The following is an excerpt from a memo from PBL Senior VP Paul Norman
to PBL managers, dated March 19th, 2003:

**1. Outside hiring** - Fill vacancies from internal sources. Mission
critical outside hires or temporary contracting will only be considered
when internal sources are exhausted. All outside hires of new BPA
employees will be handled on a case-by-case basis and must be first
approved by the Sr. VP, with final approval by the COO. Managers should
contact their respective staff management representative for guidance
and for several pre-approved exceptions to the COO approval requirement.

Paul Norman\'s first e-mail memo to managers addressing outside hires
was dated February 26th.

> \-\-\-\--Original Message\-\-\-\--
>
> **From:** Norman, Paul - P-6
>
> **Sent:** Wednesday, February 26, 2003 5:31 PM
>
> **To:** PBL Manager/Supervisors/Team Leads
>
> **Cc:** Steele, David M - PMF-6; Suckow, Kathleen - PMF-6; Meaney,
> Gerry - PMF-6; Ancell, Laura - PMF-6; Mayes, Marchelle - PMF-6;
> Chamberlain, Phyllis - PND/Walla Walla; Sandlin, Dana - PGC/Richland;
> Maichel, Chuck - PMF-6
>
> **Subject:** Once More Into the Breach: Call for Additional Cost
> Reductions
>
> I\'m just guessing that this message from Chuck was not particularly
> welcome, coming as it does on the heels of several such drills over
> the last year or so. As an instigator, I\'m sorry about that. You have
> a lot of crucial work on your plates and these cost-cutting efforts
> are a big drain. All I can say is that as our financial outlook
> continues to decline, we have had to look harder at costs, and I did
> not see an alternative to doing this again. Thanks for your
> forbearance, and if we can possibly avoid another round, we will.
>
> I also want to thank you for the creative and serious way in which you
> have been taking these difficult requests. Through your efforts, we
> have brought costs down a lot \-- much more than the \"noise\" level
> in our overall financial picture. It has made a real difference in our
> financial outlook, and it has not gone unnoticed by our customers.
>
> \-\-\-\--Original Message\-\-\-\--
>
> **From:** Maichel, Chuck - PMF-6
>
> **Sent:** Wednesday, February 26, 2003 1:01 PM
>
> **To:** PBL Manager/Supervisors/Team Leads
>
> **Cc:** Steele, David M - PMF-6; Suckow, Kathleen - PMF-6; Meaney,
> Gerry - PMF-6; Ancell, Laura - PMF-6; Mayes, Marchelle - PMF-6;
> Chamberlain, Phyllis - PND/Walla Walla; Sandlin, Dana - PGC/Richland
>
> **Subject:** PLEASE READ: Call for Additional Cost Reductions
>
> **Call for Expense Reductions for FY 2004-2006**
>
> This is a call to PBL managers to make additional expense reductions
> for FY4-06. While we made significant progress for FY03 with an
> additional \$7.5 million in reductions (kudos to all!), we are still
> higher on average than FY01 actuals for FY04-06. As you may recall, in
> Financial Choices we committed to keeping the sum of PBL internal
> costs, and Corporate/Shared Services costs functionalized to PBL, at
> (or below) FY01 actuals. Therefore, we need to do more.
>
> We are now asking that you send to your primary PMF financial analyst
> by March 7, 2003, estimates of [annual]{.underline} reductions for:
>
> ♦ Internal operating expenses, by category (except Personnel
> expenses), and
>
> ♦   Reductions in your program areas.

# **Assumptions - The PBL VP's agreed to the following assumptions for additional expense reductions for FY04-06. Also, the FY04-06 expense reductions will be considered DRAFT until we conclude the agency discussion and have communicated to employees or implemented any actual policy or guideline.**

> **Training & Travel** - Keep the reductions you just took for training
> and travel through April 2004. For May 2004 through FY06, assume the
> expense levels decided in Financial Choices for Training and Travel.

## **Awards -** Reduce your award budget to zero (\$0) for the entire period, FY04-06. Instead, PBL awards will be determined annually after achieving either our FY03-06 cost reduction targets, or achieving our Net Revenue Targets.

### **All Other Internal Operating Expense Categories (excluding personnel expenses): Grants & Agreements, Non-Labor Contracts, Labor Contracts, Materials & Supplies, and all Program Levels -** determine the portion of your expense forecast that is **[not]{.underline}** irrevocably committed and retain only that which is "Mission Critical" per the definition below:

> **Mission critical is defined as \"if not done, would result in at
> least one of the following":**
>
> **1. Significant risk of revenue loss or rate increase**
>
> **2. Significant reliability degradation**
>
> **3. Significant impairment of relationships with customers,
> constituents, Tribes and other governments**
>
> **4. Significant environmental degradation**
>
> **5. Significant internal system failure (that could result in any of
> the above)**
>
> **6. Significant risk that national or regional policy decisions will
> cause any of the above to occur when BPA is represented in a meeting**
>
> **7. Breach of legal or contract obligation**
>
> [Your PMF financial analyst will provide each manager with his/her
> expense forecast currently in the system, by category, on Thursday,
> February 27, 2003]{.underline}.
>
> Thanks for your valuable input. If you have any questions, please
> contact Chuck Maichel or David Steele. And again, please send your
> FY04-06 expense reductions through your primary PMF financial analyst
> by March 7, 2003.
>
> Chuck Maichel