Cost Accounting: Department of Energy's Management of Contractor Pension and Health Benefit Costs

Highlights

Pursuant to a congressional request, GAO reviewed Department of Energy (DOE) policies and practices regarding the reimbursement of contractors for the costs of their employees' pension and retiree health plans.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Energy	The Secretary of Energy should direct the Office of Industrial Relations to ensure that the revised DOE pension order includes a formal funding policy, encourages plan administrators to choose full-scope audits of site-specific pension plans, and addresses issues related to employee transfers and postcontract ad hoc cost-of-living adjustments.	Closed – Implemented DOE reviewed public comments on its draft order and issued a final order on September 30, 1996. Based on GAO's review of the newly issued DOE Order 350.1, the order is responsive to the recommendation.
Department of Energy	The Secretary of Energy should direct the Office of Industrial Relations to develop additional policies and procedures on settling postcontract retiree health benefits that set forth the criteria for deciding at contract expiration which approach--lump-sum settlement, continued pay-as-you-go reimbursement, or transfer of employees to the successor contractor--should be used.	Closed – Implemented The policy on postcontract retiree health benefits is included in a new DOE Order 350.1, which was issued on September 30, 1996. Based on GAO's review of the new order, the order is responsive to the recommendation.
Department of Energy	The Secretary of Energy should direct the Office of Industrial Relations to evaluate the resolution process for pension issues and accelerate the resolution of those that are long-standing.	Closed – Implemented Energy implemented a new tracking process to identify the status of all outstanding pension issues. Also, actuaries are now establishing priority lists which the Office of Industrial Relations uses to identify and accelerate action on long-standing issues. In addition, Energy resolved all pension issues that were over 1-year old.

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Auditing and Financial Management

Auditing proceduresContract administrationContract terminationContractor paymentsContractor personnelGOCOGovernment liability (legal)Pension plan cost controlPensionsPolicy evaluation