Energy to reinvest savings from freezing contractor salaries

Less than a month after freezing the salaries and bonuses of its laboratory contract workers, the Energy Department began looking into how to reinvest the savings, angering workers who believed the money would be used to pay down the federal budget deficit, Government Executive has learned.

In late December 2010, Energy Secretary Steven Chu announced that 75,000 contract workers, who manage day-to-day operations at 28 sites and national laboratory facilities, would not receive raises in 2011 or 2012. Bargaining unit employees at the labs are exempt from the freeze.

The Obama administration previously had announced a two-year pay freeze for civilian federal employees.

At the time, little was known about how much Energy would save through freezing contractor pay, or how the department would use the money saved. In his announcement, Chu only said, "households and small businesses across the country are making sacrifices" because of the struggling economy and contract employees should "join the federal workforce in playing a part."

While the pay freeze for civilian federal workers will be used, at least in part, to bring down the deficit, it appears Energy has no such intentions for its contractor workforce.

"Secretary Chu has issued principles for each laboratory to reinvest the funds not put into salary increases," Samuel Aronson, director of the Brookhaven National Laboratory in Long Island, N.Y., wrote in a Jan. 24 memorandum to staffers that Government Executive obtained. "Suggested uses are to promote sustainability and advance projects through Laboratory Directed Research and Development, or other mechanisms. We are required to submit a list of intended uses by the end of the day today."

The suggestions for reinvesting the savings would then be used to help finalize the department's fiscal 2012 budget request, according to the memo. The budget request will be unveiled on Monday.

The move elicited an outcry from Brookhaven contract workers who felt deceived by the department's intentions. Several employees have written to their respective House or Senate representatives seeking assistance.

"We are being used as political pawns," one worker wrote in a Feb. 7 e-mail to the lab's online newsletter Monday Morning Memo. "If the real issue was on saving money, the only acceptable use of the savings would be to reduce the national debt. Any other use constitutes robbing Peter to pay Paul, more of this present administration's 'redistribution of wealth.' "

"Now we learn that the DOE will reinvest funds not put into salary increases," another unidentified employee wrote in the newsletter. "My question is, by reinvesting funds, how is the DOE following in the spirit of the president's recent decision regarding reduction of the federal deficit?"

Aronson responded that he empathized with employees and their concerns, but suggested the decision was out of his hands.

"I understand the frustration staff are expressing relative to the use of the funds that are being saved by the pay freeze," he wrote. "I can appreciate how staff views the fact that the savings will be used for programmatic initiatives in lieu of their merit increase. I do not know ultimately how these funds will be used and may not know for some time. However, if the decision is made that the funds will remain with the lab, we intend to use them in venues that will sustain our lab and staff and ensure ongoing viability of [Brookhaven National Laboratory], which will benefit all of us."

The Weapons Complex Monitor, a publication covering federal laboratories, reported last month on a memo that Energy Chief Financial Officer Steven Isakowitz sent to senior department officials. "We need to solicit input from the [management and operations] contractors on how they would propose reinvesting the savings from the pay freeze," Isakowitz wrote in the Dec. 29, 2010, memo. A spokesman for Brookhaven lab deferred all questions on the contractor freeze to the Energy Department's press office, which failed to comment on the issue by Friday evening.

One Brookhaven employee suggested that the answer could be collective bargaining rights for the lab's contract workers. "This is a perfect time to form a professional union at BNL," the lab worker wrote. "The contract would ensure our raises and professional autonomy for all nonunion employees." Other staffers called for their salaries to be brought up to their expected 2013 levels when the freeze expires.

Energy is one of government's largest employers of contractors, with an outsourced workforce considerably larger than its own staff. The department has about 15,000 federal employees, many of whom are involved in overseeing an estimated 100,000 contractors, according to the Government Accountability Office.

Aronson noted he been in contact with Chu and the department's other lab directors to examine ways to ease the financial burden on contract employees. Energy recently asked all its labs to provide details on how the freeze affects employees. Among the possible mechanisms to mitigate the financial burden on workers, he later wrote, was the realignment of the variable compensation pool and flex time.

But Aronson said performance-based compensation was off the table. "The pay freeze does not allow us to recognize our staff in that way and everyone on your leadership team shares in the frustration," he wrote. "We have no ability to change this decision."

The director added salary increases are not the only way to reward high-value workers. "I also believe that we want recognition for what we do, not only financially, but also through thoughtful feedback from our peers, clients and supervisors," he wrote. "I believe that each and every one of us takes personal pride in what we do and that we are making significant scientific contributions to the world."

Senior managers would be affected by the freeze although they would be eligible for incentive compensation, he said. Variable pay, in the form of bonuses and Spotlight Awards, will still be available to contractors who perform exceptionally.

The pay freeze took effect Jan. 1, 2011. For sites that already have approved contractor salary increases for 2011, the freeze would take effect at the beginning of the next pay increase cycle and would last for two years, Chu said.