On Tuesday, the department’s inspector general, Gregory H. Friedman, issued a report calling for a wholesale restructuring of the department’s far-flung laboratories and other operations. He warned that “painful” staff reductions were certain to come as Congress sought deep federal budget cuts in the months ahead.
In one of his more striking criticisms, Mr. Friedman wrote that the department spent nearly $13 billion a year to run 16 separate laboratories but that only about half of that money went toward actual research, with 49 percent paying for overhead and capital spending. That ratio is “out of sync,” he said, and could be improved by combining some operations. The report noted that the Energy Department has three centers for nuclear weapons work, two for Navy propulsion reactors, five for energy technology and 13 for general science. “The department’s research complex is organized essentially as it has been for over a half-century,” it said.
Mr. Friedman called for the creation of an independent panel to examine ways of consolidating the labs.
The Department of Energy, whose origins date from the development of the nation’s atomic weapons program during World War II, was formally created in 1977 by the Carter administration. It has since grown into one of the government’s chief sponsors of advanced research and was one of the largest recipients of stimulus money — $35 billion — in the early months of the Obama administration.
The department has an annual budget of about $24 billion, not counting the one-time stimulus grants, and oversees more than 115,000 workers, including federal employees and contract personnel.
The agency has drawn heavy criticism in recent months for its handling of some green energy projects financed with stimulus money, particularly the loan guarantee to Solyndra, a solar equipment company. The report recommended that the loan guarantee program be placed on a department “watch list” of significant issues.
“Given the significance of the funds involved and the government’s exposure to risk, we believe that heightened and continued focus on this program is necessary,” Mr. Friedman wrote.
His report said that to save money and reduce duplications of effort, the department should also reabsorb the agency that handles nuclear weapons, the National Nuclear Security Administration, which was made a separate organization in 2000 because of security concerns.
Similar recommendations for other departments are likely to emerge as Congress moves to cut domestic spending. A report from a special Congressional committee drafting a plan to cut the deficit by $1.2 trillion to $1.5 trillion over 10 years is due this month.
The Energy Department had no immediate comment on the new report. But the Republican chairman of the House Energy and Commerce Committee, Representative Fred Upton of Michigan, said, “The broad concepts make a lot of sense.”
The report also warned that the department would probably also be forced to cut the $6 billion it spends each year on cleaning up pollution left over from nuclear weapons production. What money remains should be spent on the worst contamination, and not allocated by the state-by-state agreements now in force, it said.
The cleanup program involves two million acres in 35 states and employs more than 30,000 workers.
The inspector general warned that changes in the department’s organization could “have a significant impact” in states like Idaho, New Mexico, South Carolina, Tennessee and Washington, where department facilities and contractor operations are among the largest employers.
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