UNITED STATES 

NUCLEAR REGULATORY COMMISSION 

WASHINGTON, D.C. 20555-0001 

OFFICE OF THE 

INSPECTOR GENERAL 

September 9, 2008 

MEMORANDUM TO: R. William Borchardt 

 Executive Director for Operations 

FROM: Stephen D. Dingbaum /RA/ 

 Assistant Inspector General for Audits 

SUBJECT: MEMORANDUM REPORT: AUDIT OF THE NUCLEAR 

REGULATORY COMMISSION’S USE OF REEMPLOYED 

ANNUITANTS (OIG-08-A-15) 

The Office of the Inspector General (OIG) conducted this audit to determine the Nuclear 

Regulatory Commission’s (NRC) compliance with relevant laws, regulations, and Office 

of Personnel Management (OPM) guidance concerning rehiring annuitants. 

Additionally, OIG examined how NRC uses reemployed annuitants to accomplish the 

agency’s mission. OIG found that the agency’s reemployed annuitant process is carried 

out in compliance with policy, and the work performed by the reemployed annuitants is 

consistent with NRC’s mission. Further, during the audit, the Executive Director for 

Operations (EDO) issued and implemented a revised policy on granting pension offset 

waivers to reemployed annuitants. Therefore, OIG makes no recommendations. 

BACKGROUND

NRC currently uses a wide variety of human capital policies, programs, and strategies 

for recruiting, hiring, training and developing, and retaining skilled professionals. One of 

the human capital strategies is the use of reemployed annuitants. Rehiring a retired 

employee has become more common in the Federal Government and now at the NRC 

because these former agency employees possess critical skills in areas such as nuclear 

reactors, new plant construction, fuel cycle operations, information technology, and 

project management that may be otherwise hard to find. This strategy enables the 

agency to meet its mission using experienced, skilled individuals who are willing to 

continue working after retirement. Absent authority to waive pension offset, the salaries 

of reemployed annuitants must be reduced by their retirement annuity, also called 

pension offset. 
Audit of the Nuclear Regulatory Commission’s Use of Reemployed Annuitants 

2

The Energy Policy Act of 2005 authorizes NRC to eliminate the pension offset, on a 

case-by-case basis, for the reemployment of a Federal civilian retiree in a position for 

which there is exceptional difficulty in recruiting or retaining a qualified employee, or 

when a temporary emergency hiring need exists. The act also requires that NRC 

establish procedures for exercising this authority, including the criteria and procedures 

for any delegation of authority. 

In March 2006, the EDO issued policy and procedures to implement the pension offset 

waiver provision. These procedures state that an Office Director or Regional 

Administrator may request approval of a pension offset waiver by submitting a request 

to the Chairman or the EDO, as appropriate, through the Office of Human Resources 

(HR) and the Federal Employees Pay Comparability Act Senior Management Review 

Panel (FEPCA Panel).1

 The NRC pension offset waiver approval process is illustrated 

as follows. 

NRC Pension Offset Waiver Approval Process2

NRC’s HR, Human Resources Policy and Programs Branch, administers the 

reemployed annuitant process. Between October 1, 2006, and March 31, 2008, NRC 

had 134 reemployed annuitants.3

 During the same period, the earnings of these 

employees totaled more than $13.5 million. Of these, 118 received a pension offset 

waiver, while 16 had their NRC salary reduced by the amount of their pension. 

A reemployed annuitant is appointed as a Special Government Employee (SGE) or as a 

regular employee. Some of the differences between these two appointments are: 

• SGE appointments must end with the fiscal year cycle but may be eligible for 

reappointment the following fiscal year; regular employee appointments for 

reemployed annuitants typically do not exceed 2 years. 

• SGEs are limited to working 130 days per fiscal year; regular employees have 

no restrictions on the number of days they may work. 

 

1

 The NRC FEPCA Panel also reviews and makes recommendations regarding recruitment, relocation and retention 

incentives, and student loan repayments. 2

 When any one of the approving officials disapproves a waiver request during the NRC pension offset waiver 

approval process, HR returns the request to the originator for appropriate action. 3 Of the 134 reemployed annuitants, 106 are currently active. 
Audit of the Nuclear Regulatory Commission’s Use of Reemployed Annuitants 

3

• SGEs work an intermittent schedule, whereas regular employees may work 

an intermittent schedule or an established part-time or full-time schedule. 

PURPOSE

The objectives of this audit were to (1) determine NRC’s compliance with relevant laws, 

regulations, and OPM guidance concerning reemploying annuitants, and (2) ascertain 

how NRC uses reemployed annuitants to accomplish the agency’s mission. 

RESULTS

OIG found that: 

• The process used to reemploy annuitants is conducted in compliance with policy.

• The work performed by reemployed annuitants is consistent with NRC’s mission. 

A. PROCESS IS CARRIED OUT IN COMPLIANCE WITH POLICY 

NRC’s process for rehiring individuals receiving a pension annuity is generally compliant 

with applicable agency and OPM policy requirements. 

NRC Annuitant Reemployment Requirements 

In order to reemploy annuitants, NRC must satisfy both its internal requirements and 

requirements set forth by OPM. These requirements are as follows: 

• NRC policy requires that managers requesting reemployment of annuitants with 

waiver of pension offset address specific factors outlined in the section following. 

This process enables deciding officials to make a determination concerning 

reemployment. 

• OPM policy requires that annuitants and OPM be notified concerning salary and 

annuity adjustments. 

 

NRC Pension Offset Waiver Policy Requirements 

EDO Memorandum, Policies and Procedures for Implementation of the Provision for 

Waiver of Pension Offset in the Energy Policy Act of 2005, dated March 15, 2006, sets 

forth NRC’s process for implementing the pension offset waiver provision. NRC policy 

requires that waiver requests submitted by managers include factors such as: 

• A description of why the individual’s knowledge, skills, and abilities are important 

to the agency. 
Audit of the Nuclear Regulatory Commission’s Use of Reemployed Annuitants 

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• The nature of the position and its importance to agency function. 

• Other staffing alternatives and why these alternatives have not been or are not 

anticipated as being successful. 

• A description of the difficulty recruiting or retaining a qualified employee or, if 

appointed because of a temporary emergency hiring need, a description of the 

emergency. 

• Information about the proposed appointee’s duties. 

• An indication that the individual is unwilling to return to work unless a waiver is 

granted. 

Requests for Waivers Address Factors 

The majority of pension offset waiver requests reviewed by OIG addressed the required 

factors in accordance with agency policy. OIG analyzed a random sample of 30 

pension offset waiver requests submitted to HR and approved by the FEPCA Panel and 

EDO, or Chairman, and found that 28 waiver requests (or approximately 93 percent) 

contained the required factors. Of the pension offset waiver requests reviewed: 

• One omitted the description of the temporary emergency and how the emergency 

is beyond the scope of NRC’s normal responsibilities. 

• One omitted an indication that the annuitant is unwilling to return to work unless 

granted the waiver. 

Based on this review, OIG determined that waiver requests are generally compliant with 

agency policy. 

NRC Follows OPM Notification Policy 

In accordance with OPM policy, NRC notifies annuitants and sends OPM 

documentation concerning salary and annuity adjustments for reemploying individuals 

who receive a pension annuity. NRC staff complete and send the OPM form, 

Notification of Reemployment of an Annuitant, with a copy of Standard Form 50, 

Notification of Personnel Action, to enable OPM to determine continued eligibility for 

annuity. In addition, NRC staff discuss with the annuitants the effect of reemployment 

on their earnings. To ensure that documentation and notification steps are completed 

before the employee is included in the NRC personnel and payroll systems, NRC staff 

use a Checklist for Processing Reemployed Annuitants during the hiring process.
Audit of the Nuclear Regulatory Commission’s Use of Reemployed Annuitants 

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NRC Revised Policy 

During this audit, NRC revised its policy for waiver of pension offset. On April 29, 2008, 

the EDO issued a revised policy titled, Policy and Procedures for Implementation of 

Authority to Waive Pension Offset. Among other things, this policy served to: 

• Clarify the definition of temporary emergency hiring need. 

• Clarify how recruitment efforts meet long term needs. 

• Clarify definitions of exceptional difficulty recruiting and retaining qualified 

employees. 

The revised policy also requires that managers more specifically address the following 

factors: 

• Explain case-by-case circumstances. 

• Explain the nature of appointment and work schedule as well as the Energy 

Policy Act criterion that forms the basis for the request. 

• Explain, with narrative, the FEPCA Panel approval section. 

• Provide information for tracking number and type of appointments. 

Although revisions to this policy were underway during the course of this audit, OIG 

conducted its work based on the policy effective March 15, 2006. 

B. WORK PERFORMED CONSISTENT WITH NRC’S MISSION 

Management has a fundamental responsibility to develop and maintain effective internal 

control so that programs operate and resources are used consistent with the agency’s 

mission. OIG compared work assignments performed by a sample of reemployed 

annuitants with the work described in each employee’s pension offset waiver request. 

OIG interviewed 10 randomly selected reemployed annuitants with pension offset 

waivers. The reemployed annuitants described their assignments. The work performed 

ranged from developing specialized security rules and reviewing documents for a 

collaborative international report to training newly hired employees. Annuitants’ 

descriptions of their duties aligned with the information contained in the requests for 

their pension offset waivers. OIG concluded that reemployed annuitants are performing 

work described in their pension offset waiver requests to accomplish the agency’s 

mission. 
Audit of the Nuclear Regulatory Commission’s Use of Reemployed Annuitants 

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CONCLUSION

The NRC conducts the reemployed annuitant process in accordance with relevant laws, 

regulations, and guidance. The agency’s revised policy contains procedures that 

require requesting officials to include more information and detail in pension offset 

waiver requests. These revised requirements should strengthen internal controls. 

Furthermore, the work performed by reemployed annuitants facilitates NRC mission 

accomplishment. 

AGENCY COMMENTS

At an exit conference on September 3, 2008, NRC officials agreed with the report 

contents and provided editorial suggestions, which OIG incorporated as appropriate. 

SCOPE AND METHODOLOGY

OIG audited internal controls related to NRC’s use of reemployed annuitants. We 

conducted this audit in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit 

objectives. Steven Zane, Team Leader; Vicki Foster, Audit Manager; and 

Robert Woodward, Auditor; conducted this audit from March 2008 to June 2008. We 

performed the audit work at NRC headquarters in Rockville, MD. 

If you have any questions or concerns regarding this report, please contact 

Steven Zane, Team Leader, at 301-415-5912 or me at 415-5915. 

 
Electronic Distribution

Edward M. Hackett, Executive Director, Advisory Committee on Reactor 

 Safeguards/Advisory Committee on Nuclear Waste 

E. Roy Hawkens, Chief Administrative Judge, Atomic Safety and 

 Licensing Board Panel 

Karen D. Cyr, General Counsel 

John F. Cordes, Jr., Director, Office of Commission Appellate Adjudication 

Jim E. Dyer, Chief Financial Officer 

Margaret M. Doane, Director, Office of International Programs 

Rebecca L. Schmidt, Director, Office of Congressional Affairs 

Eliot B. Brenner, Director, Office of Public Affairs 

Annette Vietti-Cook, Secretary of the Commission 

Bruce S. Mallett, Deputy Executive Director for Reactor 

 and Preparedness Programs, OEDO 

Martin J. Virgilio, Deputy Executive Director for Materials, Waste, Research, 

 State, Tribal, and Compliance Programs, OEDO 

Darren B. Ash, Deputy Executive Director for Corporate Management 

 and Chief Information Officer, OEDO 

Vonna L. Ordaz, Assistant for Operations, OEDO 

Timothy F. Hagan, Director, Office of Administration 

Cynthia A. Carpenter, Director, Office of Enforcement 

Charles L. Miller, Director, Office of Federal and State Materials 

 and Environmental Management Programs 

Guy P. Caputo, Director, Office of Investigations 

Thomas M. Boyce, Director, Office of Information Services 

James F. McDermott, Director, Office of Human Resources 

Michael R. Johnson, Director, Office of New Reactors 

Michael F. Weber, Director, Office of Nuclear Material Safety and Safeguards 

Eric J. Leeds, Director, Office of Nuclear Reactor Regulation 

Brian W. Sheron, Director, Office of Nuclear Regulatory Research 

Corenthis B. Kelley, Director, Office of Small Business and Civil Rights 

Roy P. Zimmerman, Director, Office of Nuclear Security and Incident Response 

Samuel J. Collins, Regional Administrator, Region I 

Luis A. Reyes, Regional Administrator, Region II 

James L. Caldwell, Regional Administrator, Region III 

Elmo E. Collins, Jr., Regional Administrator, Region IV