Inside Moniz's mission to reshape the Energy Department

By Darius Dixon

03/25/2016 05:00 AM EDT

The clock is ticking down on Ernest Moniz's three-year campaign to reshape the Energy Department's mammoth bureaucracy.

Even as he helped negotiate last year's Iranian nuclear deal and pressed the global effort to fight climate change, the energy secretary has sought to streamline the agency and improve how it oversees the national labs and approves new projects.

Unlike his predecessor, Steven Chu, who ran a department flush with $35 billion in stimulus funding, Moniz has faced the budget sequester, a divided Congress and an agency bruised by bad press after the Solyndra solar imbroglio. And he's had to cope with that all while grappling with the still-unsolved problem of where to store much of the nation's nuclear waste.

"Some of these things are bigger and longer term than anybody who's in for a political term has the time and/or energy to deal with," said Dan Arvizu, who stepped down as director of the National Renewable Energy Laboratory last fall. "So, you pick your battles, pick what you're gonna do - your two or three things - and then recognize that your clock's going to run out before you know it."

Certainly Moniz, a high-ranking DOE official in the Clinton administration, entered the job knowing the challenges he faced. John MacWilliams, now a top official at the agency, recalled meeting with then-nominee Moniz at his Massachusetts Institute of Technology office in April 2013, while Cambridge was still under "shelter in place" restrictions after the Boston Marathon bombing.

"I walked in and every whiteboard in the office was filled with a detailed depiction of what became the reorganization of the department," MacWilliams said. By July of that year, Moniz unveiled his reorganization plan to the agency staff.

Many current and former DOE officials said Moniz's biggest agenda item was a relatively unheralded one: creating the role of undersecretary for management and performance. That job focused on what Moniz and his advisers saw as their most difficult task: project management.

DOE projects tend to come in one size: massive, not only in their dimensions but in delays and cost overruns. Project management problems have kept the department on the Government Accountability Office's infamous High Risk List for a quarter-century, soured its relationship with Congress and frustrated the network of research labs that report to it.

The Management and Performance office went over well with the White House, a former DOE official said. It also appealed to lawmakers on Capitol Hill, who hoped it might address the agency's terrible record on nuclear waste cleanup.

Many of the frustrations over waste stem from the political stalemate over the Yucca Mountain project, as well as criticisms that DOE's weapons cleanup mission has progressed at an painfully slow pace, allowing costs to spiral higher.

"Everyone thinks Moniz is so great, but he will be leaving the biggest mess I have ever seen for his successor," one former senior DOE official said in an email. "By the time the real liability for nuclear waste is revealed, the cost estimate for refurbishing H Canyon [a nuclear chemical separations plant] is revealed, and every other mess he has left behind, Moniz will likely be the president of some prestigious university somewhere."

The official added: "I wonder if after a while all we'll be doing is paying fines and not doing any research, cleanup or management of fuels and [high-level waste]."

One conservative critic of the agency says waste cleanup, called environmental management, is DOE's single most important task.

"And the spectacularity with which it fails at it should give pause to anyone supporting any DOE activity beyond that, as far as I'm concerned," said Jack Spencer, an executive with the Heritage Foundation's Institute for Economic Freedom and Opportunity. "DOE should be focusing on that mission and not worrying about reducing the cost of solar panels, nuclear reactors or anything else that the market is perfectly capable of taking care of."

Much of the agency's work to overhaul its project management falls to MacWilliams, now an associate deputy secretary focused on tackling some of DOE's thorniest quagmires. He is also the agency's first chief risk officer.

A former investment banker who worked at Goldman Sachs and JP Morgan Partners, MacWilliams created a risk committee stacked with some of the agency's most senior project managers - people, he said, who know the "ground truth."

But some of those decisions have generated political heat, such as the effort to defund the MOX project in South Carolina.

Moniz's confirmation was held up for several weeks while Sen. Lindsey Graham (R-S.C.) sought assurances about the administration's commitment to the project, which would process weapons-grade plutonium into nuclear fuel. But after Moniz came to power - and the release of several studies - he had to explain that the MOX project, which was billions of dollars over budget and decades behind schedule, was a mistake. The state has since sued DOE for not collecting nuclear material from the unfinished facility on time and this week Republican Gov. Nikki Haley pressed Moniz to halt a shipment of weapons-grade plutonium from entering South Carolina.

Moniz and MacWilliams have pushed for a cheaper alternative to move the plutonium out of the state about two decades ahead of schedule. But that would likely mean laying off of hundreds of contractors, and the state opposes it.

To MacWilliams, MOX is emblematic of a flawed DOE review process. It was a first-of-its-kind project that was approved with only 25 percent of its design completed, so it wasn't a surprise when it soon fell behind its deadlines. DOE's new Risk Committee now requires designs to be 90 percent completed for large nuclear projects, and forces managers to address the panel at each critical decision point, so MacWilliams said these problems are unlikely to recur. "We'll make mistakes but not these kinds of mistakes," he said.

The goal, Moniz says, is "staying ahead of the projects before they turn into big problems" - addressing "little alligators" before they turn into "big alligators," as he is fond of telling his staff.

While it's critical to make structural changes to how projects are reviewed, Moniz told POLITICO, federal spending is another issue.

"We have the funding to make serious progress," he said in an interview in his office. "We don't have all the funding we could use effectively to fast-track projects and ultimately save life-cycle costs substantially."

However, the Senate hasn't confirmed either of the people Obama nominated for the Management and Performance undersecretary post.

Another priority for Moniz has been to improve relations with the 17 national labs - some of which felt they had been pitted against each other under Chu - and improve their collaboration.

"Before we leave here, it is our intent to do a major integrative report on the laboratories," Moniz said. "That will be part of providing something that we can hand over to the next administration."

The labs have operations in 14 states, so their directors can be some of Moniz's best salespeople with the Senate if the department can gain the labs' trust and generate results.

"You have really smart people and for a while they felt like they weren't in the circle of trust," said Jonathan Levy, who helped manage the transition between the two secretaries and eventually became a deputy chief of staff to Moniz.

The labs have long felt put upon by both Congress and DOE headquarters - "One of us gets cancer, and all of us get chemotherapy," was how one former director of Sandia National Lab was known to describe the backlash from Washington. And although Chu had led a national lab himself, he didn't embrace the agency bureaucracy the way Moniz has, said Arvizu, who says he's briefed eight energy secretaries during his roughly 40 years in the lab system.

"Steven Chu's a brilliant scientist. Certainly though, one of his favorite things is not to manage a bureaucracy," Arvizu said. Where Moniz uses collaboration, Chu unintentionally fostered a competition that was "absolutely destructive" for the labs.

Moniz also instituted a tonal change that was "huge" among lab employees by insisting that no one at DOE headquarters call them "contractors," preferring instead "strategic partners," Arivizu said.

Arvizu said the lab directors see their relationship with headquarters as better than ever, but they fear that ties with Washington will erode under the next secretary. So the lab directors are looking to make permanent the councils and meetings that have been set up under Moniz.

"Institutionalize," he said, has "been the watchword for the last year or so."

Moniz is similarly boastful of how relations have improved with the labs.

"If you look out there you will see that the laboratories are doing a lot more work together now, collaboratively trying to be more than the sum of the parts," he said.

Moniz has also tried to bring together the Energy Department's agency's "applied" and basic science offices, and he executed a long-expected merger between the science and energy undersecretaries.

That built on Chu's efforts, said Brandon Hurlbut, Chu's former chief of staff, who is now consults on energy-sector investing. But Chu also had to focus on carrying out a new president's priorities and rolling out billions of stimulus dollars.

Also, changing the relationship between the applied and basic research runs counter to traditional roles inside the agency bureaucracy, said David Garman, who served as an energy undersecretary under George W. Bush, in an email.

"[T]he renewable energy interests, the nuclear interests, and the fossil interests each like having their own assistant secretary as their inside-the-administration cheerleader," Garman said. "They would all probably oppose a rational reorganization, and they would incite their allies in Congress to fight it as well."

Garman argues that DOE offices should be organized by energy use, like transportation or buildings, rather than by energy source, such as nuclear, and he helped write a proposal for DOE reform in 2013.

Though he praised many of Moniz's changes, Garman argued that both Obama's energy secretaries took a path of least resistance.

"Neither Secretary Chu nor Secretary Moniz wanted to take that fight on, so instead they implemented ARPA-E, the Innovation Hubs, the Energy Frontier Research Centers, and the Lab Councils while launching crosscutting initiatives on issues such as grid modernization," he wrote. "These are essentially workarounds that overlay the organizational stovepipes. Is it wasteful and duplicative? Yes. But it avoids upsetting the stakeholders and is thus politically convenient."