Risk Assessment for DOE O 350.1

Appropriate Appropriate to to accept transfer risk to Attachment 2 Risk Assessment risk? Contractor? Reference Model DOEO Subject Area Risk Probability Impact Risk Level Yes/No Yes/No Control Explanation H-Clause 350.1 (a) ContractorEmployeeCompensation Plan. The Contractor shall submit by(fill -in, example: close ofcontract transition), a Contractor Employee Keepcurrent languagefor inclusion COMPENSATION Overpayment of labor rates Possible Low Moderate No No Compensation Plan demonstrating how the Contractor will comply with therequirements ofthis Contract. The Contractor Employee Compensation Plan shall describe theContractor's policies regarding compensation, pensions and other benefits, and how these policies will support at reasonable cost theeffective recruitment and retention of a highlyskilled,motivated, and experienced workforce. in new solicitations only. Language is not needed for contract extensions. Page 1 A description of the compensation program shouldinclude the following components; Philosophy and strategyfor all pay delivery programs. a. System for establishing a job worth hierarchy. b. Method for relating internal job worthhierarchy to external market. c. System thatlinks individual and/or group performance to compensation decisions. Financial - d. Method for planningand monitoringthe expenditureof funds. Maintain language in the contract to Overpayment of Possible Low Moderate No No e. Method forensuring compliance withapplicable lawsandregulations. ensure contractor is informed of what Page 1 Page IV-3 labor rates f. System for communicating the programs to employees. g. System for internal controls and self-assessment. h. System toensure that reimbursement of compensation, including stipends, foremployees who areonjoint appointments with a parentor otherorganization shall be on a pro-ratedbasis. DOE-approved standards (e.g., set forth inanadvance understanding orappendix), if any, shall beapplied to the Total Compensation System. constitutes DOE approved standards. (b) Total Compensation System. Onlythe following language is needed to close a gap with FAR and DEAR: The contractor's total compensationsystem shall be fully documented, consistently applied, and acceptableto the contracting Financial - Overpayment of labor rates Possible Medium Significant No No Page 2 be fully documented, consistently applied, andacceptable to theContracting Officer. Costs incurred in implementing theTotal Compensation System shall beconsistent with theContractor's documented Contractor Employee Compensation Plan as approvedby the Contracting Officer. Financial •> Overpayment of Unlikely Low Minor Yes No Eliminate DOE governance language Page 2 lof 15 Predispositional Draft Attachment 2 Risk Assessment Appropriate to accept risk? Appropriate to transfer risk to Contractor? Reference Subject Area Risk Probability Impact Risk Level Yes/No Yes/No Control Explanation Model H-CIause DOEO 350.1 Financial - Overpaymentof labor rates Likely Medium Significant No No (d) Reports and Information. The Contractor shall provide the Contracting Officer with thefollowing reports and information with respect to pay and benefits provided under this Contract: (1)An Annual Contractor Salary-Wage Increase Expenditure Report to include, ata minimum, breakouts formerit, promotion, variable pay, special adjustments, and structure movements for each pay structure showing actual against approved amounts; (2)Alistof the top five most highly compensated executives asdefined byFAR 31.205-6(p)(2)(ii) and their total cash compensation at the timeof contract award,andat the timeof anysubsequent change to their totalcashcompensation; (3)An annual report of contractor expenditure for Employee Supplemental Compensation through theDepartment

Keepcurrentlanguage, exceptfor last sentence which is duplicative. Page 2 Workforce Information System Compensation and Benefits Module nolater than March 1ofeach year-, and (4)- Financial - Overpayment of labor rates Likely Medium Significant (ii) - No (ii) - No (e) Pay and Benefits Programs. (3)(A) TheContractor shallsubmit the following to theContracting Officerfora determination of cost Eliminatesubparagraph i as it is duplicative.Keepsubparagraph ii as the risk level is significant. Page 4 systemr(ii) Any proposed major compensation program design changes prior to implementation. Financial - Overpayment of labor rates Likely Medium Significant No No (e)(3)(A)(iii) The Contractor shall submit thefollowing to theContracting Officer fora determination of cost allowability for reimbursement under theContract: (iii)AnAnnual Compensation Increase Plan (CIP). The Compensation Increase Plan(CIP)should include the following components anddata: (1) Comparison ofaverage pay to market average pay. (2) Informationregarding surveys used for comparison. (3) Aging factors usedforescalating survey dataandsupporting information. (4) Projection of escalationin the marketand supportinginformation. (5) Information to support proposed structure adjustments, if any. (6) Analysis to supportspecial adjustments. (7)Funding requests for each pay structure to include breakouts ofmerit, promotions, variable pay, special adjustments, and structure movement, (a)The proposed plan totals shall beexpressed asa percentage ofthe payroll for the end oftheprevious plan year, (b)AH pay actions granted under the compensation increase plan are fully charged when they occur regardless of time ofyear inwhich the action transpires and whether the employee terminates before year end. (c)Specific payroll groups (e.g., exempt, nonexempt) for which CIP amounts areintended shall bedefined bymutual agreement between thecontractor andtheContracting Officer, (d)The Contracting Officer may adjust theCIP amount after approval based onmajor changes infactors that significantly affect theplan amount (forexample, intheevent ofa major reduction in force orsignificant ramp- up). (8) A discussion of the impactof budgetand businessconstraints on the CIP amount. (9) Comparison of pay to relevant factors otherthan marketaverage pay. Keep current language in DOE contracts. Page 4 PageIV-3 2 of 15 Predispositional Draft Attachment 2 Subject Area Risk Financial - Overpayment of labor rates Financial - Overpayment of labor rates Financial - Overpayment of labor rates Financial - Overpayment of labor rates Risk Assessment Probability Impact Risk Level Likely Medium Significant Unlikely Low Minor Possible Low Moderate Possible Low Moderate Appropriate to accept risk? Yes/No No N/A No No Appropriate to transfer risk to Contractor? Yes/No No N/A Yes Yes Control (e)(3)(A)(iv) Individual compensation actions for the topcontractor official (e.g., laboratory director/plant manager orequivalent and key personnel not included inthe CIP). For those keypersonnel included inthe CIP, DOE will approve salaries upon the initial contract award and when keypersonnel are replaced during the life of the contract. DOEwill have accessto all individual salary reimbursements. This accessis provided for transparency; DOE willnotapprove individual salary actions (except aspreviously indicated).

(e)(3)(A) TheContractor shall submit the following totheContracting Officer for adetermination of cost- allowability for reimbursement under the Contract: (v) Any proposedestablishment of an-ir must be budget neutraland must contains a. the design ofthe incentive compensatic measures; implementation; c.requirement for an annual approval, prior tothe performance period, of the total dollar amount of the pool. d. requirement for policy that-provides aspecific passovcr rate, i.e., percent of participants whowill not receive an incentive; e.requirement for an onnual summary report ondistributions made under on Incentive Compensation Plan; and f. requirement for pay at risk- Contractors shallsubmit to the Contracting Officer forapproval the following documents.- 7.Annually, an overtime control plan and semiannual Report onOvertime Use, if any of-the following criteria- overtime expenditures for thepreceding calendar year plus twopercent; thecontractor's overtime as a percent- of payroll exceeds the DOE contractor median overtime expenditures for the proceeding calendar year and the contractor's policy permits payment of overtime for exempt employees earning greater than orequal to$45,000 per onnum; or the contractor's overtime as apercent of payroll exceeds the DOE contractor median overtime expenditures for thepreceding calendar year and thecontractor provides for overtime premium pay onany- other-basis than for hours worked in excess of 40 hours per week. a.The overtime control planmuststrike abalonce between useof other alternatives, including thehire of additional personnel inaworkplace that is safe and promotes the health of employees. This plan must include: (1) the institutional overtime premium fund (maximum dollar amount) negotiated annually; (2)speoifio- controls forcasual overtime fornon-exempt employees; (3) prohibition ofcasual overtime forexempt employees except as stipulatod-in an advance understanding; (1) an evaluation ofalternatives tothe use of overtime; and (5) arequirement for the Contracting Officer toapprove any additional overtime premium funds orplan-changes required formission requirements not included in theapproved plan.- 3 of 15 Explanation Keep currentlanguage in DOE contracts. Eliminateduplicativelanguage which is covered under (3)(A)(ii) on page 2. Also eliminating governance language. Eliminate current language. Required in DEAR 970.5222-2 Overtime management. Eliminate current language. Required in DEAR 970.5222-2 Overtime management. Reference Model H-Clause Page 5 DOEO 350.1 Page IV-1 PageIV-5 PageIV-5 Page IV-5 Predispositional Draft Attachment 2 Subject Area BENEFITS Risk Financial - Overpayment of labor rates Financial - Overpayment ol benefit costs Financial - Overpayment of labor rates and benefit costs Financial - Overpayment of labor rates and benefit costs Financial - Overpayment of benefit costs Risk Assessment Probability Impact Risk Level Possible Low Moderate Unlikely Medium Moderate Possible Low Moderate Possible Lou Moderate Unlikelv Low Minor Appropriate to accept risk? Yes/No No No Yes Yes No Appropriate to transfer risk to Contractor? Yes/No Yes Yes No No Yes brThe semiannual Reporton Ovortime-Use-H Ojjotal cootgfoyertinie; (2) totalcostof straighttime; (^-evertime-eest-iis-a-peFeeHtage-of-stFaiglit-tii (4) total overtime hours; (5) total-straight time-hours; and (6)overtime hours as a percentage of straight-time hours: Control

it Programs. The Contractor shall establish pay and benefit programs for Incumbent Employees and Non Incumbent- Employees asdefined-in-parographo (1) and (2) below; provided, however, that employees soheduled tow» fewer than 20hours perweek receive only those benefits required bylaw? Employees are eligible for- bene subjeeH(>-the^FniSrCoiiditioi>s-aiid4HHitati(>iis-el1eaeh-btfnefit-progFan>7 (e)(1) Incumbent Employees are the employees [(fill -in) who hold regular appointments orwho are regular employees] of the incumbent contractor. (A)Pay. Subject to theWorkforce Transition Clause, the Contractor shall provide equivalent basepayto Incumbent Employees ascompared topay provided by(fill-in name of the incumbent contractor) for at least the first year of the term of the Contract. (B) Pension and Other Benefits. The Contractor shall provide a total package of benefits to Incumbent Employees comparable to that provided by[fill-in the company name of the previous incumbent contractor]. Comparability of the total benefit package shall bedetermined bythe CO in his/her sole discretion. Incumbent employees shall remain intheir existing pension plans (or comparable successor plans if continuation of theexisting plans isnotpracticable) pursuant to pension plan eligibility requirements and applicable law. (e)(2) Non-Incumbent Employees arenew hires, i.e.. employees other than Incumbent Employees who arehired by the Contractor after date ofaward. All Non-Incumbent Employees shall receive a total pay and benefits package that provides for market-based retirement and medical benefit plans that arecompetitive with the industry from which theContractor recruits itsemployees andin accordance with Contract requirements. Contractors shalldevelop andimplement wolfare benefit-programs thatmeet-the testsof allowability ond- reosonableucss established by-Fedoral Acquisition Regulation 31.205-6 and Department ofEnergy Aoquisition- l^tilation4>?0r34£2-2^-€m4P-l^ATI©N4^R-P4^ 4 of 15 Explanation Eliminate current language. Required in DEAR 970.5222-2 Overtime management. Eliminate current language as is overly prescriptive. Keep current languagein DOE contracts. Keep current language in DOE contracts. Eliminate duplicative language which is currently reflected in the FAR and DEAR. Reference Model H-Clausc Page 3 Pane 3 Page 3 DOE 0 350.1 Pace IV-6 Pase V-5 Predispositional Draft Attachment 2 Risk Assessment Appropriate to accept risk? Appropriate to transfer risk to Contractor? Reference Subject Area Risk Probability Impact Risk Level Yes/No Yes/No Control Explanation Model H-Clause DOEO 350.1 Financial - Overpayment of benefit costs Likely Medium Significant No No Pension and Other Benefit Programs. No presumption ofallowability will exist when the contractor implements a new benefit plan ormake changes toexisting benefit plans foreither Incumbent-Employees or4>ten- Incumbent Employecs-until the contracting officer makes a determination ofcost allowability for reimbursement for new orchanged benefit plans. Contractors shall submit new benefit plans and changes to plan design or funding methodology with justification tothe Contracting Officer for approval. The justification must: (A) demonstrate the effect ofthe plan changes on the contract net benefit value orper capita benefit costs, (B) provide the dollar estimate ofsavings orcosts, and (C) provide the basis ofdetermining the estimated savings or cost.

Keep current language in DOE contracts. Eliminate reference distinguishing incumbent fromnon incumbentas is overly prescriptive. Page 5 Financial - Overpayment of benefit costs Likely Medium Significant No No (0 Pension and Other Benefit Programs. (2)Cost reimbursement for Incumbent Employee and Non Incumbent Employee pension and other benefit programs sponsored bythe Contractor will bebased onthe Contracting Officer's approval ofContractor actions pursuant toanapproved "Employee Benefits Value Study" and an"Employee Benefits Cost Survey Comparison" as described below. (3)Unless otherwise stated, orasdirected bythe Contracting Officer, the Contractor shall submit the studies required inparagraphs (A) and (B) below. The studies shall beused bythe Contractor aspart of its performance selfassessment described inparagraph (d) (4) above and incalculating the cost ofbenefits under existing benefit plans. Inaddition, the Contractor shall submit updated studies tothe Contracting Officer for approval priorto theadoption of anychange toa pension orotherbenefit plan. (A) AnEmployee Benefits Value Study (Ben-Val), every two years for each benefit tier for Incumbent and Non Incumbent Employees benefits, which isanactuarial study of therelative value (RV) of thebenefits programs offered bythe Contractor to Incumbent and Non-Incumbent Employees measured against the RV ofbenefit programs offered by comparator companies approved by the Contracting Officer. To the extent that the value studies donotaddress post retirement benefits other than pensions, theContractor shall provide a separate cost and plan design data comparison for the post retirement benefits other than pensions using external benchmarks derived from nationally recognized andContracting Officer approved survey sources and, Frequencyof Benval shall be every two years. The Under Secretarymay authorize the Contracting Officer to reduce the frequency to every three yearswhendeemedappropriate and the decision and rationale are documented. The Benval may also be used for analytical purposes to supportdevelopment of a corrective action plan for cost studies which are used to mitigate financial risk. Page 6 Financial - Overpayment of benefit costs Likely Medium Significant No No Keep current language, but remove overly prescriptive reference to incumbent and non incumbent. Page 6 Page V-5 (f)(3)(B) An Employee benefits cost Study Comparison, annually tor cacn ocnciii ncr tor- incumoeni unu inuii- Incumbent Employees that analyzes the Contractor's employee benefits cost for Inoumbent-and Non-Incumbent- Employees on aper capita basis per full time equivalent employee and asapercent ofpayroll and compares it with the cost reported bythe U.S. Department ofLabor's Bureau ofLabor Statistics orother Contracting Officer approvedbroad based nationalsurvey. NNSA Process: (f)(3)(B) An Employee ucncius L.ost otudy comparison, annually cacn ior tHeumoeni ana inuu nieuiuuciii Employees that analyzes the Contractor's employee benefits cost for Incumbent and Non-Incumbent Employees on a per capita basis per full time equivalent employee and asa percent ofpayroll and compares itwith the cost reported by the U.S. Department ofLabor's Bureau ofLabor Statistics orother Contracting Officer approved broad based national survey. 5 of 15 Predispositional Draft Attachment 2 Subject Area Risk Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Financial -

Overpayment of benefit costs Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Risk Assessment Probability Impact Risk Level Likely Medium Significant Likely Medium Significant Possible Medium Significant Possible Medium Significant Unlikely Low Minor Unlikely Low Minor Appropriate to accept risk? Yes/No Yes No No No No No Appropriate to transfer risk to Contractor? Yes/No No No No Yes Yes Yes Control (4)When thenetbenefit value exceeds thecomparator group bymore thanfive percent, w4i bythecontracting officer, the Contractor shall submit a corrective action plan tothe Contracting Officer for approval, unlesswaivedby the Contracting Officer. (5)When the average total benefit percapita cost ortotal benefit cost asa percent ofpayroll exceeds the comparator group bymore than five percent, when andif required bytheContracting Officer, theContractor shall submit ananalysis of thespecific plan costs that areabove the percapita cost range or total benefit cost as a percent ofpayroll and a corrective action plan toachieve conformance with a Contracting Officer directed percapita cost range ortotal benefit cost asa percent ofpayroll, unless waived bythe Contracting Officer. (6)Within two years of Contracting Officer approval of theContractor's corrective action plan, theContractor shall align employee benefit programs with the benefit value and percapita cost range orpercent ofpayroll as approved by the Contracting Officer. (0(8) The Contractor may notterminate anybenefit plan during theterm of theContract without theprior approvalof the ContractingOfficer in writing. (0(9) Cost reimbursement forPRBs is contingent onDOE approved service eligibility requirements forPRB that shall bebased ona minimum period of continuous employment service notless than 5 years under a DOE costreimbursement contract(s) immediately priortoretirement. Unless required byFederal orStatelaw, advance funding of PRBs is notallowable. Contractors, other than thosewhoseworkers' compensation coverageis providedthrough a state funded arrangement ora corporate benefits program, shall submit totheContracting Officer for approval allnew compensation policies andall initial proposals for self-insurance (contractors shall provide copies to the Contracting Officer of all renewal policies forworkers compensation), (a) Have a claims management prog thatestablishes specific guidelines andpractices, and that ensures a regular review of program components- reviewof all claimsover $25,000in reservesand claimsover2 years old, regardless of reserveamount; 3 r an insured program onallopen claims at theendof each policy year butprior to the mcnt-programs, suchas managed carenetworks, where allowed bystatutes; and5 e claims review ofopen andclosed claims during thefirst 3 years of a contract period for clodpolioies withexisting claims activity. A written report of thefindings shall be submitted to the Contracting Officer. Contractorsunder insuredplans shall reviewand verifythe accuracyof interimpremium-adjustment reports andmakepayment of adjusted premium or request of creditfrom carrierr 6 of 15 Explanation Keep current languagewithminor modifications. Keep current language in DOE contracts. Keep current language in DOE contracts. Keep current language in DOE contracts. Eliminate overly prescriptive language. It is unnecessary to specify the "how." Eliminate current language. Reference Model H-Clause Page 6

Page 7 Page 16 DOEO 350.1 Page V-5 Page V-6 Page V-7 Predispositional Draft Attachment 2 Subject Area Risk Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Customer, Stakeholder, and Public Trust - Loss of trust and political concern. Risk Assessment Probability Impact Risk Level Unlikely Low Minor Possible Medium Significant Possible Medium Significant Rare Medium Minor Appropriate to accept risk? Yes/No No No No No Appropriate to transfer risk to Contractor? Yes/No Yes No No Yes Control insurance policies shall contain thefollowing provisions. 1 A provision- excluding any claim onthe part ofthe insurance company tobesubrogated onpayment of loss orotherwise to ld theinsurance company, 60days advance notice shall begiven to thecontractor, theContracting Officer, am Office ofContractor Human4tcsource Management. 3 Aprovision limiting theinsurance company's right of uirements. 4- policy to DOE, with payment ofallreturn premiums, premium refunds dividends, orother-moneys due ortobecome due, tobepayable tothe Government-5-Employer's . 6 Worker; for certain types of empl extendVoluntary' Compensation-Coverage to occupational disease. tically provide voluntary coverage. This allows forcoverage of Workers compensation loss income benefit payments, when supplemented by other programs (such assalary continuation, short-term disability) aretobeadministered sothat total benefit payments from allsources shall notexceed 100percent of theemployee's net pay. Contractors approve all workers compensation settlement claims uptothe threshold established bythe Contracting Officer for DOE approval and submit all settlement claims above the threshold toDOE for approval. Contracting Officer, ensure the following non discretionary all notbe locatedat a DOEnuclear weapons complex or otherhazardous motoric (b) Dependent care benefit programs for contractor operated facilities must meet employee needs ond- 7 of 15 Explanation Eliminate current language. Keep current languagein DOE contracts. Keep current languagein DOE contracts. Eliminate current language. Reference Model H-Clause Page 16 Page 17 DOEO 350.1 Page V-7 Page V-8 Page V-8 Page V-8 Predispositional Draft Attachment 2 Subject Area PENSION PLANS Risk Financial - Overpayment of costs Financial- potential exposure to lawsuits Financial - Overpayment of benefit costs Risk Assessment Probability Impact Risk Level Rare Medium Minor Rare Medium Minor Possible Medium Significant Appropriate to accept risk? Yes/No No No No Appropriate to transfer risk to Contractor? Yes/No Yes Yes No Control Suppert-<H»sts-as^ated-wklHhe-eperalion-e^^ useofDOE and contractor employees may include all oraportion ofsuch expense items asutilities and maintenaneeras-^ll-as-feod-and-medieal-serA^ operations and are readily-available toadditionally support tho fooility. Such use shall bo approved bythe contracting offioer in-advance: Formo following oosto tobeconsidered allowablcrcapital construction ofa faoilitymustbe validated and approved by-the-Gonfraoting Officer. 1Capital costs budgeted and accounted for itMiecordanee-^ilh^OIi-reqtiiremefl^ dependeiU-care-needs-CTHV%e^idequatdy-addressed-U^ w<>&plaee^iHieaMvorl^laee^oMraetor-^peHS0red^ lease^r-purehase-oteuel^eility^bal^^^ e^nded-for^ie^peratioiw>l:eontraetor^vorkplaee-0Hie^ aIlowableHmder^m-cMr^mstanras^-Ioweveir^tion^^^ empleytfe-welfare-benefits^rograms^ as it relales-to welfore-benefiter

Atty^rt^nen^tween-eenlraeteFs^mklepentot^^ t^ntractors^md^ie-DOE^r^held^KH^ ittSHfiHteei)oheJ«^miist4^retamed-by^he-depa^ appi^riate-foF^r^iees-iwevidedrT^e^irtra between-lhe^entra^oF^nd^ependenH:-are-{preg^ or^mzations^perateHnaintain-and-upgrade^Hy^roposed^^ w^f^eral^tett^nd-leea^polic-ies^egHlatiaHs^^ (h)Basic Requirements. The Contractor shall adhere to the requirements set forth below inthe establishment and administration of pension plans that arereimbursed byDOE pursuant tocost reimbursement contracts for management andoperation of DOE facilities andpursuant toother costreimbursement facilities contracts. Pension Plans include Defined Benefit and Defined Contribution plans. (1)TheContractor shall become a sponsor of theexisting pension andother benefit plans (orcomparable successor plans), including other post-retirement benefit (PR13) plans, asapplicable, for-lHeumbent-Iimployees- and-fetired-plan-participantsr with responsibility for management and administration of the plans. The Contractor shall be responsible for maintaining thequalified status of those plans. TheContractor shall carry over the length ofservice credit and leave balances accrued asofthe date ofthe Contractor's assumption of Contract performance. 8 of 15 Explanation liminate current Ianmiagc. Eliminate current lanuuage. Keepcurrent language with modification to remove reference to incumbent employees and retired participants as is overlyprescriptive. Reference Model H-Clausc Page 8 DOE O 350.1 Pa«e V-8 Pane V-9 Predispositional Draft Attachment 2 Subject Area Risk Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Risk Assessment Probability Impact Risk Level Likely Medium Significant Unlikely Low Minor Unlikely Low Minor Possible Medium Significant Possible Medium Significant Appropriate to accept risk? Yes/No No N/A N/A Yes No Appropriate to transfer risk to Contractor? Yes/No No N/A N/A No No Establishment and Maintenance of Pension Plan. _ defined benefit (DB)-or defined contribution (DC) pension plans established and/or implemented bythe Contractorshall bomaintainedconsistentwith the requirements of the IRCand ERISA. Control with applicable laws and regulations. (3)Employees working for the Contractor shall only accrue credit for service under this Contract after the date of Contract award. (4) Except for commingled plans inexistence asof the effective date ofthe contract, any pension plan maintained bythe contractor for which DOE reimburses costs, shall bemaintained asa separate pension plan distinct from any other pension plan that provides credit for service not performed under a DOE cost- reimbursement contract. When deemed appropriate bytheContracting Officer, Commingled plans shall be converted toseparate plansat thetimeof newcontract award or theextension of a contract. (h)(3) DOE approval is required prior to implementing any change toa pension plan covering prime cost mburscment contracts formanagement andoperation ofDOE facilities nnd other contract?- whon Hor.ignnted- Changes shall beinaccordance with andpursuant totheterms and conditions of thecontract (h)(4) DOE approval is required for eacli pension plans or Taft-Hartley pension plans.-

(h)(5) Each contractor pension plan shall besubmitted toat least 1)a limited-scope audit annually and a full- scope audit every three years; or2)a full scope audit annually, asrequired byERISA Section 103 and 104, conducted byanoutside independent organization andtheresulting report, submitted to DOE. NNSA Process: (h)(5) The contractor shall comply with requirements ofERISA Sections 103 and 104 for each ofitsemployee benefit plans and shall provide copies ofsuch required filings toDOE. Limited scope audits aspermitted under ERISA Section 103(a)(3)(C) thatareconducted byanindependent qualified auditor thataremembers of the AICPA Employee Benefit Plan Audit Quality Center must beaccompanied bya statement from the contractor stating that ithas confirmed that the entity isqualified under ERISA section 103(a)(3)(C) toissue the certification andtheauthorized representative signing thecertification isauthorized todosoas well ascopy of the actual certification from theissuing entity. Such limited scope audits may besubmitted totheDOE 2 outof every3 yearswitha fullscopeauditrequired at leasteverythreeyears. (h)(6) For existing Commingled plans, the Contractor shall maintain and provide annual separate accounting of DOE liabilities and assets as for a Separate Plan. 9 of 15 Explanation Eliminatesentences (1) and (2) as it is overly prescriptive. Keep sentences (3) and (4). Eliminate current language as it is duplicative. See languageon page 5 under "Pension and Other Benefit Programs." Eliminate current language as it is duplicative. See language on page 5 under "Pension and Other Benefit Programs." Revise languageto requirea limited scope audit annually anda fullscope audit every three years. Keep current language in DOE contracts. Reference Model H-Clause Page 8 Page 9 Page 9 Page 9 DOEO 350.1 Predispositional Draft Attachment 2 Subject Area Risk Financial - Overpaymentof benefit costs Financial - Overpaymentof benefit costs Financial - Overpaymentof benefit costs Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Risk Assessment Probability Impact Risk Level Possible Medium Significant Possible Medium Significant Unlikely Low Minor Possible Medium Significant Possible Medium Significant Possible Medium Significant Appropriate to accept risk? Yes/No No No Yes No No No Appropriate to transfer risk to Contractor? Yes/No No No No No No No Control (h)(7) For existing Commingled plans, the Contractor shall beliable for any shortfall inthe plan assets caused by funding or events unrelated to DOE contracts. (h)(8) The Contractor shall comply with the requirements of ERISA and any other applicable laws tothe fullest extentpractical,evcn-ifa speoificpensionplanis exemptfrom ERISA. t limited to evaluation of the following: (A) Total compensation. (B) broad based national survey. (C) Retin (h)(10) The Pension Management Plan Human Resources Management Plan shall include thefollowing: (A) APension Management Plan (PMP) discussing the Contractor's plans for management and administration ofall pension plans consistent with the terms ofthis contract. The PMP shall beupdated and submitted tothe Contracting Officer indraft annually nolater than 45 days after the last day of the Plan year along with itsdraft actuarial valuation.

(B)Within thirty (30) days after thedate of thesubmission, appropriate Contractor representatives shall meet with theContracting Officer todiscuss theContractor's proposed draft annual update of thePMP to specifically discuss any anticipated changes inthe projected pension contributions from the prior year's contributions and any discrepancies between the actual contributions made for the most recent year preceding thatmeeting andtheprojected contributions forthat year which theContractor hadsubmitted to the Contracting Officer theprioryear. Theannual revision of thePMP shall include: (i)The Contractor's best projection of thecontributions which it will belegally obligated tomake tothe pension plan(s), beginning with therequired contributions for the coming fiscal year, based onthe latest actuarial valuation, andcontinuing forthefollowing four years. This estimate will bebased upon compliance with all applicable legal requirements relating tothe determination ofcontributions and upon the assumptions set out in the plan document(s). (ii)If the actuarial valuation submitted pursuant tothe annual PMP update indicates that the sponsor ofthe pension plan must impose pension plan benefit restrictions, the Contractor shall provide the following information: (aa)Thetypeof benefit restriction thatwilltakeplace, (bb) The number ofContractor employees that potentially could beimpacted and the nature of therestriction (e.g., financial impact) by imposition of therequired benefit restriction, and (cc) The amount ofmoney that would need tobecontributed tothe pension plan toavoid legally required benefit restrictions. 10 of 15 Explanation Keep currentlanguagein DOE contracts. Keep current languageexceptthe ending phrase as it is overly prescriptive. Eliminatecurrent language. Internal DOE governance language. Keep current language in DOE contracts. Keep current language in DOE contracts. Keep current language in DOE contracts. Reference Model H-Clause Page 9 Page 9 Page 9 Page 9 Page 10 Page 10 DOEO 350.1 Predispositional Draft Attachment 2 Risk Assessment Appropriate to accept risk? Appropriate to transfer risk to Contractor? Reference Subject Area Risk Probability Impact Risk Level Yes/No Yes/No Control Explanation Model H-Clause DOEO 350.1 Financial - Overpayment of benefit costs Possible Medium Significant No No (iii) A detaileddiscussionof how the Contractorintendsto managethe pensionplan(s) to maximizethe contributionpredictability (i.e. forecastingaccuracy)and contain current and futurecosts, to includerationale for selectionof all plan assumptions that determine the requiredcontributions and whichimpactthe leveland predictability of required contributions. TheContractor is required to annually establish a longterm(e.g. five year)plan that outlinesthe projected retirement plan costs, and any plannedactionsteps to be taken to better manage predictability. The contractor must also share thefollowing information with theDepartment during the meeting: Keep current language in DOE contracts. Page 10 Financial - Overpaymentof benefit costs Possible Medium Significant No No (aa) Strategy for achieving and maintaining fully-funded status of the plan(s) (bb) Investment policystatementfor the plan,with any recent updates (cc) Resultsof recentasset liabilitystudies(requiredto be preformed every3 yearsor after a significantevent) including rational for maintaining current asset allocationstrategy. (dd) Comparison ofbudget projections submitted to the Department to actual contributions (ee) Any recentreports, findings, or recommendations providedby plan's investment consultant. (ff) Actuarial experience studiesto set the plan's actuarialassumptions (requiredto be performedevery3-5 years)

Keep current language in DOE contracts. Page 10 Financial - Overpayment of benefit costs Possible Medium Significant No No (iv) An assessment to evaluate the effectiveness of the Contractor's pension plan(s) investment management/results. The assessmentshall includeat a minimum: a reviewand analysisof pensionplan investmentobjectives; the strategies employedto achieve those objectives; the methods used to monitor execution of thosestrategies and the achievement of the investment objectives; and a comparative analysisof the objectives and performanceof other comparablepensionplans. The Contractorshall also identify its plans, if any, for revisingany aspectof its pensionplan management based on the resultsof the review. Keep current language in DOE contracts. Page 11 Financial - Overpayment of benefit costs Possible Medium Significant No No (i) Reimbursement ofContractors for Contributions to Defined Benefit Pension Plans. (1) Contractors that sponsor single employeror multiple employer defined benefit pension plans will be reimbursed for the annual required minimum contributions underthe Employee Retirement Income Security Act (ERISA),as amendedby the PensionProtection Act (PPA)of 2006. Reimbursement above the annual minimum required contribution will require prior approval of the Contracting Officer. Reimbursementamounts will take into consideration all pre-funding balances and funding standard carryover balances. Keep current language in DOE contracts. Page 11 Financial - Overpayment of benefit costs Possible Medium Significant No No (i)(2) Contractors that sponsormulti-employer DB pensionplanswill be reimbursed for pensioncontributions in the amountsnecessaryto ensurethat the plansare funded to meet the annualminimum requirement under ERISA, as amendedby the PPA. However,reimbursement for pension contributionsabove the annual minimum contribution requiredunderERISA, as amendedby the PPA, will requireprior approvalof the ContractingOfficerand will be considered on a case by case basis. Reimbursement amountswill take into considerationall pre-fundingbalancesand fundingstandard carryoverbalances. Keep current language in DOE contracts. Page 11 11 of 15 Predispositional Draft Attachment 2 Subject Area Risk Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Financial - Overpaymentof benefit costs Financial - Overpayment of benefit costs Risk Assessment Probability Impact Risk Level Possible Low Moderate Possible Medium Significant Unlikely Low Minor Possible Medium Significant Appropriate to accept risk? Yes/No No No N/A No Appropriate to transfer risk to Contractor? Yes/No No No N/A No Control (j)Reporting Requirements for Designated Contracts. The following reports shall besubmitted toDOE assoon aspossible after the last day of theplan year bythecontractor responsible for each designated pension plan funded byDOE butnolater than thedates specified below: (1)Actuarial Valuation Reports. Theannual actuarial valuation report for each DOE-reimbursed pension plan and when a pension plan iscommingled, the contractor shall submit separate reports for DOE's portion and theplan total bythe due date for filling IRS Form 5500. (2)Forms 5500. Copies of IRS Forms 5500 with Schedules for each DOE-funded pension plan, no laterthanthatsubmitted to theIRS. (3) Forms 5300. Copies of all forms in the5300series submitted to theIRS thatdocument theestablishment, amendment, termination, spin-off, or merger of a plansubmitted to the IRS.

(k) Changes to Pension Plans. Atleast sixty (60) days prior tothe adoption ofany changes tobenefits, plan design, orfunding methods for a pension plan, the Contractor shall submit the information required below, asapplicable, tothe Contracting Officer for approval ordisapproval and a determination astowhether the costs tobeincurred are consistent FAR31.205-6, as supplemented by DEAR970.3102-05-6. (I) For proposed changes topension plans and pension plan funding, the Contractor shall provide the following to the Contracting Officer: (A) a copy of the current plan document (asconformed toshow all prior plan amendments), with the proposed new amendment indicated in redline/strikeout; (B)ananalysis of the impact of anyproposed changes onactuarial accrued liabilities andcosts; (C) except incircumstances where the Contracting Officer indicates that it isunnecessary, a legal explanation of the proposed changes from the counsel used bythe plan for purposes ofcompliance with all legal requirements applicable to private sectordefined benefit pension plans; (D) the Summary Plan Description; and, (E)anysuchadditional information as requested bytheContracting Officer. esthatmayincrease costsor liabilities, andanyproposed special programs noillary benefits) and shall- (1) Terminating Operations. When operations ata designated DOE facility are terminated and nofurther work istooccur under the prime contract, thefollowing apply: (1)Nofurther benefits forservice shall accrue. (2)TheContractor shall provide a determination statement in itssettlement proposal, defining andidentifying all liabilities andassets attributable to the DOE contract. 12 of 15 Explanation Keep current language in DOE contracts. Keep current language in DOE contracts. Eliminate current language as it is duplicative. See languageon page 5 under "Pension and Other Benefit Programs." Keep current language in DOE contracts. Reference Model H-Clause Page 12 Page 12 Page 13 Page 13 DOEO 350.1 Predispositional Draft Attachment 2 Subject Area Risk Financial - Overpaymentof benefit costs Financial - Overpayment of benefit costs Financial - Overpayment of benefit costs Financial - Overpaymentof benefit costs Financial - Overpayment of benefit costs Risk Assessment Probability Impact Risk Level Possible Medium Significant Possible Medium Significant Possible Medium Significant Possible Medium Significant Possible Medium Significant Appropriate to accept risk? Yes/No No No No No No Appropriate to transfer risk to Contractor? Yes/No No No No No No Control (1)(3) The Contractor shall base its pension liabilities attributable toDOE contract work on the market value of annuities orlump sum payments ordispose ofsuch liabilities through a competitive purchase ofannuities or lump sum payouts. Insurance companies bidding for such business shall satisfy' Department ofLabor- Eflfliiirflmiijilil- rcuuii viiiciii3. (l)(4) Assets shall be determined using the "accrual-basis market value" on the date oftermination of operations. (1)(5) DOE and the Contractors) shall establish an effective date for spinofforplan termination. On the same day asthe contractor notifies the IRS ofthe spinofforplan termination, all plan assets assigned to aspun-offor terminating planshall be placed ina low-risk liability matching portfolio until thesuccessor trustee, or an insurance company, isable toassume stewardship ofthose assets. The portfolio shall berated no lower than Standard & Poor's "AA."

DOE-H-1007 (a); Ifthis Contract expires orterminates and DOE has awarded a contract under which the new contractor becomes a sponsor and assumes responsibility for management and administration ofthe pension or other benefit plans covering active orretired contractor employees with respect toservice at[name ofsite or facility] (collectively, the "Plans"), the Contractor shall cooperate and transfer tothe new contractor its responsibility for sponsorship, management and administration ofthe Plans consistent with direction from the Contracting Officer. If a Comingled planis involved, thecontractor shall: (1) spin offthe DOE portion ofany commingled plan used tocover employees working atthe DOE facility into aseparate plan. The new plan will normally provide benefits similar tothose provided by the commingled plan and shall carry with it the DOE assets on anaccrual basis market value, including DOE assets that have accrued in excess of DOE liabilities. (2) bargain in good faith with DOE orthe successor contractor to determine the assumptions and methods for establishing the liabilities involved ina spinoff. DOE and the contractor(s) shall establish an effective date of spinoff. On the same day asthe contractor notifies the IRS ofthe spinofforplan termination, all plan assets assigned toaspun-offorterminating plan shall be placed ina low-risk liability matching portfolio until the successor trustee, oraninsurance company, isable toassume stewardship ofthose assets. The portfolio shall DOE-H-1007 (b);If thiscontract expires or terminates andDOE hasnotawarded a contract toa new contractor under which thenew contractor becomes a sponsor andassumes responsibility formanagement and administration of theplans...the contractor shall remain thesponsor of theplans inaccordance with legal requirements. 13 of 15 Explanation Keep current language with modification to provide contractors with flexibilityto provide lump sum payouts. The restriction against lump sum payouts does not mitigate financial risk. Also eliminate language requiring insurance companies to meetDepartment of Labor requirements. The DOL requirement is by law. Keepcurrent languagein DOE contracts. Keepcurrent languagewithminor modification to clarify requirement. Keepcurrentlanguage withminor modification to clarify requirement. Keep current languagein DOE contracts. Reference Model H-Clause Page 13 Page 13 Page 14 Page 18 Page 18 DOEO 350.1 Predispositional Draft Attachment 2 Risk Assessment Appropriate to accept risk? Appropriate to transfer risk to Contractor? Reference Subject Area Risk Probability Impact Risk Level Yes/No Yes/No Control Explanation Model H-Clause DOEO 350.1 Financial - Overpayment of benefit costs Possible Medium Significant No No (m)Terminating Plans. (1) DOE contractors shallnotterminate anypension plan(Commingled or site specific) without notifying the requesting Departmental approval at least 60days prior tothescheduled date of plan termination. Keep current language in DOE contracts. Page 14 Financial - Overpaymentof benefit costs Possible Medium Significant No No (m)(2) To the extent possible, the contractor shall satisfy plan liabilities toplan participants by the purchase of annuities through competitive bidding onthe open annuity market orlump sum payouts. Insurance companies assumptions and procedures of the Pension BenefitGuaranty Corporation.

Keep current languagewith modification to provide contractor flexibility to provide lump sum payouts. Alsoeliminate requirement for insurance companyto meet DOL requirements, whichis not needed since it is law. Page 14 Financial - Overpayment of benefit costs Possible Medium Significant No No (m)(3) Funds tobepaid or transferred toany party asa result of settlements relating topension plan termination orreassignment shall accrue interest from the effective date of termination orreassignment until the date of payment or transfer. Keep current language in DOE contracts. Page 14 Financial - Overpayment of benefit costs Possible Medium Significant No No (m)(4) If ERISA or IRC rules prevent a full transfer ofexcess DOE reimbursed assets from theterminated plan, thecontractor shall payanydeficiency directly toDOE according toa schedule of payments tobenegotiated by the parties. Keep current language in DOE contracts. Page 14 Financial - Overpayment of benefit costs Possible Medium Significant No No (m)(5) Onthesame dayas thecontractor notifies theIRS of thespinoffor plantermination, allplanassets assigned toa spun-offor terminating plan shall beplaced ina low-risk liability matching portfolio until the successor trustee, or an insurance company, is ableto assume stewardship of those assets. Theportfolio shall be rated no lower than Standard & Poor's "AA." Keep current languagewithminor modification to clarify requirement. Page 14 Financial - Overpayment of benefit costs Possible Medium Significant No No (m)(6) DOE liability toa commingled pension plan shall notexceed that portion which corresponds to DOE contract service. The DOEshallhavenootherliability to theplan,to theplansponsor, or to theplan participants. Keep current language in DOE contracts. Page 14 Financial - Overpayment of benefit costs Possible Medium Significant No No (m)(7) After allliabilities of theplan aresatisfied, thecontractor shall return to DOE anamount equaling the asset reversion from theplan termination and any earnings which accrue onthatamount because ofa delay in the payment toDOE. Such amount and such earnings shall besubject toDOE audit. Toeffect the purposes of thisparagraph, DOEandthecontractor maystipulate to a schedule of payments. Keep current languagein DOE contracts. Page 15 Financial - Overpaymentof benefit costs Possible Medium Significant No No (n) Special Programs. Contractors must advise DOE andreceive prior approval foreach early-out program, window benefit, disability program, plan-loan feature, employee contribution refund, assetreversion, or incidental benefit. Keep current languagein DOE contracts. Page 15 14 Of 15 Predispositional Draft Attachment 2 Risk Assessment Appropriate to accept risk? Appropriate to transfer risk to Contractor? Reference Subject Area Risk probability Impact Risk Level Yes/No Yes/No Control Explanation Model H-Clause DOEO 350.1 (0) Definitions (1) Commingled Plans. Coveremployees from the contractor's private operations and its DOEcontract work. (2) CurrentLiability. The sum of all plan liabilities to employees and their beneficiaries. Currentliability includesonly benefitsaccrued to the date ofvaluation.This liability is commonly expressedas a presentvalue. (3) DefinedBenefitPensionPlan. Providesa specific benefit at retirement that is determined pursuant to the formula in the pension plan document. (4) DefinedContribution PensionPlan. Providesbenefits to each participantbased on the amountheld in the participant's account. Funds in the accountmaybe comprisedof employer contributions, employee contributions, investmentreturns on behalf of that plan participant and/or other amounts credited to the participant's account.

Keep current language in DOE contracts. Page 15 Page VI-9 (5) Designated Contract. Forpurposesof this Order,a contract(otherthana primecost reimbursement contract for management and operationof a DOE facility) for whichthe Headof the Departmental Contracting Activity determines that advancepensionunderstandings are necessaryor wherethere is a continuing Departmental obligation to the pension plan. (6) PensionFund.The portfolioof investments and cash providedby employer and employee contributions and investment returns. A pensionfundexists to defraypensionplan benefitoutlaysand (at the optionof the plan sponsor) the administrative expenses of the plan. (7) SeparateAccounting. Accountrecordsestablished and maintained withina commingled plan for assetsand liabilities attributable to DOE contract service. NOTE: The assets so representedare not for the exclusive benefit of any one group of plan participants. (8) SeparatePlan.Mustsatisfy IRCSec. 414(1) definition of a singleplan,designateassets for the exclusive benefitof employees underDOEcontract,exist undera separateplan document (havingits own DOLplan number) that is distinct from corporate plan documents and identify the contractor as the plan sponsor. (9) Spun-offPlan. A newplanwhichsatisfies IRCReg. 1.414(l)-l requirements fora singleplanandwhichis created by separating assetsand liabilities from a largeroriginal plan.The funding level of eachindividual participant'sbenefitsshallbe no less than beforethe event,whencalculated on a "plan termination basis." Keep current language in DOE contracts. Page 15 Page VI-9 15 of 15 Predispositional Draft