Wants $75 Million in Severance for 6,500 Who Aren’t Losing Jobs : Firm Seeks U.S. Gift for Its Workers
After 38 years spent building and running the federal government’s Savannah River nuclear weapons production plant in South Carolina, the Du Pont Corp. is preparing to turn the trouble-plagued facility over to a new contractor.
And, despite the government’s strenuous objections, Du Pont wants to give its 6,500 employees an exceptionally generous parting gift: $75 million in federally funded severance pay.
The Energy Department is refusing to pay the $75 million on the ground that all but a handful of Du Pont employees--by the department’s count, 37 senior managers at Savannah River--are to be hired at comparable pay and benefits by the government’s new contractor, the Westinghouse Corp., when the changeover takes place in April.
Only Change Is Employer
“Most Du Pont employees at (Savannah River) will keep the same jobs, offices, pay and benefits they have now,” a report by the Energy Department’s inspector general observes. “No Du Pont employee will be required to relocate his family. Only the name of the employer will change.”
It would seem unfair, Inspector General John C. Layton said, “to ask the taxpayers to fund what is, in effect, a $75-million severance windfall for employees who are not in reality severed from their positions.”
“It’s outrageous,” department spokesman Douglas Elmets said. “You might call it a platinum parachute for people who aren’t even going to lose their jobs.”
Not at all, Du Pont insists. The company says it has a legal obligation to pay its 6,500 employees an average of about $11,500 each in severance pay. It says also that the operating contract the government signed in 1950 obliges the department to pay all of Du Pont’s costs at Savannah River, including this one.
Under a contract first signed by the Harry S. Truman Administration in October, 1950, and renewed every five years since then, Du Pont agreed to provide its then-unique expertise in nuclear technology to build and run the Savannah River plant to make plutonium and tritium for the nation’s growing nuclear stockpile.
In a letter to stockholders in October, 1950, Du Pont President Crawford H. Greenewalt said that the company had agreed to the task “in the interests of national security” and not for profit. Du Pont would accept a fee of $1, Greenewalt said, in exchange for the government’s agreeing to “pay all costs” of building and running the Savannah River plant.
In October, 1987, only days before the National Academy of Sciences issued a report severely criticizing the physical condition and management of the production reactors, the company announced that it would not seek to renew its operating contract, which expires next year.
Du Pont gave as its reasons the fact that its expertise was no longer unique and that the government seemed to be moving away from the total protection of its contractors from liability for damages, “which is critical to us.”
Moreover, board Chairman Richard E. Heckert cited what he called the “increasingly controversial nature of the assignment” in running a nuclear weapons plant and “the increasingly contentious environment in which we operate Savannah River.”
Days later, the National Academy of Sciences issued a report describing the plant as “poorly maintained and modernized,” chiefly as a result of lax supervision over many years by the Energy Department.
In a letter to Du Pont last Aug. 22, Energy Secretary John S. Herrington suggested that Du Pont pay the $75 million out of its own funds, declare a loss on its contract and consider it a “fair exchange” for gaining “relief” from the risks inherent in running the troubled plant.
Du Pont Chairman Heckert replied two days later that Herrington’s idea was “totally unacceptable” and “completely ignores the terms of our contract and the principles that have governed our mutual obligations under it for 38 years.”
It has long been the company’s policy, Heckert argued, to provide severance pay to employees even when a new employer offers a comparable job. Under pressure from the department, he acknowledged, Du Pont had modified its policy in 1985 after conceding that workers who leave the company now “might not be suffering economic hardship after going to work immediately for a new employer.”
No Credits After 1985
But he said the only change in its policy was that workers would no longer accumulate credit for severance pay after 1985. For work before then, he insisted, the government still owes its employees severance pay at the rate of a week’s pay for every year of service.
“It would be unfair to our employees to withdraw the benefit retroactively,” Heckert said. His letter indicated also that corporate officers had discussed the issue in the fall of 1987 with then-White House Chief of Staff Howard H. Baker Jr., but he did not suggest that Baker or other officials had acceded to Du Pont’s demand for $75 million.
