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Winning the Future with a Responsible Budget

February 11, 2011 - 2:24pm

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As part of President Obama’s commitment to winning the future, the Department of Energy will make critical investments in science, research and innovation that will create jobs, grow the economy, and position America to lead the global clean energy economy. Next week, the Administration will unveil its budget for FY 2012, which will include over $8 billion for research, development, and deployment investments in clean energy technology programs.

But while we are making these investments, we are taking responsible steps to cut wasteful spending and reduce expenses.

Fiscal responsibility demands shared sacrifice – it means cutting programs we would not cut in better fiscal times. Some of the tough budget cuts the Department is making in its FY 2012 budget request include:

  • In the Office of Energy Efficiency and Renewable Energy, the Department is reducing funding for the hydrogen technology program by more than 41 percent, or almost $70 million, in order to focus on technologies deployable at large scale in the near term.
  • In January, the Department decided to end operation of the Tevatron at Fermi National Laboratory rather than extend it through FY 2014, which will save taxpayers a projected $35 million for FY 2012.
  • The Department is reducing the budget for the Office of Fossil Energy by 45 percent, or $418 million. This includes zeroing out the Fuels Program, the Fuel Cells Program, the Oil and Gas Research and Development Program, and the Unconventional Fossil Technology Program.
  • Additionally, current law provides a number of credits and deductions that are targeted towards certain oil, gas and coal activities. In accordance with the President's agreement at the G-20 Summit in Pittsburgh to phase out subsidies for fossil fuels so that the country can transition to a 21st century energy economy, the Administration proposes to repeal a number of tax preferences available for fossil fuels. Repeal of these preferences will save the taxpayer approximately $3.6 billion in FY 2012. The ten-year estimate (FY2012 to FY2021) is $46.2 billion.
  • The FY 2012 budget request closes the Holifield Radioactive Ion Beam Facility at the Oak Ridge National Laboratory, which will save $10.3 million.

Coupled with this effort, we are continuing to change the way the Department works by focusing on improving our management and operations. The FY 2012 budget demonstrates real ways in which we’re cutting waste and making government more efficient and effective.

With an emphasis on good government, smart spending, and commonsense steps to cut costs and save taxpayer money, the Department’s FY 2012 budget request reduces the cost of corporate management by nearly 13 percent, cutting nearly $45 million from our budget. Some of these spending reductions came from:

  • Office of the Secretary: 13 percent reduction
  • Office of the Chief Financial Officer: 16 percent reduction
  • Office of the Chief Information Officer: 17 percent reduction
  • Office of Human Capital Management: 22 percent reduction
  • Office of Congressional and Intergovernmental Affairs: 40 percent reduction
  • Office of Public Affairs: 16 percent reduction

In addition to these reductions, the Department is reducing certain administrative expenses across all programs in the FY 2012 budget from FY 2010 levels.

The savings represented in the FY 2012 budget request build on other efforts that we’ve undertaken to make our operations more efficient and effective.

In December, we announced a two-year decision to stop salary and bonus pool increases for site and facility management contractor employees, who manage day-to-day operations at certain Department of Energy sites and facilities, including National Laboratories. The freeze at the 28 sites and facilities went into effect January 1, 2011. These savings are being reinvested in mission-specific and sustainability initiatives.

We have also taken steps to begin reducing our vehicle fleet inventory by 35 percent in the next three years. This is expected to save more than $20 million each year.

By consolidating cell phone and Blackberry voice and data plans, the Department was able to save nearly $480,000 in FY 2010. Ongoing steps in this cost-reduction effort include reducing and/or eliminating loaner inventory and devices not in use; monitoring of international plans to maximize savings; and aggressive inventory control and accountability for all devices.

Strategic sourcing initiatives continue to provide substantial and recurring savings for the Department. During the first quarter of FY 2011, more than $36 million in savings have been achieved by our management and operating contractors through the utilization of e-commerce techniques.

The Department’s National Nuclear Security Administration Supply Chain Management Center (SCMC) is employing a series of initiatives to reduce procurement costs, including eSourcing. Since 2007 it has saved $200 million. The following are two recent examples of the results we’re seeing:

  • Lawrence Livermore National Laboratory (LLNL) had a recent requirement to consolidate its CISCO IT products and services. Using the SCMC eSourcing software, LLNL saved $860,000 against an award of $18 million.
  • Kansas City Plant (KCP) used eSourcing and saved $4.45 million (or 52%) against the third party cost estimate $9.2 million for a contract which provides “Relocation Management Services from KCP to the new KCP Facility.”

The Department has also launched a series of management reform efforts to be implemented across the complex. The goal is to expedite decision making, streamline operations, and strengthen mission activities. Some of these steps include:

  • Improving project management tracking across the complex
  • Reducing the use of support service contractors at Department headquarters and field sites
  • Revising the intra-agency concurrence process to make it consistent, more reliable and faster.

All of these steps --- funding basic research, science and innovation, making tough budget cuts, and implementing strong management reform --- will help us win the future by out-innovating, out-educating and out-building the rest of the world. Together we will lay the groundwork for the nation’s future prosperity and security, create jobs, and lead the world in a clean energy economy.

Steven Chu is the Secretary of Energy.

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