By Stephen Barr
Monday, June 12, 2006

One of the biggest benefit programs planned for federal employees and retirees in years -- enhanced dental and vision benefits -- is having trouble getting off the drawing boards.

Last month, the Office of Personnel Management announced it had selected 10 vendors for the new Federal Employee Dental and Vision Program, scheduled to start Dec. 31. Last week, the OPM quietly informed congressional committees that it had decided to take a fresh look at the bids.

"We will have a new assessment of the current bids that we have before us," said Dan Blair , deputy director at the OPM. "A new contracting officer is in place."

The reassessment of the bids was triggered by a protest filed by Blue Cross and Blue Shield at the Government Accountability Office, a congressional auditing agency that often handles contractor complaints. The protest became "moot," Blair said, when the OPM decided to reassess the process used to select the dental and vision vendors.

Blue Cross had sought to offer dental and vision packages, but was named by the OPM on May 5 as a vendor only for vision benefits in the new program.

"I don't think anything necessarily went wrong," Blair said when asked about the Blue Cross protest. But he acknowledged that the protest "suggested we could have had some improvements" and said the OPM wanted to ensure "that the new program gets off in a manner in which Congress intended."

Federal employees and retirees have eagerly awaited improved dental and vision benefits for several years. According to testimony at congressional hearings, the government offers meager dental and vision coverage to its workers, with reimbursement levels and annual maximum benefits that are much less than those provided by private-sector employers.

Sen. Susan Collins (R-Maine) and Rep. Thomas M. Davis III (R-Va.) sponsored the legislation, passed in late 2004, to create the new program. They sold it to other lawmakers largely because the program requires enrollees to pay all premium costs and does not rely on taxpayer dollars. Despite the lack of a government contribution, Collins said she expected that the OPM would be able to use the government's purchasing clout to obtain affordable group rates for employees and retirees.

In a statement, the OPM said it reopened the vendor selection process "to reaffirm the integrity of the procurement process" and to put OPM in the best possible position to negotiate for reasonably priced dental benefits.

The review "sets us back a bit, but we have every intention of meeting our time deadline," Blair said.

A Blue Cross spokeswoman said the insurance company had no comment on the bid protest or related issues.

The OPM's schedule has called for allowing federal employees and retirees to sign up for enhanced dental and vision benefits as part of the enrollment period for the federal employee health insurance program. The sign-up period starts Nov. 13.

The president's budget request for fiscal 2007 sought $26.7 million to upgrade processing of retirement claims filed by federal employees, but the House Appropriations Committee has decided not to finance the project.

The committee did not have enough money to meet all of the administration's spending priorities, aides said. Rep. James P. Moran Jr. (D-Va.), a committee member, offered and withdrew an amendment on the issue, saying he hoped to work with Republican and Democratic leaders next year to ensure that funding will be available.

The OPM, which processes retirement claims, relies on a paper-based system that often moves slowly because it takes time to gather personnel folders to make calculations. Moran said many recently retired federal employees are waiting three to six months to receive their full annuity. Until then, they receive partial pensions, with payments cut between 15 percent and 35 percent, he said.

The delays may worsen in coming years, as baby boomers depart the government in substantial numbers, and the issue is of concern to area lawmakers. "Zeroing out this funding now not only stalls the project but threatens OPM to go back to square one," said Robert White , a spokesman for Rep. Davis. Davis will "search for ways to address this issue," White said.

Moran said he is encouraged that the committee signaled support for the retirement upgrade in a report on fiscal 2007 appropriations.

Linda M. Springer , the OPM director, said she was not giving up and hopes to win a congressional pledge for some funding before House-Senate negotiators meet in a conference late this year to make final spending decisions. "Our job between now and the conference is to continue to educate members in both houses," she said.

Stephen Barr's e-mail address isbarrs@washpost.com.