Senate backs lower contractor pay cap, break for women-owned firms

Sen. Joe Manchin, D-W.Va. authored a provision to cap contractor salary reimbursements. Sen. Joe Manchin, D-W.Va. authored a provision to cap contractor salary reimbursements. Jacquelyn Martin/AP

The Senate on Tuesday gave final approval to the hard-fought fiscal 2013 defense authorization bill, including provisions limiting reimbursement of contractor executive pay and removing caps on contract set-asides for women-owned small businesses.

In a unanimous vote on the $650 billion package -- which must now be reconciled with a House version at conference meetings next week -- senators approved a provision authored by Sen. Joe Manchin, D-W.Va., to cap contractor salary reimbursements at $230,700, a sizable drop from the current allowable Defense Department reimbursement for top contractor employees of $763,029.

Also included was an amendment by Sens. Barbara Boxer, D-Calif., and Charles S. Grassley, R-Iowa., to require the Pentagon to compile a report on top contractor salaries in recent years. The move was hailed by National Treasury Employees Union President Colleen Kelley, who said, “At a time when our economy is struggling, millions of Americans are unemployed, and our national debt and deficit continue to grow, taxpayers should not fund exorbitant government reimbursements for exorbitant private contractor salaries.”

Such caps have long been opposed by the contracting community. Stan Soloway, president of the Professional Services Council, in October issued a statement saying, “This proposed limitation would deprive the government of access to critical skills, such as those currently in high demand to defend government networks from cyber intrusions. Existing limitations on compensation for federal employees are already hindering the government’s ability to recruit and retain highly skilled professionals. While it may seem that this proposal could address the issue, it fails to recognize that federal contractors have to compete for top talent with companies that operate exclusively in the commercial sector.”

The Senate-passed bill also includes an amendment approved on Monday to remove current limits on the anticipated award price for contracts let under the procurement program for women-owned small businesses. Sponsored by Sens. Olympia J. Snowe, R-Maine, and Mary Landrieu, D-La., it also calls for the Small Business Administration to conduct a study every five years to examine disparities in the North American Industry Classification System code.

Advocates for women in contracting had for nearly a decade argued that the cap of $4 million for goods and services contracts and $6.5 million on manufacturing contracts discouraged contracting officers from taking the trouble to solicit women-owned businesses.

Barbara Kasoff, president of Women Impacting Public Policy, called approval of the amendment “a very important step toward bridging the gap for women entrepreneurs who wish to do business with the world’s largest consumer -- the federal government.”

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