Lawmakers expand target of contractor pay-cap proposal

Congressional backers of a proposal to impose a stricter salary cap on government-funded contractor wages directed their efforts this month to the so-called supercommittee charged with coming up with a 10-year deficit reduction plan by Nov. 23. Those backers are now pushing for the most extreme version of the cap proposal yet.

Driven by the desire to restrain rising payments to contractors and make the companies feel the same pocketbook pinch as government employees, the latest call for change goes the furthest by proposing to significantly lower the existing cap by more than two-thirds and also greatly expand its reach to all of a contractor’s employees, not just a handful of senior executives, Matthew Weigelt reports on FCW.com.

Industry groups questioned the wisdom of the increasingly aggressive proposals and argued that they would hinder contractors’ abilities to recruit the most talented private-sector employees for critical government-funded work.

Sen. Barbara Boxer (D-Calif.), Sen. Chuck Grassley (R-Iowa) and Rep. Paul Tonko (D-N.Y.) sent an Oct. 12 letter to the members of the Joint Select Committee on Deficit Reduction urging the cap changes, as did an Oct. 13 report to the supercommittee from Democrats on the House Oversight and Government Reform Committee.

Current rules impose a cap of about $694,000 on the total amount contractors can charge the government for compensation of their top five employees. The recent proposals would lower the cap to $200,000 and apply it to all of a contractor’s employees. In September, President Barack Obama called for the reduction of the cap to $200,000 to match federal pay scales, but for contractor executives only.

Under all the proposed changes, as with the existing rule, the government would not limit the amount contractors can pay their executives or employees but only the amount the vendors can seek in compensation from the government per employee.

Contractor executives seemed not to have suffered excessively under the existing rules. The average reported annual compensation was $8 million per executive for the top five leaders at Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon, Brian Friel wrote for Bloomberg Government and the Washington Post in a story about recent efforts to cap compensation in defense contracts.

A former government contracting official told Friel that large companies with billions of dollars in government work can prorate the costs of executive pay across numerous contracts.

Government employee trade unions strongly support the more aggressive cap proposals.

“If $200,000 or less is enough for the Nobel-winning scientists at the National Institutes of Health and NASA; the secretaries of the Defense, State, and Health and Human Services departments; and the other professionals who work to protect the public interest, it's good enough for the government's contractors,” wrote Jacqueline Simon, public policy director at the American Federation of Government Employees, in a letter published in Federal Times.

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Reader comments

Tue, Oct 25, 2011 Program Manager Chantilly, VA

So instead of micromanaging the salaries of contractors, why doesn't the Government simply declare in every RFP exactly what it will pay and remove "price" as an evaluation criterion from every purchase? Then it doesn't have to worry about who gets paid what, and will get the best available (not necessarily the best) products and services that price will buy. KOs and SSBs will only have to evaluate quality, and the Government will have no reason to worry about my salary.

Mon, Oct 24, 2011

I love these comments. Ranting and misspelling make you appear uneducated.

Mon, Oct 24, 2011 J FL

Absolutely Anti-Capitalistic. Surprise, unions support it! A great way to mandate mediocrity. But wait, maybe if we demand mediocrity, America will make the government stop doing things they do poorly (most of it). So I think I am for this after all. Want some Kool-Aid? Mine was tasty.

Mon, Oct 24, 2011 Kyle

Jaqueline Simon - Typical Union spin. The saleary is nothing compared to the lavish benefits(pension + med) federal union employees get. USA today puts total compensation for fed employees at 2x that of private workers. And Fed employees can't be fired...for life! If we are going to solve our budget problems, lets at least use meaningful facts. You only mention part of the problem. What do you numbers show for total compensation ?

Mon, Oct 24, 2011

Can we impose the $200K cap on American Federation of Government Employees executives? Can we have AFGE pay their union stewarts instead of the taxpayers? Can the union dues collected by AFGE go back to the Government who is paying the union stewarts salaries instead of lush pension plans for the AFGE executives?

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