Annual Report on Contractor Work Force Restructuring -- FY 1995 and 1996

NOTE: Appendices can be found separately throughout the Office of Worker and Community Transition Home Page.

Interim Planning Guidance for Contractor Work Force Restructuring

Work Force Planning Guidance and Schedule

Office of Worker and Community Transition Contacts

DOE Work Force Restructuring Field Contacts

DOE Community Transition Field Contacts

Community Reuse Organization Contacts

DOE Order 350.1; Contractor Human Resource Management Programs

Chapter I - Labor Relations

Chapter II - Labor Standards

Chapter III - Reduction in Contractor Employment

OVERVIEW AND SUMMARY

The Office of Worker and Community Transition (the Office) was established by the Secretary of Energy on September 15, 1994. The Office succeeded a task force established by the Secretary in March 1993 to implement the requirements of section 3161 of the National Defense Authorization Act for Fiscal Year 1993. This legislation requires the Secretary of Energy to develop work force restructuring plans for Department of Energy (the Department) defense nuclear facilities whenever work force changes are necessary. For reasons of fairness, the Secretary directed that the process set forth in section 3161 should be applied to the extent practicable wherever work force restructuring takes place in the Department.

This report responds to the requirement of section 3161 to report to Congress on the results of work force restructuring. It covers activities through FY 1995 and FY 1996 and serves to update Congress and the public on the outcomes of work force restructuring and community transition.

This report also fulfills the requirement of section 3157 of the National Defense Authorization Act for Fiscal Year 1995. Section 3157 requires a report to Congress on Economic Redevelopment and Conversion Activities Resulting from Reconfiguration of Department of Energy Nuclear Weapons Complex.

The overall objective of the work force restructuring plans is to ensure that the Department meets its mission requirements, while minimizing the social and economic impacts of restructuring on both workers and communities surrounding these sites. The Office cooperates with (1) appropriate field offices to prepare work force restructuring plans that provide reasonable assistance to affected workers and (2) affected communities to develop community transition plans that address the potential economic impacts of restructuring.

In an effort to widely disseminate information about the Department's restructuring policies, the Office prepares a bi-monthly program update; holds national workshops for stakeholders; established and maintains a home page on the Internet; and publishes guidance for work force restructuring and community transition. These activities allow the Department to monitor and respond to stakeholder input. In addition, the Office helps resolve labor issues related to restructuring.

During the period covered by this report, the Department also has been changing its contracting practices, replacing management and operating contracts with performance-based management and integration contracts that reward completion of specific tasks. In response to these changes, the Department has made work force planning primarily a responsibility of the prime contractors at each site, with the affected field offices having responsibility for evaluating the plans.

Major Accomplishments

Reductions in the Contractor Work Force. From a peak of 148,700 prime contract employees at the end of FY 1992, the Department's contractors separated about 37,000 employees through the end of FY 1996, an average of over 9,300 employees per year.

Voluntary Separations. Of the 37,000 separations since FY 1993, 78 percent were voluntary, including early retirement, non-retirement voluntary separations, and attrition.

Costs of Reductions. The total estimated cost through the end of FY 1996 for separating these 37,000 employees was $643 million, or slightly under $17,400 per employee. This compares favorably with U.S. Department of Defense and private industry benchmarks and is substantially below the upper range of $25,000 in benefits established in the Guidance issued by the Office.

Cost Effectiveness. The average annual cost of employing a full-time prime contractor employee is estimated at $125,000; consisting of approximately $61,000 in total compensation (salary and benefits) and $64,000 in overhead cost. Given these estimates, the Department can reasonably expect to achieve annual savings of approximately $2.3 billion to $4.6 billion per year as a result of the 37,000 reductions made since FY 1992.

Community Transition. Each community adjacent to a site undergoing work force restructuring is eligible to form a Community Reuse Organization (CRO) and apply for funding to plan and implement programs and projects that mitigate the social and economic impacts of restructuring. To date, 11 communities have planning underway, and most of these communities have implemented programs and projects. These activities have retained, expanded or created over 200 businesses and nearly 5,000 jobs. The average cost per job created at the communities surrounding these sites was $14,800. An additional 15,000 to 21,000 jobs are projected to be created over the next few years as the result of these efforts.

Work Force Planning. The Office, at the request of the Under Secretary, has emphasized the need for work force planning by the prime contractor at each site throughout the complex. Draft guidance for carrying out work force planning was provided to Department field offices in July 1996. Contractor, labor, and field representatives met with headquarters staff to discuss and critique the proposed guidance at a workshop in August 1996. As a result, work force planning has become an integral part of restructuring activities for FY 1997 and FY 1998.

Transition Guidance. Over the past year, the Office has revised the Interim Guidance for Community Transition Activities that will be published in the Federal Register in early 1997. The Interim Guidance provides guidance for planning and implementing community projects and programs that mitigate the impacts of work force restructuring. It also establishes performance measures, including financial measures, to enable the Office and appropriate field organizations to evaluate the performance of activities carried out under Community Transition Plans.

Labor Relations. The Office has helped resolve a number of labor relations issues at various Department sites, such as a job classification dispute involving the building trades council at Sandia National Laboratory, and the resolution of preference-in-hiring issues at the Los Alamos National Laboratory. The Office has responded to questions about allocation of work between major unions at several sites and about appropriate labor standards coverage, an issue raised by both operating and construction unions.

Public Participation. Over the last two years the Office has held four National Stakeholders Conferences in Denver, Atlanta, Albuquerque, and Washington, DC. Program Updates, a periodic report about Office and field activities, is issued every two months. The Office also has established a home page on the Internet at http://www.stat-usa.gov/owct.html. In addition, the Office has held workshops, conferences, and working sessions that address specific topics such as work force restructuring, community transition, labor relations and work force planning.

Organization of This Report

The Report is organized into three sections. Section I summarizes work force restructuring and community transition activities at all sites. It outlines the separation patterns, costs and cost savings, activities to mitigate restructuring impacts, community transition activities, satisfaction with restructuring, lessons learned, and the results of steps taken following the previous annual report. Section I also provides a summary of the U.S. Department of Energy Displaced Workers Questionnaire for Fiscal Year 1995. Section II summarizes work force restructuring and community transition activities for defense nuclear sites. Section III summarizes work force restructuring activities at all non-defense sites.

Each site summary in Section II and several site summaries in Section III are printed as separate sub-sections to facilitate individual reprinting. At the start of each site sub-section, an exhibit summarizes the work force restructuring analysis that follows. Where applicable, the results of the 1995 displaced worker survey are included.

SECTION I: SUMMARY OF WORK FORCE RESTRUCTURING AT ALL SITES

I.0 Background

Following World War II, the onset of the Cold War between the United States and the former Soviet Union led to the buildup of an elaborate network of research, production, and testing facilities known as the nuclear weapons complex. During its half century of operations, this network expanded to 20 major facilities covering 2.3 million acres of land with 120 million square feet of buildings. To meet nuclear weapons production requirements and other national security obligations, the Department and its predecessor agencies assembled an extensive contractor work force. The breakup of the Soviet Union in 1991, together with President Bush's announcement of the first unilateral nuclear weapons reduction agreement on September 27 of that year, signaled the end of the Cold War and dramatically reduced the need for further nuclear weapons production.

The end of the Cold War also brought about fundamental changes in contractor work force requirements as the Department shifted from weapons production to other missions such as environmental management, weapons dismantlement, industrial competitiveness, and science and technology research. To carry out these new missions, the work force expanded by nearly 22,000 employees to 148,700 contract workers by the end of FY 1992. These employees were hired in addition to the existing weapons production work force. In 1993, faced with the post-Cold War mission, significant budget reductions, and overstaffing problems, the Department began to restructure its work force.

In passing section 3161 of the National Defense Authorization Act of 1993,⁽¹⁾ Congress encouraged the Department to establish policies to assist workers and communities affected by this restructuring. Section 3161 requires the Secretary of Energy to develop a plan for restructuring the work force for a defense nuclear facility whenever there is a determination that a change in the work force is necessary. Section 3161 also identifies objectives that each plan should address, including: minimizing social and economic impacts; giving workers adequate notice of impending changes; minimizing involuntary separations; offering preference-in-hiring to the extent practicable to those employees involuntarily separated; providing relocation assistance under certain conditions; providing retraining, educational and outplacement assistance; and providing local impact assistance to affected communities.

To address the challenges posed by changing missions, and consistent with departmental policy to apply the work force restructuring process at all sites undergoing significant work force changes, the Secretary of Energy established a Task Force on Worker and Community Transition on April 21, 1993. The primary function of the Task Force was to coordinate adjustment assistance consistent with section 3161. The Task Force was subsequently replaced by the Office on September 15, 1994, and assigned the responsibility for reviewing and evaluating work force restructuring plans from all sites. In cooperation with affected field offices, the Office has emphasized retention of workers with skills critical to ongoing or changing site missions, and has integrated separation incentives with this objective.

Since 1993, the Office has issued three versions of general guidance to field offices tasked with drafting work force restructuring plans. This guidance addresses the need for plans to meet the objectives of section 3161 and offers guidelines for preparing and structuring these plans.

I.1 Changing Separation Patterns

Fiscal Year 1992-Fiscal Year 1996. The Department-wide prime contractor work force has decreased by 37,000 employees since the FY 1992 peak of 148,700. Work force restructuring plans coupled with mission changes, contract reforms, and budget cuts helped reduce the number of employees to 121,800 by the end of FY 1995, and to 111,900 by the end of FY 1996 (Exhibit I.1).

This reduction in contractor employment of 25 percent since FY 1992 has been accomplished consistent with the objectives of section 3161. Since FY 1993, voluntary separations, including early retirement, and non-retirement voluntary separations, have accounted for 78 percent of all separations. The remaining 22 percent have been involuntary (Exhibit I.2).

Data for FY 1993 and FY 1994 were gathered early in FY 1995 and, as a consequence, include some figures for that year. The Office has since collected data by fiscal year starting in FY 1995 and FY 1996. While the data from FY 1993 and FY 1994 are not exactly compatible with data collected in FY 1995 and FY 1996, meaningful comparisons can be made.

Fiscal Year 1993-Fiscal Year 1994. In FY 1993, as the Department began work force restructuring, voluntary separations were the preferred method of prime contractor reductions. During FY 1993 and FY 1994, voluntary separations accounted for 82 percent of the total separations. Nearly two-thirds of all voluntary separations occurred through non-retirement incentives, followed by early retirement and attrition. Involuntary separations comprised the remaining 18 percent of Department-wide contractor work force separations reported for FY 1993 and FY 1994 (Exhibit I.3).⁽²⁾

Fiscal Year 1995. Nearly 18,800 prime contractor workers were separated from the Department in FY 1995. Even though the number of separations tripled, the percentage of voluntary and involuntary separations in FY 1995 remained consistent with FY 1993 and FY 1994 data. Voluntary separations dominated FY 1995 figures, representing 80 percent of the total separations. The remaining 20 percent were involuntary. Within the cohort of voluntary separations, the percentages of early retirements and other incentivized separations declined while attrition expanded (Exhibit I.4).

Fiscal Year 1996. More than 11,700 prime contractor workers were separated from the Department in FY 1996, a 38 percent reduction from FY 1995. Voluntary separations still outnumbered involuntary ones, representing 71 percent of all separations (Exhibit I.5). Involuntary separations expanded to 29 percent.

Although the FY 1995 and FY 1996 data are not entirely comparable to earlier data, comparisons show a trend toward fewer incentivized separations and more separations through managed attrition. Incentivized voluntary separations declined from 72 percent of all separations in FY 1993-1994 to 34 percent of all separations in FY 1996. At the same time, attrition increased from 9 percent to 37 percent.

I.2 Costs and Cost Savings ⁽³⁾

The purpose of work force restructuring is to increase the cost-effectiveness and efficiency of Department-wide site operations by matching skilled employees with mission requirements. To achieve this result, prime contractors must separate or retrain workers whose skills no longer match mission needs. Sites employ a variety of means to minimize the economic and social impacts of voluntary and involuntary separations. These include enhanced severance for non-retirement voluntary separations, early retirement incentives, tuition assistance, medical benefit extensions, and outplacement services. The costs associated with these benefits are offset by savings realized from restructuring the work force.

Separation Costs - Fiscal Years 1993 and 1994. The total cost of the work force restructuring plans for FY 1993 and FY 1994 ($165.4 million), averaged over the 8,029 affected workers, was $20,600 per employee. The Department's Report on Work Force Restructuring Plans During FY 1993 and 1994, issued in February 1996, provides a detailed discussion of these cost figures.

Separation Costs - Fiscal Year 1995. The total cost incurred during FY 1995 was $313 million, and the average cost per separation was $16,700 (Exhibit I.6). Nearly 82 percent of these funds went to costs associated with voluntary separations such as early retirement and non-retirement voluntary separations. Severance costs for early retirement averaged $46,500 per recipient. Non-retirement voluntary separations averaged nearly $19,900 for severance per separation, and $21,000 when ancillary benefit costs are included. The severance cost for involuntary separations was $15,900 for each involuntary separation receiving severance benefits (not including those involuntarily separated with no benefits).

Separation Costs - Fiscal Year 1996. The total cost incurred during FY 1996 was $164 million, and the average cost per separation was $13,900 (Exhibit I.6). Over 68 percent of the total went to voluntary separation incentives. Severance costs for early retirement averaged $39,600 per recipient. Non-retirement voluntary separations averaged $23,800 for severance, and $27,000 when other additional benefits are included. The severance cost for involuntary separations was $10,800 for each separation with severance benefits (not including those involuntarily separated with no benefits).

Cost Comparisons. The cost-effectiveness of the Department's work force restructuring plans has improved since FY 1993. The average cost per worker has steadily declined since FY 1993 and FY 1994, when the overall average separation cost was about $20,600. In FY 1995, the average separation cost dropped to $16,700 per worker, and to about $13,900 in FY 1996. These figures represent an average cost of all separations, including attrition and workers separated who were not eligible for enhanced benefits. These declines appear to be due to increased attrition and involuntary separations of employees not eligible for enhanced severance.

Early retirement costs have remained fairly constant for the period reported. For FY 1993 and FY 1994, per capita early retirement costs averaged over $42,200, followed by $46,500 for FY 1995, and $39,600 for FY 1996. The costs of non-retirement voluntary separations have increased over the same period. Average costs of non-retirement voluntary separation severance packages have risen from $18,200 in FY 1993 and FY 1994, to $19,900 in FY 1995, and $23,800 in FY 1996. This is due, in part, to more senior personnel opting for this type of separation.

The severance costs of involuntary separations have not followed a consistent pattern. In FY 1993 and FY 1994, the average severance cost of involuntary separations was $10,100, $15,900 in FY 1995, and $10,800 in FY 1996. The average severance cost does not include ancillary benefits or unemployment insurance received by those who were involuntarily separated.

Cost comparisons among the ancillary benefits yield mixed results. The average cost of extended medical benefits was $4,800 per recipient in FY 1993 and FY 1994, then decreased to $1,800 in FY 1995 and $2,000 in FY 1996. The decrease in average cost for medical benefits may be due to some recipients being in the second and third year of the extended medical benefits program, which would bring the average cost down. The average cost of relocation went from $1,600 per person in FY 1993 and FY 1994, to $2,700 in FY 1995, and $2,300 in 1996. The cost of educational assistance followed the same pattern with an average cost of $2,200 in FY 1993 and FY 1994, $2,200 in FY 1995, and $1,900 in FY 1996. The average cost of outplacement services was $400 in FY 1995 and $1,000 in FY 1996 (average cost was not calculated in FY 1993 and FY 1994.)

External Benchmarking of Costs. The Office has conducted a number of activities to gain knowledge and understanding of best practices in work force restructuring, including: (1) conducting a review of the relevant literature; (2) meeting with internal experts on human resources issues and benefits programs for Federal and private-sector restructuring; and (3) hosting or attending symposia and workshops where experts in private- and public-sector work force restructuring presented best management practices (Exhibit I.7).

Based on this information, it was determined that the enhanced voluntary separation package generally offered by the Department's contractors (an average of one and one-half to two week's pay for each year of service) is similar in value to enhanced severance packages offered in the private-sector. In addition, the overall goal of approximately $25,000 per separation is consistent with Congressionally-approved Federal buy-out packages. In general, the average cost per separation compares favorably with those reported by the Department of Defense and many private sector firms (for example NCR's average separation was in excess of $30,000 and ATT set aside $75,000 per separation).

Annual Cost Savings. Exhibit 1.8 illustrates the cost savings associated with the separations for the periods FY 1993 and 1994, FY 1995, and FY 1996, on a yearly basis.⁽⁴⁾ Total cost savings in the year that separations occur depend on the timing of the action and the ability of the contractor to eliminate overhead costs associated with the separated employees. Cost savings are also reduced by the one-time costs of separation. In future years, however, the Department will save, on average, the total cost of compensation plus the overhead associated with the separated employee. Based on assumptions of total annual cost for each employee, we calculate a range of potential annual cost savings of: (1) $490 million to $1,004 million for the 8,029 separations in FY 1993 and FY 1994; (2) $1,145 million to $2,346 million for the 18,764 separations in FY 1995; and (3) $718 million to $1,471 million for the 11,765 separation in FY 1996. The range of cost savings reflects, at the low end, savings from salary and benefits, and savings from salaries, benefits, and overhead at the upper end. One-time costs associated with these separations were $165 million in FY 1993 and FY 1994; $313 million in FY 1995; and $164 million in FY 1996.

Budget Reductions. A measure of the Department's ability to capture these cost savings is the decrease in the Department-wide budget from FY 1993 through FY 1996. Another measure indicating that the Department is capturing savings from work force restructuring is the decrease in total spending at major field sites. Exhibit I.9 compares the percentage changes in inflation-adjusted budgets for the Department and selected sites between FY 1993 and FY 1996, as well as the percentage reductions in prime contractor employment over the same period. These measures indicate that the Department's budget, both globally and at major sites, is declining consistent with reductions in contractor employment. It also suggests that contractor employee reductions are not being offset by increases in subcontractor employment because increases in subcontracting would increase total outlays. Data from Hanford and Savannah River indicate that funding for subcontracting has been declining over the past four years, by 40 percent at Hanford and 25 percent at Savannah River.

I.3 Mitigating Restructuring Impacts

The Department employs a number of measures to mitigate the impacts of work force restructuring, especially the impacts of involuntary separation. Several measures have been used successfully to avoid the need for separations: (1) placing at-risk workers in other positions, either directly or by training them for other jobs that may require new skills; (2) transferring workers to other sites with available positions created by changing missions or attrition; (3) providing hiring preferences for involuntarily separated workers. Additionally, sites can offer displaced workers medical benefits, relocation assistance, a variety of out placement services, and educational assistance. Exhibit I.6 presents information discussed in this section.

Placement. In FY 1995, over 1,795 workers were placed in other positions at the sites where they worked. Many of these workers would have been separated had placement not been a viable option. Some minor costs were incurred, averaging less than $100 per employee. An additional 236 workers were placed through retraining at a cost of over $8.6 million or $36,200 per worker. This cost includes worker salaries while undergoing training. The bulk of this retraining represents completion of a program to develop specialized skills for the Defense Waste Processing Facility at the Savannah River Site. In addition to internal transfers, 108 workers were transferred to available positions at other sites. These costs totaled almost $263,000 or an average of about $2,400 per worker.

In FY 1996, 601 workers were placed without retraining, and 220 workers were placed with retraining. Retraining costs dropped sharply to $1,000 per recipient, possibly because a smaller number of workers received wages while retraining. Completion of the training program at the Savannah River Defense Waste Processing Facility was also a factor. The number of workers transferring to other sites in FY 1996 dropped to 31.

Medical Benefits. In 1992, Secretary of Energy James Watkins directed that all prime contractor employees separated from DOE sites not otherwise eligible for another medical program would be eligible for displaced worker medical benefits. Under this program, employees continue to participate in their former employer's medical program, but at a cost to the participant that increases over time. During the first year, the participant contributes the same amount as when he or she was employed by the company. In the second year, the employee pays one-half the applicable Consolidated Omnibus Budget Reconciliation Act (COBRA) rate. In the third and subsequent years, the employee pays the full COBRA rate.

About 3,300 employees separating in FY 1995 used this coverage at a total annual cost of about $6.1 million, an average of $1,800 per worker. In FY 1996, over 3,700 employees used displaced worker medical benefits at a total annual cost of $7.5 million, an average of $2,000 per worker.

Relocation Assistance. The Department offered relocation assistance to separated prime contractor employees to help them relocate to jobs at other sites where such costs are not normally reimbursed. In FY 1995, about 177 employees took this benefit, costing $480,000, or nearly $2,700 per employee. Declining budgets at other sites have limited opportunities for such transfers. The number of workers receiving relocation assistance in FY 1996 declined to 106 with the cost of assistance decreasing to $2,300 per worker.

Outplacement Services. All Department facilities included in this Report have access to outplacement services to assist separated employees in finding new employment either within or outside the Department. Some sites use consultants or subcontractors to provide such services, while others use in-house contractor staff. Some centers are staffed with job counselors, state employment services personnel, and employee assistance counselors to help separated employees locate possible new employment, prepare resumes, and accommodate personal and family concerns resulting from their separations. Services often include automated job listings, skills assessments, workshops, resource libraries, clerical help, job fairs, and résumé distribution.

Almost 9,900 separated employees used some outplacement services in FY 1995 at a total cost of over $4.0 million, averaging about $400 per employee. In FY 1996, over 6,400 employees used outplacement services, averaging $1,000 per employee. The higher average cost per employee may reflect increased outplacement assistance needed for recently separated workers who require additional services to locate employment. This may result from tight job markets in the communities affected by the Department's work force restructuring.

The Office recently contracted with a national outplacement services firm to provide services to sites as requested. These services are available on a cost-per-employee basis, less than the average-per-employee cost in FY 1995 and about 30 percent of the estimated cost per employee for FY 1996.

Educational Assistance. Employees, whether voluntarily or involuntarily separated, were often eligible to receive financial assistance of up to $10,000 per employee over a two-year period. Some sites capped the total value of benefit packages, and employees receiving educational benefits received correspondingly smaller benefits in other areas.

Over 1,600 employees took advantage of educational assistance at a cost for FY 1995 of almost $3.5 million or about $2,200 per employee. In FY 1996, the number of separated workers receiving some educational assistance increased to over 3,300. While the number of workers receiving this benefit from FY 1995 increased, the average cost for this assistance dropped to $1,900 in FY 1996. This drop may reflect declines in costs as former workers finish their education. Specific educational programs developed in cooperation with local community colleges and targeted to separating workers may have also led to reduced costs.

Preference-in-Hiring. Consistent with section 3161, all defense nuclear facility employees involuntarily separated under work force restructuring who meet certain qualifications for service at Department sites are eligible for preference-in-hiring elsewhere in the complex. At the time the legislation was enacted, there was reason to assume that positions would be available for employment in the Department's new Environmental Restoration and Waste Management program. However, because of budget reductions, the projected growth in the program has not materialized. Consequently, the use of preference-in-hiring for involuntarily separated defense nuclear employees to obtain employment at other facilities has been limited. Site records regarding use of preference-in-hiring are incomplete. To facilitate re-employment in other programs, the Department developed the Job Opportunity Bulletin Board System (JOBBS), an electronic system to announce vacancies and to allow employees to post resumes for review by other contractors and programs.

I.4 Community Transition

The Department's community transition program is designed to minimize the social and economic impacts of work force restructuring at defense-related facilities by providing local impact assistance to affected communities. The program encourages the local communities affected by the Department mission changes to chart their own economic future through the creation of a community reuse organization (CRO), similar to the base closure committees created to assist communities affected by military base closures.

This program began in 1993, with most job and business development activities starting in 1994 or later. Initial program guidance for the community transition program was first developed in the spring and summer of 1993, shortly after the formation of the Department's Task Force on Worker and Community Transition. In the intervening period, the program has evolved through an extensive process of stakeholder and public involvement. Revisions to the Interim Guidance for Community Transition Activities, that will be published in the Federal Register in January of 1997, will increase accountability in Headquarters, field offices, and CROs by clarifying roles and responsibilities among program participants. The revised guidance also establishes evaluation criteria for funding decisions and program-specific performance measures.

Job Creation. To date, eleven communities have received community transition assistance. About $151 million has been committed to community transition activities, but only $73 million had actually been spent as of the date of this report. These expenditures resulted in the retention, expansion, or creation of over 200 businesses and the creation of 4,900 new jobs. After only four years, the Department's community transition program has created one new job for every $14,800 in assistance provided. An additional 15,000 to 21,000 jobs are projected to be created by the CROs over the next few years as the result of initiatives stimulated by these funds. Exhibit I.10 summarizes community transition funding and job creation statistics by site for FY 1993 through FY 1996.

Job Creation Benchmark. The Department's community transition program is comparable to the base closure program of the Department of Defense (DoD). As in the case of a base closure, the challenge at the Department's sites is to stimulate local growth to replace jobs lost as the result of an entire site either closing or downsizing in a community. The General Accounting Office's most recent study of 60 DoD base closures in 1988, 1991 and 1993 shows that over $30,000 federal dollars have been spent for each job created.⁽⁵⁾ The Department's experience of creating one job for less than $14,800 per job compares favorably, but we are aware that other Federal and state agencies have benchmarks lower than our initial experience. For example, the Department of Commerce's Economic Development Administration (EDA) has created one job for every $2,500 in Federal assistance.⁽⁶⁾

However, EDA has stated that job creation is a long-term undertaking that should properly be viewed over as many as 20 years, and requires several years to begin producing significant results, therefore this benchmark should be used to measure a mature program .⁽⁷⁾ In addition, EDA has indicated that a Small Business Administration (SBA) cost of $35,000 per job created is an appropriate benchmark for revolving loan funds programs, which are often used by communities affected by the Department's restructuring.

The new Interim Guidance for Community Transition Activities establishes an evaluation criterion for community proposals that they seek to create at least one job for each $10,000 to $25,000 in Federal funding received. The average cost per job created for the community transition program to date is $14,800, which is well within this range, and also below the DoD and SBA benchmarks of $30,000 and $35,000, respectively.

Office Initiatives. Economic development is a long-term process that requires flexible approaches and multiple strategies to achieve success. To improve the success of the program, the Office has undertaken several initiatives that will provide ideas and assistance to the communities.

Inter-agency agreement. This past year, the Office entered into an inter-agency agreement with the U.S. Department of Commerce's Economic Development Administration (EDA.) for third party review of community transition proposals. EDA has over 30 years of economic development experience working with all levels of government and the private sector. This will improve the quality and consistency of the proposals, and increase the probability of successful outcomes.

Integration team. The Office has formed a work force integration team to refine the Department's benchmarks and identify best practices for community transition activities. This initiative will serve to increase information sharing among the affected communities and result in more effective program design.

Program Assessments. The Office is implementing a process for Department field organization program assessments to meet the responsibilities of overall program direction and accountability for the use of funds for local economic development. These program assessments will identify areas for improvement, validate program execution, document successes that can then be shared with other locations, and improve communication and understanding among program participants.

I.5 Satisfaction with Restructuring

For the second successive year, the Office conducted a survey of separated employees to determine the effects of separation on individuals and identify areas for improvement (Exhibit I.11)

A total of 11,016 displaced workers received surveys. This represented about two-thirds of the prime contract employees separated in FY 1995. Of the surveys sent, 3,877 were returned, representing a 35 percent response rate that equaled the response rate of the previous year. This survey included demographic information to determine whether the employees who responded represented site populations in general. Analysis of this data shows that the personal characteristics of the respondents from each site generally reflected the total population at that site and that the overall characteristics of the respondents matched the overall characteristics of workers across the complex at sites surveyed.

In general, more respondents were satisfied than dissatisfied with the treatment they received during work force restructuring -- 58 percent were satisfied, while 35 percent were dissatisfied. These results indicate a higher degree of dissatisfaction among respondents than among workers displaced in FY 1993 and FY 1994.

Of those responding, 57 percent reported that they are currently doing what they intended to do after separation. Fifty-five percent wanted full time employment: 50 percent as employees and another 5 percent as self-employed individuals. Additionally, while 16 percent wanted to retire full time, over 20 percent were actually fully retired. Of those intending to find full-time employment, 54 percent are currently employed full-time. At the time of the survey, 23 percent of respondents were unemployed and searching for work. The majority of these individuals had been unemployed for less than six months.

Respondents were asked whether they found the Department's outplacement services helpful when they left the site. Of those individuals seeking employment, 64 percent used outplacement services, and 67 percent of those using outplacement services reported the services helpful in finding employment. Sixty percent said they were given the opportunity to review the work force restructuring plan at their site. Approximately 53 percent reported that the work force restructuring plan was communicated adequately, and 70 percent stated that plan benefits were clearly explained.

I.6 Lessons Learned and Steps Taken

A review of Lessons Learned and Next Steps from the previous report issued by the Office, Report on Work Force Restructuring Plans Completed During Fiscal Years 1993 and 1994 (February 1996), helps to clarify the progress the Department has made in assisting workers and communities in transition:

Voluntary Incentives

Lesson Learned. Analysis of information provided by site and Headquarters personnel, community representatives, contractors, and labor representatives involved in work force restructuring suggested that the use of voluntary incentives was an effective way to accomplish restructuring objectives. The Office decided to build on initial successes and continue to offer voluntary separation programs to the extent feasible under evolving budgetary constraints.

Steps Taken. The Department has continued to offer voluntary separation incentives, with the number and percentage of voluntary separations remaining approximately the same in FY 1995. However, analysis of FY 1996 data suggest that the use of incentives decreased because of skill mix issues and the reduced pool of workers who are likely to accept incentive programs after declining to participate in earlier offers.

Cost Effectiveness of Voluntary Separations

Lesson Learned. While it was initially difficult to predict separation costs in early plans, analysis of the plans suggested that voluntary separations were a cost-effective way to reduce the contractor work forces at the sites involved.

Steps Taken. The costs per person of restructuring have declined even as the number of separations has increased.

Communications

Lesson Learned. The FY 1993 and FY 1994 report noted the need for effective and open communications when sites prepare work force restructuring plans. Early plans did not always reflect the amount and nature of communications with stakeholders.

Steps Taken. At the national level, the Office has held several stakeholder workshops each year and has implemented regularly scheduled teleconferences with CROs, community transition field office contacts, and work force restructuring field office contacts at sites undergoing restructuring.

While stakeholder input has improved, there is still need for better communication with affected workers and community representatives. Many site work force restructuring plans now recognize the need for stakeholder input, and are identifying processes for accomplishing it. The Office will continue to work with field offices to further improve planning, implementation, and reporting of stakeholder participation.

Outplacement Services

Lesson Learned. Problems of access sometimes prevented separating workers at some sites from effectively using outplacement services. Uncertain record keeping made it difficult for the Office to track usage. Often a site outplacement center would record only the number of visits made by users, not the discrete number of workers using available services. Additionally, the survey of displaced workers in FY 1993 and FY 1994 indicated that they did not consider many of the services provided to be especially useful.

Steps Taken. The use of outplacement services has increased and many workers surveyed in FY 1995 reported that outplacement services were more useful. The Office has also contracted with a nationally recognized outplacement services firm that will offer a range of outplacement services to individual sites. This service may be particularly useful to smaller sites where setting up an outplacement center may not be cost-effective.

Preference in Hiring

Lesson Learned. Sites reported that preference-in-hiring was not widely used.

Steps Taken. Preference-in-hiring was included in section 3161 because it was thought that a large number of separating defense workers could, either directly or through retraining, transfer to jobs involved in clean up of former production sites. Because of budget constraints, downsizing across the complex, privatization of some clean up activities, and other factors, the need for large numbers of prime contractor clean-up jobs has not materialized. Additionally, many jobs that might have been available to separated workers have been filled by onsite transfers, direct placements, and placements of retrained workers who would themselves otherwise be at risk of separation. For these reasons, preference-in-hiring may not be a substantial factor in future work availability for separating workers, but may be a major factor in privatization efforts.

Notwithstanding the current limited number of available jobs for exercising the hiring preference, the Department recognized that this was a very important benefit to eligible workers, and developed the Jobs Opportunity Bulletin Board (JOBBS) where all job openings at the Department's sites could be advertised, and former Department workers could list their resumes and advertise their availability for job openings, and those with the hiring preference would be specially highlighted. In 1996, Internet access to JOBBS and the capability to scan information into resumes was added. The Department will continue to promote the rehiring of displaced workers who are eligible for the hiring preference.

Reemployment/Education

Lesson Learned. Placement in other positions at some affected sites, either directly or with onsite retraining, has reduced the number of workers that had to be separated. Additionally, tuition reimbursement has helped some separated workers improve their qualifications for new employment.

Steps Taken. Internal and external placement continues to be an effective means of work force restructuring with about 2,100 workers in FY 1995 and 850 workers in FY 1996 placed in other positions, either on site or at another DOE site. Separation of these workers would have increased the number of prime-contractor separations by almost 13 percent and would have increased the number of required new hires by a corresponding figure. As opportunities diminish for new positions within the Department, retraining for available jobs and educational assistance for jobs outside the Department will play a larger role in reemployment.

Relocation Assistance

Lesson Learned. In FY 1993 and FY 1994, relocation assistance was used sparingly. This assistance was available to separating workers taking jobs at other sites when new employers did not pay relocation costs. Workers may have been uninterested in moving from established communities or may have been reemployed by businesses willing to pay relocation costs.

Steps Taken. No steps taken. In FY 1995 and FY 1996, relocation assistance remained small. The Department expects relocation assistance to continue to play a minor role in assisting workers seeking new employment.

Coordination with Community Planning

Lesson Learned. The Department needs to better coordinate work force planning with community transition planning. At the time of the previous report, steps were underway to increase coordination.

Steps Taken. A substantial revision of the Community Transition Guidance is being issued by the Office for transition planning and implementation. Earlier guidance had primarily addressed the need for communities to plan for impacts of the jobs lost at the nearby site and to help create, to the extent practicable, jobs for which separated workers would be qualified. The revised Guidance details an overall program scope, establishes roles and responsibilities, outlines the process for preparation, submission and review of plans, sets out plan contents, and establishes performance measures and financial management criteria. The process for revising the Guidance involved numerous meetings with community representatives in workshops, conference calls, working groups, and peer reviews.

Worker Stress

Lesson Learned. Separating workers as well as those remaining at sites undergoing restructuring continue to experience anxiety and distractions. Sites need to better identify critical skill categories that would be impacted during restructuring and emphasize retraining where possible to prevent valued employees from being separated unnecessarily. The Department needs to improve work force planning and develop a structured approach to identify skills and abilities needed to fulfill changing missions at the sites.

Steps Taken. Senior officials in the Department have reemphasized the need for advanced work force planning to address problems of anxiety in both separating and retained work forces and to better retain workers whose abilities and skills are considered essential to new missions. The Office is supporting these efforts in a number of ways -- first of all by establishing a work force planning process based primarily on planning by site prime-contractors in consultation with their work forces. Review responsibility is devolved to field offices -- both to speed the review process and establish reviews at levels closest to the sites. The Office will advise and assist in this decentralized process, reducing the time and resources needed for review and approval at Headquarters. The Office has developed a corporate Work Force Information System (WFIS). This system will be fully operational by the summer of 1997.

The Office is also addressing stress management. In March 1996, the Office held a workshop in Atlanta for labor, contractor, field office human resources personnel, and other stakeholders to address the need to establish best practices in dealing with separating and remaining workers. The Assistant Secretary for Environment, Safety, and Health led a discussion at the workshop on worker participation in health and safety at the sites. The results of these sessions were published in the National Stakeholder Workshop Summary Report, issued in May 1996. The Office has also sponsored two surveys over the last two years to examine the circumstances of displaced workers at a number of sites undergoing restructuring.

More recently, the Office has joined with the Office of Environment, Safety and Health to support a study by the Boston University School of Public Health to examine the effects on employees of downsizing at selected nuclear weapons sites. The study is structured to provide additional knowledge about the best approaches to work force restructuring in terms of improved employee well-being and organizational performance.

I.7 New Lessons and Next Steps

Based on the experience of the Office in FY 1995 and FY 1996 new lessons learned and follow-on actions have been identified.

Review Processes

New Lesson. The current process for review and approval of work force restructuring actions by the Department needs to be streamlined to ensure appropriate oversight and timely action to meet time-sensitive requirements at sites.

Next Steps. The Office established a Process Improvement Team to examine the steps involved in preparing and evaluating work force restructuring plans. Items being addressed include timing and amendments of plans, requirements for non-defense sites, omnibus plans with separate action approvals versus plans for each separation action, increased stakeholder participation, overseeing plan implementation, contractor versus Department liabilities, work force planning and tracking relationships, roles of labor organizations, and coordination with community transition plans. The outcome of this effort will be streamlined planning and approval process for FY 1997 work force restructuring activities and will be incorporated into subsequent versions of the Department's contractor work force restructuring guidance.

Impact of Contract Reform

New Lesson. As the Department moves from management and operating contracts to integrating contracts, the role of the Office and the Department in work force planning is changing. Integrating contracts involve a lead contractor with responsibility for integrating a number of other, more specialized contractors that perform discrete but varied functions such as tank waste clean-up, safety activities, security, and materials supply. As responsibility for these functions are disseminated to individual contractors, adjustments will be required in the methods used to track employment and prepare for work force planning.

Next Steps. The Office is changing its approach to developing work force restructuring plans, requiring that prime or integrating contractors, in consultation with their work forces, have responsibility for basic planning. Rather than following a structured approach with detailed guidance from DOE Headquarters, the planning will involve three key ingredients:

(1) a process that allows contractors maximum flexibility to structure their own work forces while keeping the Office apprised of any significant changes;

(2) the Work Force Information System (WFIS), which uses the Common Occupational Classification System (COCS) across all sites; and,

(3) a set of performance measures, developed primarily from data already collected at each site, to assist the Office in evaluating each site's work force restructuring activities and to assess the overall departmental impacts of restructuring.

The Office held a workshop in August 1996 for field office, contractor, labor, and community representatives to discuss the potential impacts of the proposed work force planning process. The consensus of workshop attendees was that most contractors and field offices are comfortable with this approach with some modifications to all three ingredients.

Needs of Remaining Workers

New Lesson. As the Department continues to reduce its work force, it is important to attend to the needs of remaining workers. Changes in work force composition and size will affect remaining workers, in some cases affecting their performance and, potentially, their physical or mental health.

Next Steps. The Office is supporting a Boston University School of Public Health study to examine the effects on the well-being of surviving workers at several sites described in this report. The specific aims of the study are to: identify and measure the effects of downsizing on organizational climate, employee health and performance; determine the most significant relationships between certain downsizing practices and employee health that suggest areas for intervention; and develop a health promotion program based on the most significant problems associated with downsizing.

The project will use mechanisms such as site visits, on-site personnel interviews, worker surveys, focus groups, and review of organizational policies, procedures, and health and performance records. The study will also examine the degree of employee participation in the restructuring process, impacts on the employee assistance programs, and impacts on survivor workloads.

Critical Skills and Institutional Knowledge

New Lesson. As site work forces are further reduced, it is essential to maintain critical skills and institutional knowledge. Declining budgets and mission changes will continue to affect work force requirements, making both separations and skill retention increasingly difficult.

Next Steps. The work force restructuring practices the Office outlined in guidance to the field -- and instituted through field offices and prime contractors -- compare favorably with private sector practices (Exhibit I.7). A series of best practices that have worked in other restructuring efforts will be used to maintain critically skilled workers and to separate surplus workers in the most supportive and cost effective ways possible. The Office's past experience providing workable severance techniques, its current participation in a national study of best downsizing practices, and its ongoing research in emerging practices that work in both the public and private sectors will all contribute to a revision of the Interim Guidance for Contractor Work Force Restructuring in the spring of 1997. These revisions will be shared with stakeholders, including field offices, labor representatives, contractors, community reuse organizations, and the general public to help craft a series of practices.

SECTION II: DEFENSE NUCLEAR SITES

II.0 Background

Defense nuclear sites accounted for 93 percent of all workers separated in FY 1995 and 87 percent in FY 1996. Prime-contractor separations at these sites were 93 percent of all separations in FY 1995 and 96 percent in FY 1996.

II.1 Separation Patterns

Fiscal Year 1995. There were 17,510 defense prime-contractor separations in FY 1995. Of these separation, 14,207 left voluntary; 2,711 took early retirements, 6,188 accepted a voluntary separation package, and 5,308 employees left through attrition. An additional 3,303 were separated involuntarily (Exhibit II.1 and Exhibit II.2).

Fiscal Year 1996. The number of prime-contractor separations decreased an estimated 42 percent, from 17,510 workers in FY 1995 to 10,222 workers in FY 1996. There were 7,105 voluntary separations; 981 took early retirement, 2,411 accepted a voluntary separation package, and 3,713 employees left through attrition. An additional 3,117 were separated involuntarily (Exhibit II.3).

II.2 Costs and Cost Savings

Total separation costs were $299 million in FY 1995, and $146 million in FY 1996.

The average cost per prime-contractor separation at defense nuclear sites in FY 1995 was approximately $17,100, and $14,300 in FY 1996.

The average cost per early retirement was $46,400 in FY 1995, and decreased to $39,100 in FY 1996. This may be because less generous benefits packages were offered in reaction to declining budgets and because lower seniority candidates were eligible for these programs. The average cost per recipient for non-retirement voluntary programs remained stable at $19,600 for FY 1995, but increased to $25,600 in FY 1996. Cost per recipient for involuntary separations changed from $10,100 in FY 1993 and FY 1994, to $16,500 in FY 1995, and $10,700 in FY 1996.

Fiscal Year 1995 and 1996 Cost Savings. Exhibit II.4 illustrates the cost and cost savings associated with separating for FY 1995 and FY 1996, on a yearly basis. Based on total annual cost per employee, we calculate a range of potential yearly savings for defense site employees separated of: (1) $1,068 million to $2,189 million for 17,510 workers separated in FY 1995; and (2) $624 million to $1,278 million for 10,222 workers separated in FY 1996. One-time costs associated with these separations were $299 million in FY 1995; and $146 million in FY 1996.

II.3 Mitigating Restructuring Impacts

Placement. In FY 1995, 1,990 employees were placed in other positions, either at the same site or other sites. The majority of these, 1,673 employees, were placed at their same site without retraining. Another 218 employees who were place internally received retraining at an average cost of $39,300 per employee. All except one of these retrainees were located at the Savannah River Site Defense Waste Processing Facility. Costs were high because of the nature of the training and because workers received full pay during retraining. Finally, 99 employees were transferred to other sites for placement at an average cost of $2,700 per employee.

The number of workers internally placed without retraining in FY 1996 dropped to 573 because of the smaller number of available vacant positions. External transfers also dropped substantially to 14 due to the decline in job openings across the complex. Workers placed through retraining in FY 1996 remained stable at 220, but the average cost decreased substantially to $1,100 per person.

Medical Benefits. In 1995, 3,071 separated workers took extended medical benefits with an average cost of $1,900 per worker. In FY 1996, 3,230 employees received medical benefits with an average cost of $2,000 per recipient.

Relocation. In FY 1995, 177 employees received relocation assistance at an average cost of $2,700. Another 104 employees relocated in FY 1996 with an averaged cost of $2,300 per worker.

Outplacement. Figures for outplacement services were not collected in FY 1993 and FY 1994 because of substantial differences in record-keeping among the sites. In the past 18 months, the Office has worked with field offices to help outplacement centers report discrete numbers of users. The results show that 9,440 workers used outplacement services in FY 1995, with an average cost of $400 per worker. About 5,900 workers used outplacement services in FY 1996, and the average cost increased to about $1,000 per worker. Outplacement services are typically available to both prime-contractor and subcontractor workers.

Educational Assistance. About 1,600 workers received educational assistance in FY 1995, with educational costs averaging about $2,200 each. Data for FY 1996 indicates that more than 3,100 workers received educational assistance and costs per worker dropped to about $1,900 each.

II.4 Site Summaries

Site summaries follow the same general structure as the preceding summary with the following exceptions:

Costs of Restructuring. Cost savings are not calculated for each site because the wages and benefits vary widely depending on the types of site activities. For example, laboratory activities usually involve the higher wages of scientists and engineers with advanced training and result in wages and benefits higher than the average cost savings figures used in this Report.
Mitigation. Mitigation measures usually appear in the discussion of restructuring costs. Not all mitigation measures were used at each site. Consequently, discussion of some of these measures is not included in the site summaries. Additionally, preference-in-hiring has been used sparingly, so little information is available concerning its use at each site.
Community Transition. Only 10 defense nuclear sites had received community transition assistance in FY 1995 and FY 1996, therefore, not all site summaries contain this discussion.
Satisfaction with Restructuring. The sites included in the displaced worker survey were the larger sites undergoing substantial work force restructuring. Consequently, not all site summaries contain this discussion.

Subcontractor Separations. The Department has not historically tracked subcontractor employment data. Reporting subcontractor separations is not consistent across sites.

II.4.1 Argonne National Laboratory

II.4.1.1 Work Force Restructuring

Argonne National Laboratory separated 250 employees in FY 1995, its first year of restructuring (Exhibit II.5). Of that number, 180 (72 percent) were separated through incentivized non-retirement voluntary separations, and the remainder were separated through an involuntary program that paid substantial severance benefits. In addition to the separations, 23 workers were placed in other positions at the site without requiring retraining. Fifty-five of the separating workers made use of outplacement services.

Another 144 employees were separated in FY 1996: 40 through the non-retirement voluntary program and 104 involuntarily. Twelve employees were placed in other positions at the site without retraining. Seventy-four employees used outplacement services.

II.4.1.2 Costs of Restructuring

The costs for restructuring in FY 1995 totaled nearly $8.3 million, with an average cost of over $33,100 per separated worker. The average cost for non-retirement voluntary separations was $39,700 and the average cost for involuntary separation was $13,900. Outplacement costs totaled $148,000 or $2,700 per worker. These costs may be due in part to start-up costs of establishing the outplacement center.

The total cost of restructuring in FY 1996 was $1.95 million, with an average cost at $13,500. While the average costs for retirees increased somewhat to $42,500, average costs for involuntary separations declined significantly to $1,900. The average cost for outplacement services also decreased significantly to $740 per user.

There were no medical benefits, relocation assistance, training costs, or educational assistance provided to separated workers.

II.4.2. Brookhaven National Laboratory

II.4.2.1 Work Force Restructuring

Brookhaven National Laboratory separated 332 employees in FY 1995 (Exhibit II.6). The majority (320) were voluntary separations, including 237 workers who left through attrition, 76 who took early retirements, and seven separations through the non-retirement incentivized voluntary separation program. An additional 12 employees were involuntarily separated. In addition to the separations, three employees were place in other positions at the site. Thirty-nine employees were provided extended medical benefits.

In FY 1996, 270 employees were separated. Nearly all of these (244) were voluntary separations, with most leaving through attrition. Twenty-five left through early retirement, and another 13 left through non-retirement incentivized separations. Twenty-six employees left involuntarily. In addition to the separations, 20 employees were placed in other positions at the site. Sixty-nine employees received extended medical benefits in FY 1996.

II.4.2.2 Costs of Restructuring

Restructuring costs in FY 1995 totaled nearly $3.6 million, an average of more than $10,800 per separated employee (Exhibit II.6). Early retirements averaged more than $44,100 per retiree; non-retirement voluntary separations averaged more than $7,800 per employee. The 12 involuntary separations received an average of $5,200 each.

In FY 1996, the total cost of work force restructuring was $1.8 million, with an average of $6,800 per separation. The average costs for early retirements increased slightly to $47,200 per worker. Incentivized voluntary separations increased to $18,400 in FY 1996. The average cost for involuntary separations increased slightly to $7,900 in FY 1996. The average cost of extended medical benefits remained stable at about $3,000 per recipient in FY 1995 and FY 1996.

II.4.3 Fernald Environmental Management Project

II.4.3.1 Work Force Restructuring

Fernald Environmental Management Project separated 397 workers in FY 1995 (Exhibit II.7). All workers were separated by voluntary means. Most workers (204) took non-retirement incentives to leave voluntarily. Another 171 workers left through attrition. Eleven workers were given early retirement, while another 11 separated through normal retirement. Eighteen workers received extended medical benefits, and 3 received educational assistance. The number of workers using outplacement services exceeded the number separated in FY 1995 because a number of workers previously separated at Fernald were still using outplacement services.

In FY 1996 there were 356 separations, all voluntary. There were 200 separations through the incentivized voluntary program and 16 through early retirement. Attrition accounted for 128 separations, and there were 12 normal retirements. Ten workers received extended medical benefits, while 3 received educational assistance.

II.4.3.2 Costs of Restructuring

Costs for restructuring in FY 1995 totaled over $5.1 million, with an average of nearly $12,900 per separated worker. Costs for incentivized voluntary separations averaged nearly $24,700. The cost of medical benefits averaged just over $1,200 per worker, and the cost of educational assistance averaged $2,200 per person. No costs were attached to outplacement services as these were covered by previous years' expenditures. Early retirement costs were not available, therefore are not included in this report.

In FY 1996, overall separation costs rose to nearly $6 million or an average of $16,800 per separation. Average incentivized voluntary separations increased to more than $29,300 per worker. The average cost of medical benefits increased substantially to $6,100, and the cost of educational assistance averaged $4,500 per person.

II.4.3.3 Satisfaction with Restructuring

Forty-four percent of the FY 1995 displaced workers from the Fernald site responded to the displaced worker survey. Among those responding, 92 percent reported that they left the work force voluntarily. Sixty-four percent stated they intended to find full- or part-time employment. About 65 percent of respondents reported they were currently doing what they had intended to do, with 59 percent of those intending to find full-time employment having done so.

Of respondents seeking employment, 59 percent reported using the outplacement center. Among those using the service, 71 percent reported that the outplacement center was helpful in finding employment. Seventy-eight percent of respondents said they were given the opportunity to review the work force restructuring plan at the site. Sixty-one percent of the respondents reported that the work force restructuring plan was communicated adequately, and 84 percent stated that the plan benefits were clearly explained. Overall, 54 percent expressed satisfaction with their treatment during downsizing.

II.4.3.4 Community Transition

In FY 1996, the communities around the Fernald Site formed a Community Reuse Organization which will help determine the future use options for the site and create jobs and businesses that will employ displaced workers.

II.4.4 Idaho National Engineering Laboratory

II.4.4.1 Work Force Restructuring

The Idaho National Engineering Laboratory changed prime contractors during FY 1994. This contract changeover and changes in mission at the site were responsible for a number of the work force restructuring measures that were put into place.

A total of 1,493 Idaho National Engineering Laboratory workers were voluntarily separated in FY 1995 (Exhibit II.8). This total comprised 623 early retirements and 587 other incentivized voluntary separations. Another 283 workers left the site through normal attrition.

In FY 1996, total separations dropped substantially to 402 workers. All separations were voluntary, with 220 through attrition and 182 through the incentivized voluntary separation program. In addition to the separations, 70 workers were placed in other positions at the site.

Preference in Hiring. The current prime contractor has had no involuntary separations since taking over at Idaho, but has assumed responsibility for 112 employees of the previous prime contractor with preference-in-hiring rights. All were contacted, and 29 requested to be placed on the preference-in-hiring list. As a result, 20 former Idaho workers were placed in temporary positions with the prime contractor, while two were hired into full-time positions. One eligible candidate from another site was hired into a regular full-time position.

Rehires. Two occupational nurses who took early retirement were hired back on a part-time basis. Because of their specialized training, they were rehired as emergency fill-in personnel for full-time nurses. One has since terminated her employment. There have been no cases of any other voluntarily separated workers being replaced.

II.4.4.2 Costs of Restructuring

In FY 1995, the total cost of workforce restructuring was $35.2 million, with an average cost of $23,500 per worker (Exhibit II.8). This includes an average cost of $38,300 for early retirements and $17,500 for incentivized voluntary separations. A total of 312 workers used extended medical benefits for an average per-person cost of $760. Twenty-nine workers were provided relocation assistance at $1,690 per person, and 279 workers took advantage of the educational assistance program, at an average cost of $1,670. Outplacement costs averaged $700 per person for the 427 workers using these services.

In FY 1996, the total restructuring cost was $5.7 million, with an average cost of $14,300 per worker. The costs for non-retirement incentivized voluntary separations increased significantly, to $24,000 per person. This increase was due to a change in skill mix requirements, which led to the elimination of more highly-paid professional positions, therefore the voluntary separation program targeted more highly-paid employees. A total of 300 workers used extended medical benefits in FY 1996 for an average of $1,900 per person. Two hundred sixty-eight employees took advantage of the educational assistance benefit at a cost of $1,700 per employee. Outplacement usage decreased slightly to 378, while average costs remained stable.

II.4.4.3 Satisfaction with Restructuring

Of employees separated from Idaho National Engineering Laboratory in FY 1995, 44 percent responded to the survey of displaced workers. All respondents reported that they had left the work force voluntarily. Sixty-two percent stated that they intended to find full- or part-time employment. Sixty-two percent of respondents are currently doing what they intended to do, with 55 percent of those intending to find full-time employment having done so. Fifty-one percent of respondents seeking employment used the outplacement center, and 69 percent of those using the service reported that the outplacement center was helpful in finding employment.

Fifty-four percent of respondents said they were given the opportunity to review the work force restructuring plan at the site. Forty-eight percent of the respondents reported that the work force restructuring plan was communicated adequately, and 74 percent stated that the plan benefits were clearly explained. Overall, 66 percent expressed satisfaction with their treatment during downsizing.

II.4.4.4 Community Transition

More than $8.3 million has been made available for community transition in the Idaho site area, with over $1.2 million spent to date. A total of 260 jobs has been created to date, with substantially more jobs projected. The cost per job created for Idaho is $5,000 which is below the Department benchmark cost of $10,000 to $25,000 per job.

Of the $8.3 million committed, the Eastern Idaho Community Reuse Organization has received community transition grants totaling $5,325,000 to implement a regional economic development project. The project's goal is to help diversify the economy and achieve less dependence on the Laboratory as a major employer. Elements in this effort include:

An Enterprise Fund. This program would contribute 65 percent of the funds for a business financing program for loans and investments in businesses that create jobs not dependent on the Laboratory.

Regional Demonstration Projects. This program would contribute 10 percent of the funds for regional marketing, worker training, and business assistance to new and existing businesses wishing to expand in the region.

Performance-Driven Block Grants. This program would make available 20 percent of grants given to local economic development organizations, which would decide how best to use the funds to achieve the performance measures of job and business retention, expansion, and creation.

The Eastern Idaho Community Reuse Organization has used its funding to leverage $3 million in cash from equity and investors in business financing of The Enterprise Fund, and $139,700 of in-kind services. Federal property valued at over $275,000 has been loaned to two businesses. These loans are expected to result in the creation of 230 to 300 new jobs between mid-summer 1996 and mid-summer 1998.

II.4.5 Kansas City Site

II.4.5.1 Work Force Restructuring

The Kansas City site had a total of 154 separations in FY 1995, and 48 separations in FY 1996. All separations were through normal attrition at no cost to the Department (Exhibit II.9).

II.4.5.2 Costs of Restructuring

While the FY 1995 and FY 1996 separations did not incur any costs, ancillary services were provided to workers who were previously separated from the Kansas City site. The total cost of these services in FY 1995 were $1.5 million, and $388,000 in FY 1996.

Displaced medical benefits were provided to 306 workers in FY 1995 and 69 workers in FY 1996 for an average cost per recipient of $2,967 and $828 respectively. In 1995, 275 workers received educational assistance for an average cost of $2,251 per recipient; 150 workers received educational assistance in FY 1996, averaging $2,179 per recipient. Outplacement services were used by 99 people in FY 1995 and 62 people in FY 1996. The cost of these services were negligible.

II.4.6 Lawrence Livermore National Laboratory

II.4.6.1 Work Force Restructuring

Lawrence Livermore National Laboratory had 753 separations through attrition in FY 1995; 60 of these through normal retirement (Exhibit II.10). In FY 1996, 878 employees were separated, all voluntary. The majority (606) were separated through attrition, including 48 who took normal retirement. An additional 272 separated through an incentivized voluntary program.

II.4.6.2 Costs of Restructuring

No separation costs were incurred in FY 1995. Restructuring costs for FY 1996 totaled about $10.8 million, with an average cost of $12,300 per separation (Exhibit II.10). The average cost for the 272 incentivized voluntary separations was $39,600.

II.4.7 Los Alamos National Laboratory

II.4.7.1 Work Force Restructuring

In FY 1995, 516 prime-contractor employees separated at Los Alamos National Laboratory (Exhibit II.11). Of those, 452 were voluntary; 252 incentivized non-retirement voluntary separations, 181 non-retirement attrition, and 19 normal retirements. There were also 64 involuntary separations.

In addition to the prime-contractor separations, 470 subcontract employees were involuntarily terminated due to overall work force restructuring at the site. Outplacement assistance was used by 786 workers, including subcontractor employees.

In FY 1996, another 374 prime-contractor employees were terminated at the site. There were 181 voluntary separations due to attrition and 193 involuntary separations. In addition to the separations, 15 workers were placed in jobs elsewhere at the site through retraining programs and two were transferred to other sites.

Five separated workers received relocation benefits to move to jobs at other sites. An additional 193 workers used outplacement services at the site, and 98 workers are receiving extended medical coverage. Additionally, 127 separated workers also received educational assistance.

II.4.7.2 Costs of Restructuring

Total restructuring costs in FY 1995 amounted to nearly $7.3 million, with an average cost of $14,100 per separation (Exhibit II.11). Nearly all these costs were for either voluntary or involuntary severance payments. Costs averaged $13,700 per worker for those voluntarily separated, and almost $14,000 per worker for those involuntarily terminated. The only other costs incurred for FY 1995 were for outplacement services totaling $46,800, with an average of $60 per user.

The total restructuring cost for FY 1996 was $5 million, with an average cost of $13,600 per separation. Average costs per involuntary separation were $23,200. Average costs for the 98 workers receiving medical benefits were nearly $600 per worker. The outplacement costs averaged $900 per user, and the educational assistance benefits averaged $1,500 per worker.

II.4.7.3 Satisfaction with Restructuring

Twenty-seven percent of FY 1995 displaced workers from the Los Alamos site responded to the survey of displaced workers. Of those responding, 91 percent reported that they had left the work force involuntarily. Ninety-five percent reported that they intended to find full- or part-time employment. Twenty-five percent of respondents are currently doing what they intended to do, with 18 percent of those intending to find full-time employment having done so. The outplacement center was used by 77 percent of respondents seeking employment, and 37 percent of those using the service reported that it was helpful in finding employment. Eighty-six percent of respondents said they were not given the opportunity to review the work force restructuring plan at the site. Eighty-seven percent said that the work force restructuring plan was not communicated adequately, and 57 percent stated that the plan benefits were not clearly explained. Overall, 82 percent expressed dissatisfaction with their treatment during downsizing.

The survey results indicate that improvements are needed in the work force restructuring process at Los Alamos. To begin to address these concerns, the Office has met with work force representatives to improve preference-in-hiring procedures and to help structure a process for employee evaluation that is nondiscriminatory and useful in defining those positions that are critical to the ongoing operations of the Laboratory. In addition, the Office will carefully examine proposed processes for employee communications and stakeholder input in future Los Alamos work force restructuring plans.

II.4.7.4 Community Transition

A CRO has been formed recently in Northern New Mexico to carry on the work being done by the Northern New Mexico Defense Adjustment Task Force. The newly-created CRO, composed primarily of business representatives from the three affected counties -- Rio Arriba, Los Alamos, and Santa Fe counties -- will make recommendations to the Department about projects that should be funded. To date, the Department has allocated $5 million for economic development efforts in Northern New Mexico. The Office has reviewed recommendations from the Northern New Mexico Defense Adjustment Task Force and will immediately fund $3.2 million in proposals; $1.5 million in pooled funds that benefit the entire Northern New Mexico region; $1.6 million for community-specific proposals; and $96,000 for program administration. Because the $5 million in community transition funds have just recently been made available to the CRO, no jobs have been created as a result of these funds at this time.

The pooled funds will be used for in-plant training for workers directly and indirectly affected by downsizing at the site, and a revolving loan fund for companies to offer additional job opportunities to these displaced workers. Several initiatives that have been advanced by the newly formed CRO for FY 1997 are:

A maturation fund for technologies emerging from the Laboratory
Efforts to encourage the regional location of businesses that are privatized/outsourced

A telecommunications initiative

Community-specific projects include an incubator facility for Española businesses; construction of a state-of-the-art computer chip fabrication facility "clean room" at the Northern New Mexico Community College; the creation of Land Authorities for planning and pre-development in Los Alamos and Rio Arriba Counties; support of a video conferencing center at the University of New Mexico-Los Alamos, and for highly leveraged Santa Fe City projects.

II.4.8 Mound Plant

II.4.8.1 Work Force Restructuring

In FY 1995 the Mound Plant separated 207 workers, 173 were voluntary and 41 were involuntary (Exhibit II.12). Of the voluntary separations, 48 were early retirements, 41 were non-retirement voluntary separations, and 84 were through attrition. In addition to the separations, 111 workers were internally placed without retraining and seven workers transferred to other sites.

In FY 1996, 204 workers were separated. These separations included 99 who left through attrition, 29 workers who took early retirement, and 4 workers who took normal retirement. Another 53 workers left through an incentivized voluntary separation program. Nineteen were involuntarily terminated.

In FY 1995, two workers received relocation assistance and 51 workers received medical assistance. Educational benefits were provided to 300 people and outplacement services were available to all employees at the site (770). Actual tracking of outplacement usage began in 1996. These numbers include workers who were separated prior to FY 1995. In FY 1996, three workers received relocation assistance, 43 received extended medical benefits, 108 received outplacement assistance, and 250 received educational assistance.

II.4.8.2 Costs of Restructuring

In FY 1995, the total separation costs were $6.9 million, with an average cost of $33,300 per separation (Exhibit II.12). The average cost of early retirement was $85,800. A significant portion of the early retirement costs in FY 1995 and FY 1996 reflects pension accrual. The average cost of non-retirement voluntary separations was $14,400, and the average cost of involuntary separations was $11,900.

The total cost of separations in FY 1996 was $3.6 million, or $17,600 per worker. The average cost of voluntary separations was $13,800 and the average cost of involuntary separations was $2,700.

Costs for outplacement services averaged $700 per person in FY 1995 and $1,700 in FY 1996. Relocation assistance averaged $1,400 per person in FY 1995 and $1,200 in FY 1996. The average costs for educational assistance were $2,800 in 1995 and $2,500 in FY 1996. Extended medical benefits cost an average of $4,300 in FY 1995 and $3,700 in FY 1996.

II.4.8.3 Satisfaction with Restructuring

Of employees separated from the Mound Plant in FY 1995, 35 percent responded to the survey of displaced workers. Of those responding, 94 percent left the work force voluntarily. Seventy-eight percent stated that they intended to find full- or part-time employment. Thirty-nine percent of respondents reported that they were currently doing what they intended to do, with 46 percent of those intending to find full-time employment having done so. Ninety-two percent of respondents seeking employment used the outplacement center, and 64 percent of those using the services reported that it was helpful in finding employment. Fifty-six percent of respondents said they were given the opportunity to review the work force restructuring plan at the site. Forty-four percent of the respondents reported that the work force restructuring plan was communicated adequately, and 56 percent stated that the plan benefits were clearly explained. Overall, 42 percent expressed satisfaction with their treatment during the downsizing.

II.4.8.4 Community Transition

The Miamisburg Mound Community Improvement Corporation has received community transition grants totaling $15.7 million to plan for commercial reuse of the site. The Miamisburg Mound Economic Plan identifies the elements and resources needed to focus community reuse of the assets of the Mound Site. The community's goal is to have a self-sustaining, privately-owned industrial park on the site by the year 2005.

The Plan integrates three major programs: (1) a Redevelopment Program to focus stakeholder involvement in the redevelopment and reuse of the Mound Site, as well as defining a means for integrating Mound's infrastructure into the community; (2) a Business Development Program to strengthen marketing capabilities and foster new businesses at Mound; and (3) a Business Assistance Program to fund start-ups and improve facilities.

The Miamisburg Mound Community Improvement Corporation is currently negotiating with the Department on terms for sale and transfer of ownership of the entire site. As of September 1996: 18 buildings had been leased; 9,511 pieces of equipment were being used by private businesses; and 21 businesses had located on site resulting in 221 new private sector jobs. The cost per job for the Miamisburg Mound Community Improvement Corporation is $24,000, which is within the Department's benchmark range of $10,000 to $25,000.

II.4.9 Nevada Test Site

II.4.9.1 Work Force Restructuring

The Hatfield amendment, signed by President Bush in 1992, imposed an indefinite moratorium on nuclear testing, and ensuing FY 1995 budget cuts required reductions in prime-contractor personnel at the Nevada Test Site. These events, coupled with the consolidation of three prime contractors to a single performance-based management contractor in January 1996, have resulted in continued, substantial overall site reductions.

The Nevada Test Site started work force restructuring in early 1993 and has continued to restructure its work force through FY 1996. In FY 1995, 1,512 employees were separated (Exhibit II.13 ). Of these, 976 workers were voluntary separations, 204 were early retirements, 305 were incentivized voluntary separations, and 457 were normal attrition. There were 799 involuntary separations. In addition to the separations, two workers were placed in other jobs at the site without retraining. Twenty-two workers received relocation assistance to take jobs at other locations. Extended medical benefits were received by 409 workers, and another 292 workers received educational assistance. Outplacement services were used by 163 workers.

An additional 1,338 workers were separated in FY 1996 (Exhibit II.13). The majority of these workers, were separated involuntarily (799). A total of 539 workers separated voluntarily; 374 through attrition, 71 who took early retirement, and 94 received enhanced severance to leave voluntarily. One worker was placed in another position at the site without retraining. There were 669 workers who received extended medical benefits, and one worker received relocation assistance. A total of 288 workers used the outplacement services offered, but more than 1,000 received educational benefits.

Preference in Hiring. Nevada Test Site prime contractors consider separated employees for preference-in-hiring when attempting to fill a position. The files of separated employees with preference-in-hiring are forwarded to supervisors for review. At the present time, there is no list of how many employees separated in FY 1993 through FY 1996 who qualify for preference-in-hiring.

Rehires. A total of 21 employees have been separated and then rehired to different positions, departments, or organizations. The new contractor at the site has rehired some employees separated by previous contractors. There have been 28 hires to fill positions created by the new contractor or to fill positions vacated by the previous contractors' downsizing.

II.4.9.2 Costs of Restructuring

In FY 1995, total costs were nearly $11.4 million, with an average cost of $7,500 per separation (Exhibit II.13). The average cost for early retirement was $14,300. The average cost of non-retirement voluntary separation was $12,000. The average cost for involuntary severance was $19,100.

In FY 1996, costs totaled $11.8 million, with an average cost of $8,850 per separation. The average cost for early retirement increased to about $17,300. The average cost of other incentivized voluntary separations increased to nearly $16,600 per worker. Costs for involuntary workers receiving severance dropped to $11,100.

II.4.9.3 Satisfaction with Restructuring

Thirty percent of FY 1995 displaced workers from the Nevada Test Site responded to the survey of displaced workers. Of those responding, 44 percent reported that they had left the work force voluntarily. Eighty-three percent stated that they intended to find full- or part-time employment. Fifty-five percent of respondents are currently doing what they intended to do, with 55 percent of those intending to find full-time employment having done so. Of respondents seeking employment, 41 percent reported using the outplacement center and 37 percent of those using the service reported that it was helpful in finding employment. Eighty-two percent of respondents said they were not given the opportunity to review the work force restructuring plan at the site. Seventy-two percent of the respondents reported that the work force restructuring plan was not communicated adequately, and 52 percent stated that the plan benefits were not clearly explained. Overall, 49 percent expressed satisfaction with their treatment during the downsizing.

II.4.9.4 Community Transition

As of September 1996, over $6.2 million had been allocated for community transition in the Nevada Test Site area, with over $1.33 million spent for specific initiatives. These initiatives include establishing a community reuse organization, developing the Corporation for Solar Technology and Renewable Resources, and supporting a communications system for state economic development authorities.

The NTS Development Corporation was created in 1996 to be the community's reuse organization. It is a nonprofit entity that acts as a single voice to communicate and coordinate economic development initiatives with the Nevada Operations Office. The Department granted NTS Development Corporation a $2.5 million grant in May 1996 to implement economic development initiatives that will privatize or promote the reuse of existing facilities and equipment at the Nevada Test Site.

The NTS Development Corporation is comprised of four divisions: the Capital Finance Fund, Business Assistance Program, Business Development and Marketing Program, and Administration/Operating. An example of the projects the NTS Development Corporation is considering is Kistler Aerospace, a company that is developing reusable commercial rockets that return to the launch site. The proposed action is to build launching, landing, and vehicle fueling facilities, and use existing Nevada Test Site facilities for operations and assembly areas. In addition to the NTS Development Corporation program, the Department has awarded a $3 million grant to pursue development of a solar power production facility in Southern Nevada. The NTS Development Corporation has only been in existence approximately six months, therefore, it has not created any jobs from the community transition funds it has been allocated.

II.4.10 Oak Ridge Site

II.4.10.1 Work Force Restructuring

The Oak Ridge site received approval of its first work force restructuring plan in August 1993. In FY 1993 and FY 1994, 281 full-time prime contract workers separated through non-retirement incentivized voluntary separations. In May 1995, the Oak Ridge Operations Office announced that changing missions and cost-saving efforts in Environmental Management and other programs would have a substantial impact on the site work force during the next two years. Additionally, approximately 700 to 900 positions were scheduled to be eliminated in a phased approach over the following two years. Planned work force restructuring activities included new contractor arrangements, realignment of contractor management structures, elimination of duplicated activities or services, and new business practices associated with contract reform initiatives.

In FY 1995, 845 prime contract workers were separated from the site (Exhibit II.14). The majority of separations (799) were voluntary, with 453 early retirements, 47 non-retirement incentivized separations, and 299 separations through attrition. Another 46 employees were separated involuntarily.

In addition to the separations, 191 workers were placed elsewhere at the site without retraining. An additional 87 subcontract employees were involuntarily terminated as the result of work force restructuring activities. Nineteen workers received extended medical benefits, and 236 workers took advantage of outplacement services.

In FY 1996, a total of 1,124 prime-contractor employees were separated (Exhibit II.14). Of these, 628 employees were separated voluntarily: 152 through early retirement, 122 through a non-retirement incentivized voluntary program, and 354 through attrition. The remaining 496 employees were involuntarily terminated.

In FY 1996, an additional three employees were transferred to jobs at other sites, and 201 employees were internally placed in other positions without retraining. Restructuring activities also resulted in the involuntary separation of 169 subcontract workers. Three separated employees received relocation assistance to take jobs at other sites, while another 777 used site outplacement services. The number of separated workers receiving extended medical benefits increased to 84. Ten workers also received educational assistance.

II.4.10.2 Costs of Restructuring

The overall prime-contractor separation costs in FY 1995 were almost $26 million, with an average cost of $30,700 per separation (Exhibit II.14). The average cost for early retirement was $53,900 per separations, and the average cost for each non-retirement voluntary separation was $18,200. The average cost for each involuntary separation was $11,200. The average cost of medical benefits was $700 per worker; outplacement services totaled almost $179,000 for an average per-worker cost of about $760. Subcontractor worker separation costs totaled $197,000 or $2,300 per worker for the 87 workers affected

In FY 1996, the total separation costs were $13.6 million, with an average cost of $12,000 per separation. The average cost of early retirement was $45,000. The average cost for each non-retirement voluntary separation increased to $24,900 and the average cost for each involuntary separation decreased to $6,100. Costs for workers receiving extended medical benefits averaged $2,300 per worker. Relocation assistance costs averaged $2,500 per worker. Outplacement service costs averaged about $590 for each user and educational assistance averaged $1,250 per recipient. Separation of 169 subcontractor workers incurred costs to the Department of about $71,600, an average cost of $424 per worker.

Preference in Hiring. Oak Ridge prime-contractor employees subject to involuntary separation who meet the job attachment test are encouraged to use JOBBS. In addition, each contractor has implemented a system to administer the Department's preference-in-hiring policy for involuntarily separated workers. Two employees have found employment through the JOBBS system, and there are currently 76 former employees with the hiring preference who have been separated and meet the job attachment test. Prime contractors have rehired nine separated employees who were receiving benefits. (These include temporary, short-term assignments because of immediate need for specific expertise and assignments to the clerical pool.) No positions vacated as a result of the reductions have been filled by new employees.

I.4.10.3 Satisfaction with Restructuring

Results of the displaced worker survey for the Oak Ridge site should be interpreted with caution because of the small sample size. Thirty-five percent of FY 1995 separated employees responded to the survey of displaced workers. Of those responding, 63 percent reported that they had left the work force voluntarily. Fifty-eight percent stated that they intended to find full- or part-time employment. Fifty-four percent of respondents reported that they are currently doing what they intended to do, with 31 percent of those using the service intending to find full-time employment having done so. Of respondents seeking employment, 50 percent reported using the outplacement center, and 63 percent of those using the service reported that it was helpful in finding employment. Eighty-two percent of respondents said they were not given the opportunity to review the work force restructuring plan at the site. Sixty-three percent of respondents reported that the work force restructuring plan was not communicated adequately, but 55 percent stated that the plan benefits were clearly explained. Overall, 57 percent expressed satisfaction with their treatment during the downsizing.

II.4.10.4 Community Transition

Over $30 million has been allocated to date for community transition activities within the Oak Ridge community. Major initiatives supported by this funding include preliminary work force planning, establishing Centers for Manufacturing Technology, developing a Manufacturing Skills Campus, providing technical assistance for reuse of DOE facilities and lands, and other new business and job creation efforts. These actions have resulted in creation of approximately 2,700 jobs. The cost per job for the Oak Ridge community is approximately $12,000 per job which is within the Department's benchmark range of $10,000 to $25,000 per job.

The Oak Ridge Centers for Manufacturing Technology tap the site's resources to help U.S. industry solve tough manufacturing problems. This assistance provides private sector benefits by creating or saving jobs and enabling business to expand. To date, the Centers have retained 403 skilled employees, created 955 jobs, and expanded 62 existing businesses.

The Oak Ridge Manufacturing Skills Campus was funded to provide manufacturing skills training to the Oak Ridge work force and to private industry. The Skills Campus has retrained 1,604 workers from the Y-12 Plant, provided training to 1,399 external participants in the private sector, retained 953 jobs, and enabled 75 businesses to expand.

The Community Reuse Organization of East Tennessee (CROET) was established in FY 1996, replacing the East Tennessee Economic Council as the local community reuse organization. CROET serves as a single voice to the Department with regard to economic development issues relating to the contraction of DOE presence in Anderson, Knox, Loudon, and Roane Counties. CROET was established as a Public Benefit Organization to reduce the region's dependence on the federal government. Its goal is to foster economic diversification by reutilizing DOE property for private sector investment and job creation.

The Department awarded $3.2 million to CROET in July 1996 to implement a strategic plan with the following four initiatives: (1) reindustrialization and reuse; (2) regional work force development; (3) regional planning, research, and development; and (4) community transition and regional economic diversification. Of that amount, $1.6 million will be available in FY 1996, and the remaining $1.6 will be made available in FY 1997. The $3.2 million in funding for CROET is expected to result in the creation of over 3,250 jobs and the creation or expansion of 240 businesses by 2005.

II.4.11 Pinellas Plant

II.4.11.1 Work Force Restructuring

The Pinellas Plant has discontinued operations except for limited cleanup activities and will close out all work force restructuring activities by the end of FY 1997. Part of the site has been sold to a local economic development agency.

In FY 1995, the Pinellas Plant had 236 separations; 190 voluntary and 46 involuntary (Exhibit II.15). Of the voluntary separations, there were nine early retirements, 54 non-retirement voluntary separations, and 45 separations through attrition. In addition, 73 employees were transferred to other sites, avoiding separation.

In FY 1996, there were 143 separations; 98 voluntary and 45 involuntary. Of the voluntary separations, 27 took early retirement, 28 took a non-retirement voluntary separation, and 40 workers separated through attrition. In addition to the separations, three workers were transferred to other sites.

II.4.11.2 Costs of Restructuring

Restructuring costs for FY 1995 and FY 1996 were not separated by fiscal year. The numbers reflected in Exhibit II.15 have been pro-rated to FY 1995 and FY 1996 based on the number of separations each year. The total restructuring costs reported for FY 1995 were $9.1 million, with an average cost of $38,800 per separation. In FY 1996 the total costs were $4.2 million, with an average cost of $29,000 per separation. The average cost of early retirements was $65,200. The non-retirement voluntary separations cost an average of about $17,000 each. Normal retirements costs were $36,100 per separation. Costs for the involuntary separations were $27,200 each.

Due to the unique accounting of benefits and costs associated with plant closure, the actual cost of ancillary benefits for FY 1995 and FY 1996 are not available (Line 4.0, Exhibit II.15). As a result, the total cost of work force restructuring and the average cost per separation is under reported. The complex-wide average cost of ancillary benefits was $7,100 per sparation in FY 1995 and $7,200 per separation in FY 1996.

II.4.11.3 Satisfaction with Restructuring

Thirty-two percent of the FY 1995 employees separated from the Pinellas Plant responded to the survey of displaced workers. Of those responding, 61 percent reported that they left the work force voluntarily. Eighty-five percent stated that they intended to find full- or part-time employment. Forty-nine percent of respondents reported that they are currently doing what they intended to do, with 58 percent of those intending to find full-time employment having done so. Seventy-two percent of respondents seeking employment used the outplacement center, and 89 percent of those using the service reported that it was helpful in finding employment. Although 75 percent of respondents said they were given the opportunity to review the work force restructuring plan at the site, all employees had an opportunity to review the plan and provide comments. Sixty-three percent of the respondents reported that the work force restructuring plan was communicated adequately, and 75 percent stated that the plan benefits were clearly explained. Overall, 51 percent expressed satisfaction with their treatment during downsizing.

II.4.11.4 Community Transition

To date, approximately $16 million has been allocated for community transition activities for the Pinellas Plant Community Reuse Organization. Major initiatives supported by this funding include Pinellas Plant seed projects, technology deployment center, commercialization program and seed/challenge funds. These actions have resulted in the creation of approximately 600 jobs, with an average cost per job of $8,000, which is below the Department's benchmark cost of $10,000 to $25,000 per job.

The Pinellas CRO produced a Community Transition Plan in October 1995. The Department sold the facility to the Pinellas County Industry Council on March 17, 1995, after cost analyses projected the sale would save the Department a minimum of $3.3 million and also expedite the availability of the plant for community transition projects and programs. The plan outlined a strategy that takes into account the Pinellas County Industry Council's acquisition of anchor tenants for the site; it also called for continuing support of the Technology Deployment Center. Space has been leased to seven small tenants. Leases are being negotiated for two large anchor tenants. A Master Plan for Facility Leasing and Operation has been submitted by the Pinellas County Industry Council to the Pinellas Area Office.

Pinellas Plant seed projects have jump-started commercialization of Pinellas Plant technologies, resulted development of three products, and leveraged an $8 million Federal Aviation Administration grant. The Technology Deployment Center, with 24 projects in progress, is developing new product prototypes and assisting in their deployment by private businesses using Pinellas Plant resources. The Suncoast Manufacturing Technology Center helps small businesses solve technical manufacturing problems, increase productivity, improve quality and/or build capabilities.

Currently, the Center is aggressively expanding coverage following recent incorporation into the National Institute of Standards and Technology (NIST) network and has leveraged Department funding from these sources on a basis of $3.7 for every DOE dollar provided. The Innovation Commercialization Program (ICP) has leveraged Department funding on a basis of $6.5 for every DOE dollar provided. The ICP provides management consultation to companies to support commercialization of product and process technologies and creation of high quality jobs. Seed/Challenge funds for eight projects enable entrepreneurs to engage in high risk research and development projects that typically cannot be financed through conventional sources.