Procurement

Administration pushing Congress to reduce contractor compensation

capitol dome and bills

The White House is set to send a proposal to Congress that would cap federal contractor executives' salary reimbursements at President Obama's pay grade.

The new proposal builds on previous administration proposals, as well as on language included in President Obama's latest budget, said Joe Jordan, Administrator of the Office of Federal Procurement Policy in the Office of Management and Budget.

Under current law, Jordan explained in a May 31 post on OMB's blog, contractors paid based on their incurred costs can demand reimbursement for executive salaries, bonuses and other compensation up to the level of top U.S. private- sector chief executives. That cap is currently $763,029 per executive.

Jordan warned that in the coming weeks, the current law requires the cap to be raised to more than $950,000. According to Jordan, the taxpayer reimbursement level has skyrocketed by more than 300 percent since the original law was enacted in the mid-1990s. Taxpayers have had to foot the expense, despite the fact that the rapidly increasing cost has had little bearing on the value agencies receive under their government contracts.

Congress has been trying to reform the law this spring, but several Senate and House measures have stalled. The White House's proposal calls on Congress to abolish the current formula and tie the reimbursement cap to the president's salary and apply it across-the-board to all defense and civilian cost-reimbursement contracts. That level "provides a reasonable compensation" for federal contractors, said Jordan.

About the Author

Mark Rockwell is a senior staff writer at FCW, whose beat focuses on acquisition, the Department of Homeland Security and the Department of Energy.

Before joining FCW, Rockwell was Washington correspondent for Government Security News, where he covered all aspects of homeland security from IT to detection dogs and border security. Over the last 25 years in Washington as a reporter, editor and correspondent, he has covered an increasingly wide array of high-tech issues for publications like Communications Week, Internet Week, Fiber Optics News, tele.com magazine and Wireless Week.

Rockwell received a Jesse H. Neal Award for his work covering telecommunications issues, and is a graduate of James Madison University.

Click here for previous articles by Rockwell. Contact him at mrockwell@fcw.com or follow him on Twitter at @MRockwell4.


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