3). Specifically, DOE-sponsored FFRDCs  received about 79 percent of the nearly $84 billion in total funding for  FFRDCs sponsored by these agencies for fiscal years 2008 through  2012, according to our analysis of agency reports of contractor and  agency data provided in response to our survey of FFRDC sponsors. As shown in table 1, DOE obligated about 34 percent of its available  budget authority toward the FFRDCs it sponsored, while DOD and NSF  dedicated less than 1 percent and 4 percent, respectively, based on  obligations as a percent of budget authority from fiscal year 2008 through  fiscal year 2012. For fiscal  years 2008 through 2012, FFRDCs sponsored by DOE, DOD, and NSF  received approximately $15 billion of the nearly $84 billion in total funding  from sources other than their sponsoring agency—specifically from other  federal agencies (about $13 billion) and nonfederal entities, such as state  or local governments, and private entities (about $1.9 billion). Many FFRDCs Sponsored by DOE, DOD, and NSF Spent Over Half of Their Total Funding on Compensation, and These Agencies Have Processes to Review FFRDC Contractor Compensation

Many FFRDCs sponsored by DOE, DOD, and NSF spent over half of  their total funding on compensation for fiscal years 2010 through 2012,  and sponsoring agencies have processes to review compensation  annually to ensure that FFRDC contractors were not reimbursed in  excess of the cap amount set in federal law. DOE, DOD, and NSF Have Processes to Review Compensation Reimbursements for Senior Executives and other FFRDC Contractor Employees

DOE, DOD, and NSF have processes to annually review compensation  reimbursements for senior executives against the federal statutory cap  and conduct general reviews of compensation for other employees. DOE has  additional processes in place to review compensation for all FFRDC  contractor employees. In May 2014, DOE updated its policy on senior executive compensation  to require documentation of all the laboratory directors’ pay and nonpay  benefits subject to the cap in addition to the reviews described above. DOE, DOD, and NSF Use Multiple Reviews to Assess FFRDC Performance

DOE, DOD, and NSF assess FFRDC performance through three types of  reviews—comprehensive reviews, annual performance reviews, and  other review activities such as day-to-day oversight. DOE, DOD, and NSF Conducted Comprehensive Reviews of the Use and Need for FFRDCs That Vary in Level of Detail

DOE, DOD, and NSF conducted comprehensive reviews of the use and  need for the FFRDCs they sponsored and, in keeping with the flexibilities  the FAR provides, these reviews varied in level of detail. The FAR  requires sponsoring agencies to conduct a comprehensive review at least  every 5 years on the use and need for an FFRDC prior to extending the  contract or agreement, and it describes five elements it should include:  (1) an examination of the special technical needs and mission  requirements performed by the FFRDC, (2) a consideration of alternative  sources, (3) an assessment of the efficiency and effectiveness of the  FFRDC in meeting the sponsor’s needs, (4) an assessment of the  adequacy of the FFRDC management in ensuring a cost-effective  operation, and (5) a determination that the sponsoring agreement or  contract complies with other FAR requirements concerning FFRDCs. Working with the DCAA. NSF officials said that they do not  have employees collocated or on-site at the FFRDCs to perform  oversight. Agency Comments

We provided a draft of this product to DOE, DOD, and NSF for their  review and comment. Technical comments provided by DOE, DOD, and NSF  were incorporated, as appropriate. We chose  to review FFRDCs sponsored by the Department of Energy (DOE),  Department of Defense (DOD), and NSF because these three agencies  sponsor the largest numbers of FFRDCs—16, 10, and 4, respectively. To learn about FFRDC funding and compensation we surveyed the  agency sponsors for the 30 FFRDCs in our scope, spoke to agency  officials and contractor representatives, and reviewed agency policy and  guidance documentation. Appendix II: Funding and Contract Data for FFRDCs Sponsored by DOE, DOD, and NSF

To learn about funding and compensation at federally funded research  and development centers (FFRDC) we surveyed the agency sponsors for  the 30 FFRDCs sponsored by the Department of Energy (DOE),  Department of Defense (DOD), and National Science Foundation (NSF)  and collected information on their operators.
Why GAO Did This Study

Federal agencies sponsor 40 FFRDCs for research and development tasks that are integral to their missions. DOE, DOD, and NSF sponsor the largest number of FFRDCs—16, 10, and 4 centers, respectively. Federal agencies sponsor FFRDCs by contracting with nonprofit, university-affiliated, or private industry operators. Federal statute and regulations provide for reimbursements for compensation for FFRDC contractor employees and require that sponsoring agencies evaluate the use and need for their FFRDCs.
GAO was asked to review the management and oversight of FFRDCs. This report (1) describes funding for FFRDCs sponsored by DOE, DOD, and NSF for fiscal years 2008 through 2012; (2) examines compensation for FFRDC employees and these agencies' processes for review of compensation; and (3) determines how these agencies assess FFRDC performance. GAO surveyed the agency sponsors for the 30 FFRDCs, analyzed agency policies and reviews of these FFRDCs, and interviewed agency officials and contractor representatives.

What GAO Found

The 30 federally funded research and development centers (FFRDC) sponsored by the Department of Energy (DOE), Department of Defense (DOD), and National Science Foundation (NSF) received nearly $84 billion in total funding for fiscal years 2008 through 2012. Of these 30 centers, the 16 sponsored by DOE received about 79 percent of this funding according to GAO's analysis of sponsoring agencies' responses to a GAO survey on FFRDC funding and compensation. During this time, DOE obligated about 34 percent of its budget to the FFRDCs it sponsored, and DOD and NSF devoted less than 1 percent and 4 percent of their budgets, respectively. FFRDCs sponsored by these agencies received approximately $15 billion of their total funding from sources other than the sponsoring agency—specifically other federal agencies, nonfederal entities such as state or local governments, and private entities.
Many FFRDCs sponsored by DOE, DOD, and NSF spent over half of their total funding on employee compensation, and the three agencies had processes in place to review such compensation. For example, the agencies reviewed senior executive compensation to ensure that they do not reimburse FFRDC contractors in excess of the cap set in statute. All three agencies also have processes in place to document the total reimbursed compensation for senior executives against the cap, although DOE changed its policy during the course of GAO's work. In May 2014, DOE updated its policy on executive compensation to require documentation of compensation subject to the cap—a requirement that was not in place prior to this date. DOE officials noted that this change was due, in part, to the recent action by Congress in December 2013 to reduce the cap from $952,308 to $487,000.
DOE, DOD, and NSF assess performance of FFRDCs through three types of reviews: (1) comprehensive reviews—which the Federal Acquisition Regulation (FAR) requires at least every 5 years, (2) annual performance reviews, and (3) other review activities such as day-to-day oversight. DOE, DOD, and NSF conducted timely comprehensive reviews of the use and need for the FFRDCs they sponsored in most cases and, in all cases, the agencies recommended the continuance of the FFRDCs they sponsor. The FAR describes five elements the review should include, and DOE, DOD, and NSF generally included these elements, with varying levels of detail in keeping with the flexibilities the FAR provides. These agencies also have procedures to annually review and document the performance of the FFRDCs they sponsor, and many of these reviews use surveys of federal officials who interact with the centers. In addition, officials from DOE, DOD, and NSF told GAO that they engage in other day-to-day oversight activities to help them assess FFRDC performance, such as observing work and meeting with contractor employees.

What GAO Recommends

GAO is not making recommendations in this report. DOE, DOD, and NSF reviewed a draft of this report and did not provide formal comments. Technical comments provided by DOE, DOD, and NSF were incorporated, as appropriate.