Yes, that does mean Federally Funded R&D Center.

This was one of the Aldridge Commission recommendations. Right now all the NASA centers except JPL are directly-run government facilities and the staff are government employees (except for contractors of course). In contrast, in the Department of Energy most of the labs are run by universities or university consortia, or in some cases corporations (PNNL is run by Battelle) and employees of those laboratories are actually employed by the university or consortium, rather than by the government. In principle this gives increased flexibility for the work the people do and reduces some of the political pressures that make it hard to actually accomplish things - it also tends to increase the level of communication and technology transfer with local entities so has an economic impact as well. FFRDC bureaucracies tend to be more effective than government ones, though any bureaucracy is capable of stupidity.

It also has the advantage that ineffective management can be thrown out by moving the contract to a new organization - this is done relatively rarely, but did happen recently at Brookhaven Lab. It's hard to fix problems that easily within a government-run center.

NASA put out some sort of request for suggestions on moving labs to the FFRDC model a few months ago, and I was in touch with one group that was making a serious proposal. But I haven't heard lately how that's going.