Staff Reports
NS&D Monitor
1/16/2015
For the first time in years, Y-12 and Pantex are in compliance with Department of Energy 350.1, which governs how much federal contractors can spend on employee benefits. Consolidated Nuclear Security, which that took over management of the two nuclear weapons plants on July 1 as part of a new combined contract, brought the plants into compliance by changing the healthcare benefits for employees and retirees.
And, while the plants are reportedly in compliance as of the first of the year, when the new benefits packages went into effect, there’s more work to be done. CNS still has to negotiate new packages with union groups when those collective bargaining agreements expire. Currently, the benefits of the hourly workers are protected by their existing agreements.
Plants Out of Compliance for Years
Y-12 and Pantex have reportedly been out of compliance for years—maybe since as long as 2008, according to information provided earlier by the National Nuclear Security Administration. Enforcement of the DOE order was put on hold during the lengthy contract competition for the two plants, which was extended by multiple protests on the initial award of the $22 billion contract to Bechtel-led CNS.
The Department of Energy rules state that a contractor can spend no more than 5 percent above the average amount spent by a comparative group. The benefit packages for Y-12/Pantex were compared to those of 27 other companies and institutions, which included Y-12’s neighbors—Oak Ridge National Laboratory and the Tennessee Valley Authority.
CNS President Jim Haynes recently said the benefit reductions enacted by the contractor would bring Y-12/Pantex to 4 or 5 percent above the average. “We ended up with this new benefit package getting to 1.04 or 1.05—which is right at the top of the range,” Haynes said. “So, we’re still right at 5 percent above the comparative group, which is well above the average for industry in general in the United States.”
More Adjustments Possible in Future Years
In the future, it will be important to continue making adjustments to stay in compliance, the CNS president said. “The comparative group is going to constantly change, so you have to constantly monitor it,” Haynes said. He also said it’s possible that more benefit changes will be needed. Contractor officials said the impacts were harder felt because CNS had to make up for lost time in reaching compliance quickly, instead of a more graduated approach.
Y-12 retirees were particularly upset by the changes, with some of the plant’s former workers staging protests, applying pressure to elected officials to reverse the changes and blasting the government and its contractor on Twitter, Facebook and other social media. “I know it’s difficult for all of us to swallow. It’s my benefits as well as all the employees’ benefits,” Haynes said in response to questions about the impact on employees and retirees. “It’s a tough pill for anyone to swallow because you get accustomed to a certain level of benefits. … But it’s part of the financial discipline that we have to meet, and employees are adjusting.”
Haynes added: “We will adjust to things, we will be compliant and create a more sustainable future for this place by doing so. And that’s the key, to make sure 20, 30 years from now, people standing here … will say Y-12 has a bright future for the next 20, 30 more years because we practiced financial discipline, we’ve got our benefits in compliance, we got a new set of missions, all the stuff that you want to see.”
