Kennedy Slips Another Mickey Finn Into Defense Authorization

Amidst the earmarks, 936 of them in the Senate’s version of the Defense Authorization bill, and Senator Kennedy’s federalization of “hate crimes” against gays amendment, Senator Kennedy got in another one yesterday that may cause serious costs to defense contractors and to taxpayers.

By a party-line vote of 51-44 (three Republicans joining the Democrats- Warner, Snowe and Spector), Kennedy’s amendment S3058 requires Defense Department contractors to offer benefits equal to DOD employees, and requires hiring of contractors to provide cost savings. According to the Congressional Quarterly (subscription required):

“Kennedy, D-Mass., amendment no. 3058 to the Levin, D-Mich., substitute amendment no. 2011. The Kennedy amendment would bar the Defense Department from hiring contractors unless they offer health care and retirement benefits that match or exceed what the agency offers its employees. It also would require contractors to demonstrate that they can save the government 10 percent of personnel-related costs for performance or $10 million.”)

I’ve not yet found further details of the amendment. They are usually presented as insert a word or phrase here and delete one there, which requires quite a bit of research and analysis, but you can be sure that the cost implications are significant.

Defense civilian employees belong to the Federal Employees Health Benefits Program, which according to the Office of Personnel Management provides for retirement and survivor health benefits as well, with approximately 72% of premium subsidized by DOD. The retirement savings Thrift program operates like a 401(k), but with a required 1% contribution by the employer and up to several percent more at the discretion of the specific agency.

Most contractors pass their internal contract costs on to the government, so the net effect is an added cost to taxpayers. But, additionally, there will be an added cost to other consumers of contracting companies’ goods or services as benefits across the workforce are normally pretty uniform.

The other portion of Kennedy’s amendment, requiring certain levels of cost savings in contracting, especially in the absence of mitigating language for critical needs, is another hindrance on the effective management of our defense.

The Senate and House have yet to meet in conference to meld their different Defense Authorization bills. This Kennedy amendment needs to be left out.