Tuesday, March 01, 2005

Good, Stable Contractor

The Coalition for LANL Excellence (yahoo groups) has been following the new LANL contract process. The coalition members are concerned employees and retirees who would like to assure a viable institution into the future. Honestly, this issue overshadows any recent short term events. We need to attract a good, stable contractor and retain a healthy workforce. Any contractor will bring in their own management team.

There are several changes to the proposed RFP listed in the four white papers posted by the SEB Feb. 18th 2005 on the DOE site. These changes came from employee/retiree concerns, and also potential contractor input. The employees most at risk during this change are mid-career (i.e. baby-boomers). A summary of the four papers follows:

1. Retiree health care (white paper d)
A. Retiree healthcare is assured; they will be in a risk pool with LANL employee population.

2. Contractor Issues (white paper a)
A. Contractor's Operating Fee doubled to 3% of 1.7 billion = 51 million first year.
B. Contract term will be 7 years to start (up to 20 years allowed).
C. Removes special clause retaining UCRP (old section H) if UC wins contract. (was a competition issue voiced by bidders) Therefore UC can't have a special clause and must create LANL spinoff retirement fund under any scenario. Does not address if this creates new LANL pension rules, i.e. service credit vs. pension amt. is immediately lower because spinoff value is less.
D. No longer guarantees ALL current employees a job- contractor may choose to hire some fraction. Retirees and those who freeze UC service are definitely NOT being guaranteed employment. (this was also bidder request)
E. Gives 180 day evaluation period- 60 days contractor, 60 days DOE, 60 days current employees.
F. Savings created by removing inefficiencies at LANL will be spent on R&D. (no portion to contractor)
G. Gross receipts tax will not be addressed in the RFP.

3. Pension Issues (white paper c)
A. All current retirees remain UCRP.
B. Transfer employees to receive `substantially equivalent' pension, but new employees hired after new contract can have different pension rules. (similar to current vacation difference )
C. Transfer employees (those offered jobs) transfer at base salaries. (However see section 2 item D.)
D. UC or any other contractor will have separate LANL pension plan.
E. Contractor will submit plan to bring LANL into compliance with 105% Ben-Val. Transfer employees are not to be impacted substantially.
F. NNSA requests a time extension. 6 months minimum.
G. Employees who become retirees near contract change are not guaranteed jobs.
H. Employees who become inactive (quit) near contract change are not guaranteed jobs and would become new employees if hired. (Employees who quit would lose leave balance and would have new pension rules, however retain UC service credit - see Section 3 item B.)

4. Contractor Compensation (white paper b)
A. 3% fee first year; after first year - 30% fixed, fee 70 % at will fee of 3%~ 60 M.
B. Unlike the current UC contract, there is no future cap on contractor liability.
C. There will be no share in savings for contractor. (from efficiencies eliminated. See Section 2 item F)


I question your Item 3.H.

That would appear to be a double count of UC service credit.
Item 3.H. is stating that an employee would "freeze" their UCRP credit, not be guaranteed re-hiring by the new contractor, and would begin all over again as a new employee with no credit, under the new contractor's pension plan rules.

Please keep in mind that the contractor is under no obligation to these new employees as to "substantially equivalent" pension benefit as compared to UCRP and additionally, is actively committed to lowering their overall benefits to the 105% cap, all while carrying those employees who choose to bring over their UCRP credit and not "freeze" and stay UC.
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