Agenda

1. NNSA Briefingto LANL Employees Los Alamos National LaboratoryManagement and Operating Contract June 10, 2005

2. SEB ChairmanC. S. Przybylek(Tyler Sha-bell-ik)Human Resources SpecialistRoberto ArchuletaContracting OfficerMichael Loera

3. Agenda • Status of Current Contract • Path Forward • LANL Employee Benefits • Q&As

4. Status of Current Contract • Current Contract scheduled to expire Sep 30, 2005 • NNSA has received DOE Headquarters approval to negotiate an extension • NNSA seeking a not-to-exceed 12 month extension • 8-month extension taking the current contract expiration date from Sep 30, 2005 to May 31, 2006 • Option(s) that can be unilaterally exercised by the Government to extend the expiration date to Sep 30, 2006, if needed • Contract modification subject to UC and NNSA HQ approval

5. SEB Path Forward on New Contract • May 19, 2005 - Final RFP issued • July 19, 2005 - Proposals due • August/September 2005 – SEB evaluates Proposals • October 2005 – Finalize SEB Report • November 2005 – Selection & Contract Award • December 1, 2005 – Transition Period commences • June 1, 2006 – New Contractor commences Management & Operations

6. Transition Period - 6 Months Timing of Decisions NOTE: Dates shown below are proposed and not firm. Dec. 05 Jan. 06 Feb. 06 Mar. 06 Apr. 06 May 06 Winner of the competition proposes a new compensation package for Transferring Employees and submits substantially equivalent Pension Plan One for NNSA Contracting Officer approval. Sixty day window during which current employees will have the opportunity to chose which approach best fits their needs and plans Transition Activities Completed Winner of the competition proposes a new compensation package for New Employees and submits Pension Plan Two for NNSA Contracting Officer approval.

7. LANL Employee Benefits • What we heard and what we did in the final RFP • “Comparability” changed to “substantially equivalent” • Protect Current Employee Benefits – RFP establishes separate Pension Plans (One & Two) • Employment Guarantee – Expanded to include inactive vested transferring employees • Need time to consider options – Provided an extended transition period so employees can consider their options related to UCRP and employment at LANL • Provide for Retirees (current and future) - Continue retiree medical coverage under new contract including coverage for current retirees

8. LANL Employee Benefits • Stand Alone Pension Plan • Benefits Substantially Equivalent to current LANL employees benefits • Include UCRP age factors • Preserve accrued benefits earned under UCRP • Recognize service credit earned under UCRP • Plan funding is backed by US Government • De-links plan from corporate-wide coverage • Allows for site-specific actions based on needs at LANL • Will facilitate smoother transition in future contract awards

9. Pension Plan One(Covers Transferring Employees) • Substantially Equivalent to the University of California Retirement Plan (UCRP) • Current LANL Employees bring their accrued service credit and leave balances with them • Includes UCRP age factors • Pension Plan One is not subject to the corrective action requirements of the ben/val process • Contractor will consider amending Pension Plan One to incorporate changes made to the UCRP during the course of the contract • To be developed during the transition period

10. Pension Plan Two(Covers New Employees including Inactive Vested Transferring Employees and UCRP Retiring Employees hired by the Contractor) • New total compensation package that is market-driven • Geared toward the recruitment and retention of needed critical skills • Pension Plan Two is subject to the corrective action requirements of the ben/val process • To be developed during the transition period

11. 3 1 2 Current Employees have Three Choices Current LANL Employee Transferring Employee UCRP Retiring Employee Inactive Vested Transferring Employee Seek to Continue Working At LANL Elect to Leave LANL Desire to Continue Working At LANL Employment Status with Successor If Rehired by Successor, Becomes “New Employee” Automatically hired by Successor, Becomes “New Employee” Automatically hired by Successor Status of Leave Balances Carried Over Start New Carried Over Status of Accrued Service Credit Carried Over Start New Start New Covered by Pension Plan One Covered by Pension Plan Two Covered by Pension Plan Two Pension Plan Rolled over to Pension Plan One Employee Receives UCRP Benefits * Employee is an Inactive Vested Member of UCRP * Employee’ s Status in UCRP 11 * Employees encouraged to contact UC/LANL regarding requirements and benefits.

12. Questions on the RFP Please explain H-36, Section B-H, p.26,(a) (2) (i) of the RFP. Does it mean that employees have six months from June 1, 2006, to Dec. 1, 2006, to determine their permanent status? If so, I'm confused because elsewhere, the Fact Sheet states: "May 31, 2006, Transition period ends." Response: The employees must exercise their option to retire or become an inactive vested participant of UCRP by May 31, 2006. The RFP wording was intended to cover those employees who may be asked by the incumbent contractor to perform “phase-out” support should the “Continuity of Services” clause under the predecessor contractor’s contract become effective. Should such a situation arise, the Contracting Officer will deal with this situation on a case-by-case basis under the new Contract. To avoid further confusion, the SEB is considering amending the RFP H-36, subparagraph (a)(2)(i) as follows: ““Transferring Employees” are those employees who transfer from employment with the predecessor contractor to employment with the Contractor on June 1, 2006.”

13. Questions on the RFP Paragraph (a)(2). In the LANL RFP there appears to be an inconsistency on page 35, Section H-36.  This is where the RFP states: (2)     Definitions (i)     “Transferring Employees” are those employees who transfer from employment with the predecessor contractor to employment with the Contractor within six (6) months after June 1, 2006 and without a break in their employment at LANL.  (ii)    “Inactive Vested Transferring Employees” are transferring employees who do not elect to retire under the University of California Retirement Plan (UCRP) prior to June 1, 2006 and who remain vested participants as “inactive members” of the UCRP. (iii)   “UCRP Retiring Employees” are employees of the predecessor contractor who elect to retire under the UCRP prior to June 1, 2006. (iv)    “New Employees” are those employees hired by the Contractor on or after June 1, 2006, who are not Transferring Employees. It appears that there is no transfer period for employees to decide whether to retire with UCRP or not, since they must retire before June 1, 2006.  Essentially, the Transferring Employees do NOT have 6 months to decide whether to transfer to the new contractor or retire with UCRP or to go to Inactive status under UCRP.  Basically, the only option available to them is to transfer from employment with UC to employment with the new contractor (or quit altogether).  They can NOT elect to retire with UCRP or go inactive with UCRP during the 6 months that are allotted to the Transferring Employees since these options must be elected prior to June 1, 2006.  Is this correct? Is this what you intended? If this is correct, what is the point of giving the LANL employees 6 months to decide whether to transfer or not if the two most important options are not available to them? Response: The new benefits packages will be rolled out during the transition period allowing the employees at least 60 days to evaluate their options. Employees will have to exercise their options prior to the end of the transition period, May 31, 2006.

14. Questions on the RFP I have a basic question on Section H-36, part (d) (6) (ii) on page 40 of Section B-H of my Word file. It says (and I quote): When the total RV and/or per capita cost exceed the comparator group by more than 5 percent, as required by the Contracting Officer, the Contractor shall submit for approval corrective action plans, including a timeline, to achieve a net benefit value and per capita cost not to exceed the comparator group by more than 5 percent. Does this apply to existing pensions of transferring employees?  In other words, does this mean in one year after the award of the contract that the new contractor has the possibility of substantially reducing a LANL employee's pension based on what the current market is for pensions?  Or does this only apply to non-pension benefits?  It seems to me that this is in direct opposition to Section H-36, part (e) (3) (i) that states that: Pension Plan One.  The Contractor shall consider amending Pension Plan One to be consistent with any changes made by the Board of Regents of the University of California to the UCRP during the term of this Contract. For Transferring Employees (not including Inactive Vested Transferring Employees), Pension Plan One shall include UCRP age factors, preserve accrued benefits and recognize service credit earned under the predecessor contractor's retirement plans including the UCRP. In this paragraph, it clearly states that transferring employees will be guaranteed UCRP age factors.  Nowhere does it state that this only applies for the first year of the contract.  Is this guarantee only for one year or does it apply to the contract lifetime of 7 years?  Any help you can give me would be greatly appreciated. Response: Paragraph (d)(1)(i)(II) states in part that Paragraphs (d)(6)(ii) – (iv) below do not apply to evaluating the reasonableness of benefits for Transferring Employees. Thus, the corrective action plans associated with the ben/val study and per capita cost survey are not applicable to Pension Plan One for transferring employees. With regard to the question related to the guarantying pension benefits, the actual benefits will be negotiated between the new Contractor and the Contracting Officer during the new contract’s transition period.

15. Questions on the RFP Regardless of what organization is awarded the LANL contract, will LANL employees who retire before the current contract expires on 9/30/05 remain in the University of California Retirement Program (UCRP) after the new contract takes effect or will they be transferred into some other pension plan? Response: LANL employees who retire before the current contract expires will remain in the University of California Retirement Program (UCRP).

16. Questions on the RFP Will ALL those UC employees currently eligible to retire from UC with medical benefits continue to receive such coverage under the new contract. Specifically, there is a tiered level of medical coverage for employees with less than 20 years of service. For example, for someone with 15 years of service, the UC employer contribution will be paid at 75% and the UC retiree pays the difference. If someone retires under that condition, what will happen with a new contractor when the medical coverage is taken over? Response: Retiree health care will be provided by the successor (new) contractor. See Clause H-36, paragraph (i) “Post Retirement Benefits.” The benefits under the new contractor’s plan are required to be “substantially equivalent to those provided by the predecessor contractor.” The actual benefits will be negotiated between the new contractor and the Contracting Officer during the new contract’s transition period.

17. Questions on the RFP The RFP is very unclear about retiree health care. I am already retired from LANL under UCRP. Will future retiree health care be provided by UC or will it be provided by the new contractor? Response: Retiree health care will be provided by the successor (new) contractor. See Clause H-36, paragraph (i) “Post Retirement Benefits.”