Contractor salary cap raised by OFPP

 The Office of Management and Budget has raised the compensation limit allowable under federal contracts to $684,181, a nearly $72,000 increase from last year, according to a Federal Register notice.

The limit doesn’t cap what salaries contractors can pay. It applies to the amount of compensation that can be applied to contract costs.

The dollar figure is the median amount of compensation senior corporate executives receive.

The Office of Federal Procurement Policy set the fiscal 2008 cap at $612,196. Since 2004, the compensation increased by an average of $50,265.60. The previous years’ compensation amounts were:

  • 2007: $597,912
  • 2006: $546,689
  • 2005: $473,318
  • 2004: $432,851

OFPP bases this amount on data from commercially available surveys of executive compensation. The surveys analyze data made available by the Securities and Exchange Commission. Officials then average the amount of compensation accrued over a recent 12-month period for the top five highest paid executives of publicly traded companies with more than $50 million in annual sales.

These days, contractor pay is at an unprecedented level of scrutiny.

“I will say that this figure is taking on added importance with the Obama administration taking a hard look at what government contractor executives make,” said Larry Allen, president of the Coalition for Government Procurement.

“Coupled with the transparency mandate and the [stimulus]-related pay disclosures, I think a lot more companies need to be aware of what the government ‘limit’ is,” he said.

About the Author

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

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