SLAC Approach to Indirect Costs including G & A Budget

1. SLAC Approach to Indirect Costsincluding G&A Budget Alexander Merola Chief Operating Officer Linac Ops Review Committee February 18, 2009

2. PRESENTATION OUTLINE/PURPOSE • Governance: • How does SLAC ensure that its scientific programs receive indirect resource allocation at the appropriate level and in the right priority • G&A Budget and Procurement Burden: • Content and Decisions • Successes/Challenges: • We have started some processes but are just beginning

3. TOTAL SLAC FUNDING OVER YEARS

4. FY2008 SLAC COSTS* AND FTEBY FUND TYPE *FY08 Costs Only **Not Funding

5. CONTRIBUTION BY SLAC DIRECTORATEFY08 INDIRECT POOL

6. PRESENTATION OUTLINE/PURPOSE • Governance: • How does SLAC ensure that its scientific programs receive indirect resource allocation at the appropriate level and in the right priority as it has moved from a single to multi-purpose Lab • G&A Budget and Procurement Burden: • Content and Decisions • Successes/Challenges: • We have started some processes but are just beginning

7. IT’S ABOUT THE SCIENCE • Governance and Management Models ensure that the support organizations are SLAC’s competitive edge • To ensure that it’s about the Science, the support organizations fully participate in Lab’s planning • Vision and Mission • Ten Year Plan • SLAC Agenda • Business Plans • Executive Council • SubCouncils

8. INDIRECT EFFORTS PLANNING • Right Support Services and Infrastructure • Baselined G&A Budget • Ups/Downs • Services • Infrastructure • Investments • Finalized by ALDs/Director • This is a major improvement in fact-based decision making and governance aligned with science (12/08)

9. Execution Departmental Plans Continuous Improvements Procedures Consistent with policies Strategic Sourcing Project Management Each staff member (R2A2s) Assurance PEMP Metrics Self Assessments Peer Reviews SubCouncils Project Management Office EXECUTION AND ASSURANCE

10. PRESENTATION OUTLINE/PURPOSE • Governance: • How does SLAC ensure that its scientific programs receive indirect resource allocation at the appropriate level and in the right priority • G&A Budget and Procurement Burden: • Content and Decisions • Successes/Challenges: • We have started some processes but are just beginning

11. APPROACH • Science-Driven, Activity-Based • Shortcomings of Financial Reporting System • No Common Format for Financial Data • Created Operations Central Financial Planning Group • Partner of Choice Model, 11/2008 • Set Standards for financial data reporting • Data Collection (some reversed-engineered) • Great Accomplishment - 80%!, 12/2008

12. Ops Div/Dept with Linac Ops Funding

13. FY09 BASELINE APPROACH: ORIENTATION & METHODOLOGY • SUOH: Gen. Counsel, Office of the Presidents, Provost, Internal Audit, Risk Management, Sponsor Project

14. FY09 BASELINE APPROACH: GETTING TO THE FY09 BASE • Includes a few key leadership hires. • Base + SLI Support + contingency = $64.9M • Forecasted G&A collection = $66.6M • Allows interaction of Ups/Downs/Investments/G&A Rate • Performed by SubCouncils and Ops Leadership • Decided by Executive Council

15. Ups/Downs Investments IT Migration Policies and Procedures Gate Evaluation ESH Emergency Services Work Planning and Control Facilities Seismic/Structural Engineering Site Clean Up SCCS Network Engineer Enterprise Architect Communications Event Tour Coordinator PR and Writing Writer AV Upgrades Downs were achieved to the $1.5M level, included reduced: services, software support, education

16. Legacy Issues: Facilities are aging • Current Deferred Maintenance Backlog: $26.8M • Reduction Plan: • SLI Project • Research Support Building (56ksf) • Accelerator Research Support • LCLS Management • Renovations of Buildings 3, 24 and 41 (65ksf) • Demolition of Sub-Standard Trailers ( (57ksf) • Stimulus proposal submitted in January, 2009 • Prioritize funds consistent with other Lab priorities

17. Legacy and Emerging Issues: Business Systems • Generally acknowledged that business needs of SLAC are not being met by current environment • Mission/Business Need to Modernize Business Systems • Enterprise Systems: HR/Finance • # of parallel and shadow systems is tremendous • # of extra reports (2000?) is extraordinary • Paper timecards, no online procurement • Summer 2008: DeLoitte analysts favor option of merger with Stanford • Current Status • Analysis of options, for best value • Joint SLAC Stanford team • Identification of showstoppers with DOE (if any)

18. Legacy and Emerging Issues:Scientific Computing and Computing Services • Cooling, Power and Space capacity of the computer building • Plan for future IT and scientific computing capacity at SLAC • Campus collaboration is possible • Standard software configuration and support strategy (including central tools) for desktops • Re-establish a central service desk as well-defined interface to SCCS • Improve SLAC telecommunication and network infrastructure • Support LCLS Computing

19. INDIRECT BUDGET SUMMARY (K$)

20. PRESENTATION OUTLINE/PURPOSE • Governance: • How does SLAC ensure that its scientific programs receive indirect resource allocation at the appropriate level and in the right priority • G&A Budget and Procurement Burden: • Content and Decisions • Successes/Challenges: • We have started some processes but are just beginning

21. CHALLENGES 1 of 2 • Needed Improvements • 80%  90% Accuracy • Continue toward Science-Driven, Activity-based, not level of effort • Enterprise Systems • Governance, in particular SubCouncils • Formalize service delivery models • Centrally Managed • Centralized • Satellite • Matrixed • Self-provided • Partner of Choice • Right sizing service levels • Benchmarking Reviews

22. CHALLENGES 2 of 2 • Fully reconcile G&A and Linac Ops budget • Maintain economies of scale, recognize good FTEs come in integers • Simplicity and Transparency • Improved Governance and Accountability • Consistency of reporting across lab • Consolidated, standardized, and individualized reports • Costing Structure that allows for all of this!

23. GENERAL AND ADMINISTRATIVE (G&A) 1 OF 2 • General management, administration, support • Benefit the Lab as a whole • If you work at SLAC, you can expect a certain level of infrastructure and service • Users generally have little discretion as to whether to use the service • Human Resources, Business and Admin IT, Network, Roads, ESH, Security and Fire Protection, Lab Directorate • G&A rate is forecasted based on projected costing level of the Lab programs and projected G&A costs • G&A rate can be revised • but that new rate is applicable for the entire year

24. GENERAL AND ADMINISTRATIVE (G&A) 2 OF 2 • May not be used if benefits/costs can be connectedto a specific base that is not Lab-wide • G&A currently includes: • General (15.5%) • Site Support (27.0%) • Other overhead which is recovered similar to G&A currently includes: • LDRD (1.5%) • IGPP (1.0%) • We intend to reduce G&A rate and increase LDRD • No net increase in total overhead rate • Investments to be made in near term

25. SERVICE CENTER RECHARGES 1 of 2 Provides specific services to multiple users • Users must have discretion over the amount of service used • No equitable benefits Lab-wide • procurement • space • engineering and fabrication shops • telephone services, workstation support, backup services • writing or editing, web design • specific Library services • computing services • vehicles

26. SERVICE CENTER RECHARGES 2 of 2 Basis of charge • Identifiable or estimated • Allows somewhat precise allocation of costs • Procurement charge based on the value of the order • Page charge based on pages printed • Backup Charge based on time to recover • Space charge based on square footage • Subscription charge based on availability whether used or not • Journal, whether read or not • Backups whether used or not • Encourages optimal use of service • Recharge mechanisms should be kept simple or they can be costly to administer

27. ORGANIZATIONAL BURDEN 1 of 2 • General Management and support for a directorate/division/department as a whole • Division staff have little discretion as to whether to use the service • ALD, Division Director, Department Heads • division-wide administrators • building managers • ESH coordinators • staff between assignments • required training and/or professional development • general operating costs like phones or copy machines, space, general electricity, general computing

28. ORGANIZATIONAL BURDEN 2 of 2 • More useful when the organization has multiple funding sources • Can be used by program and support organizations • Burden rates in support divisions can: • Can discourage use of central or matrixed services • Can encourage local optimization at the expense of One Lab approach • Governance is an interesting challenge • Burden Rates can be revised but that new rate is applicable for the entire year • Indirect Costs are often confused with Indirect Efforts. The best management structure, in my opinion, would have all indirect efforts tracked as indirect costs.

29. LINAC OPS • Purpose of the Linac Ops budget is to provide a sustainable technical infrastructure to ensure that LCLS has the services when needed • In Operations area: • Services and Infrastructure specific to LCLS operations • Portion of the ‘organizational burden’ • Maintenance of Core Competency and Capabilities • LCLS cannot risk relying on other programmatic funding • While this will benefit other areas of SC and SLAC, that is only a benefit not the purpose • A more integrated and formal governance and cost structure will be established in this FY

30. Conclusion • Governance: • SLAC has taken strong initial steps to ensure that its scientific programs receive indirect resource allocation at the appropriate level and priority • G&A Budget and Procurement Burden: • These budgets are transparent and monitored • Successes/Challenges: • FY09 goal is to ensure a fully integrated governance model and financial structure for all SLAC indirect efforts to be implemented in FY10 • Created a set of principles by which it is based