Thomas O’Connor GC-63 Contractor Workforce Restructuring

2  If DOE contractors are prevented – by legal or other means – from restructuring their work forces to meet current mission requirements, or  If that workforce restructuring entails large legal costs, There will be problems for DOE in meeting its mission objectives.

SECTION 3161 of the National Defense Authorization Act for FY  Requires DOE/NNSA to consult with affected stakeholders (e.g., unions) and to develop plans to mitigate the impact of workforce restructuring on the employees and on communities around the sites Applies by its terms to DOE defense nuclear facilities Sec. O’Leary extended to all Dept. facilities, to the extent practicable

Sec. Chu’s 2011 Workforce Restructuring Policy 4 Key Changes from Previous Policies –  Responsibility and Accountability (Under Sec’y or delegate)  Stricter Time Targets  Self-Select Separation Program – Contractors encouraged, but not required, to do before an involuntary separation program (ISP)  Waivers in Involuntary Separations  Diversity Analysis-ISP

 Statistical tool to evaluate patterns of selection for possible discrimination based on race, sex, age, etc.  Compares random and actual selections of employees  Does not prevent all risks but assists and encourages sound business justifications for separations  “Contractors... must continue to perform... when the involuntary separation actions affects 50 or more contractor employees within a rolling 12-month period.” Policy memo, p. 3. Submission to field counsel required; GC approval not required What is a Diversity Analysis? 5

Early Retirement Incentive Program 6  “Early retirement incentives that are funded through contractor pension plans will continue to be unallowable....” Policy Memo, p. 3 (emphasis added). These window-period programs are different from, e.g., early retirement incentives already built into the features of SR DB plan that may not be very susceptible to change

Templates/Models Announcement and General Plan Template 2. Model Contractor Plan for Self-Select Programs 3. Model Contractor Plan for Involuntary Separation Programs

EM Delegation of Workforce Restructuring Approval 8 EM-1HCACO Contractor Specific Plans Unlimited N/A WFR* programs (with approved specific plan) Unlimited ** Pay in lieu of WARN Notice (with approved specific plan) Unlimited1-499N/A Enhanced severance pay Unlimited1-499N/A *Voluntary, involuntary, or mixed voluntary and involuntary ** 30 days notice of WFR to Under Secretary required

EM HCA Directive: Roles and Responsibilities for Workforce Restructuring 9  Provides guidelines for business case for approval of contractor workforce restructuring packages – Skills mix requirements Costs of restructuring Cost savings from restructuring

Sequestration 10  7/30/12 Department of Labor Guidance Letter  In the event of sequestration, WARN Act does not require federal contractors to give full 60-day notice until a plan closing or mass layoff under the WARN Act is reasonably foreseeable  9/28/12 OMB Memorandum  Where a contractor acts consistent with DOL Guidance, then any resulting costs for WARN Act liability and other litigation costs, would qualify as allowable costs and be covered by the contracting agency, if otherwise reasonable and allocable.  Some management law firms have advised caution in relying upon the OMB guidance

11 Review!

Department of Energy 12 Early retirement incentives that are funded through contractor pension plans are unallowable. TRUE FALSE

Department of Energy 13 CORRECT! “Early retirement incentives that are funded through contractor pension plans will continue to be unallowable....” Next Slide >>

WRONG ANSWER! 14 << Try again

Department of Energy 15 True or False? In the event of sequestration, WARN Act requires contractors to give full 60- day notice until a plan is closing or mass layoff under WARN Act is reasonably unforeseeable. TRUE FALSE

Department of Energy WARN Act does NOT require contractors to give full 60-day notice until a plan is closing or mass layoff under WARN Act is reasonably unforeseeable. CORRECT! 16 Next Slide >>

WRONG ANSWER! 17 << Try again

18 Department of Energy 18 True or False? Diversity analyses should only include data based on race. TRUE FALSE

WRONG ANSWER! 19 << Try again

Department of Energy Diversity analyses could be based on a variety of identifiers such as race, sex, age, etc. CORRECT! 20 Next Slide >>

Department of Energy Why was the tailor fired from his job? BONUS QUESTION! 21 He wasn’t suited for it!