Thursday, March 29, 2007

:: Contracting for services ::

So, the whole idea of privatizing government services appears to have some serious holes in it.  Here's my idea:  Don't privatize those services.

Yesterday's notice, signed by Ingrid A.C.Kolb, the department's director of management, said Energy spent $1.07 billion in fiscal 2006 to reimburse 46 contractors for their employee pension and medical benefits. The reimbursement represented a 226 percent increase since fiscal 2000, the notice said.

The reimbursement covered benefits for about 100,000 contract workers and 100,000 retirees, dependents and beneficiaries, the department said. The benefit programs included 45 defined-benefit pension plans, 37 defined contribution plans, 23 life insurance plans, and about 260 medical benefit plans.

The department, which had a $23.6 billion budget in fiscal 2006, relies on the 46 contractors to manage and operate nuclear weapons plants, science labs and other facilities. Under the contracts, the companies may pass to the government the costs of pension, health, vacation and other employee benefits.

...

On average, the department said in the notice, pension benefits received by contract employees are higher than those provided federal and private-sector workers. Energy contract employees also pay less, on average, for their health-care benefits, compared with federal and private-sector workers, the department said.

Energy officials said they are seeking comments and recommendations from the public and interested parties on how to address the increasing benefit costs of the contract workforce. Comments may be sent by e-mail to contractorpensions@hq.doe.gov. The deadline is May 11.

The point being, benefits and pension are a part of salary and as a contractor, billed to the client. Example: Base Salary x profit factor x benefit factor x overhead factor = billed employee rate. See the difference from what is described above? Vast.


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