The Department of Energy (DOE), which carries out its national security, environmental cleanup, and research missions through extensive use of contractors, faces significant costs for postretirement health and pension benefits for contractor employees. Given DOE's long history of using contractors and the rising cost of postretirement benefits, the Chairman, House Committee on Appropriations, Subcommittee on Energy and Water Development, asked GAO to (1) analyze DOE's estimated financial obligation for postretirement health and pension benefits for contractor employees at the end of fiscal year 2003, (2) determine how DOE evaluates its contractor postretirement health and pension benefit programs and assesses the comparative levels of benefits offered by contractors, and (3) assess how DOE's oversight of these benefits could be enhanced.
Recommendations for Executive Action
|Department of Energy||The Secretary of Energy should institute systematic management review of pertinent data from each contractor location to enhance the consistency of benefit program evaluations and reduce the instances of nonconformance with the requirements of DOE Order 350.1 and other recommended procedures. The intent of the management review would be to correct areas of nonconformance, identify best practices, and disseminate this information across the agency.|
|Department of Energy||The Secretary of Energy should extend the comparison study requirements of DOE Order 350.1, to the extent practical, to all contractor locations with benefit obligations to provide better information about programwide contractor employee benefit costs.|
|Department of Energy||The Secretary of Energy should, in cases where the extension of the order is not practical, develop and perform appropriate alternative procedures to provide similar information.|
|Department of Energy||The Secretary of Energy should incorporate into DOE's oversight process a focus on the long-term costs and budgetary implications of decisions pertaining to each component of contractor benefit programs, especially pension and postretirement health benefits, that have budgetary requirements beyond the current year. This would augment the current consideration of total annual benefit costs.|