Little Known ‘alphabet soup’ U.S. Federal Government Organizations: PBGC

I have worked in and around the Federal government for a long time, so it’s sad to see how little the general public knows about the workings and services provided by the government. This is one of occasional posts about little known Federal organizations.

I’m guessing that very few people know about the Pension Benefit Guaranty Corporation (a Federal agency).  It was created by The Employee Retirement Income Security Act (ERISA) legislation passed in 1974….  Basically, It’s purpose is to insure the viability of self-funded corporate pension plans.  The companies pay into a PBGC fund based on the number of employees enrolled in their pension plans…. So this agency is self-funded, and Congress sets the rates that companies pay.

Their 10 biggest ‘bail outs’ were:

Firm and Year Terminated	Total Claims In Billions	Vested Participants	Average Claim Per Person
1. United Airlines (2005)	$7.4	123,957	$60,033
2. Delphi (2009)	$6.1	69,042	$88,475
3. Bethlehem Steel (2003)	$3.7	91,312	$40,021
4. US Airways (2003)	$2.8	55,770	$49,337
5. LTV Steel (2002, 2003, 2004)	$2.1	83,094	$25,694
6. Delta Air Lines (2006)	$1.6	13,291	$123,473
7. National Steel (2003)	$1.3	33,737	$37,811
8. Pan American Air (1991, 1992)	$0.8	31,999	$26,285
9. Trans World Airlines (2001)	$0.7	32,263	$20,717
10. Weirton Steel (2004)	$0.6	9,410	$68,064
Top 10 Total	$27 B	543,875	$49,933

According to Wikipedia…During fiscal year 2010, the PBGC paid $5.6 billion in benefits to participants of failed pension plans. That year, 147 pension plans failed, and the PBGC's deficit increased 4.5 percent to $23 billion. The PBGC has a total of $102.5 billion in obligations and $79.5 billion in assets.  PBGC pays monthly retirement benefits to approximately 631,000 retirees of 3,800 terminated defined benefit pension plans. PBGC is responsible for the current and future pensions of about 1.3 million people.

So, everyday the Federal employees at PBGC show up to work to shore up the failings of major corporations who fail to adequately fund pension plans, or whose pension investments have soured, or whose business falls apart for other reasons.

The idea that corporations do things better and more efficiently than the Federals government continues to stir the political pundit gabfests. You’ve heard many variations on the theme:

·      ‘get the government off of the backs of industry’

·      ‘the government stifles business’

·      ‘regulations constrain the job creators’

·      ‘government agencies are ineffective’

·      ‘bureaucrats don’t provide needed functions’

·      ‘government welfare only goes to poor people’

·      … and other opinions of that ilk ….

The continual denigration of Federal agencies and the valuable work they do, erodes the confidence the American public has in their government, and sheds little light on what essential functions are performed in all of those Washington D.C. cubicles. 

All too many ill-informed citizens support political positions and philosophies that are not in their own, (and other citizens’) long-term economic security interests.  They don’t realize how much the government actually does, albeit quietly, and out of the spotlight of mainstream press coverage.  It would be devastating for a citizen to lose a promised pension, after spending 30 years of their working lives trying to accumulate enough to sustain themselves in a dignified retirement.  Without PBGC there would be no safety net for them.

More ‘alphabet soup’ agency posts coming soon.  Leave suggestions in the comments.

Federal I.T. Lesson Learned and the Hero of Katrina: National Finance Center’s Gil Hawk

It’s been 8 years since Katrina, but a good story about the Federal Government working well can’t be repeated too often and serves as a lesson to CMS and others operating Federal systems.  The agency that worked extremely well during and in the immediate aftermath of Katrina was the U.S. Coast Guard.  The USGG didn’t need anyone is Washington D.C. to direct them.  Their rescue mission is well defined and executed 24/7/356 without hesitation or confusion.  

But there is another Federal organization that actually worked extremely well before, during and after Katrina. The National Finance Center (NFC) is a part of the Department of Agriculture and processes the personnel and payroll for many other agencies and organizations.  NFC’s massive data center is located in New Orleans on a spit of land between Lake Pontchartrain and Lake Borgne. Before Katrina it had over 1,100 employees, processed payroll/personnel for 600,000 federal employees as well as processing health benefits for ~2M participants.  Other organizations at the data center had about 350 employees and made over 2.5M payments back then and ran several financial and administrative systems.

Sounds like a disaster in the making huh?  Somehow Gil Hawk and his teams managed to keep ALL MAJOR FEDERAL FUNCTIONS running in spite of the affects of the storm on the NFC employees lives, families and homes. How’d they do that?  Through contingency planning, practice drills of those plans, continuity of operations (COOP) preparations, establishing alternate operational sites, off-site data storage and backup infrastructure, and a host of other well-known and recognized techniques for ensuring continuity of services under the most adverse conditions.

If the Healthcare.gov team at CMS hasn’t reached out to Gil Hawk yet, they should.  After the current “glitches” of the Exchange portal are fixed, and the back-end systems for subsidy calculation and payment to insurance companies are rolled out. They need to quickly focus on Preparedness Planning.   The Healthcare.gov data centers aren’t surrounded by lakes…. but they’re probably on the same electrical grid, nor’easter area, communications cable trunk, ‘’snowmageddon’ zone, or eastern-earthquake area. Since planning doesn't seem to be CMS's strong suit, it needs to ensure that they redouble efforts to prepare for these or other conceivable natural or man-caused major disruptions. They couldn't go wrong by seeking advice from Mr. Hawk.

Give kudos to Gil Hawk and the dedicated employees at NFC.

The media ‘talking heads’ who suggest “outsourcing” to contractors as a solution to developing and operating federal systems are wrong. 

Follow this blog and read about the Myth of Successful Outsourcing in the next post.