Officials debate disclosure of executives' pay

Officials are at odds over requiring some government contractors to release their executives’ salaries.

According to the proposed Government Contractor Accountability Act, executives of companies that receive more than 80 percent of their annual gross revenue from federal contracts and have contracts worth more than $5 million in any fiscal year would have to submit their salaries to a public database.

The House Oversight and Government Reform Committee is considering the bill. But Rep. Edolphus Towns (D-N.Y.), chairman of the committee’s Government Management, Organization and Procurement Subcommittee, said today that he plans to move forward on the legislation and other contractor-related bills.

Legislators and Bush administration officials may adjust details, such as raising the $5 million threshold to $25 million, according to testimony.

Rep. Christopher Murphy (D-Conn.) introduced the bill last October after the scandal surrounding Blackwater, a government contractor, was exposed. He said the company had a significant increase in profits because of government contracts, which were often won through no-bid processes. From 2001 through 2006, Blackwater’s revenue from government contracts increased from about $737,000 to $593.6 million, he said.

Blackwater roused Congress when it wouldn’t turn over information that lawmakers requested.

Disclosing the executives’ salaries would help the government get fair and reasonable prices on contracts, Murphy said at the subcommittee’s hearing

Transparency is the main goal of the bill, he said. He added later that private investors would use executives’ salaries to determine whether to invest in a company.

“I think it should be part of our consideration,” he said.

But Rep. Tom Davis (R-Va.), the oversight committee’s ranking member, said releasing salaries to the public doesn’t hit at the heart of the contracting issues facing the government.

“However well-intentioned, these proposals do not focus on creating the most effective and efficient federal acquisition system possible,” he said.

Similarly, Paul Denett, administrator of the Office of Federal Procurement Policy, said the information is there for the contracting officers who need it.

The government should not get involved in what chief executive officers of private companies are paid, as long as the government is getting a reasonably priced contract, he said.

Requiring the disclosure would not help the contracting process but may cause businesses to instead question whether to contract with the government, Denett said.

“Public disclosure…would likely have a chilling effect on contractor participation in federal acquisition,” he said.

Davis said that possible effect may stifle competition for contracts.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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