March 28, 2008

A summary of daily news relevant to the federal workforce produced by the Partnership for Public Service.      

1. FDIC Plans Staff Boost for Bank Failures
2. Federal Diary: Merit Pay in a Nuclear Test Project
3. Funding Shortfalls Mean Missed Cleanup Milestones for Energy

FDIC Plans Staff Boost for Bank Failures

The Associated Press

By Alan Zibel

Federal bank regulators plan to increase staffing 60 percent in coming months to handle an anticipated surge in troubled financial institutions.

The Federal Deposit Insurance Corp. wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, John Bovenzi, the agency's chief operating officer, said Tuesday.

"We want to make sure that we're prepared," Bovenzi said, adding that most of the hires will be temporary and based in Dallas.

There have been five bank failures since February 2007 following an uneventful more than two-year stretch. The last time the agency was hit hard with failures was during the 1990-1991 recession, when 502 banks failed in three years.

The FDIC provides insurance for deposits up to $100,000. While depositors typically have quick access to their bank accounts on the next business day after a bank closure, winding down a failed bank's operations can take years to finish. That process can include selling off real estate, investments and dealing with lawsuits.

There are 76 banks on the FDIC's "problem institutions" list _ which would equate to about 10 expected bank failures this year, though FDIC officials declined to make projections. Historically, about six banks fail per year on average, FDIC officials said.

Since 1981, total failures per year averaged about 13 percent of the number of institutions that started the year on the agency's list of banks with weak financial conditions.

There have been two failures in 2008 _ both of which were small Missouri-based banks. By far the largest recent failure was the September 2007 shutdown of Georgia-based NetBank Inc., an online bank with $2.5 billion in assets. NetBank's insured deposits _ representing more than 100,000 customers _ were assumed by ING Bank, part of Dutch financial giant ING Groep NV.

The FDIC's chairman, Sheila Bair, has said that banks that were cautious about their lending should be able to weather the economic downturn, but cautioned that those that weren't so careful won't be so lucky. Regulators have warned of problems lurking, especially in smaller banks with a high concentration of real estate construction loans.

FDIC officials said last month they planned to bring back about 25 retirees to the agency and noted those workers will train new hires. Over the next five years, about 50 percent of employees with experience in bank failures, especially those who were at the agency during the savings and loan crisis of the late 1980s and early 1990s, will be eligible for retirement, officials added.

Merit Pay in a Nuclear Test Project

The Washington Post
By Stephen Barr

The agency that maintains the nation's nuclear weapons stockpile is undertaking a five-year project to overhaul pay practices so it will be more competitive in hiring scientists, engineers and other professionals.

 

Under the pilot project, the National Nuclear Security Administration will leave the government-wide pay system -- the 15-grade General Schedule -- and replace it with up to four broad salary scales, or pay bands, designed to reward the best workers based on job performance rather than length of service.

 

Employees will be rated on the work they do and their level of accomplishment, and will earn "shares" that will be converted into a raise. The shares will vary in value year by year because of budget constraints or other factors. Employees who do not meet expectations may not receive a pay raise, though they will continue to be eligible for small bonuses linked to achievements for specific tasks.

 

The pay project should give managers greater leeway to provide higher pay for employees through promotions and job evaluations and make it easier to offer higher starting salaries to attract top talent, the agency said.

 

Like other parts of the government, NNSA has an aging workforce. The average age for senior engineers is 49, and many will soon be eligible to retire, Michael C. Kane, the agency's associate administrator for management and administration, said yesterday.

 

The pilot project will cover about 2,000 of NNSA's 2,500 employees. The other 500 have been in a pay-for-performance system because they were appointed to jobs that do not require regular civil service competition for openings.

 

Experience with managing that system and insights learned from the Defense Department's new performance-based pay system should help, Kane said. Officials will pay particular attention to feedback from employees and managers, and Kane said he expects changes will be made to the system during its five-year test run.

 

If the project succeeds, the NNSA would be able to adopt it as an alternative to the traditional General Schedule system.

 

Changes at the TSA

 

The Transportation Security Administration is moving to streamline its merit-based pay system for more than 40,000 airport security screeners.

 

In a message this week to TSA employees, Kip Hawley, the agency head, said the Performance and Accountability Standards System, called PASS, "has become far too complicated."

 

The system, he added, "has distracted the workforce from its primary mission as they continually struggle with its burdensome administrative and testing requirements."

 

Effective Tuesday, screeners will no longer sign a "fitness for duty" pledge when they come to work, job ratings will be simplified and paperwork to administer the system will be sharply reduced, Hawley wrote.

 

Gale Rossides, deputy administrator at the TSA, said yesterday that reducing paperwork chores will permit supervisors to spend more time as mentors and coaches to front-line employees at airport checkpoints. The TSA is conducting an analysis to determine how many hours spent on paperwork will be saved, she said.

 

Federal unions have criticized the TSA's workplace practices and pay system since it was created after the 2001 terrorist attacks. The unions do not have collective-bargaining rights at the TSA and have lobbied Congress for approval to represent airport screeners and negotiate on their behalf.

 

Mark Roth, general counsel at the American Federation of Government Employees, said the TSA modifications "confirm AFGE's unease with PASS as an inherently flawed and subjective system that lacks fairness and credibility."

 

Colleen M. Kelley, president of the National Treasury Employees Union, said that "the small changes TSA is making will provide partial relief to employees caught in a byzantine system" but that they fall short of treating screeners fairly.

 

Rossides said front-line employees and supervisors suggested the changes in focus groups and advisory meetings that began last year. The unions "had nothing to do with the inputs we received," she said, adding that "we felt no pressure from any of the unions to do this."

   

Funding Shortfalls Mean Missed Cleanup Milestones for Energy

Federal Times

By Tim Kauffman 

 

Cleanup of some of the most contaminated nuclear waste sites in the country is behind schedule because of inadequate funding, experts say.

 

While the Energy Department has been able to reduce cost overruns and delays through robust project management, overall progress has been stymied, they say.

 

Funding shortfalls will cause the department to miss 23 of the milestones it has pledged to meet for fiscal 2009. They have already caused completion dates for cleaning up some of the most contaminated sites to be pushed back 20 years or more, said Martin Schneider, editor in chief of Exchange Monitor Publications, which publishes trade journals on the nuclear industry.

 

Cleanup at the 586-square-mile Hanford Site, a former plutonium production facility that left behind decades of contamination along the Columbia River in southeastern Washington state, was projected to be completed in 2035 but now it likely won't be finished until between 2050 and 2062.

 

The 34,000 civil service and contractor employees who work for the department have about 4,500 facilities remaining to clean up and demolish at 22 sites whose total area equals the size of Rhode Island and Delaware combined, said James Rispoli, assistant Energy secretary for environmental management. There is enough nuclear waste in those facilities to fill the Louisiana Superdome.

 

The department has made a "tremendous accomplishment" in cleaning up sites many once thought were unsalvageable, Rispoli said. However, "the toughest sites are still on the docket," he said. Since 2001, Energy's environmental management program has cleaned up and closed 14 sites, including three former weapons production sites. Two of those cleanup efforts -- the Rocky Flats nuclear weapons plant near Denver, and the Fernald uranium processing facility outside Cincinnati -- were recognized as the project of the year by the Project Management Institute in 2006 and 2007, respectively.

 

But after seeing its budget increase consistently during the first half of the Bush administration, the program has been getting less support in recent years as the Energy Department has shifted its focus to other priorities, Schneider said.

 

"The department has chosen to place its emphasis on science, and the budget reflects that focus," Schneider said March 19 at the Energy Facility Contractors Group's executive council meeting in Washington, where Rispoli also spoke.

 

Since reaching a high of $7.4 billion in fiscal 2005, the administration's requested funding for Energy's nuclear cleanup efforts has declined by nearly 35 percent to $5.5 billion for fiscal 2009.

 

Lawmakers are working to add funding to the president's fiscal 2009 request, although many in Congress are skeptical about whether the department can deliver on its promises to clean up the sites in light of missed milestones and ever-widening time frames, Schneider said.

 

"It's hard for everyone when the baselines you're working with are 50 or 60 years. That's hard to hang your hat on," he said.

 

Rispoli acknowledges the department won't be able to deliver on some of the promises it has made to state and federal regulators at current funding levels. Many of those milestones and targets were set years ago with overly optimistic assumptions about the department's ability to clean up the sites, he said.

 

Since 2005, the department has set up a rigorous project management program for environmental cleanup projects. Rispoli said the rigor has paid off: Only one of 70 ongoing projects reviewed is not on cost or on schedule, compared with 20 in 2005.

 

The department is about to test two different evaluation systems at the Hanford Site that will allow managers to drill down into every activity involved in a project so managers can pinpoint which ones are more than 10 percent off schedule. Based on the results of that test, the department will select a system to deploy department-wide, he said.