oversight

Department of Energy Workforce Reduction: Community Assistance Can Be Better Targeted

Published by the Government Accountability Office on 1999-05-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Requesters




May 1999
                  Department of Energy
                  Workforce Reduction
                  Community Assistance
                  Can Be Better Targeted




GAO/RCED-99-135
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Resources, Community, and
      Economic Development Division

      B-282320

      May 7, 1999

      The Honorable John Warner
      Chairman
      The Honorable Carl Levin
      Ranking Minority Member
      Committee on Armed Services
      United States Senate

      The Honorable Floyd D. Spence
      Chairman
      The Honorable Ike Skelton
      Ranking Minority Member
      Committee on Armed Services
      House of Representatives

      Since 1993, the Department of Energy (DOE) has reduced its contractor
      workforce by 46,000 employees from a high of about 149,000. Brought on
      by the end of the Cold War,1 this downsizing has been carried out using the
      benefits authorized by the National Defense Authorization Act for Fiscal
      Year 1993. The act requires DOE to develop workforce restructuring plans
      for minimizing the impact of downsizing at its affected defense nuclear
      facilities. These plans provide assistance—retraining, early retirement, and
      other options—for workers affected by the downsizing. DOE also provides
      assistance to surrounding communities so that they can create and attract
      new businesses to compensate for the jobs lost in DOE’s downsizing.

      The Strom Thurmond National Defense Authorization Act for Fiscal Year
      1999 required that we, among other things, describe the funds DOE
      committed to spend (obligated) and spent (expended) for workforce
      restructuring, compare the separation benefits paid to DOE contractor
      employees with other organizations’ benefits, and describe the criteria
      used in providing community assistance. The act also required that we
      describe the length of service for contractor workers separated during
      fiscal years 1997 and 1998 and analyze the number of jobs created.

      To address these matters, we focused on three questions: (1) How much
      funding has DOE obligated and expended to support its worker and
      community assistance program for fiscal years 1994 through 1998?
      (2) Who received benefits during fiscal years 1997 and 1998 and how did


      1
       DOE recognizes Sept. 27, 1991, the date of the first announcement of a unilateral reduction in the
      nation’s nuclear stockpile, as the Cold War’s end.



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                   the separation benefits compare with the benefit packages of other federal
                   and nonfederal organizations? (3) What effect did DOE’s criteria have on
                   determining which communities received assistance?

                   Appendix I describes the length of service for DOE’s defense facility
                   contractor workers separated during fiscal years 1997 and 1998. Appendix
                   II describes the length of service for the remaining DOE defense facility
                   contractor workers. As agreed with your offices, in order to assess DOE’s
                   job creation efforts, we analyzed the methodology of a 1998 study on the
                   number of jobs created or retained through DOE’s program. This analysis is
                   in appendix III.


                   DOE’s assistance to separated contractor workers is reasonably consistent
Results in Brief   with the types of benefits offered by other government and private
                   employers. However, its community development assistance funds did not
                   necessarily go to those communities most affected by downsizing or those
                   with the highest unemployment. For fiscal years 1994 through 1998, DOE
                   obligated and spent about $1.033 billion on benefits for the contractor
                   workers and communities affected by its downsizing. About $853 million
                   was spent on worker assistance and the rest on community assistance.
                   About $460 million of the $1.033 billion was provided by DOE’s Office of
                   Worker and Community Transition and the remainder by other DOE
                   programs, such as defense and environment. At the end of fiscal year 1998,
                   DOE had a carryover balance of $72 million, including $10 million in
                   unobligated funds and $62 million in funds that were obligated but not yet
                   spent.

                   Most of the contractor workers separated during fiscal years 1997 and
                   1998 received benefits under DOE’s workforce restructuring program.
                   While DOE generally offered its separated contractor employees a large
                   range of benefits, the value of the benefits varied widely, primarily
                   because of the differences in the benefits packages among sites and in the
                   employees’ length of service and base pay. These benefit packages are
                   reasonably consistent with the types of benefits offered by public and
                   private employers. However, the benefit formulas in some of DOE’s
                   workforce restructuring plans, such as those determining voluntary
                   separation benefits and extended medical coverage, potentially allow
                   more generous benefits than those offered for federal civilian employees.

                   DOE’s community assistance criteria, which focus on the merits of
                   individual projects and not on a community’s relative economic need, do



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             not necessarily result in the most assistance going to the communities
             most affected by its downsizing or with the highest unemployment. For
             example, for fiscal years 1995 through 1998, the communities surrounding
             DOE’s Richland, Washington, facility had more than twice the
             unemployment rate and nearly twice the DOE job loss of those surrounding
             the Rocky Flats, Colorado, facility; but Richland received $18 million, or 25
             percent less than the $24 million that Rocky Flats received. Had DOE used
             the unemployment and job lost criteria2 used by the Department of
             Commerce’s Economic Development Administration to evaluate the
             request for community assistance, Rocky Flats would have been ineligible
             for funding, given the strength of its employment. In addition, five of the
             eight DOE sites that received community assistance would have been
             ineligible under these criteria at the time of the funding decisions.
             Furthermore, because most DOE assistance went to communities with
             relatively strong economies, the extent to which DOE’s assistance aided in
             creating or retaining jobs is not clear.

             This report makes a recommendation to improve the criteria that DOE uses
             in allocating assistance funds among communities.


             To carry out its mission, DOE relies on contractors for the management,
Background   operation, maintenance, and support of its facilities. Since the end of the
             Cold War, DOE’s employees’ skill requirements have shifted because the
             mission at its defense nuclear facilities has expanded from focusing
             primarily on weapons production to also focusing on cleanup and
             environmental restoration. In addition, DOE facilities have had to reduce
             their workforce in response to overall cuts in the federal budget. At the
             end of fiscal year 1998, total employment by contractors at both DOE
             defense and nondefense facilities was estimated at about 103,000, down
             from a high of nearly 149,000 since the beginning of fiscal year 1993. DOE
             plans to reduce its contractor workforce by another 4,000 employees by
             the end of fiscal year 2000, leaving it with 99,000 contractor employees.

             Section 3161 of the National Defense Authorization Act for Fiscal Year
             1993 requires DOE to develop a plan for restructuring the workforce for a
             defense nuclear facility when there is a determination that a change in the
             workforce is necessary. These plans are to be developed in consultation
             with the appropriate national and local stakeholders, including labor,



             2
              The Economic Development Administration, which helps communities to deal with the negative
             effects of job loss, has threshold criteria that are based on the economic needs of the community.



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                         government, education, and community groups. The act stipulates, among
                         other things, that

                     •   changes in the workforce should be accomplished to minimize social and
                         economic impacts and, when possible, should be accomplished through
                         the use of retraining, early retirement, attrition, and other options to
                         minimize layoffs;
                     •   employees should, to the extent practicable, be retrained for work in
                         environmental restoration and waste management activities, and if they
                         are terminated, should be given preference in rehiring; and
                     •   DOE should provide relocation assistance to transferred employees and
                         should assist terminated employees in obtaining appropriate retraining,
                         education, and reemployment.

                         While the act refers only to defense nuclear facilities, the Secretary of
                         Energy determined that, in the interest of fairness, the workforce
                         restructuring planning process would be applied at both defense nuclear
                         facilities and nondefense facilities. DOE’s Office of Worker and Community
                         Transition is responsible for coordinating restructuring efforts, reviewing
                         and approving workforce restructuring plans, and reporting on the status
                         of the plans.


                         For fiscal years 1994 through 1998, DOE obligated and spent about $1.033
DOE Has Spent Over       billion to provide benefits to contractor workers and communities affected
$1 Billion on Its        by its downsizing efforts. At the end of fiscal year 1998, DOE had not used
Downsizing Efforts       all workforce restructuring funds, resulting in a carryover balance of
                         $72 million. These funds included $10 million that was unobligated and
                         $62 million that was obligated but not yet spent (called uncosted
                         balances). The Office of Worker and Community Transition and other DOE
                         programs each provided about half the total funding. Combined, these
                         programs spent about $853 million on worker assistance, and the
                         remaining $179 million went to community assistance.

                         Of the $1.033 billion spent on worker and community assistance, about
                         $460 million was provided by the Office of Worker and Community
                         Transition.3 Roughly two-thirds ($311 million) of the $460 million funded
                         assistance to separated DOE contractor employees. More than $227 million,
                         or 73 percent, of the $311 million was spent on one-time separation
                         payments and early retirement incentives.

                         3
                          The $460 million includes expenditures the Office of Worker and Community Transition classified as
                         administrative.



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                        The remaining third ($148 million) assisted local community transition
                        activities, such as new business development. Over the years, the amount
                        of funds available for community assistance has grown. In fiscal year 1994,
                        this assistance accounted for only 6 percent of the funds spent by the
                        Office of Worker and Community Transition. However, by fiscal year 1998,
                        this assistance had grown to 68 percent of funds the Office spent.
                        Meanwhile, overall appropriations for this Office have been declining,
                        from a high of $200 million in fiscal year 1994 to $61 million in fiscal year
                        1998.4

                        At the same time, most of the uncosted balances are attributed to
                        community assistance. Of the $62 million in uncosted balances at the end
                        of fiscal year 1998, almost $51 million was for community assistance. Over
                        half of these balances are for communities surrounding two
                        facilities—$14 million at Oak Ridge and $13 million at Savannah River.

                        The remaining $573 million came from other DOE programs, such as
                        defense and environmental management. According to the Office of
                        Worker and Community Transition, about $542 million of this amount was
                        spent on worker benefits, and the remaining $31 million was spent on
                        community assistance.


                        DOE provided separation benefits to about 88 percent of the 5,469 defense
Benefits Went to Most   facility contractor employees separated during fiscal years 1997 and
Separated Workers       1998.5 While DOE generally offered these employees a wide range of
and Contained Similar   benefits, the value of the benefits varied because of differences in benefit
                        packages among the sites and in the employees’ length of service and base
Types of Benefits       pay. DOE offered its separated contractor workers severance packages that
Provided in Public      were relatively consistent with the types of public and private sector
                        benefits we analyzed. Although, we did not compare the value of the
and Private Plans       benefits offered to DOE contractor employees with all of the benefits
                        offered by the other public and private employers we reviewed, the benefit
                        forumulas in some DOE workforce restructuring plans potentially allow
                        more generous benefits than those offered for federal civilian employees.




                        4
                         The Office of Worker and Community Transition received an appropriation of $28.2 million in fiscal
                        year 1999 and has requested a $30 million appropriation for fiscal year 2000.
                        5
                         Apps. I and II provide information on the lengths of service for defense contractor employees hired
                        before and after the end of the Cold War who (1) received separation benefits during fiscal years 1997
                        and 1998 and (2) remained as DOE contractor employees.



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Benefits Were Provided to   While the 1993 act focused benefits on defense facilities, DOE provided
Most Separated Employees    separation benefits to most of its separated contractor employees. Of the
                            5,469 contractor workers separated during fiscal years 1997 and 1998,
                            4,788 received separation benefits. According to DOE, the remaining 681
                            workers had relatively low seniority and were not eligible for benefits. DOE
                            decided that in the interest of fairness, similar benefits should also apply
                            to contractor workers separated at nondefense facilities. According to our
                            analysis of 10 defense facility workforce restructuring plans for fiscal
                            years 1997 and 1998, almost all plans offered the same types of benefits.
                            While DOE guidance has been updated periodically, the criteria for
                            separation benefits were derived primarily from the fiscal year 1993
                            legislation.

                            DOE’s criteria require that workforce restructuring plans for each facility
                            minimize impacts for all workers and recognize a “special responsibility”
                            to Cold War workers. One of these criteria is to minimize layoffs through
                            early retirement incentives, voluntary separations, and retraining.
                            However, if layoffs are to occur, the restructuring plans are to provide for
                            adequate notification and funding for education, relocation, and
                            outplacement assistance. DOE criteria were not prescriptive and gave field
                            offices substantial autonomy to determine benefit levels. These plans had
                            to be approved by the Secretary of Energy.

                            For fiscal years 1997 and 1998, we found that the 10 plans we reviewed
                            offered the same types of benefits. Separation benefits were provided
                            under three types of programs: enhanced retirement, voluntary separation,
                            and involuntary separation. Enhanced retirement provided for full
                            retirement benefits with fewer years of eligibility or service. One plan had
                            provisions that enhanced workers’ eligibility by adding 3 years to both
                            their age and years of service. Nine plans had some type of separation
                            payment based on length of service and base pay for those employees
                            voluntarily or involuntarily separated. All plans also included extended
                            medical benefits,6 which require the contractor to pay its full share of a
                            separated employee’s medical insurance payments for the first year after
                            separation and half the contribution during the second year. In all plans,
                            educational assistance was available, usually for up to 4 years after
                            separation. All of the plans included outplacement assistance, some of
                            which consisted of resume-writing workshops, job bulletin boards, and
                            employment search strategies—many provided by an outside contractor. A
                            hiring preference for involuntarily separated workers at other DOE

                            6
                            Of the 10 plans, 7 provided extended medical coverage to both voluntarily and involuntarily separated
                            workers, and 3 plans offered coverage to voluntarily separated workers.



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                        contractors’ work sites was provided for in 8 of the 10 restructuring plans.
                        The other two plans did not offer rehiring preference because they did not
                        call for involuntarily separating any contractor workers. Eight plans
                        included relocation assistance.


The Value of Benefits   While DOE generally offered its separated contractor employees the same
Varied Widely           types of benefits, the value of these benefits varied because of the
                        differences in the packages among sites and employees’ length of service
                        and base pay (which reflects employee job and skill level). For example, in
                        fiscal year 1997, the restructuring plan for the Portsmouth Gaseous
                        Diffusion Plant in Ohio (which covered facilities in both Portsmouth and
                        Paducah, Kentucky) based voluntary separation pay on years of service,
                        with a limit of $25,000 per worker. Lawrence Livermore National
                        Laboratory in California based its voluntary separation pay on years of
                        service, with employees receiving 2 weeks’ pay for each year of service,
                        subject to a limit of 52 weeks. With the 52-week limit on separation
                        payments, Lawrence Livermore’s average voluntary separation payment of
                        $43,939 exceeded Portsmouth’s cap of $25,000.

                        Table 1 identifies the lowest and highest average benefit amount offered
                        separated contractor workers at defense nuclear sites for fiscal year 1998.
                        For example, the lowest average voluntary separation benefit was $5,523
                        (at the Fernald facility in Ohio) and the highest was $64,907 (at Sandia
                        National Laboratory in New Mexico). The table also identifies the number
                        of separated workers receiving benefits among DOE’s defense facilities and
                        the average cost of these benefits. For example, 748 employees at eight
                        sites received voluntary separation payments that averaged $23,659 per
                        worker.




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Table 1: Range of Average Benefit Costs at Defense Nuclear Facilities, Fiscal Year 1998
                                                                                                                              Average cost of
                              Lowest average cost         Highest average cost              Number of workers            benefits provided per
Type of benefit               per separated worker        per separated worker               receiving benefits                         worker
Enhanced retirementa                           $31,999                     $49,507                               14                       $33,250
Voluntary separation                            $5,523                     $64,907                              748                       $23,853
Involuntary separation                          $2,097                     $67,252                              699                       $10,685
Extended medical coverage                        $979                       $6,657                           1,501                            $3,154
Relocation assistance                           $1,583                      $3,577                               19                           $2,052
Educational assistance                           $793                       $2,781                           1,644                            $1,662
Outplacement assistance                          $106                       $2,754                           3,213                             $603
                                           a
                                            Enhanced retirement benefits generally provided full annuity with fewer years of eligibility or
                                           service. The cost figures for the enhanced retirement benefit represent incentive payments
                                           provided to workers who retired early.

                                           Source: GAO’s analysis of DOE’s data.




DOE Generally Offered                      DOE generally offered its separated contractor workers benefits that were
Types of Benefits That                     similar to those offered in public and private sector severance
Were Similar to Those of                   packages—such as education assistance and preference in rehiring.
                                           However, some of DOE’s voluntary separation benefits were greater than
Other Plans                                those offered federal employees. For example, the formula for extended
                                           medical coverage and the provisions for relocation assistance offered by
                                           DOE were more generous than the benefits offered to separated federal
                                           civilian employees.

                                           Table 2 shows the types of benefits generally offered and compares these
                                           generic benefits with the benefits offered in DOE’s workforce restructuring
                                           plans, the plans offered by DOE contractors in the absence of DOE’s plans,
                                           and the plans offered by the military, the federal government to its civilian
                                           employees, DOD contractors, and 25 other public and private sector
                                           organizations, including DOE-provided information on a survey of private
                                           company benefits.




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Table 2: DOE Benefits Compared With Other Public and Private Sector Severance Packages Offered From 1993 Through
1998
                  Workforce                                                                             Public and
                  restructuring                                                                         private
Type of benefit   plans            DOE contractors Federal military Federal civilian DOD contractors organizations
Early and            One plan adds 3      Two contractors      Officers may        May be eligible to   Two companies      Seventeen
enhanced             years to age         conducted early      retire early with   retire early at      offered early      offered early
retirement benefit   and/or eligibility   retirements prior    15-20 years         specified            retirement         retirement; 10
                     to allow for early   to workforce         service with        age/service          programs; other    with additional
                     retirement, plus     restructuring        reduction in        combinations         studies show       incentives; 9 with
                     separation           plans                annuity             with a reduction     contractors        reduced annuities
                     payment                                                       in annuity, plus     offered early
                                                                                   separation           retirements
                                                                                   payment
Voluntary            Lump sum             One contractor       Based on years      Lump sum             DOE provided       Fourteen offered
separation benefit   payment, 1-2         conducted            of service (6-20    payment based        two examples       payments, often
                     weeks per year of    voluntary            years) paid over    on years of          where benefits     more than federal
                     service, some        separations prior    twice the years     service; $25,000     averaged           government
                     with limits of up    to workforce         the years of        maximum              $63,000 and
                     to 40.5 to 52        restructuring        service                                  $74,000
                     weeks of base        plans
                     pay
Involuntary          Lump sum             Lump sum             May receive         Payments at          Five offered       Private survey
separation benefit   payment,             payment, 1 week      separation pay if   same interval as     payments in        states that 82%
                     generally about 1    a year of service,   between 6-20        salary; based on     1997; seven in     of companies
                     week a year of       no maximum;          years service;      years of             1998               offer involuntary
                     service, some        some hourly          based on years      service—up to                           separation
                     with limits of up    employees get        of active service   one-year’s salary                       benefits
                     to 26 weeks of       no payments          and base pay
                     base pay
Extended medical     Employer pays its    DOE directed in      Both voluntary      Non-retirees may     Four               Four packages
coverage a           full contribution    1992 that            and involuntary     retain temporary     combinations       offered extension
                     for first year,      employers pay        receive extended    coverage under       offered extended   of medical and/or
                     about 50% the        the full             medical and         current plan at      medical benefits   insurance benefits
                     second, and no       contribution for     dental benefits     worker’s             in 1997
                     contribution for     first year about                         expense;b
                     subsequent           50% the second,                          retirees may be
                     years (not all       and no                                   eligible to retain
                     plans)               contribution for                         current medical
                                          the third year                           plan with same
                                                                                   contribution
Educational          All plans include    In fiscal years      Involuntarily       No additional       Two                 Four packages
assistancec          about $2,000 to      1991 and 1992,       separated           benefits identified combinations        offered tuition
                     $2,500 a year, for   educational          workers eligible                        offered             reimbursement;
                     about 1-4 years      assistance was       for Montgomery                          educational         23 packages
                                          provided to some     GI Bill funds                           assistance in       offered some job
                                          facilities                                                   1997                training
                                                                                                                                 (continued)




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                    Workforce                                                                                              Public and
                    restructuring                                                                                          private
Type of benefit     plans                DOE contractors Federal military            Federal civilian      DOD contractors organizations
Relocation          All plans            In fiscal years      Travel and             May be offered to None identified           Twenty-three
assistance          reimburse from       1991 and 1992,       transportation         DOD civilian                                packages offered
                    $2,000-$5,000,       relocation           allowances for         employees hired                             relocation
                    some up to 1         assistance was       involuntary            by private sector                           assistance to
                    year after           provided to some     separations            firms                                       workers
                    separation (under    facilities                                                                              separated
                    certain                                                                                                      involuntarily
                    conditions)
Outplacement        All plans            Outplacement         Employment         Employees are             Four                  Twenty-three
assistance          provided,            assistance           assistance offered eligible to receive       combinations          packages offered
                    included access      available for all                       career transition         provided              outplacement
                    to jobs bulletin     employees                               assistance                outplacement          assistance to
                    board and                                                                              assistance in         workers
                    assistance                                                                             1997                  separated
                    offices with staff                                                                                           involuntarily
                    and resources
Rehiring preference Involuntarily        Collective           Priority affiliation   Employees are         None identified       Some had
                    separated            bargaining           with the National      eligible for                                rehiring
                    workers meeting      agreements           Guard and              reemployment                                preferences
                    eligibility          require rehiring     Reserves for           priority
                    requirements get     preference for       involuntary
                    hiring preference    separated            separation
                    at all DOE           workers
                    contractor
                    facilities
Other benefits      Three plans          All employees        Continued use of       Ability to convert    GAO survey of         Twenty-three out
                    specifically offer   offered              military housing       to individual life    non-federal           of 25 employers
                    employee             counseling           and dependents         insurance and to      employers (which      offered employee
                    counseling           services             schools; excess        enroll in             included DOD          and job
                    services                                  leave and              employee              and some              counseling or
                                                              temporary duty         assistance            contractors)          other benefits
                                                              for involuntary        programs              found use of job
                                                              separations                                  and family
                                                                                                           counseling and
                                                                                                           other benefits

                                               a
                                                Under the Consolidated Omnibus Budget Reconciliation Act of 1985, separated employees may
                                               retain their health insurance at a rate equal to the full premium for group insurance plus an
                                               administrative surcharge.
                                               b
                                                Benefit limited to 18 months if separated by other than retirement. Worker must also pay full cost
                                               and an administrative fee.
                                               c
                                                Benefits under the Job Training Partnership Act, as amended, are available to separated
                                               workers.



                                               We did not compare the value of the benefits offered to DOE contractor
                                               employees with all of the other benefit packages offered by the public and




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private employers we considered. However, table 2 shows that formulas in
DOE’s workforce restructuring plans allow for potentially more generous
benefits than offered in some of the other benefit plans highlighted in the
table. For example, we noted that some of DOE’s workforce restructuring
benefits had formulas that could provide more benefits than the amount
separated federal civilian employees could expect to receive. Some of
DOE’s benefit formulas would allow for larger severance payments than do
federal civilian packages. Voluntarily separated federal civilian employees
received a one-time severance payment of 1 week of annual salary per year
for up to 10 years’ service and 2 weeks of salary per year for more than 10
years’ service; with an adjustment for age. This benefit was paid out in a
lump sum and was capped at $25,000. In contrast, while half of the DOE
defense workforce restructuring plans we reviewed for fiscal years 1997
and 1998 had caps based on weeks of pay, these caps could exceed
$25,000, depending on a contractor worker’s base pay and years of service.
As a result, seven workers who received voluntary separation payments at
one DOE defense facility averaged $64,907 each in fiscal year 1998.
Furthermore, 65 percent of the 748 employees voluntarily separated
during fiscal year 1998 received an average separation payment of over
$25,000.

Among the DOE plans we reviewed, one plan offered enhanced retirement
benefits that added years to a contractor worker’s age and eligibility to
allow for early retirement without penalty and with a cash payment. While
federal workers could retire early and receive a separation payment, they
were not given added years of age or eligibility and their annuity amount
was reduced.

In addition, the formula for extended medical coverage and the provisions
for relocation assistance offered by DOE were more generous than the
benefits offered to separated federal civilian employees. For extended
medical coverage for eligible contractor workers, DOE pays the full
employer cost for the first year of separation and about half of that cost in
the second year.7 Separated federal workers who are eligible and wish to
retain extended medical coverage must pay the full cost, plus an
administrative fee, for the coverage upon separation.




7
Of the 10 plans, 7 provided extended medical coverage to both voluntarily and involuntarily separated
workers, and 3 plans offered coverage to voluntarily separated workers.



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                        The use of DOE’s criteria does not result in the most assistance going to the
DOE’s Criteria Do Not   communities most affected by DOE’s downsizing or those with the highest
Ensure That Most        rate of unemployment. Several communities with low unemployment rates
Assistance Goes to      and comparatively fewer DOE job losses received more funds than did
                        communities that had higher rates of unemployment and lost more DOE
the Communites Most     jobs. Unlike DOE’s criteria, the criteria used by the Department of
Affected by             Commerce’s Economic Development Administration (EDA) include specific
                        provisions for determining the distribution of economic assistance on the
Downsizing or Those     basis of local unemployment and job loss. In applying EDA’s criteria to the
With the Highest        eight communities that received DOE assistance,8 we found that only four
Unemployment            would have received funds at the time of the decision. Furthermore,
                        because most DOE assistance went to communities with relatively strong
                        economies, the extent to which DOE’s assistance aided in the creation or
                        retention of jobs is not clear.


Neediest Communities    DOE’s criteria does not result in the most assistance going to the
Have Not Received the   communities most affected by the Department’s downsizing. DOE’s
Most Benefits           community assistance guidance has evolved since the program’s inception
                        in 1993. DOE’s February 1997 Policy and Planning Guidance for Community
                        Transition Activities refined the Department’s criteria for evaluating all
                        project and program funding requests in community transition plans.9 DOE
                        requires communities requesting funds to submit plans describing the
                        impact of the Department’s downsizing. These plans “may be based upon
                        community needs and may incorporate an analysis of the socio-economic
                        strengths, weaknesses, opportunities, and threats.” In developing their
                        plans, communities are asked to identify the primary and secondary
                        economic impacts likely to result from DOE’s downsizing. Communities are
                        instructed to use local information sources to establish a baseline of
                        primary impacts and project factors, such as net job loss, changes in
                        unemployment, loss of wages and disposable income, and business
                        closings. In addition, communities should identify secondary impacts,
                        such as decreases in tax revenues and property values.

                        Although DOE requires communities to develop plans that include
                        economic impact, DOE focuses its review on the merits of a plan’s

                        8
                         In addition to these eight communities, the communities surrounding the Fernald and Idaho sites
                        received assistance. However, they were not included in this analysis. The communities surrounding
                        the Fernald site were not included because Secretarial decisions justifying assistance are only required
                        for funding over $1 million. The communities surrounding the Idaho site were not included because
                        they are not within a standard metropolitan statistical area.
                        9
                        This revision responded in part to findings contained in our report entitled Energy Downsizing:
                        Criteria for Community Assistance Needed (GAO/RCED-96-36, Dec. 27, 1995).



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individual projects, not on a community’s relative economic need. DOE
uses a number of written criteria to evaluate individual projects. These
include the project’s ability to create at least one job for each $10,000 to
$25,000 received and to provide jobs for separated DOE workers, induce
investment or growth in the production of goods and services, and reduce
the community’s dependency on DOE. In addition to DOE’s written guidance,
the Director of the Office of Worker and Community Transition told us
that DOE formally uses four criteria prior to submitting a recommendation
to the Secretary: (1) economic distress measured by unemployment and
the loss of income; (2) job loss relative to the size of the community
affected as a measure of economic dependence on DOE; (3) the diversity of
employment within a community and the impact of job loss on the
economic base; and (4) the overall size of the workforce reduction.
However, while the Director said that these are formal criteria, they are
not published in the Department’s guidance nor are the communities
evaluated against these four criteria in the memorandums sent to the
Secretary for funding approval.

After completing its review, DOE submits a community’s plan to EDA for its
independent review. Under the National Defense Authorization Act of
1998, EDA is required to review and approve DOE’s community plans.
However, rather than using its own criteria, EDA evaluates the community
plans using DOE’s criteria, set out in DOE’s February 1997 guidance.

Table 3 shows the relative disparity between DOE’s assistance to the
affected communities and communities’ unemployment rates or job losses.
For example, the communities surrounding Rocky Flats had an average
unemployment rate of 3.3 percent for fiscal years 1995 through 1998, lost
2,922 contractor jobs, and received about $25 million in DOE assistance. In
contrast, the communities surrounding Richland had more than twice the
unemployment rate and nearly twice the job loss of Rocky Flats during
this same time but received only about $18.5 million in community
assistance.




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Table 3: Comparison of Allocated
Community Assistance Funds, Fiscal                                                                                          Community
Years 1995 Through 1998                                                                                                       assistance
                                                           Unemployment              Number of                             allocated per
                                     Location                      ratea            separations            Allocated             job lost
                                     Fernald                            3.95                  434          $ 411,921                   $ 949
                                                                             b
                                     Idaho                                                 1,392          20,325,000               14,601
                                                                                                                      c                    c
                                     Kansas City                        4.00                  373
                                     Lawrence
                                                                                                                      c                    c
                                     Livermore                          5.89                  525
                                     Los Alamos                         4.55               1,229          10,665,160                   8,678
                                     Mound                              4.13                  398          4,100,000               10,302
                                     Nevada                             4.94               2,564          12,320,000                   4,805
                                     Oak Ridge                          4.17               2,832          16,800,000                   5,932
                                                                                                                      c                    c
                                     Pantex                             3.79                  342
                                     Pinellas                           3.86                  812          7,154,700                   8,811
                                                                             b
                                     Portsmouth                                               246          5,000,000               20,325
                                     Richland                           7.92               5,964          18,475,382                   3,098
                                     Rocky Flats                        3.33               2,922          24,835,624                   8,500
                                     Savannah River                     6.23               4,734          40,525,625                   8,561
                                     Total                                                24,521       $160,613,412               $ 6,486
                                     Note: To compare job creation in nearby communities with the job creation and retention
                                     associated with the DOE-approved community organizations, we used statistical areas that
                                     included counties similar to the affected counties identified by these organizations.
                                     a
                                     The average unemployment rate nationwide during this period was 5.19 percent.
                                     b
                                      DOE facilitates in these parts of Idaho and Ohio do not have standard metropolitan statistical
                                     areas.
                                     c
                                     Did not apply for funds.

                                     Source: GAO’s analysis of DOE’s and the Department of Labor’s information.




Some Community                       Applying EDA’s job loss and unemployment criteria to DOE’s community
Assistance Would Have                assistance funding decisions for fiscal years 1995 through 1998, we found
Been Ineligible Under                that some communities that received assistance under DOE’s criteria would
                                     not be eligible under EDA’s criteria. EDA—which helps communities
Other Criteria                       recover from the effects of job losses—has threshold criteria for its
                                     economic assistance that are based on job loss and unemployment. Under
                                     EDA’s regulations in effect during this period, communities in a standard
                                     metropolitan statistical area suffering from sudden and severe economic
                                     distress were eligible for EDA’s assistance if, among other things, they met




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                          B-282320




                          one of the following tests: (1) the area’s unemployment rate was equal to
                          or less than the national average and 1 percent of the employed
                          population, or 8,000 jobs, were lost or (2) the area’s unemployment rate
                          was greater than the national average and .5 percent of the employed
                          population, or 4,000 jobs, were lost. While EDA’s internal guidance further
                          stated that employees subject to DOE downsizing were eligible for
                          assistance, this provision was not a legal requirement until
                          February 1999.10 Using EDA’s criteria to assess DOE’s funding decisions for
                          the eight communities that received assistance for the fiscal year 1995
                          through 1998 period and where comparable data were available, we found
                          that nine of the 21 decisions (some communities had more than one
                          funding decision), representing four of the eight communities, did not
                          meet these criteria. Appendix IV shows this analysis.

                          These nine decisions provided about $51 million to five communities
                          surrounding the Mound, Pinellas, Nevada11, Oak Ridge, and Rocky Flats
                          facilities. The remaining 12 decisions provided about $57 million to the
                          four other communities surrounding the Los Alamos, Nevada, Richland,
                          and Savannah River facilities. In the Secretarial decision memorandums
                          we reviewed, DOE justified awarding some of its funds on the basis of
                          economic conditions at the county level and impacts on the economic
                          diversity of the communities surrounding a facility, rather than on the
                          standard metropolitan statistical areas. However, these criteria are not in
                          DOE’s written guidance.



The Effect of DOE’s       Since 1993, jobs in the national economy have grown rapidly, bringing
Assistance Is Uncertain   unemployment rates to their lowest levels in decades. Because of the
Because of a Strong       strong national and local economies, DOE’s contribution to job growth was
                          uncertain in communities that received its assistance. For example, table 3
Economy                   shows that six of the eight communities (excluding communities
                          surrounding the Fernald and Idaho facilities) that received community
                          assistance had a local unemployment rate lower than the national average
                          of 5.19 percent for the 1995 through 1998 period. As discussed in appendix

                          10
                            In response to the Economic Development Administration Reform Act of 1998, EDA revised its
                          regulations. After Feb. 11, 1999, the criteria are no longer limited to an event-related job loss but
                          include per capita income, prevailing unemployment, and other factors. Specifically, an area meets the
                          criteria if it has (1) 80 percent or less of the national average per capita income, (2) an unemployment
                          rate of at least 1 percent greater than the national average, or (3) a special need. Special need criteria
                          include, among other things, economies that are injured by Department of Energy defense-related
                          funding reductions.
                          11
                           DOE made three community assistance funding decisions for its Nevada facility during the fiscal year
                          1995 through 1998 time period. Our analysis shows that two of these decisions would not have met
                          EDA’s criteria, while one would have met the criteria.



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III, defining DOE’s contribution to community job creation is difficult
because job creation measurements have not differentiated between jobs
that DOE created, those created by other assistance, or those created by the
economy as a whole.

While determining DOE’s contribution to overall job growth is difficult,
comparing the number of jobs created in the local communities with the
ones DOE reports it has created or retained provides a rough measure of
DOE’s impact. In doing this comparison, we found that DOE’s contribution
had a relatively small impact on the growth of jobs in three of the six
communities surrounding nuclear defense facilities for which we had
comparable data. For the six sites for which comparable data on local job
creation were available, DOE was responsible for about 1.8 percent of the
total jobs created. For example, although the overall economy in the
Denver area surrounding the Rocky Flats facility created 170,367 jobs,
DOE’s contribution to that growth was 1,191 jobs, or .7 percent. However,
in Richland, DOE’s contribution appears to be more significant. At this
location, DOE contributed to about 36.1 percent of the job growth. Table 4
compares the increase in the number of jobs created in local economies
with the number of jobs that were created or retained by DOE’s community
assistance program.




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                                     B-282320




Table 4: Comparison of Increase in
Employment in Local Economy to DOE                                    Increase in                                   Percentage of
Job Creation and Retention, Fiscal                             employment in local         Jobs DOE helped to DOE-created jobs
Years 1994 Through 1997              Location                          economya               create or retainb in local economy
                                     Los Alamos                                   2,360                        570                        24.2
                                     Nevada                                    151,075                       1,645                         1.1
                                     Oak Ridge                                  13,485                       2,901                        21.5
                                     Pinellas                                  113,529                       1,323                         1.2
                                     Richland                                     2,108                        762                        36.1
                                     Rocky Flats                               170,367                       1,191                          .7
                                     Total                                     452,924                       8,392                         1.9
                                     Note: To compare the increase in employment in nearby communities with the job creation and
                                     retention associated with the DOE-approved community organizations, we used Office of
                                     Management and Budget Bulletin 98-06 to identify statistical areas and counties for comparison
                                     with the affected counties identified by these organizations. For Idaho Falls, Mound, Fernald, and
                                     Savannah River, it was difficult to identify similar counties; therefore we did not provide a
                                     comparison. For Lawrence Livermore National Laboratory, Kansas City Plant, and Pantex Plant,
                                     there were no DOE community organizations.
                                     a
                                      Information on jobs created in the local economies was provided by the Bureau of Labor
                                     Statistics. We calculated local job creation for fiscal years 1994 through 1997 by subtracting the
                                     number of persons employed as of Sept. 30, 1993, from the number of persons employed as of
                                     Sept. 30, 1997.
                                     b
                                      The DOE data on job creation and retention was obtained from a report entitled Study on the
                                     Effects of the Department of Energy’s Work Force Restructuring and Community Transition Plans
                                     and Programs (Germantown, Md.: Booz, Allen & Hamilton, Inc., Sept. 30, 1998). Because the
                                     DOE data identify jobs created and retained, while the Bureau of Labor Statistics data identify
                                     only job creation, the data are not directly comparable.



                                     While DOE estimated that it helped to create or retain 8,392 jobs in the
                                     communities surrounding the sites listed in table 4, it is difficult to directly
                                     link DOE’s community assistance to job creation and retention. To illustrate
                                     this point, the Director of DOE’s Office of Worker and Community
                                     Transition mentioned the difficulty in showing a direct relationship to job
                                     creation at the Bridgestone/Firestone, Inc. plant near Savannah River.
                                     Bridgestone/Firestone, Inc. is investing $435 million in a new tire facility
                                     that will eventually employ 800 workers. The company received assistance
                                     from DOE as well as from other government sources; however, without a
                                     strong national economy, it might not have expanded its tire production.


                                     DOE’s criteria for assessing community assistance requests focus on the
Conclusions                          merits of individual projects and not on a community’s relative economic
                                     need. This focus has resulted in some communities with relatively lower
                                     job losses or unemployment rates receiving more financial assistance than




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                  B-282320




                  those with higher job losses or unemployment rates. The most effective
                  and efficient use of federal resources would be to provide relatively more
                  funding to those communities that have a greater need. Need-based
                  criteria exist for DOE to use in developing an allocation formula that targets
                  needs to these communities, such as that used by the Department of
                  Commerce’s Economic Development Administration. Furthermore, if DOE
                  believes that other factors, such as diversity of employment within a
                  community, more accurately reflect the economic impact of DOE
                  restructuring, then it needs to identify these factors in its criteria. In
                  addition, DOE should demonstrate that these other factors document the
                  best allocation of community assistance resources to those with the
                  greatest economic need.


                  In order to target financial assistance to those communities that need it
Recommendation    the most, we recommend that the Secretary of Energy revise the
                  Department’s criteria for administering community assistance so that aid
                  is more focused on economic need. One way of doing this would be to
                  develop community financial assistance criteria similar to those used by
                  the Economic Development Administration in its existing guidance. These
                  could include such factors as a community’s unemployment rate and the
                  impact of federal job loss on the local economy.


                  We sent a draft of this report to the Department of Energy for its review
Agency Comments   and comment. The Department stated that the draft report inaccurately
                  portrayed its worker and community transition program because it
                  contained numerous factual errors and inappropriate comparisons.

                  First, the Department questioned our recommendation because it believes
                  that the criteria it uses for providing community transition assistance are
                  consistent with the statutory direction provided by the Congress and the
                  regulations developed by the Department of Commerce. Furthermore, the
                  Department said that it does consider economic need in awarding
                  community assistance grants. We are not disputing the criteria’s
                  conformance with statute or regulation. However, we believe that these
                  criteria could be improved. While approval memorandums for individual
                  projects discuss some of the affected communities’ economic conditions,
                  DOE’s written criteria do not. For example, DOE’s March 18, 1998,
                  memorandum allocating $4.5 million for fiscal year 1998 for assistance to
                  communities surrounding the Department’s Portsmouth facility, found that
                  a four-county area surrounding the facility experienced unemployment



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              B-282320




              rates double the state’s average and that one in four people in this area
              lived in poverty. If DOE believes such county-level economic factors are
              important, then it needs to make these factors part of its written criteria
              for allocating community assistance. DOE should also demonstrate that
              these factors document the best allocation of community assistance
              resources to those with the greatest economic need. Therefore, we believe
              that DOE’s criteria could be improved by explicitly describing the economic
              factors it will consider in determining relative need when allocating funds
              among affected communities.

              Second, the Department said that the benefits it provides to separating
              contractor employees were consistent with the practices of other private
              and public organizations and are comparable in value. On the basis of
              additional information provided by DOE, we revised our report to show that
              the types of benefits offered were reasonably consistent with the practices
              of other private and public organizations. We did not compare the value of
              the benefits offered to DOE contractor employees with all the other benefit
              packages offered by the public and private employers we reviewed.
              However, some of the formulas in DOE’s workforce restructuring plans,
              such as those determining voluntary separation benefits and extended
              medical coverage, potentially allow for more generous benefits than
              offered in some of the other benefit plans we describe in the table.

              DOE’s   comments and our evaluation of them are provided in appendix V.


              To determine the amount of funds DOE has obligated and expended in
Scope and     support of its worker and community assistance program for fiscal years
Methodology   1994 through 1998, we reviewed budget records and talked to officials in
              DOE’s Office of Worker and Community Transition and the Office of the
              Chief Financial Officer.

              To determine who received benefits during fiscal year 1997 and 1998 and
              to compare the types of benefits with the benefit packages of other federal
              and private organizations, we reviewed program criteria and reports from
              the Office of Worker and Community Transition, federal laws, and Office
              of Personnel Management publications governing federal civilian and
              military benefits. In addition, we reviewed DOE’s workforce restructuring
              plans for nuclear defense facilities for fiscal years 1997 and 1998, GAO and
              DOE Inspector General reports, the National Defense Authorization Act of
              1993, and other relevant legislation. We also discussed with DOE officials
              the benefits provided under their restructuring efforts. However, we did



              Page 19                               GAO/RCED-99-135 DOE Workforce Reduction
B-282320




not attempt to compare the value of DOE’s benefits with the value of the
benefits provided by other federal and private organizations.

To examine the results of DOE’s criteria for determining which
communities should receive assistance, we interviewed officials in DOE
and the Department of Commerce’s Economic Development
Administration. We also reviewed DOE’s policy, operating guidelines, and
documentation of the approval process; the interagency agreement
between DOE and Commerce; and individual communities’ transition plans.
We obtained economic information from an online database containing
Department of Labor and Department of Commerce statistics. We used
these statistics in conjunction with the statistics provided in DOE’s Office
of Worker and Community Transition annual reports for fiscal years 1993
through 1998.

To describe the contractor workforce in terms of length of service for
Cold War workers and non-Cold War workers, we used data that the Office
of Worker and Community Transition requested from its contractors’
databases. This information identified those individuals who were
separated during fiscal years 1997 and 1998 and those currently employed
at defense facilities.

To analyze the extent to which the methodology used in a 1998 consultant
study can be relied upon to evaluate the number of jobs DOE created or
retained through its worker and community assistance program, we
reviewed the study and the consultant’s supporting workpapers. We also
interviewed the consultant’s investigators.

We did not independently verify the data provided by DOE, its contractors,
or DOE’s consultant. The consultant verified a sample of DOE’s job creation
data. Data on community assistance and job creation and retention are
contained in DOE’s annual reports to the Congress on its workforce
restructuring activities. We used Department of Labor data, which is
commonly used, to estimate job growth in surrounding communities. We
conducted this work in accordance with generally accepted government
accounting standards from January 1999 through April 1999.


As arranged with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report for 30 days after the
date of this letter. At that time, we will send copies of this report to
Senator Ted Stevens, Chairman, and Senator Daniel Inouye, Ranking



Page 20                                 GAO/RCED-99-135 DOE Workforce Reduction
B-282320




Minority Member, Subcommittee on Defense, Senate Committee on
Appropriations; and Representative Jerry Lewis, Chairman, and
Representative John Murtha, Ranking Minority Member, Subcommittee on
Defense, House Committee on Appropriations. We will also make copies
available to others on request.

If you or your staff have any questions about this report, please call me at
(202) 512-3841. Major contributors to this report were Jeffrey Heil, Tim
Minelli, Robert Antonio, Greg Hanna, Kendall Pelling, and Sandy Joseph.




Susan D. Kladiva
Associate Director, Energy,
  Resources, and Science Issues




Page 21                                GAO/RCED-99-135 DOE Workforce Reduction
Contents



Letter                                                                    1


Appendix I                                                               24
Length of Service of
Workers Separated at
DOE Defense
Facilities, Fiscal Years
1997 and 1998
Appendix II                                                              27
Length of Service of
Remaining Work
Force at DOE Defense
Facilities, Fiscal Year
1998
Appendix III                                                             28
Consultant’s Study
Estimated the
Number of Jobs DOE
Helped to Create and
Retain




                           Page 22   GAO/RCED-99-135 DOE Workforce Reduction
                         Contents




Appendix IV                                                                                        30
Application of
Economic
Development
Adminstration Criteria
to DOE Funding
Decisions, Fiscal
Years 1995 Through
1998
Appendix V                                                                                         31
                         GAO’s Comments                                                            39
Comments From the
Department of Energy
Tables                   Table 1: Range of Average Benefit Costs at Defense Nuclear                 8
                           Facilities, Fiscal Year 1998
                         Table 2: DOE Benefits Compared With Other Public and Private               9
                           Sector Severance Packages Offered From 1993 Through 1998
                         Table 3: Comparison of Allocated Community Assistance Funds,              14
                           Fiscal Years 1995 Through 1998
                         Table 4: Comparison of Increase in Employment in Local                    17
                           Economy to DOE Job Creation and Retention, Fiscal Years 1994
                           Through 1997
                         Table I.1: Separations at Defense Sites, Fiscal Years 1997 and            24
                           1998
                         Table II.1: Length of Service of Remaining Work Force at DOE              27
                           Defense Facilities, Fiscal Year 1998


Figures                  Figure I.1: Length of Service for Cold War and Non-Cold War               25
                           Workers, Fiscal Years 1997 and 1998
                         Figure I.2: Composition of Separations at Defense Sites, Fiscal           26
                           Years 1995 and 1998



                         Abbreviations

                         DOE        Department of Energy
                         EDA        Economic Development Administration


                         Page 23                               GAO/RCED-99-135 DOE Workforce Reduction
Appendix I

Length of Service of Workers Separated at
DOE Defense Facilities, Fiscal Years 1997
and 1998
                                           As table I.1 shows, the Department of Energy (DOE) separated 5,469
                                           defense nuclear workers during fiscal years 1997 and 1998, with Cold War
                                           workers—those workers hired on or before September 27,
                                           1991—accounting for 4,094 of the separations and non-Cold War
                                           workers—those hired after September 27, 1991—accounting for 1,375
                                           separations. For all separated workers, the overall average length of
                                           service was 8.6 years. Cold War workers averaged 14.6 years of service
                                           overall, ranging from an average of 8 to 26.5 years among the 13 sites.
                                           Non-Cold War workers averaged 2 years of service overall, ranging from
                                           an average of 1.1 to 4.9 years among the sites. The percentage of Cold War
                                           workers separated at individual sites ranged from 100 percent to
                                           33 percent.


Table I.1: Separations at Defense Sites, Fiscal Years 1997 and 1998
                                                                                                       Non-Cold War workers
                     All workers                      Cold War workers                                         Average     Percent of
                             Total          Number       Average years Percent of total           Number       years of          total
Site                   separations        separated          of service   separations           separated       service   separations
Idaho                              0                 0                0                  0               0           0              0
Kansas City                    373              363                25.8                 97              10          2.3             3
Lawrence                       253              219                17.3                 87              34          3.7            13
Los Alamos                         2                 2             16.0               100                0          0.0             0
Nevada                         545              282                11.2                 52             263          1.1            48
Oak Ridge                     1516             1307                20.2                 86             209          4.3            14
Ohio (Fernald)                     3                 1              8.0                 33               2          2.0            67
Ohio (Mound)                   174              162                17.7                 93              12          3.4             7
Pantex                         342              268                24.6                 78              74          3.3            22
Richland                       882              423                13.5                 48             459          3.4            52
Rocky Flats                    455              327                13.0                 72             128          3.0            28
Sandia                         375              352                26.5                 94              23          4.9             6
Savannah River                 549              388                 9.1                 71             161          4.5            29
Total/average                5,469            4,094                14.6                 75            1,375         2.0            25
                                           Source: DOE’s Office of Worker and Community Transition.



                                           DOE data show that contractor employees who were voluntarily separated
                                           had more years of service than those who were separated involuntarily in
                                           fiscal years 1997 and 1998. The Cold War workers who voluntarily
                                           separated had an average of 18 years of employment. The Cold War
                                           workers who were involuntarily separated had 10.5 years of employment.




                                           Page 24                                           GAO/RCED-99-135 DOE Workforce Reduction
                                         Appendix I
                                         Length of Service of Workers Separated at
                                         DOE Defense Facilities, Fiscal Years 1997
                                         and 1998




                                         Overall, the non-Cold War workers separated averaged 2 years of
                                         employment. Non-Cold War workers who voluntarily separated averaged
                                         3.4 years of employment, while those who were involuntarily separated
                                         averaged only 1.7 years of employment. Figure I.1 shows the lengths of
                                         service for these groups of workers.


Figure I.1: Length of Service for Cold
War and Non-Cold War Workers, Fiscal
Years 1997 and 1998




                                         Source: DOE’s Office of Worker and Community Transition.




                                         Figure I.2 shows that the number of involuntary separations has been
                                         increasing as a percentage of all separations. Between fiscal year 1995,
                                         when most of the restructuring actions took place, and fiscal year 1998,
                                         the percentage of involuntary separations increased from 27 percent to
                                         56 percent. DOE reported that because the number of older, eligible
                                         individuals in the workforce has decreased, there is a trend toward a
                                         greater use of involuntary separations.




                                         Page 25                                         GAO/RCED-99-135 DOE Workforce Reduction
                                         Appendix I
                                         Length of Service of Workers Separated at
                                         DOE Defense Facilities, Fiscal Years 1997
                                         and 1998




Figure I.2: Composition of Separations
at Defense Sites, Fiscal Years 1995
and 1998




                                         Note: Top figure shows 1995 separations and lower figure shows 1998 separations.

                                         Source: DOE’s Office of Worker and Community Transition.




                                         Page 26                                          GAO/RCED-99-135 DOE Workforce Reduction
Appendix II

Length of Service of Remaining Work Force
at DOE Defense Facilities, Fiscal Year 1998

                                          In table II.1, DOE data show that the remaining 76,010 defense nuclear
                                          workers reflect roughly the same percentage of Cold War and non-Cold
                                          War workers as the recently separated workforce. The overall average
                                          length of service is 14 years, 16.7 years for Cold War workers and 4.4 years
                                          for non-Cold War workers. Individual site averages ranged from 12.6 to
                                          20.2 years for Cold War workers and from 2.1 to 5 years for non-Cold War
                                          workers. At individual sites, the percentage of Cold War workers ranged
                                          from 33 percent to 91.3 percent.


Table II.1: Length of Service of Remaining Work Force at DOE Defense Facilities, Fiscal Year 1998
                    All remaining workers              Cold War workers                         Non-Cold War workers
                                  Average                       Average                                       Average
                                  years of                      years of    Percent of                        years of    Percent of
Site                 Number        service      Number           service total workers          Number         service total workers
Idaho                  5,743          13.0           4,679           15.0              81             1,064        4.0           19
Kansas City            3,256          18.7           2,972           20.2              91              284         2.8            9
Lawrence
Livermore              6,608          15.8           5,566           18.0              84             1,042        4.0           16
Los Alamos             7,009          13.4           4,916           17.3              70             2,093        4.2           30
Nevada                 2,515          12.4           1,795           16.5              71              720         2.1           29
Oak Ridge             12,367          17.1          10,695           19.0              86             1,672        4.6           14
Ohio (Fernald)         1,977           6.6            653            12.6              33             1,324        3.7           67
Ohio (Mound)             667          16.5            579            18.4              87               88         3.8           13
Pantex                 2,856          12.8           1,718           18.5              60             1,138        4.2           40
Richland               9,309          11.1           6,203           14.9              67             3,106        3.6           33
Rocky Flats            3,120          12.1           2,452           14.5              79              668         3.4           21
Sandia                 7,501          15.4           5,880           18.3              78             1,621        5.0           22
Savannah River        13,082          12.9          11,258           14.3              86             1,824        4.4           14
Total/average         76,010          14.0          59,366           16.7              78            16,644        4.4           22
                                          Source: DOE’s Office of Worker and Community Transition.




                                          Page 27                                           GAO/RCED-99-135 DOE Workforce Reduction
Appendix III

Consultant’s Study Estimated the Number of
Jobs DOE Helped to Create and Retain

                            Under the National Defense Authorization Act for Fiscal Year 1998,12 the
                            Secretary of Energy was required to have an independent auditing firm
                            study the effects of DOE’s workforce restructuring plans. Booz-Allen &
                            Hamilton, Inc., which was awarded the contract, issued its report on
                            September 30, 1998. While the study’s methodology reasonably estimates
                            the number of jobs that DOE “was helping” to create or retain, it is difficult
                            to know the extent to which DOE should receive full credit for these jobs
                            because the consultant was not asked to (1) measure the impact of other
                            assistance in creating or retaining jobs or (2) analyze the extent to which a
                            strong economy helped to produce these jobs.13 The consultant’s report,
                            Study of the Effects of the Department of Energy’s Work Force
                            Restructuring and Community Transition Plans and Programs, was based
                            upon the consultant’s visits to affected DOE sites, related communities, and
                            their new businesses. The consultant verified and/or estimated that about
                            22,000 jobs were created or retained in those communities.

                            The act required that the study include an analysis of the number of jobs
                            created by any employee retraining, education, and reemployment
                            assistance and any community impact assistance provided in each
                            workforce restructuring plan. However, the consultant used the category
                            job retention because DOE collected information for jobs retained and one
                            of the objectives of the act that originally authorized the worker transition
                            program was, to the extent practicable, to retain workers in other jobs at
                            the site to avoid layoffs. DOE defined created jobs as those that did not
                            previously exist and retained jobs as those that held the existing work
                            force in place and provided substitute employment for at-risk or displaced
                            workers within a defined geographic area. The consultant’s report
                            concluded that DOE had a positive impact on mitigating the social and
                            economic impacts of the DOE transition by helping to create or retain more
                            than 22,000 jobs.


Consultant’s Methodology    The consultant used a reasonable methodology to determine that jobs
Reasonably Estimates the    were created or retained in the communities that received DOE assistance.
Number of Jobs Created or   The consultant employed several approaches in its evaluation. It validated
                            DOE’s reported job creation and retention figures by surveying DOE field
Retained                    offices and community reuse organizations to collect data on business
                            development and job creation. It visited the Oak Ridge, Mound, and

                            12
                              Section 3153 of Public Law 105-85 included the requirement for the study.
                            13
                             DOE defines job creation as “the act of creating jobs that did not previously exist in a defined
                            marketplace” and defines job retention as “holding in place the existing work force and providing
                            substitute employment for at-risk or displaced workers within a defined geographic area.”



                            Page 28                                             GAO/RCED-99-135 DOE Workforce Reduction
                             Appendix III
                             Consultant’s Study Estimated the Number of
                             Jobs DOE Helped to Create and Retain




                             Richland facilities and about 60 businesses receiving DOE assistance. It also
                             conducted telephone interviews with all DOE sites participating in the
                             program. Furthermore, it reviewed DOE and the communities’
                             methodologies for determining created and retained jobs


Scope of the Consultant’s    While this methodology provides reasonable results for the jobs created or
Job Creation and Retention   retained, the consultant’s scope of work did not include an analysis of
Analysis Limited             (1) the impact of other assistance in creating or retaining jobs and (2) the
                             extent to which the strong economy helped to produce these jobs.

                             First, the methodology did not include the impact of other assistance. Both
                             the consultant and DOE acknowledged the difficulty in estimating job
                             creation and retention for specific programs. Therefore, the consultant
                             and DOE both used the qualifier that the Department’s program “was
                             helping” to create or retain these jobs. The Director of DOE’s Office of
                             Worker and Community Transition told us that it is difficult to directly link
                             program stimulus to job creation and retention. To illustrate this point,
                             Bridgestone/Firestone, Inc. is investing $435 million in a new tire facility
                             that will eventually employ 800 workers near Savannah River. South
                             Carolina, Aiken County, the Department of Commerce, and DOE are also
                             contributing funding for infrastructure development in support of this
                             facility. In this case, DOE, along with three other government entities, each
                             helped to create these jobs.

                             Second, another difficulty is separating DOE’s contribution to job creation
                             from the effects of a strong economy. Since 1993, jobs in the national
                             economy grew rapidly, bringing unemployment rates to their lowest levels
                             in decades. While Bridgestone/Firestone, Inc. received government
                             assistance, the company may not have been looking to expand its tire
                             production capacity without a strong national economy in which to sell its
                             tires. Furthermore, the local economy can be a significant factor in
                             creating jobs. As discussed earlier in the report, table 4 shows the
                             relatively small impact DOE had on job creation in some communities.




                             Page 29                                      GAO/RCED-99-135 DOE Workforce Reduction
Appendix IV

Application of Economic Development
Adminstration Criteria to DOE Funding
Decisions, Fiscal Years 1995 Through 1998

                                                                                                         Average
                                                                                                       number of
                                                                                                           people
                                                             National        Number of DOE       employed for 2
                                       Regional       unemployment           separations for          years up to
                            unemployment rate         rate for 2 years         3-year period       decision date
                 Date of     for 2 years leading        leading up to           surrounding      in metropolitan      Met overall
Decision place   decision   up to decision date         decision date         decision datea      statistical area EDA eligibility?
Mound            10/21/94                     5.37                 6.72                    824            443,005                     No
Richland         11/1/94                      7.36                 6.66                  5,082             84,800                     Yes
Richland         4/16/96                      7.47                 5.72                  5,557             86,844                     Yes
Richland         1/20/98                      8.35                 5.17                    882             85,706                     Yes
Pinellas         12/20/94                     5.93                 6.58                    766            997,404                     No
Pinellas         4/15/96                      4.64                 5.72                    812          1,039,430                     No
Pinellas         7/11/97                      4.15                 5.50                    621          1,063,758                     No
Nevada           2/22/95                      6.86                 6.43                  2,919            518,514                     Yes
Nevada           3/25/96                      5.82                 5.75                  2,451            555,462                     No
Nevada           1/20/98                      4.80                 5.17                    545            617,700                     No
Los Alamos       11/17/95                     3.48                 5.93                  1,210             70,677                     Yes
Los Alamos       11/9/95                      3.48                 5.93                  1,210             70,677                     Yes
Los Alamos       5/13/96                      3.92                 5.68                  1,210             70,518                     Yes
Oak Ridge        5/9/97                       4.38                 5.44                  2,286            326,147                     No
Oak Ridge        4/3/98                       4.26                 5.06                  1,516            325,050                     No
Rocky Flats      7/2/97                       3.61                 5.38                  1,418          1,023,731                     No
Savannah River   4/23/96                      6.40                 5.72                  4,953            189,093                     Yes
Savannah River   5/22/97                      6.77                 5.44                  1,659            188,058                     Yes
Savannah River   12/2/97                      6.54                 5.21                    975            189,210                     Yes
Savannah River   8/20/98                      6.07                 4.88                    975            191,155                     Yes
Savannah River   9/29/98                      6.00                 4.86                    975            191,433                     Yes
                                    a
                                     Represents the separations for a 3-year period before, during, and after, the decision date.
                                    Separations for some decisions in fiscal year 1995 may be overstated because DOE reports
                                    separation numbers for fiscal years 1993 and 1994 together. Separations for decisions made in
                                    fiscal year 1998 may be understated because potential separations for fiscal year 1999 were not
                                    included.

                                    Source: GAO Analysis of EDA criteria, and DOE’s Office of Worker and Community Transition’s
                                    and Department of Labor’s statistics.




                                    Page 30                                           GAO/RCED-99-135 DOE Workforce Reduction
Appendix V

Comments From the Department of Energy


Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




                             Page 31   GAO/RCED-99-135 DOE Workforce Reduction
                 Appendix V
                 Comments From the Department of Energy




See comment 1.




See comment 2.




                 Page 32                                  GAO/RCED-99-135 DOE Workforce Reduction
Appendix V
Comments From the Department of Energy




Page 33                                  GAO/RCED-99-135 DOE Workforce Reduction
                 Appendix V
                 Comments From the Department of Energy




See comment 3.




See comment 4.




                 Page 34                                  GAO/RCED-99-135 DOE Workforce Reduction
                 Appendix V
                 Comments From the Department of Energy




See comment 5.




                 Page 35                                  GAO/RCED-99-135 DOE Workforce Reduction
                 Appendix V
                 Comments From the Department of Energy




See comment 6.




See comment 7.




See comment 8.




                 Page 36                                  GAO/RCED-99-135 DOE Workforce Reduction
                 Appendix V
                 Comments From the Department of Energy




See comment 9.




                 Page 37                                  GAO/RCED-99-135 DOE Workforce Reduction
Appendix V
Comments From the Department of Energy




Page 38                                  GAO/RCED-99-135 DOE Workforce Reduction
                     Appendix V
                     Comments From the Department of Energy




                     Our comments on DOE’s two main assertions are summarized in the body
GAO’s Comments       of the report. In its comments, DOE asserted the following:

                 •   The report draft did not accurately portray the Department’s Worker and
                     Community Transition Program and contained numerous factual errors
                     that, along with inappropriate comparisons, raises basic questions about
                     the validity of the recommendation and major findings.
                 •   The Department’s criteria are consistent with statutory direction and
                     Department of Commerce regulations, and the benefits provided to
                     separated employees were consistent with the practices of other private
                     and public organizations.

                     In this appendix, we address each of the comments made in the
                     attachment to DOE’s letter. In addition, DOE provided us with additional
                     detailed comments that elaborated on the points made in the attachment
                     to its formal response. We used this supplemental material where
                     appropriate to revise our report.

                     1. DOE challenges our recommendation for four reasons. First, the
                     Department commented that its criteria for awarding community financial
                     assistance are consistent with the congressionally mandated criteria of the
                     Economic Development Administration Reform Act of 1998 and ensure
                     that aid is focused on economic need. The act makes communities
                     affected by DOE’s defense-related reductions eligible for the Economic
                     Development Administration’s (EDA) assistance, regardless of the local
                     unemployment rate, or the per capita income in the affected communities.
                     The Department commented that its criteria are consistent with the act,
                     but it appears that DOE’s claim to consistency is based on a provision of the
                     act that allows communities affected by DOE’s defense-related funding
                     reductions to qualify for assistance. However, the act was not effective
                     until February 11, 1999. Furthermore, DOE’s guidance does not have any
                     economic threshold criteria for determining affected communities’ need.
                     Most other communities that suffer economic hardships not caused by
                     defense-related funding reductions are required to meet economic
                     threshold criteria, such as an unemployment rate above the national
                     average.

                     Second, DOE commented that EDA must approve each community proposal
                     before funding is provided and that economic need criteria are a key
                     factor in its approval process. While EDA assesses the economic condition
                     of the DOE community applying for assistance, the degree of, or relative,
                     economic need is not a criteria in determining funding levels. We noted in



                     Page 39                                  GAO/RCED-99-135 DOE Workforce Reduction
Appendix V
Comments From the Department of Energy




our draft report that DOE submits the community plans to EDA for
independent review and approval. However, EDA reviews the community
plans using DOE’s criteria for reviewing projects and programs, set out in
DOE’s Policy and Planning Guidance for Community Transition Activities.
These criteria address projected job creation from the project, the amount
of local participation in the project, and the ability of the project to
become self-sufficient, not whether the communities requesting assistance
meet threshold economic need.

Third, DOE notes that its Policy and Planning Guidance for Community
Transition Activities contains explicit criteria for ensuring that economic
assistance is provided to communities suffering economic hardship.
Furthermore, DOE added that each Secretarial decision memorandum
approving community assistance formally addresses the economic need
fulfilled by the funding to be provided. As we noted in our draft report,
DOE’s criteria focus on the merits of the community’s individual projects,
such as projected job creation, and not on the community’s relative
economic need. Our analysis shows that communities differ in their degree
of economic strength, and DOE’s criteria for determining community
assistance funding do not result in the most assistance going to the
communities most in need. We do note that several Secretarial decision
memorandums included a general discussion of economic conditions,
including job losses, and loss of economic diversity. For example, the
June 1997 decision for Rocky Flats stated, “Although unemployment in
Colorado is comparatively low, new jobs are being created primarily in
retail and service industries, not the high-wage manufacturing and
engineering sectors. Wage growth is not keeping pace.” However, none of
the memorandums we reviewed considered threshold criteria or relative
economic need.

Fourth, DOE notes that a 1998 independent audit found, “The principal
criteria for providing assistance to DOE sites and adjacent communities
was degree of need, driven by how many workers were impacted by the
transition.” On the basis of our review of Secretarial memorandums, we
concur that the primary consideration for determining assistance was that
workers were separated. However, our analysis shows that there was no
correlation between the actual number of workers separated and the
amount of assistance provided to communities.

2. DOE reports in its table 1 that each community it provided with
community assistance met at least one economic threshold criterion
established “by the Congress for such assistance.” We disagree with DOE’s



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Appendix V
Comments From the Department of Energy




response on several points. First, DOE’s table 1 uses criteria that did not
exist at the time the Department made its funding decisions. These
congressionally-mandated criteria, which included the DOE special need
criterion, were not effective until February 11, 1999. However, our analysis
applies economic threshold criteria, such as those used by EDA, to show
funding decisions based on relative economic need. We used the
administration’s economic threshold criteria that were in existence during
fiscal years 1995 through 1998, when the bulk of DOE’s community
assistance money was allocated. When we applied these criteria, the
communities surrounding the Los Alamos, Richland, Savannah River, and
Nevada facilities (one the three decisions for the Nevada facility) met
EDA’s criteria for economic need.


Second, DOE’s analysis misapplies EDA’s economic threshold criteria in two
ways. DOE’s comments applied EDA’s 1999 criteria to individual counties
around their Los Alamos and Oak Ridge facilities. If the facility is located
within a standard metropolitan statistical area, then that area should be
used to determine eligibility. As noted in the report, EDA uses standard
metropolitan statistical area data when determining funding eligibility for
communities located in these statistical areas. By using the larger standard
metropolitan statistical areas as provided for in EDA’s guidance, our
analysis is more likely to reflect the total impact of separating workers in
the communities surrounding those facilities. If DOE believes that the
county-level analysis more accurately reflects the economic impact of its
restructuring than does the use of metropolitan statistical areas, then it
may want to consider using counties’ economic strength in its community
assistance allocation criteria.

Additionally, DOE’s comments use the unemployment rate only for the year
in which the majority of the workforce restructuring occurred at each DOE
facility and compares it with the average national unemployment rate for
that year. This provides a comparison for only one year out of the six that
community assistance programs have been in existence. As shown in
appendix IV, if economic and DOE restructuring information are compared
against the appropriate administration criteria for each funding decision
made since the beginning of fiscal year 1995 (soon after the Office of
Worker and Community Transition was created), only four sites (Richland,
Los Alamos and Savannah River, and one allocation decision for the
Nevada facility) would have been eligible for funds.

3. According to DOE’s comments, our table showing funding allocations to
communities for the period 1995 through 1998 contained a basic factual



Page 41                                  GAO/RCED-99-135 DOE Workforce Reduction
Appendix V
Comments From the Department of Energy




error by including funds that were spent since the beginning of the
program. The data contained in table 3 of our draft report were derived
from community assistance allocation figures contained in the Office of
Worker and Community Transition’s annual reports. Since the receipt of
DOE’s comments, the Office provided us with figures for the 1995-98 period.
Table 3 has been revised accordingly but still shows that communities
with relatively low unemployment rates generally received more funds per
worker than those with higher rates of unemployment.

According to DOE, using data for comparable periods (1995 through
1998) yields starkly different results for total community assistance
funding and funding per job lost. Even with the revised allocation figures,
we disagree with DOE for two reasons. First, to support its assertion, DOE
commented that its table shows that communities generally received
between $5,000 and $10,000 per employee separated. However, DOE’s table
shows a wide disparity in the range of community assistance per job
lost—ranging from $949 to $14,601. Importantly, DOE’s table does not show
the allocation amounts with the communities’ unemployment rates. For
example, the communities surrounding the Mound facility had an overall
unemployment rate of 4.13 percent for the 1995-98 period and received
$10,302 in community assistance per separated worker. In contrast, while
the communities surrounding the Richland facility, which had an
unemployment rate of 7.92 percent, received only $3,098 per separated
worker. Even among communities with comparatively low unemployment
rates, our revised table 3 shows that there is a wide range of community
assistance allocations. For example, the communities surrounding the Oak
Ridge and Rocky Flats facilities had aggregate unemployment rates of
4.17 percent and 3.33 percent, respectively, and separated roughly the
same number of workers—2,832 and 2,922—respectively. However, the
communities surrounding Oak Ridge received $5,932 per separated worker
versus $8,500 per separated worker for communities around the Rocky
Flats facility.

Finally, DOE states that Richland received less funding because its
downsizing started later than in other communities. The fact that some
facilities started their restructuring earlier than others may help explain
some of the disparity in the allocation of community assistance funds.
Nevertheless, because of the criteria DOE uses in providing community
assistance, the disparity in the allocation of funds is not likely to be made
up over time. In addition, the Secretary’s memorandums approving
community assistance allocations generally do not describe the




Page 42                                  GAO/RCED-99-135 DOE Workforce Reduction
Appendix V
Comments From the Department of Energy




communities’ economic conditions nor do they discuss threshold or
relative economic need in the decisions to fund community development.

4. DOE asserted that our comparison of the assistance provided to Richland
and Oak Ridge was inaccurate for two reasons—incorrect allocation and
unemployment data. First, as discussed under comment 3, we
incorporated DOE’s community assistance figures. Even though Richland
received more community funding than Oak Ridge, it received less per
worker separated—Richland received $3,098 per job lost14 and Oak Ridge
received $5,932 per job lost. Second, DOE challenged our analysis of these
two facilities by using a single county’s (Roane) unemployment data for its
Oak Ridge facility. As discussed in our second comment, this is a
misapplication of EDA’s criteria. Following EDA’s criteria, we used the
standard metropolitan statistical area for our analysis. Using the
unemployment rate for the standard metropolitan statistical area
surrounding Oak Ridge, rather than the unemployment rate for Roane
County, results in an unemployment rate for Oak Ridge of 4.2 percent
instead of 7.3 percent. Furthermore, DOE’s May 9,1997, Secretarial
memorandum justifying $10 million in community assistance does not
even discuss Roane County. However, as discussed in comment 2, if DOE
believes that the county-level analysis more accurately reflects the
economic impact of DOE’s restructuring than does the use of the standard
metropolitan statistical area, then it should include this factor in its
community assistance criteria.

5. DOE states that we inaccurately reflect how it assists workers displaced
by defense-related reductions. It cites the consultant’s study that shows
DOE’s program helped create more than 22,000 jobs. Like the consultant’s
study, our draft report concurred that DOE helped to create and retain
these jobs. However, the consultant’s study did not provide information on
the extent to which DOE should receive credit for the jobs created and
retained. We noted in the draft report that the DOE data contain jobs
created and retained, while the local employment data we used from the
Bureau of Labor Statistics include only jobs created. Therefore, our
analysis is likely to overstate the impact of DOE’s job creation efforts in any
given area. Furthermore, the consultant’s study did not measure the
impact of other assistance in creating or retaining jobs, or analyze the
extent to which a strong economy helped to produce these jobs. We
maintain that DOE’s contribution had a relatively small impact on the

14
 Table 2 in DOE’s comments shows that Richland separated 5,694 workers for the period 1995 to 1998,
and the community received $3,245 for each job lost. However, the Office of Worker and Community
Transition’s Annual Report shows that Richland separated 5,964 workers—which DOE subsequently
confirmed as the correct number.



Page 43                                           GAO/RCED-99-135 DOE Workforce Reduction
Appendix V
Comments From the Department of Energy




overall growth of jobs in three of the six communities surrounding nuclear
defense facilities for which we had comparable data. However, for three
other communities, our draft shows that DOE contributed significantly to
job growth.

6. DOE commented that our draft report incorrectly characterized
enhanced retirement offerings. DOE provided us with additional
information comparing its enhanced retirement offerings with those of
other organizations, and we have revised the report accordingly. However,
the formula for extended medical coverage and the provisions for
relocation assistance offered by DOE were more generous than the benefits
offered to separated federal civilian employees. For extended medical
coverage for eligible contractor workers, DOE pays the full employer cost
for the first year of separation and about half of that cost in the second
year.15 Separated federal workers who are eligible and wish to retain
extended medical coverage must pay the full cost, plus an administrative
fee, for the coverage upon separation.

DOE also commented that 17 of the 25 public and private sector employers
identified in our 1995 report offered enhanced retirement. DOE’s
interpretation is not exact. The report states that 17 of the 25 organizations
offered early retirement programs and at least 10 of these programs
offered some incentive for early retirement. The incentives generally gave
employees credit for a specified number of years of service and/or a
specified number of years added to their age; however, nine organizations
also imposed penalties on the annuities of early retirees.

7. DOE said that the draft report is factually incorrect concerning
involuntary separation benefits. DOE provided us with additional
information on involuntary separation benefits offered at other
organizations, and we revised our draft accordingly.

8. DOE contends that its management contractors offered extended medical
benefits before the enactment of the worker and community transition
program. The Office of Worker and Community Transition has since
provided us with information supplementing its official comments
indicating that a medical benefits program for displaced workers was
approved by the Secretary of Energy on July 29, 1992. According to DOE’s
comments, these benefits are limited to contractor-separated employees



15
 Of the 10 plans, 7 provided extended medical coverage to both voluntarily and involuntarily
separated workers, and 3 plans offered coverage to voluntarily separated workers.



Page 44                                             GAO/RCED-99-135 DOE Workforce Reduction
           Appendix V
           Comments From the Department of Energy




           who cannot obtain coverage through an employer or spouse. We have
           revised our report accordingly.

           DOE also commented that our draft report did not include the wide range
           of additional benefit categories offered by other organizations. Based on
           DOE’s comments we revised table 2 that compared DOE benefits with other
           public and private sector severance packages offered from fiscal years
           1993 through 1998. The revised table provides more detail of the benefits
           that were offered by the number of organizations that we identified.
           However, the benefit formulas in some of DOE’s workforce restructuring
           plans, such as those determining voluntary separation benefits and
           extended medical coverage, potentially allow more generous benefits than
           those offered for federal civilian employees.

           9. DOE’s comment focuses on the overgeneralization of the data presented
           in table 2 of our draft report. This table compared DOE benefits with other
           public and private sector severance packages offered from fiscal years
           1993 through 1998. DOE asserted that, overall, the frequency with which
           DOE contractors offered classes of benefits has not been substantially
           different than the frequency offered by other employers captured by
           private surveys. We agree and revised this table, as noted in comment 8.

           Finally, DOE commented that only a limited number of its sites offered
           some benefits. However, we note that DOE did not count benefits offered to
           its workforce when fewer than 10 individuals, or 1 percent of the
           separated workers, received benefits. Furthermore, DOE stated that
           because of qualification requirements, a large number of separated DOE
           workers were not provided with certain benefits, even when offered at a
           site. While these qualifications may preclude some separated workers
           from receiving a specific benefit, the benefit was still offered at a specific
           site.




(141276)   Page 45                                  GAO/RCED-99-135 DOE Workforce Reduction
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