:  Interagency Federal Laboratory Review

A central objective of this Administration's science and technology policies is to review all federal support for research and development (R&D) to ensure that programs reflect the Administration's priorities and effectively serve evolving national needs.  The National Science and Technology Council (NSTC) is responsible for coordinating the entire range of
Federal science and technology investments.  One part of the government's research enterprise that requires careful attention is its laboratories, which account for one-third of the Federal Government's R&D budget of about $70 billion.

 The three largest Federal laboratory systems, those of the Department of Defense, the Department of Energy, and the National Aeronautics and Space Administration, were funded at $18 billion in FY 1993 - nearly three-quarters of the combined budgets for all federally owned or operated laboratories.  These three laboratory systems are rich in human talent and facilities, have many responsibilities in common, and - with the end of the Cold War and changes in national priorities - must all reexamine their roles and missions.

Since decisions made about the future of these laboratories have major implications for the nation's entire research enterprise, an integrated, interagency review of options is necessary. DOD and DOE are conducting reviews of their major laboratories, and NASA has recently performed a roles and missions review for its Centers as well as taking part in an interagency National Facilities Study.  The NSTC will conduct an interagency review, providing guidance to, building upon, and integrating the individual agency reviews.

While the DOD, DOE and NASA laboratory systems are the focus of this review, programs in other Federal laboratory systems that overlap those of the three systems under review shall be considered as necessary and appropriate.  Other laboratory systems may be given focused attention in subsequent interagency reviews.

The purpose of the review is to evaluate and develop recommendations for ways to improve the efficiency and effectiveness of the Federal R&D investment in the Federal Government's three largest laboratory systems.  The review shall define and assess a clear set of options and develop recommendations to achieve this purpose.

Areas of National Need to be considered in the Review

The review will consider evolving national needs in categories listed below, and will evaluate the effectiveness and comparative advantages of the laboratories under review in responding to these needs.  The categories of national need to be considered are:

1. Fundamental science, including scientific issues that arise in connection with other strategic area, such as national security, energy supply and use, and space exploration.

2. National security, including advanced conventional weapons systems; stewardship of the nuclear weapons stockpile; nonproliferation of weapons of mass destruction and advanced conventional weapons and their delivery systems; verification of multilateral and regional arms control and nonproliferation agreements; and intelligence collection and analysis.

3. Technologies and activities that contribute to the competitive performance of U.S. industry and the Nation's economic growth, such as manufacturing process technologies (both generic and industry-specific), energy technologies, computer and information technologies, transportation and communication infrastructure, medical and biotechnologies, education and training technologies, and the effective diffusion of these technologies throughout U.S. industry.
 

4. Environmental protection and cleanup technologies including research and development for remediation and restoration, end-of-pipe controls, pollution avoidance and prevention, response to human health and ecological risks and to global environmental threats, and the science underlying these environmental issues.

5. Space exploration, both with and without human presence, and civilian space and aeronautical research and development.

Other key areas of national need, such as education, training and public literacy and health research and development, may be considered in the context of one or more of the five areas listed above, as appropriate.

Issues to Consider in the Review

The NSTC will assure that relevant important issues are raised in each of the laboratory reviews conducted by individual agencies.  These may include the following.
 

• Comparative advantage, or special capabilities, including physical  infrastructure, of the laboratory system under review in meeting each of the  national needs outlined above.  These capabilities shall be compared, insofar as possible, with capabilities of other research institutions, such as other Federal laboratories, universities, contract laboratories, and industrial laboratories.

• Methods agencies use for selecting their research laboratories versus other research institutions for performing R&D activities (e.g., peer review of proposals for fundamental scientific research).

• Missions appropriate for the laboratory systems under review, and for individual laboratories within the systems, in the context of evolving national needs in the post-Cold War era.

• Methods agencies use for selecting research areas for their laboratories and the process for re-orienting the research to meet changing national needs.

• Mechanisms for evaluating the quality and performance of major programs in  laboratory systems or at individual laboratories, measured against world standards.

• Redundancies and possibilities for restructuring, consolidation or closure, redirection, or reassignment to other agencies of laboratories in the systems under review.

• Alternative management and funding options for the laboratory systems, and/or  individual laboratories, to enhance quality, cost-effectiveness, and increased  responsiveness to national needs; alternatives may include privatization of  laboratories or programs within laboratories.

• Relations between parent agencies and laboratory systems, with attention to  layers and detail of management that may put unnecessary cost and quality  burdens on the laboratories.

• The process agencies use for performing work at their laboratories for other  agencies and for non-government entities, and opportunities for lowering  barriers to inter-laboratory and interagency cooperation.

In addition, the NSTC may provide guidance to laboratory reviews conducted by DOD, DOE, and NASA on issues to raise in each of the five areas of national need, as appropriate and necessary.

In its interagency Federal Laboratory Review, the NSTC shall address any issues that cannot be easily accommodated in, or may be inappropriate for, individual agency reviews.  The NSTC review shall also ensure that interests of all agencies, including those not conducting the individual reviews, are adequately represented, and that such agencies may participate in the review.

External Advice

The NSTC may seek advice from members of the President's Committee of Advisors on Science and Technology and other appropriate representatives of industry, academia, the nonprofit private sector, and state and local government in preparing its reports of the Federal Laboratory Review.

Resources

Agencies shall provide NSTC with the resources needed to prepare guidance for individual agency reviews and for the NSTC's Federal Laboratory Review.

Timing

The NSTC shall prepare an interim report of the Federal Laboratory Review by September 15, 1994.  The interim report will provide options/recommendations on issues that need to be resolved in time to affect the FY 1996 budget.

The NSTC shall complete a final report of the Federal Laboratory Review, including options/recommendations, by April 15, 1995.  Any difference in view among agencies should be noted.

_____________________________                                             ________________________
John H. Gibbons                                                                              Date
Assistant the President for Science
  and Technology