M&O Contractor Salary Increase Budget, Submission and Implementation

From the LANL Blog

June 2, 2009
M&O Contractor Salary Increase Budget, Submission and Implementation
Department of Energy
National Nuclear Security Administration
Washington, DC 20585


FROM: GERALD L. TALBOT, JR.
ASSOCIATE DEPUTY ADMINISTRATOR FOR NUCLEAR SAFETY AND OPERATIONS

TO: SITE OFFICE MANAGERS

SUBJECT: M&O Contractor Salary Increase Budget, Submission and Implementation

The purpose of this document is to change the cycle for contractor Compensation Increase Plan (CIP) submissions to October 1 and to delay resultant pay raises to allow consideration of the most recent annual Program Evaluation Plans (PEP) in pay programs.

The change to the CIP submission date from July 1st to October 1st is for two reasons: First, NNSA has approved employee performance incentive pay (bonus) plans at KCP and Y-12 and is expecting proposals shortly from LLNS and LANS. Also, SNL has a variable pay component tied to performance. These plans should provide pay to employees based on the contractors' performance against PEP measures and on individuals' performance. Since Contractors submit CIPs on July 1st each year and many distribute pay raises and bonuses to employees on October 1st, the cycle does not allow consideration of the contractors' PEP performance in setting pay. Second, a delay in submission will allow for use of more current salary survey results published in July to determine position to market. Starting in 2009, the contractors shall submit their salary increase requests for the fiscal year on October 1st and shall not provide pay increases/incentive payments to employees until the PEP evaluation is complete and is considered in employee performance evaluation and pay determinations, where appropriate for this year. For future employee performance cycles, contractors will be expected to develop a method to consider PEP evaluations in pay determination decisions for employees as appropriate. This will facilitate contractor focus on contract performance in executing pay programs.

DOE Order 350.1 and/or your site contract require NNSA approval of the Contractor's annual compensation increase plan (CIP). For FY 2009, NNSA approved salary increase budgets in July 2008 that ranged between 3.5% and 6.1%. However, more recent data indicates that most commercial companies, who are providing salary increases in 2009, have revised their salary increase budgets to between 2% and 3%. Additionally, a recent survey by Grant Thornton LLP shows that 65% of companies surveyed said that they will not give pay raises in 2009. Since our contractors have already distributed their 2009 increases they have likely gained ground in pay relative to their market competitors. Therefore any CIP request greater than 3% will be heavily scrutinized given the data available to date. Updated data will become available by August and should be incorporated into the contractor's FY2010 submissions. Contractors shall perform their usual market analysis to determine their CIP request. It is imperative that annual Compensation Increase Plans (CIPs) submitted for NNSA approval contain adequate, up-to-date information in order for NNSA to make informed decisions regarding expenditure of taxpayer money.

Contracting Officers are hereby requested to make appropriate contract changes to facilitate the October 1st submission date for CIPs with increase salary payment dates that allow PEP evaluation consideration in setting pay increase and bonus amounts for employees. Please direct questions to David Boyd, Director Office of Acquisition and Supply Management, at (202) 586-7554.

Cc: Site Office Contracting Officers
NA-63
NNSA Service Center/OBS
Posted by Frank Young at 8:49 PM