WASHINGTON, DC – The U.S. Department of Energy (DOE) today announced in the Federal Register that it is seeking public comment on how to address the increasing costs and liabilities of contractor employee pension and medical benefits.  Under the Department of Energy's unique Management and Operating and other site management contracts, DOE reimburses its contractors for allowable costs incurred in providing contractor employee pension and medical benefits to current employees and retirees.  In FY2006, these costs reached approximately $1.1 billion – a more than 226 percent increase since FY2000 – and are expected to grow in future years.

“The Department of Energy is committed to finding ways to help ensure the long term viability of our contractor employee pension and medical benefit plans while managing our long term financial commitments,” Ingrid Kolb, Director of DOE’s Office of Management said.  “While no decision on a path forward has been made at this time, we are continuing our efforts to seek input on this important policy matter.”

To address the rising costs and liabilities, on April 27, 2006, DOE issued a Contractor Employee Pension and Medical Benefits policy which continued reimbursement of costs for current and retired contractor employee pension and medical plans under contract provisions and required market-based pension plans and medical plans for new employees.  The policy required the Secretary of Energy to approve the costs of contractor proposed benefit augmentations and provided for the continuation of pension and medical benefits commitments made by contractors through collective bargaining agreements.  On June 19, 2006, the Secretary of Energy suspended implementation of the revised policy to continue consultations with stakeholders.  At this time, DOE has made no decision on a path forward.

DOE obligates approximately 80 percent of its estimated $24 billion budget to 46 major cost-reimbursement contracts for management of DOE sites and facilities in 20 states.  Pension and post retirement benefit programs sponsored by DOE contractors include 45 contractor defined benefit pension plans, 37 contractor defined contribution pension plans, 23 contractor life insurance plans, and approximately 260 contractor medical plans.   These benefits are provided to approximately 100,000 active employees and 100,000 retirees, dependents, and beneficiaries.

To view the Federal Register notice and submit comments through May 11, 2007, access http://management.energy.gov/request_for_comments.htm

Media contact(s):
Megan Barnett, (202) 586-4940