At Energy, Benefits Are a Growing Liability

By Stephen Barr
Wednesday, March 28, 2007

In a notice that could have been written by a struggling corporation, the Energy Department yesterday lamented soaring pension and health-care costs and asked for recommendations on how to meet its financial challenge.

Costs and liabilities for pension and health-care benefits for contract employees are projected to grow at a rate "that significantly exceeds likely increases in the department's budget," the Energy Department reported in a Federal Register notice.

The department's past, current and future debt for the benefits is estimated to be $15.8 billion, according to Energy's Web site.

The "growing challenge" is how to balance the costs of department programs, such as nuclear weapons research and scientific discovery, against the needs of contractors who offer benefits designed to attract highly qualified workers, the notice said.

The department moved last year to change pension and medical benefits for future contract workers, but pension experts and several members of Congress protested the policy. Opponents said the government should not be in the business of telling employers what types of benefits they may and may not offer.

Energy Secretary Samuel W. Bodman suspended the policy, which would have directed the contractors to offer "market-based" benefits to their new hires.

Yesterday's notice, signed by Ingrid A.C.Kolb, the department's director of management, said Energy spent $1.07 billion in fiscal 2006 to reimburse 46 contractors for their employee pension and medical benefits. The reimbursement represented a 226 percent increase since fiscal 2000, the notice said.

The reimbursement covered benefits for about 100,000 contract workers and 100,000 retirees, dependents and beneficiaries, the department said. The benefit programs included 45 defined-benefit pension plans, 37 defined contribution plans, 23 life insurance plans, and about 260 medical benefit plans.

The department, which had a $23.6 billion budget in fiscal 2006, relies on the 46 contractors to manage and operate nuclear weapons plants, science labs and other facilities. Under the contracts, the companies may pass to the government the costs of pension, health, vacation and other employee benefits.

The tradition of covering pension and medical expenses began in the 1940s, when the government needed to attract scientists to work on secret projects in remote locations, and continued through the Cold War. Only now has the government started to worry about unfunded retirement and health-care liabilities.

On average, the department said in the notice, pension benefits received by contract employees are higher than those provided federal and private-sector workers. Energy contract employees also pay less, on average, for their health-care benefits, compared with federal and private-sector workers, the department said.

Energy officials said they are seeking comments and recommendations from the public and interested parties on how to address the increasing benefit costs of the contract workforce. Comments may be sent by e-mail to The deadline is May 11.

TSA, a Union Target

The National Treasury Employees Union announced yesterday that it would set up a chapter next week for federal security screeners who work at John F. Kennedy International Airport in New York.

Colleen M. Kelley, NTEU's president, said more than 600 employees of the Transportation Security Administration at the airport plan to join the union. TSA employees who had previously organized as the Metropolitan Airport Workers Association asked NTEU to set up a JFK chapter, she said.

Current law does not give TSA screeners collective-bargaining rights, although the agency permits them to join unions and be advised by union representatives in some proceedings, such as those called to discipline or fire screeners. Legislation approved by the House and Senate would provide bargaining rights to screeners; the Bush administration has threatened to veto any bill that carries a union-rights provision for the TSA.

The NTEU announcement was criticized by the American Federation of Government Employees, which has pushed for union rights at TSA since 2002. Peter Winch, an AFGE organizer, said AFGE has 300 members at the JFK airport and about 5,000 dues-paying screeners across the nation.

AFGE plans to create a nationwide TSA chapter after the legislative veto threat is resolved, Winch said. "NTEU is coming very late to the game," he said.

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