Report: OMB should increase health care cost estimates for job competitions

But Federal Employees Health Benefits Program costs have escalated by more than 65 percent since then, Comptroller General David Walker wrote in a Nov. 17 letter to leaders of the House and Senate government reform, appropriations and armed services committees.
FEHBP annual premium increases have ranged from 7.9 percent to 13.3 percent from 1999 to 2005, GAO noted.
"Our review of the federal budget costs for FEHBP and the annual average premium increases announced for FEHBP health insurance plans indicates that civilian employee health benefit costs have increased substantially since OMB last revised this cost factor," Walker stated.
"We recognize that an adjustment of this factor could result in higher estimates of the total cost of government performance, and in some cases this could affect the outcome of public-private competitions," Walker added.
But "in our view, fairness requires that any cost factor used in estimating the cost of performance, whether by private or public sector sources, be as accurate and current as possible in order to protect the integrity of the process," he wrote.
GAO also recommended that the health care cost percentage be adjusted more regularly. Other standard rates such as pay raise assumptions that are assessed in the process of comparing competitive sourcing bids are updated routinely, GAO noted.
The auditors looked into the health benefit cost factor as part of ongoing research into implementation of a union-backed competitive sourcing requirement in the fiscal 2005 Defense appropriations act.
Under that law, the Pentagon must ensure that contractors don't receive an advantage for a proposal that "would reduce costs . . . by not making an employer-sponsored health insurance plan available to workers . . . under the contract" or by contributing less to health premiums than the Defense Department contributes for civilian employees.
This measure effectively "takes health care [costs] out of the equation altogether," said Jacque Simon, public policy director for the American Federation of Government Employees. Any time an across-the-board percentage is used to calculate costs, there's a risk that the figure will be a "political compromise number," she said.
GAO's assessment of the health benefits cost factor is too simplistic, Simon added. Health costs assessed to federal employee teams aren't static because they're calculated as a percentage of total payroll costs, which change each year, she said.
Further, over the past 15 years, there has been a gradual shifting of health care costs from the government to beneficiaries, Simon said, meaning that employees are shouldering a substantial portion of increased costs. Federal employees will see a 10 percent jump in premiums for 2006, for example, while agencies will see an increase of about 5 percent, she noted.
The GAO letter misses a "critically important point," said Colleen Kelley, president of the National Treasury Employees Union. "Private sector companies are not required to offer their employees health care coverage. Unquestionably, a growing number of private sector companies are either reducing or eliminating health care benefits for their workers."
Kelley joined AFGE in arguing for rules that "require, at a minimum, that private companies wanting federal work are not advantaged by not providing health coverage to [their] workers."
Preliminary versions of the fiscal 2006 Defense appropriations bill (H.R. 2863) in both the House and Senate contain competitive sourcing health care requirements similar to that enacted in last year's law. This year's bill has yet to complete the conference negotiations process, however.
Defense officials initially resisted the 2005 measure, and groups representing contractors are opposed to such language.
Cathy Garman, senior vice president of public policy at the Contract Services Association, an industry group, said the provision ties the government's hand. CSA pointed out that the health care cost factor was out of date several years ago, Garman added.
In a Dec. 19, 2002, letter to commenting on proposed revisions to Circular A-76, the OMB rule book on competitive sourcing, CSA suggested prefacing the standard cost factors for fringe benefits with an advisory note reading: "subject to annual adjustment."
Service contractors must include more current benefits in their bids, Garman noted.
OMB indicated in comments on a draft of Walker's letter that it is working with the Office of Personnel Management to review the cost factor and to look at "options for reviewing these factors on a more regularized basis."

The National Marine Fisheries Service recently won seven of eight contested articles of its collective bargaining agreement before the Federal Service Impasses Panel.

NMFS and American Federation of Government Employees, Local 231, which represents approximately 60 agency employees, brought issues before the panel:

* Union Facilities: AFGE requested the NMFS provide the union with a designated work space separate from the union president’s normal workstation. NMFS countered that a normal workstation provided adequate resources. The Panel sided with the agency, stating that it had provided necessary accommodations.

* Employee and Representative Travel: The union argued that grievance meetings, arbitration hearings and midterms negotiations should be conducted “face-to-face” as often as possible, while the agency argued that video- and teleconferencing was equally acceptable and more cost effective. FSIP agreed with the agency, citing rising travel costs throughout the federal government.

* Union Representatives Official Time: NMFS sought to cap the number of annual hours allotted for union official time at 418 and training hours at 100, while AFGE requested no cap and 300 training hours. Though the Panel stated it did not how the agency determined the cap number, it agreed with NMFS that the cap was needed and agreed with the 100-hour limit.

* Grievance Procedure: The union wanted individual employees to be permitted to file grievances and the agency wanted to reserve that right for only itself and union representatives. The Panel sided with the agency, stating that “permitting a bargaining-unit employee to file a grievance … could generate numerous disputes over issues unrelated to the employee’s own employment.”

* Details and Temporary Promotion: AFGE requested that when the agency determined “no single best candidate” for a position and “all are deemed to be equally qualified”, seniority would be the deciding factor. The agency wanted to the ability to consider other factors in those situations. FSIP granted NMFS that ability, citing the need for “junior” employees who might “benefit from the experience of working a detail assignment or having at temporary promotion opportunity.”

* Employee Health and Fitness: The union sought up to three hours per week for employees “to voluntarily participate in wellness/fitness activities if their workload permits.” The agency argued adequate resources were available through its Employee Assistance Program. The Panel ruled that allowing employees three hours per week was too much time and would detract the agency from pursuing its mission.

* Employee Recognition: The union sought a non-voting membership on agency awards panels to ensure all regulations were met. The agency argued that membership was not necessary -- no significant problems had arisen from the current panel configurations. FSIP agreed with the agency, stating the union had not provided sufficient evidence to change the status quo.

* Research Cruise Staffing Article: AFGE addressed what it considered “unsanitary conditions” on some research boats, among other nautical working conditions. The agency countered that it would address matters “to the extent that the employer has control over them.” The Panel sided with the union, stating the agency is required to “ensure employees are provided with a safe and healthful environment while at sea.”

Pentagon delays new pay system
Tuesday, November 22, 2005
Times Business Writer [email protected]
January hearing sought on lawsuit filed by 10 unions
The use of a new personnel system governing Department of Defense civilian workers has been temporarily delayed following a court agreement between the Pentagon and several unions that represent affected workers.
The National Security Personnel System was adopted in late October, and 10 unions jointly filed a lawsuit in early November aimed at blocking its implementation.
An agreement reached by the Pentagon and the labor unions last week delays implementation of the system until Feb. 1. The two sides have requested a court hearing in January on the lawsuit.
The new system, which replaces the longtime General Schedule system, was to begin going into effect late this year, with employee pay system changes by 2007. In replacing the General Schedule system, the Pentagon said a performance-oriented system would reward top performers, provide more workplace flexibility for managers and make it easier to recruit talent.
The unions, including the American Federation of Government Employees that represents about 8,000 workers at Redstone Arsenal, claim in the lawsuit that the Pentagon did not collaborate in the rules' development with the unions, as required by Congress.
The lawsuit also contends that the new system effectively eliminates collective bargaining and has an inadequate employee review and grievance process, giving supervisors too much power, without appeal rights.
A similar system for the U.S. Department of Homeland Security is on hold after a federal judge ruled that it improperly ends workers' collective bargaining rights.
Don Eiermann, president of AFGE Local 1858 at Redstone, said the Pentagon is unlikely to change its approach because of the delay.
"We're going to go out and start talking to people after Thanksgiving about the changes that are coming," Eiermann said. "But everything is real vague. We're still waiting for the 'implementing issuances,' which will spell out the specifics on the procedures they want to implement."
The Department of Defense said that it will continue to train employees on the new system but that the changes won't take effect until Feb. 1.


Labor News / From Press Associates Inc.
Posted by alecdubro on Nov 21, 2005 - 11:01 AM
By Mark Gruenberg, Press Associates, Inc. Staff Writer

WASHINGTON (PAI)–Labor’s campaign against GOP President George W. Bush’s Defense Department personnel rules–rules that strip 800,000 workers of their union rights, collective bargaining, whistleblower protection, fairness in pay, job protections and more–accelerated in mid-November in Congress and in court.

Labor got a win, at least temporarily, when federal workers’ unions and the Bush Justice Department–acting for DOD–agreed to delay the starting implementation of the new rules until at least Feb. 1. A court hearing on them may occur at about the same time. And unions got sympathetic comments from senators of both parties when they took their complaints to Capitol Hill on Nov. 17.

The defense workers’ fight is important: Bush wants to extend the personnel rules, which deprive workers of virtually all rights, beyond DOD and the Homeland Security Department to all 2 million federal workers. The rest of the government is waiting and watching for their turn” to adopt new personnel rules, Bush Office of Personnel Management Director Linda Springer told senators at the hearing.

And some Bush Right Wing backers then want to extend the scheme, which literally destroys union representation, to other workers nationwide, private and public.

AFGE President John Gage and AFL-CIO Metal Trades Department President Ron Ault testified Bush Defense Secretary Donald Rumsfeld and Bush’s OPM broke the law that let the Defense Department establish a new National Security Personnel System (NSPS) for its 800,000 civilian workers, starting with 300,000 in 2006.

NSPS leaves workers unprotected and open to political pressure, favoritism in pay and promotions, management whims, and disciplinary hearings where their agency is the prosecutor and Rumsfeld appoints the judicial board. It also lets Rumsfeld arbitrarily take issues out of bargaining, making them totally management prerogatives.

This is a setup to take away unions’ rights,” to bargain for and protect the workers, Gage told the GOP-run Senate Governmental Affairs Committee. That’s not only the rights we have now, but any rights in the future.”

The NSPS is like The Emperor’s New Clothes,” the fairy tale that he reads to his 5-year-old daughter, Ault said. I do feel stark naked,” like the emperor in the story. NSPS is not about security. It’s about control.” Some 36 federal workers’ unions, united as never before,” are challenging the Bush/Rumsfeld rules, Ault added.

The NSPS rules reflect a broad view of unions as interlopers,” Ault noted. He said they were drafted before 9/11 by the right-wing Heritage Foundation, a D.C. think tank. The rules’ creator there is now a top DOD personnel aide implementing NSPS.

It is driven by disdain for workers and their rights, disregard for justice, disrespect for Congress and pure arrogance. It is time for Congress to step in and stop this now,” Ault declared. Gage also sought legislation stopping NSPS.

Senators from both parties were supportive. Sen. John Warner (R-Va.)–whose state houses many, if not a majority, of the defense workers–said his past experience as Navy Secretary showed we cannot, as a consequence of NSPS, have that civilian (defense worker) feel disenfranchised.” Sen. George Voinovich (R-Ohio) said there’s a lot of apprehension” among Defense Department workers about the rules.

Gage said the workers and unions were barred from participating in making the new NSPS rules, which were drafted secretly–a claim DOD officials denied. The Bush DOD’s top witness claimed to the senators there was little dissent except for a small group” against the NSPS rules, but Gage said he was wrong.

The non-partisan Government Accountability Office told lawmakers that Bush’s DOD is moving too far, too fast. GAO Director David Walker opposed Bush’s plan to extend the NSPS rules government-wide. The one-size-fits-all’ approach is not appropriate to all agencies’ demands, challenges and missions,” Walker warned.

AFGE, the Metal Trades Department and other unions sued in early November to stop the rules in their tracks. That follows the unions’ success in court against Bush personnel rules involving the 125,000 workers at the Department of Homeland Security. Federal Judge Rosemary Collyer, a former Reagan administration labor official, said Bush’s DHS rules illegally destroyed collective bargaining. She halted them. White House officials said on Nov. 15 that Bush would appeal Collyer’s order to higher courts.

In the DOD suit, to be heard by federal Judge Emmet G. Sullivan, the unions said Rumsfeld and Bush’s Office of Personnel Management broke the law by convening secret working groups to draft the NSPS behind closed doors,” then published them on Oct. 27 for 30 days’ notice before would have begun Nov. 28. The agreement announced just before hearing delays their start until February.

The suit covers at least 285,000 of the 800,000 Defense Department civilian workers. They are members of AFGE, the National Federation of Federal Employees/, IAM, the Association of Civilian Technicians, the National Association of Government Employees/SEIU, the United Power Trades Organization (Corps of Engineers workers in the Pacific Northwest), the Professional and Technical Engineers, the Teamsters, the Laborers and the Fire Fighters.

The unions explained in their court papers that the 2004 defense authorization law, which let Rumsfeld establish the NSPS, ordered that he and Bush’s OPM do so only in collaboration with and in a manner that ensures the participation of employee representatives in the development and implementation” of the personnel system.

That law also mandated meaningful discussions” of the new personnel rules, at least 30 days for the unions to review and comment on them and ordered Rumsfeld and OPM to give any recommendations” from the unions full and fair consideration.”

Over the course of more than a year” Rumsfeld and DOD developed their proposed labor relations system, to the point of publication, using secret working groups,” the unions’ court papers said. Rumsfeld did not give the unions the opportunity to collaborate with, participate in or have discussions with the secret groups,” and hid the drafts of the rules. DOD held concept discussions” with the unions, but (it) said they were not meaningful,” the papers add. That broke the law.

The unions want Sullivan to order DOD to give them its instructions to the secret working groups, copies of the draft rules, order DOD and OPM to have meaningful discussions” of the personnel rules with the unions and to block Rumsfeld’s system until his agency follows the law. No date for the court hearing has been set yet.

Nonunion employees need a voice in NSPS, observers say
By Karen Rutzick
[email protected]
As labor unions vocally criticize the Pentagon for diminishing their role under the National Security Personnel System, at least two other observers are questioning whether nonunion employees will have enough of a say.
David Walker, comptroller general of the Government Accountability Office, told a Senate committee last week that participation of nonunion employees is one of his three main areas of concern about the system. Walker's own agency has led the way on personnel reform and has been closely monitoring NSPS' progress.
"Although the regulations do provide for continuing collaboration with employee representatives, they do not identify a process for the continuing involvement of individual employees in the implementation of NSPS," Walker said at a hearing before the Senate Homeland Security and Governmental Affairs Subcommittee on Oversight of Government Management.
The hearing was called after the Defense Department issued final regulations on NSPS in the Federal Register. The new personnel system is designed to replace automatic across-the-board and within-grade pay increases with performance-based raises, collapse the General Schedule grades into broad pay bands with increased pay flexibility and streamline collective bargaining.
An NSPS spokesperson said about 60 percent of Defense's civilian employees are represented by labor unions - leaving 40 percent of civilian employees out of the loop.
"We're very concerned about the employees who are not represented by unions," said GAO's Derek Stewart, director of defense capabilities and management. "GAO cannot overemphasize the importance of getting input from every employee ... not just those represented by the unions."
Stewart said GAO recommended in July that the Pentagon develop a communications strategy that caters to individual concerns, not just those of unions. That strategy would include posting every implementing issuance on a Web site and allowing 30 days of comment, and taking feedback surveys for each issuance.
The final regulations do not meet this recommendation, Stewart said.
Federal Managers Association president Michael Styles testified at the same hearing that he is concerned his group will not be formally recognized by the secretary of Defense under the new rules, and will be locked out of dialogue.
NSPS final regulations state that the department "may request views and comments from representatives of other employee groups, such as a managers' association."
FMA is a nonprofit group representing managers and supervisors in the government. It does not bargain on behalf of its membership, but it advocates for them and is included in some discussions on workplace issues.
Styles called for the department to insert language into the NSPS regulations mirroring existing requirements from which Defense is exempt under the new personnel system. Those requirements would make the Pentagon formally recognize FMA. He also asked department leadership to set up regular monthly or bimonthly meetings with his group.
"The recognition of management organizations such as FMA is a fundamental part of maintaining a collaborative and congenial work environment," Styles said. Under the current personnel system, FMA can "come to the table with DoD leadership and discuss issues that affect managers, supervisors and executives," he said.
"While this process is not binding arbitration, the ability for managers and supervisors to have a voice in the policy development within the department is crucial to its long-term vitality," Styles added.
FMA has been included in numerous discussions on the creation of the NSPS, and if the group submits a formal request for regular meetings, officials will give consider it, said spokeswoman Joyce Frank. She also emphasized that Defense officials have reached out to nonunion employees through town hall meetings, focus groups, surveys and web contacts, as well as through veterans and other groups.
Styles called for the Pentagon to adopt five provisions of the United States Code, Title 5, which governs personnel management at most executive branch agencies but does not cover NSPS. These would require:
• Organizations such as FMA to be able to provide information, views and services to aid in agency operations.
• Supervisors and managers to be included in decision-making and notified of executive-level decisions in a timely basis.
• The department to maintain a system for intramanagement communication and consultation
• The department to develop a consultative relationship with groups such as FMA.
• The department to provide support services to nonlabor managerial associations when it determines it is warranted.
Acting Deputy Defense Secretary Gordon England, who is leading NSPS development and implementation, said in his testimony that "employees, managers and supervisors" in addition to unions were consulted in the creation of the system.
As for ongoing communication with employees, England said information will be passed down the chain via supervisors. He also focused on NSPS Web sites and printed materials.
Styles said that after a bumpy start, NSPS staff has so far included FMA in the process.
"We were initially discouraged by the lack of outreach that the DoD was conducting to management and employee groups as well as OPM," Styles said. However, once communication efforts were increased, "the NSPS staff has availed themselves to our membership."
Styles said FMA leaders met with NSPS officials several times during the development of the regulations.

Join AFGE Today


Shutdown Lawsuit

Diversity Week

I Serve Veterans

Behind the Scenes

AFGE Events

Event Calendar is for Members Only. Please Log In to see our calendar of events.


SUBSCRIBE Latest news & info