Lawmakers push OMB to update executive pay cap

Three lawmakers pushed Office of Management and Budget officials to finally update the cap on how much money a government contracting company can pay its top senior executives.

The administrator of the Office of Federal Procurement Policy sets the executive compensation benchmark, but, for 2011, Administrator Dan Gordon has not updated the salary limit for the year. Even so, the 2010 cap of $693,951 carries over into 2011. It will remain so until Gordon revises it. OFPP announced the latest cap in April 2010.

In the letter sent Sept. 15, Sens. Barbara Boxer (D-Calif.) and Charles Grassley (R-Iowa), and Rep. Paul Tonko (D-N.Y.) told OMB Director Jacob Lew that OFPP is late in setting the cap for this year. They pointed out that since 2004 updates came only as late as May.

“At a time when millions of Americans are unemployed, and millions more are taking home paychecks that don’t go as far as they used to, we ask you to determine the executive compensation benchmark for 2011,” they wrote.

The executive compensation benchmark was first set up in 1998 to limit the amount the top five executives of a government contractor can charge taxpayers for their salary.

“The American people deserve to know exactly how much government contractor executives will charge the taxpayer for their salaries this year,” the lawmakers wrote.

OMB didn't respond to questions about the cap for 2011.

The benchmark is the median amount accrued over one year for the highest paid employees in management positions at publicly traded U.S. companies with annual sales over $50 million. Compensation includes total amount of wages, salary, bonuses and deferred compensation. Federal procurement officials cap salaries based on commercially available surveys.

The average salaries of CEOs from top companies went up 27 percent in 2010, USAToday reported in April. After analyzing data from GovernanceMetrics International, USAToday also found the pay began its increase after companies had to scale back over the past two years. But the salaries are going back to prerecession levels.

About the Author

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

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Reader comments

Mon, Sep 19, 2011 Am I Blue

I'm with fritzdadolt (Fritz, you're not a dolt on this issue.) The salary cap should be reduced heavily. Let the company pick up the slack--they're getting paid the rest of the money. If they don't want those conditions, there are LOTS of smaller companies who would be eager to get the contracts and co-source them. I know some. But what I see are handshake agreements to award contracts over and over to the same companies--and they give us crappy service. They really are sucking at the public tit (that's not a dirty phrase!), and wherever I can, I dump them. That makes for some unhappy contractors, but they weren't making me happy with their so-called "service."

Mon, Sep 19, 2011 fritzdadolt

The way I see it is that the cotracting companies can pay their top brass any amount of money they want to but only charge the government what the guidelines are sent by Congress. This way their executives will cost the Government a lower amount and the contracting companies will have to make up the difference.

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