1. What It Costs and Why Cindy Conger Chief Financial Officer OHEP FY17 Budget Briefing 4 March 2015

2. Objectives Overview of indirect costs and how they work Fermilab’s indirect costs Comparison to other labs Major categories and amounts Cost drivers and mitigations 3/4/15C. Conger | What It Costs and Why2

3. Indirect Costs at a Single Program Lab 33/4/15C. Conger | What It Costs and Why As a single-program lab, indirect is not just a “tax” on “customers,” but rather a direct reduction of the HEP dollars available for the science mission. We have an incentive to keep indirect costs as low as possible! Total Fermilab High Energy Physics Budget Fermilab is the largest “single program” in the DOE Office of Science Fermilab’s Director is head of the lab; head of the FNAL High Energy Physics Program; and President of FRA. Singular focus on the HEP mission. Slide presented to CRENEL

4. DOE Contract DE-AC02-07CH11359 – Cost Driver 3/4/15C. Conger | What It Costs and Why4 http://www.fnal.gov/directorate/Legal/documents.shtml Between Fermi Research Alliance LLC and DOE Effective January 1, 2007 Modified 151 times since then 540 pages long

5. Indirect Costs – Simplified Example, HEP only 3/4/15C. Conger | What It Costs and Why5 HEP Funding – Total $360M Operations B&Rs $180M Research B&Rs $90M Projects B&Rs $90M Indirect Costs $120M Divisional Program Support ~$30M Facilities, IT ~$30M each Directorate, ESH&Q ~$10M each Finance, WDRS, Management Fee, LDRD ~$15M total (adds to $125M due to rounding) 33% indirect to total ----------------- 50% effective rate

6. Indirect Costs – Simplified Example with Non-HEP 3/4/15C. Conger | What It Costs and Why6 HEP Funding – Total $360M LCLS II & Other Non-HEP Operations $180M Research $90M Projects $90M Non-HEP $40M Indirect Costs $120M Divisional Program Support ~$30M Facilities, IT ~$30M each Directorate, ESH&Q ~$10M each Finance, WDRS, Management Fee, LDRD ~$15M total (adds to $125M due to rounding) 30% indirect to total ----------------- 42% effective rate

7. Indirect Cost Allocation to Projects 3/4/15C. Conger | What It Costs and Why7 HEP Funding – Total $360M LCLS II & Other Non-HEP Operations $180M Research $90M Projects $90M Non-HEP $40M Indirect Costs Allocated to Direct Labor Costs Indirect Costs Allocated to Direct Material Costs 33% indirect to total ----------------- 49% effective rate 25% indirect to total ----------------- 33% effective rate

8. Indirect Ratio – FY2009 through FY2015 3/4/15C. Conger | What It Costs and Why8 The primary factor in the fluctuation of Fermilab’s effective indirect rate is the total activity funded at the laboratory.

9. Comparison to Other Labs – FY2014 ICR 3/4/15C. Conger | What It Costs and Why9 Data from the annual Institutional Cost Report submittal to DOE

10. Indirect Projections, By Category 3/4/15C. Conger | What It Costs and Why10 * Rollup based on DOE’s Institutional Cost Report categories Actual Plan Budgets look higher but we historically spend 95-98% of budget.

11. Facilities ($30M in FY15 Plan) Includes facilities management, engineering, maintenance, and services for:  6800 acres  353 buildings at 2.4M gross square feet  27 miles of Industrial Cooling Water piping (also fire protection water supply)  19 miles of Domestic Water Supply piping  14 miles of Sanitary piping  16 ponds (experimental cooling)  18 miles of Natural Gas Piping  2 primary electrical substations (345KV)  241 secondary electrical substations  115 miles of electric cable  36 miles of roads  122 acres of parking lots SC considers at a minimum that maintenance investments of 2% of the real property Replacement Plant Value (RPV) be made each year. For Fermilab in FY15 this alone is nearly $18M, and this increases each year by an average of 3% based on DOE escalation of RPVs. 3/4/15C. Conger | What It Costs and Why11

12. Information Management ($27M in FY15 Plan)  3,400 miles of networking fiber (The distance between New York and Los Angeles is 2,800 miles)  485 wireless access points  2,200 wireless clients/day  6 PB/day of data moved across the network  Scientific data centers (grid/cloud) - 3 MW of IT capacity  5 Petabytes of storage deployed for SAN, NAS, and Virtual Machines  1000+ machines are backed up each night within a 10 hour window  ~600 Websites managed by the Central Web Service  ~600 virtual machines deployed   200 TB of data move outside of Fermilab daily (Widely quoted size of the Library of Congress = 20TB)  240 Gbps of offsite bandwidth  23,989 network interfaces on network  2,642 desktops/laptops supported at the lab  5,800 user accounts  60,000 Intrusion Detection events are triggered each day  8,000 malicious URLs blocked each day 3/4/15C. Conger | What It Costs and Why12

13. Business Operations ($34M in FY15 Plan) Division Management & Administration $16M –Provides managers and administrative support for 5 divisions: Accelerator, Technical, Computing, Particle Physics and the new Neutrino Division Finance & Procurement - $7M –Purchases = $162M in FY14 –50,000 paychecks, 30,000 A/P checks per year Human Resources $4M Other - $7M –Property Management, Transportation, Distribution, Fleet, Travel Office, Technical Pubs/Library, Records Management, Conference Office, service on internal & external reviews 3/4/15C. Conger | What It Costs and Why13

14. ESH&Q ($15M in FY15 Plan) Includes subject matter experts and oversight of lab wide program delivering essential core operational support for the following: DOE Regulatory Reporting Occupational Safety Radiation Protection Industrial Hygiene Environmental protection/Sustainability ES&H Training Occupational Medicine Office Emergency Management Security Fire Protection Quality Assurance 3/4/15C. Conger | What It Costs and Why14

15. Executive Management ($24M in FY15 Plan) Executive Direction (the Chiefs) Office of Project Support Services Office of Planning & Performance Management Lab-Directed R&D program (LDRD) – growing to $3M in FY15-17 Partnerships & Technology Transfer Communications and Outreach Education Office General Counsel’s office Internal Audit FRA management fee ($4M) 3/4/15C. Conger | What It Costs and Why15

16. (Direct & Indirect) Cost Drivers and Mitigation 3/4/15C. Conger | What It Costs and Why16

17. BACKUP SLIDES 3/4/15C. Conger | What It Costs and Why17

18. OHEP Deliverable – Overhead Table 3/4/15C. Conger | What It Costs and Why18

19. Indirect Costs – Management & Oversight Indirect costs = Categories of costs that cannot be attributed directly to a particular B&R category Fermilab indirect costing practices must comply with federal Cost Accounting Standards (CAS), including maintaining a DOE-approved CAS Disclosure Statement at all times. Rates are set provisionally at the beginning of the year and may be adjusted during the year based on experience (e.g. funding or schedule changes) Rates are adjusted to actual at September 30 th each year as required by CAS. All expenditures must be charged indirect costs in accordance with disclosed practices. No “waiving” of indirect is allowed, unless approved by DOE through a modification to the CAS Disclosure Statement. Indirect costs are budgeted in same manner as direct costs; actuals and rates are monitored monthly 193/4/15C. Conger | What It Costs and Why

20. DOE Institutional Cost Reporting Executive Direction Human Resources Chief Financial Officer Internal Audit Procurement/ Acquisition Legal Central Administrative Support Program/Project Planning & Control Technology Transfer Outreach Activities Business Development Information Management Enviromental Safety & Health Facilites Management Maintenance – Facilites Maintenance – General Utilities Safeguards & Security Safeguards & Security WFO Funded Cyber Security Logistical Support Quality Assurance Management Award / Incentive Fee Taxes LDRD IGPP/IGPE Other/Organizational Management 3/4/15C. Conger | What It Costs and Why20 Each category is defined in the Guidance (excerpt): Categories: Lab submissions are periodically peer-reviewed by DOE/Contractor teams

21. Contract Deliverables List (DOE-FSO) 3/4/15C. Conger | What It Costs and Why21 610 rows 14 columns

22. Steady decline in costs; costs lag funding by ~a year. Expect costs to increase in FY15. ---------------------------------------- Indirect costs are nearly flat. Indirect cost ratio is up in FY14 due to total cost decrease. ----------------------------------------- Burdened labor and labor multipliers are stable in FY14 because cost decrease is primarily M&S. ------------------------------------------- Direct FTE percentage stable. Fermilab Indirect Metrics FY2012 - FY2014 22 Excerpt from DOE Contractor Budget Officer Metrics – Fermilab submissions. 3/4/15C. Conger | What It Costs and Why