Review of Pension and Fringe Benefits for Contractors' Employees at NASA's Marshall Space Flight Center

In response to a congressional request, GAO reviewed allegations made by a professional employee contracted by the National Aeronautics and Space Administration (NASA). NASA had recently recompeted a professional service contract and made the award to a different company. GAO was to determine if the professional employees involved had: (1) received salary and fringe benefits less than those paid by the previous contractor; (2) been subject to wage busting by the new contractor; and (3) lost accrued pension benefits and vesting rights in the previous contractor's pension plan, as a result of the contract changeover. GAO also reviewed the new contractor's policies for providing professional employees' salary increases after the contract was in operation.

GAO found that the new contractor offered to compensate incumbent professional employees with the same or greater salaries and benefits as they had previously received. As part of its proposal, the new contractor had to submit a total compensation, including salaries and fringe benefits, for professional employees not covered by the Service Contract Act of 1965 (SCA). GAO did find that some employees lost their pension benefits due to the contract changeover, because the previous contractor's pension plan required 10 years service for employee vesting. Since SCA requires agencies to recompete service contracts at least every 5 years, it is inevitable that some contractor changeover will result in employees in incumbent positions working for employers with different pension plans. Furthermore, applicable legislation permits variances in private pension plans under broad Federal standards, and there is no requirement that employees receive immediate vesting when their employers change as a result of recompetition of service contracts. Additionally, there is no Government policy regarding whether, or to what extent, Federal agencies should attempt to protect the pension benefits of contractors' employees working at Government installations.