Category Archives: Studies/Reports/Audits

Feds stop requiring bi-weekly Kansas reports on Medicaid

Source: Associated Press, July 12, 2017
 
Federal officials are no longer requiring Kansas to file bi-weekly reports on a large backlog of applicants for the state’s privatized Medicaid program.  The Kansas Department of Health and Environment was notified last week by the Centers for Medicare and Medicaid that the state can discontinue the reports it has been sending since early 2006. At the time, Kansas had more than 7,000 backlogged applications that had been pending for more than 45 days for its Medicaid program, called KanCare. …

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Kansas House fails to override Brownback Medicaid expansion veto
Source: Hunter Woodall, Kansas City Star, April 3, 2017
 
The Kansas House failed by a narrow margin Monday to override Gov. Sam Brownback’s veto of a bill that would expand Medicaid to thousands of low-income Kansans.  Lawmakers voted 81-44 to override the governor’s veto, three shy of the total needed to pass the bill without his support.  That effectively ends the Medicaid expansion push in Kansas after it passed out of both chambers with Republican and Democratic support earlier this year. … The legislation vetoed by Brownback would have expanded KanCare, the state’s privatized Medicaid program, to roughly 150,000 people in the state. …

Brownback Vetoes Medicaid Expansion in Kansas
Source: Russell Berman, The Atlantic, March 30, 2017

Governor Sam Brownback of Kansas on Thursday vetoed legislation expanding Medicaid passed with Republican majorities in the state’s House and Senate. Supporters of the bill are likely a few votes shy of the two-thirds majority needed to override Brownback’s veto. The move was expected, since Brownback has opposed expanding Medicaid for years. But the expansion effort could find new life if the governor leaves office before his term ends next year; President Trump is reportedly considering an appointment for Brownback as U.N. ambassador for food agriculture, a posting that would take the one-time presidential candidate from Topeka to Rome. …

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Lawmakers Aim to Restrict Use of Lowest-Price Contracts

Source: Charles S. Clark, Government Executive, July 10, 2017
 
A contractors group has welcomed a bipartisan House bill placed in the hopper last month aimed at curbing agency use of lowest price technically acceptable contracts.  The Promoting Value Based Procurement Act (H.R. 3019), introduced by Reps. Mark Meadows, R-N.C., and Don Beyer, D-Va., would amend the Federal Acquisition Regulation to require civilian agencies to align themselves with the Defense Department and stiffen their rationales for resorting to lowest price technically acceptable contracts, which have grown in use in recent years but are controversial. …

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The Challenge of Applying the LPTA Process to the Procurement of Complex Services

Source: TASC, Inc., 2012

From the press release:
Increased reliance by government customers on the Lowest Price Technically Acceptable (LPTA) acquisition strategy poses unnecessary risks such as budget overruns, delivery delays and, in the worst cases, mission failure. According to a new report by TASC, Inc., the LPTA process can be appropriate for commoditized services with clearly defined requirements, but not for complex services that support sophisticated, high-risk missions. In cases where the government does elect to use the LPTA process, it should rigorously define and evaluate technical acceptability and past performance to avoid compromising the performance of the program or system and, ultimately, the success of the mission….

…The TASC report makes the case that using the LPTA approach in the acquisition of complex mission services can compromise mission success and increase total program costs over time when factoring in rework and related costs. To achieve the best value, TASC recommends that solicitations for complex services adopt a classic best-value, cost-technical tradeoff approach that considers innovation, scheduling rigor and program cost containment. When the government does use the LPTA process, technical and past performance requirements should be defined precisely. In addition, applying detailed technical criteria using scenario-based evaluations, high standards of past performance and price-realism analyses are essential to mitigate the risk of unsuccessful performance on a given contract solicited on an LPTA basis. The TASC report offers examples of solicitations that utilize these recommendations….

Trump’s air traffic overhaul faces bumpy skies

Source: Brianna Gurciullo and Lauren Gardner, Politico, July 9, 2017
 
A month after Trump offered his public support in a White House speech, the proposal to split up the Federal Aviation Administration still faces opposition from rural interests, small-plane owners and key Republicans in Congress, where the to-do list for returning lawmakers is piled high with big tasks like repealing Obamacare and rewriting the tax code.

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AFSCME Pres. Lee Saunders on FAA Privatization Bill
Source: AFSCME Press Release, June 23, 2017
 
AFSCME Pres. Lee Saunders issued the following statement on the FAA privatization bill released Thursday: “AFSCME is strongly opposed to inefficient and risky efforts to privatize the nation’s air traffic control operations. Air traffic safety must be our chief concern and that requires responsible governmental control and continued strong oversight. AFSCME cannot support the Federal Aviation Administration (FAA) reauthorization legislation now pending in the House of Representatives. “The bill, as introduced, has the potential to threaten safe and efficient air travel for many Americans, to significantly weaken the economy, and to harm the committed federal workforce that is dedicated to the safe and efficient aviation all Americans deserve and expect. Congress must reject this risky plan.”

House unveils latest bill to privatize air-traffic control
Source: Bart Jansen, USA Today, June 21, 2017
 
A House chairman unveiled his latest proposal Wednesday to move air-traffic control out of the Federal Aviation Administration and to a non-profit corporation governed by industry stakeholders, setting off a contentious debate that will play out through the fall.  Rep. Bill Shuster, R-Pa., said the change would allow faster, more efficient modernization of the system from ground-based radar to satellite-based GPS. Strong support from President Trump and airlines, along with changes to the corporation’s board and for general-aviation, improved the bill’s chances from a similar proposal last year, he said.

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Hundreds of millions of taxpayer dollars on the table in closed-door Medicaid haggling

Source: Tony Leys, Des Moines Register, July 3, 2017

The three companies running Iowa’s $4 billion Medicaid program contend they need millions more dollars from taxpayers, starting this month — but there’s been no public hint of how much more money the state will have to fork over. Iowa hired the companies last year to manage the state’s Medicaid program, which covers health care for about 600,000 poor or disabled residents. The shift has been intensely controversial, with critics complaining it has led to tangles of red tape for care providers and cuts in services for Medicaid recipients. Supporters, including Gov. Kim Reynolds, say the new system is saving money for the state by leading to more efficient, effective care. …

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Disabled Iowans, fed up with cuts under privatized Medicaid, sue Gov. Reynolds
Source: Tony Leys and Jason Clayworth, Des Moines Register, June 13, 2017
 
Iowa’s roiling controversy over its for-profit Medicaid management spilled into federal court Tuesday when six Iowans with disabilities filed a lawsuit against Gov. Kim Reynolds.  The lawsuit alleges that the state’s chaotic shift to a privately run Medicaid program is depriving thousands of Iowans with disabilities the legal right to live safely outside of care facilities. The suit holds Reynolds and her human services director responsible for the private management companies’ actions. …

Complaints about Iowa’s privatized Medicaid are spiking
Source: Jason Clayworth, Des Moines Register, May 9, 2017
 
Centered largely on allegations of terminated or reduced health services, complaints about Iowa’s privatized Medicaid program have spiked in recent months, according to information presented to state officials Tuesday.  State quarterly reports show grievances and appeals filed with the three companies managing Iowa’s Medicaid program have spiked by almost 270 percent — from 343 to 1,268 — in the latest three-month report published in March. …

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Betsy DeVos Picked A Student Loan CEO To Run The Student Loan System

Source: Molly Hensley-Clancy, Buzzfeed News, June 20, 2017
 
When the Trump administration announced its pick to run the $1.3 trillion federal student loan system on Tuesday, there was one notable thing about the candidate that wasn’t mentioned in the press release: He’s the CEO of a private student loan company.  The Education Department’s statement described A. Wayne Johnson as the “Founder, Chairman and former CEO” of a payments technology company called First Performance Corporation. … But what wasn’t noted was Johnson is currently the CEO of Reunion Student Loan Services, a detail confirmed by a company representative reached by phone on Tuesday afternoon. Reunion originates and services private student loans, and offers refinancing and consolidation for existing loans. …

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Betsy DeVos undoes Obama’s student loan protections
Source: Danielle Douglas-Gabriel, Chicago Tribune, April 11, 2017

Education Secretary Betsy DeVos on Tuesday withdrew a series of policy memos issued by the Obama administration to strengthen consumer protections for student loan borrowers.  The Education Department is in the middle of issuing new contracts to student loan servicing companies that collect payments on behalf of the agency. These middlemen are responsible for placing borrowers in affordable repayment plans and keeping them from defaulting on their loans. But in the face of mounting consumer complaints over poor communication, mismanaged paperwork and delays in processing payments, the previous administration included contract requirements to shore up the quality of servicing. Companies complained that the demands would be expensive and unnecessarily time consuming. … DeVos has withdrawn three memos issued by former education secretary John King and his under secretary Ted Mitchell. One of the directives, which was later updated with another memo, called on Runcie to hold companies accountable for borrowers receiving accurate, consistent and timely information about their debt. … The Obama administration requested routine audits of records, systems, complaints and a compliance-review process. … The exhaustive list of demands were a direct response to an outpouring of complaints to the Education Department and the Consumer Financial Protection Bureau. The CFPB, in particular, has documented instances of servicing companies providing inconsistent information, misplacing paperwork or charging unexpected fees. Because the federal government pays hundreds of millions of dollars to companies such as Navient, Great Lakes and American Education Services to manage $1.2 trillion in student loans, advocacy groups and lawmakers argue that more should be required of these contractors. …

Federal Student Loan Servicing: Contract Problems and Public Solutions
Source: Eric M. Fink, Roland Zullo, Elon University School of Law, University of Michigan, June 2014

One consequence of the 2007–2008 financial crisis was an abrupt shift from bank-based to direct federal student loans. This momentous change required the Department of Education to rapidly establish the capacity to service loans, which was achieved by outsourcing this responsibility to four large for-profit firms and a group of smaller regional entities. Loan servicing involves routine payment processing, account management and borrower communication, as well as the non-routine yet more labor intensive role of assisting borrowers that face hardship with debt repayment. Borrowers have expressed dissatisfaction with the present system. Complaints jumped significantly in the first two years of the loan servicing contracts and remain at historic highs. Several factors contribute to this increase, including the lackluster job market for graduates. However, upon close inspection it appears that loan servicers bear part of the blame for neglecting their responsibility to counsel borrowers with distressed loans. The Student Loan Ombudsman’s Office of the Consumer Finance Protection Bureau has issued several reports that further validate this assertion. To understand why the system is underperforming, we draw attention to the public-private contract. A question for any public-private contract is whether the incentives within are adequate to encourage contractor behavior consistent with the mission of the service. In our review of the contract terms, we conclude that the incentives to reduce operational costs far outweigh the incentives to be responsive to the needs of borrowers…This case illustrates the inherent limitations of a performance-based contract as an administrative tool. Regardless of design, contractors will strive to minimize operational commitment to any labor-intensive task, in this instance attending to the personal needs of borrowers….

Judge rules Tennessee must release outsourcing records about Fall Creek Falls purchase

Source: Associated Press, June 29th, 2017

A judge has ruled in favor of a media group that sued the state of Tennessee to release records about its attempt to outsource services at Fall Creek Falls State Park. The Tennessee Coalition for Open Government says Davidson County Chancellor Bill Young on Tuesday ruled that the state must produce records to City Press Communications LLC, parent company of the Nashville Scene and the Nashville Post, and reporter Cari Wade Gervin. …

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Controversial state plan to outsource college jobs moves forward
Source: Adam Tamburin, The Tennessean, May 26, 2017

Tennessee moved forward with a controversial plan to outsource jobs at public colleges Friday when officials finalized a contract with a corporation that already handles a sizable amount of state business.  Under the contract, JLL — which currently manages about 10 percent of state facilities — will oversee the potential expansion of outsourcing at college campuses, state parks and prisons. It is a pivotal moment for the proposed expansion, which has been in the works for two years. …

Fall Creek Falls state park outsourcing push draws no bidders
Source: Associated Press, May 11, 2017
 
A push by Gov. Bill Haslam’s administration to outsource hospitality services at a Tennessee state park has drawn no bidders. Tennessee Department of Environment and Conservation spokeswoman Kim Schofinski says that no one bid on the proposal at Fall Creek Falls State Park, located on the Upper Cumberland Plateau in Van Buren and Bledsoe counties. TDEC planned to award the winning bidder $20 million to raze the park’s inn and build a new one. The Tennessee State Employees Association and park workers opposed it. …

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Maryland Judiciary fails to monitor contracts, audit finds

Source: Doug Donovan and Jean Marbella, The Baltimore Sun, May 10, 2017

Maryland’s court system has failed for years to properly monitor how it spent tens of millions of dollars in contracts and lacked adequate oversight to prove it was getting the most cost-effective deals for taxpayers, a state audit released Friday has found. The Maryland Judiciary lacked “sufficient documentation” to support four contract awards totaling $26 million between July 1, 2012, and Dec. 20, 2015, the audit reported. … Auditors said the judiciary did not provide adequate cost-benefit analyses to support the award of two contracts to existing vendors: a five-year, $21 million contract for Internet services, and a four-year, $2.1 million contract for a digital recording system. In the latter contract, there was a competing bid for almost two-thirds less, $736,000, according to the audit. Additionally, the judiciary didn’t save information about the losing bidders’ proposals for three contracts totaling about $5 million. … The audit also raised concerns about the number of staff allowed to access the purchasing and payment system; the security of its financial management system and database; the processing of traffic citations; and the controls over its equipment and warehouses. … The findings come as the Maryland Judiciary is beginning to prepare a report requested by the Department of Legislative Services to explain “the apparent pattern of overbudgeting” for the state’s Clerks of the Circuit Court offices, according to budget analysis documents. Between 2012 and 2016 the clerks offices were allocated up to 9 percent more than they spent, a surplus that funded other efforts “without the opportunity for the General Assembly to vet those purposes,” according to the legislative services analysis. …

GAO: DOE Needs to Implement Invoice Review Policies, Data Analytics to Manage Fraud Risks

Source: Jane Edwards, Executive Gov, May 3, 2017

The Government Accountability Office has recommended that the Energy Department adopt data analytics tools and develop invoice review procedures and policies in order to manage improper payments and fraud risks associated with contracts. GAO said in a report released Monday that DOE should also require contractors to keep detailed cost information that can be correlated with the amounts billed to the department. GAO made the recommendations after it found that DOE lacks invoice review policies and processes at five of six locations that have oversight on invoice assessments and discovered time restrictions that appear to affect the effectiveness of such reviews. …

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State works on emergency agreement for child welfare services in Omaha area

Source: JoAnne Young, Lincoln Journal Star, May 6, 2017

Health and Human Services Committee Chairman Merv Riepe announced to state senators last week that child welfare services in the Omaha and Sarpy County area could be in jeopardy. The state withdrew its intention to award a five-year, $70 million-a-year contract to Nebraska Families Collaborative on Thursday and rejected all bids after an opposing bidder filed a challenge to the bid award. The lack of a contract could lead to a gap in services for vulnerable children and families beginning in July, Riepe said. The department is attempting to negotiate a one-year emergency contract with Nebraska Families Collaborative, and then to restart the bidding process, he said. …

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Nebraska HHS official recommends extending child welfare contract for another year
Source: Martha Stoddard, Omaha World-Herald, March 18, 2015

A top state official is recommending that Nebraska continue contracting out management of Omaha-area child welfare cases for another year. In a letter to lawmakers, Tony Green, acting children and family services director for the Department of Health and Human Services, said a contract extension would allow time to choose the best course of action for the future. Green said he would start negotiating the extension on April 1, unless the Legislature’s Health and Human Services Committee objects….The state’s contract with the Nebraska Families Collaborative, an Omaha-based nonprofit, expires June 30. It was originally signed in 2009 and has been extended once already for one year. The contract this year is worth up to $59.5 million….

Nebraska privatization of child welfare hasn’t produced ‘any measurable benefit,’ new study finds
Source: Martha Stoddard, Omaha.com, February 6, 2015

Nebraska’s five-year experiment with privatizing child welfare has not produced “any measurable benefit” for the state, according to a study report released Thursday. The study compared results achieved by state child welfare workers and by the Nebraska Families Collaborative, the private agency that manages child welfare cases in the Omaha area. It found no cost savings and no significant difference — either positive or negative — in outcomes for children and families….. They offered three options — staying the course with the private contractor, returning all case management responsibilities to the state or revamping the roles of the state and the collaborative to achieve real reform. ….

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GAO: Architect of the Capitol’s Oversight of the Senate Food Service Contract

Source: William T. Woods, Government Accountability Office, GAO-17-481R: May 12, 2017

The Architect of the Capitol administers contracts to acquire goods and services for the U.S. Capitol complex. In 2015, questions arose regarding the wages for workers employed by the Senate’s food service contractor. We reviewed the AOC’s oversight of this contract and found that it had considered this contractor’s performance satisfactory in 2015, and extended its contract for another 7 years. However, after the wage issues were identified, the agency enhanced its oversight and required the contractor to provide data on wages paid to its employees.

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Feds Go After Concessions Company That Shorted Senate Workers $1 Million
Source: Dave Jamieson, Huffington Post, December 30, 2016

The Labor Department wants to bar a concessions company from receiving new federal contracts, after the company allegedly stiffed low-wage workers inside the U.S. Senate out of $1 million. In June, the department announced that Restaurant Associates, a subsidiary of the food service conglomerate Compass Group, would repay 674 Senate workers back wages after the company failed to pay employees the prevailing wage under federal law and didn’t compensate employees for all the hours they worked. Restaurant Associates has since paid back the workers. But the department went a step further on Thursday, filing a complaint requesting that the company be forbidden from receiving new contracts for a period of three years. The request will now go before an administrative law judge. If approved, it will only affect future contracts, not the current one at the Senate building, which runs through 2029, according to the Labor Department filing. … According to the Labor Department, Restaurant Associates misclassified workers by putting them in lower job categories, resulting in lower pay. The company said the misclassification was an honest mistake, resulting from “administrative technicalities related to [workers’] evolving day-to-day work responsibilities.” In a statement Friday, Restaurant Associates said it was “surprised and disappointed” that the Labor Department was seeking disbarment: “Restaurant Associates, which had no history of previous [prevailing wage] violations, fully cooperated in the investigation. The company immediately paid all back wages owed and made all changes to pay practices going forward as requested by DOL. … DOL’s decision is unprecedented in these circumstances.” …

US Capitol workers want their voices heard over wage theft
Source: Alba Morales, The Hill, September 20, 2016

Last month, the U.S. Department of Labor announced that U.S. Senate federal contract workers like me had been robbed of over $1 million dollars from our paychecks by our employer, Compass Group. DOL found that Compass had been paying us less than the legal rates for our jobs, had not being paying us proper overtime or even for all the hours we worked, and had not kept proper payroll records. Within weeks, some of my co-workers started receiving as much as $20,000 in back-pay awards. But I only received $240, with no explanation of how it was calculated. I’ve worked at the Senate for over a decade and I believe the company likely stole much more than a couple of hundred bucks from me. And I’m not alone. Over a dozen Senate contract workers received little or no compensation as wage theft victims. Worst of all, neither myself, nor any of these workers were contacted or interviewed by the Labor Department or the Architect of the Capitol, the agency that oversees the contract, as part of the investigation. … The truth is that this is a symptom of a bigger problem: Workers and our representatives have not been invited to participate in the investigation and settlement talks even though we exposed the illegal conduct and are directly impacted by the results. If this were a court case, the victims would have their say, but we are low-wage workers who can’t afford a private attorney. That’s why workers are sending a letter to the Architect of the Capitol and the Department of Labor to request that our voices are respected. For us, respect means a willingness to bring workers into the process. …

House and Senate Restaurants: Current Operations and Issues for Congress
Source: Sarah J. Eckman, Congressional Research Service, August 23, 2016

Those involved with restaurant administration in the House and Senate have often considered how management choices affect operating costs, services available, oversight, and other elements of the restaurant systems. For much of their histories, the House and Senate operated their own restaurants, but since 1994 in the House and since 2008 in the Senate, private vendors have run the restaurants. In August 2015, the House entered an agreement with Sodexo to operate the 17 facilities in the House restaurant system, subject to direction from the Chief Administrative Officer (CAO) and the Committee on House Administration. In December 2015, the Senate entered a new contract with Restaurant Associates to operate the 12 facilities in the Senate restaurant system, subject to direction from the Architect of the Capitol (AOC) and the Committee on Rules and Administration. … Food and price issues, along with other day-to-day operational issues, including personnel matters, are largely the responsibility of the restaurant contractors. Some Members and observers have raised concerns about the degree of accountability for the House and Senate restaurant contractors, believing that the restaurants’ administration reflects upon Congress and that the restaurants should set an example for other businesses to follow. Although the House and Senate are responsible for restaurant oversight, the delegation of restaurant operations to private contractors means the chambers have less control over employee wages and benefits, procurement, or other business decisions that affect the restaurant systems. …

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Senate Cafeteria Workers Will Receive $1 million in Backpay from Restaurant Associates
Source: Lauren Godles, On Labor, July 26, 2016

Today, the Department of Labor announced today that the Senate cafeteria workers who were illegally denied wages will receive $1 million dollars in backpay from Restaurant Associates (RA) and its subcontractor, Personnel Plus. The money will be split among 674 employees, though DOL did not specify how much particular individuals will receive. … In an official investigation, DOL’s Wage and Hour Division (WHD) concluded that RA misclassified the cafeteria workers, in violation of the Service Contract Act. RA was also found to have violated the FLSA. According to the Associated Press, the WHD is considering whether RA should be banned from future government contracts. …

Most Senate cafeteria workers were mistreated on wages, top Capitol official says
Source: Mike DeBonis, Washington Post, March 21, 2016

A majority of the roughly 90 blue-collar restaurant workers serving the U.S. Senate were improperly classified by their private employer, a top U.S. Capitol administrator told a congressional committee last week, putting them at risk of being underpaid and prompting a Labor Department inquiry into the matter. The workers employed by Restaurant Associates have sought higher wages for more than a year, and a December contract renegotiation appeared on its face to deliver better pay and benefits. But several workers said they were subsequently reclassified into new, lower-paying jobs, thus cheating them out of the raise they were expecting. … Ayers’s deputies then interviewed 86 of the cafeteria and restaurant employees. That inquiry determined that 35 employees were classified properly, said Laura Condeluci, a spokeswoman for Ayers; the other 51 were not. Restaurant Associates immediately reclassified 35 of the 51 misclassified workers and delivered back pay, leaving 16 in dispute, Ayers said. Half of those are being resolved through negotiations; the rest have been referred to the U.S. Department of Labor for resolution.

Senate Cooks Say Contractor Dodged Raises
Source: Rhonda Smith, Daily Labor Report, February 1, 2016 (Subscription Required)

The seven-year contract extension between Restaurant Associates and the AOC took effect Dec. 14. As a result, Restaurant Associates increased wage rates for about 80 percent of the 115 employees who work in Dirksen Senate Office Building eateries and in the Senate dining room. In the complaint, signed by attorney George W. Faraday, legal and policy director for Good Jobs Nation, the group said the minimum wage rates to which Compass Group employees at the Senate are legally entitled are established by the federal Service Contract Act for each occupational category. The letter notes that the new wage rates resulted in substantial wage increases for Compass workers classified in the lowest-paid SCA occupational categories, including cashiers, dishwashers and food-service workers. But the federal contractor downgraded various cooks to food-service worker positions, it added, which reduced their hourly wage rate. …

Senate Food Workers Allege ‘Raise Theft’
Source: Bridget Bowman, Roll Call, January 29, 2016

According to the complaint, congressional staff members were told at a Dec. 14 briefing that minimum wages for Level 1 cooks would be raised by $3.65, to $17.45 an hour, and Level 2 cooks would would receive a $5.70 increase to $19.50 an hour. But the complaint alleges several cooks were reclassified as a lower-tier “food service worker,” meaning their wages did not increase as expected. Under the new contract, food service workers’  minimum wage increased to $13.80 per hour. A labor organizer said so far they know of roughly a dozen workers who have had their classification downgraded, even though they still perform the duties of a cook.
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