Message From the Secretary

The end of the Cold War is perhaps the defining event of the 20th century, one which altered both the definition of national security and related missions of the Federal Government, especially the mission of the Department of Energy. Recognizing the need to rethink the basic national security missions in the post-cold war era, the Department initiated a broad slate of strategic and managerial reform initiatives that have already saved taxpayer dollars while enhancing the capability of the Department to fulfill core mission requirements.

By redefining core missions and overhauling critical management systems, these reforms are transforming a Department—which was built to win the cold war and to respond to the energy crises of the 1970s—into a Department prepared to meet the challenges of the 21st century. The reports that support these reforms consistently identified privatization as a potentially powerful management tool to enable institutional change. In recognition of this and in support of the Clinton Administration’s commitment to a government that works better and costs less, I formed the Privatization Working Group, chaired by the Department’s Chief of Staff, Dan Reicher, to examine how privatization could help transform DOE.

This report presents the findings and recommendations of the Privatization Working Group. By focusing on the three basic privatization methods available to the Department, and the key legal and policy issues associated with them, it provides practical policy guidance in the use of privatization as a management tool. It will be clear to the reader that the diversity of the Department’s activities precludes a “one size fits all” approach to privatization.

Secretary O'Leary

The report demonstrates that there is a broad array of privatization opportunities within the Department. It assesses the key issues that must be addressed in determining whether and how to pursue each potential privatization. And it highlights the Department’s significant privatization successes over the past 2 years. The total value of DOE privatization projects currently under way exceeds $4 billion. The Department projects actual savings from privatization to be upwards of 25 percent relative to the cost of activities performed under traditional management and operating contracts.

Now is the time to pursue privatization opportunities that meet the policy and principles articulated in this report. To this end, the Department will incorporate privatization opportunities in its strategic planning, budget development, and management. At the same time, the Department must be mindful that serious impacts can result from ill-conceived privatization, including economic dislocation and increased safety risk to workers and the public.

This report is the result of the dedicated efforts of many individuals inside and outside the Department. I particularly want to thank the Privatization Working Group, under Dan Reicher, for its exemplary service.

Hazel R. O’Leary

Secretary of Energy