Obama Budget Renews Effort to Cap Contractor Pay

Nata-Lia/Shutterstock.com

Deep inside President Obama’s fiscal 2014 budget released last week is language to set in motion another effort to clamp down on the amounts taxpayers reimburse contractors for the compensation of their top executives as well as their workforce writ large.

Currently, contracting firms are permitted to write off pay and benefits of up to $763,000 for each of their top five executives. Lawmakers such as Sen. Barbara Boxer, D-Calif., and Rep. Paul Tonko, D-N.Y., have joined with unions such as the American Federation of Government Employees to lower the reimbursement cap to help curb the federal deficit. They argue that executive pay and benefits have risen by 300 percent since the cap was introduced in the mid-1990s.

The Obama budget states that the administration was “encouraged by the proposal in the 2013 Senate’s National Defense Authorization bill to cap reimbursement for defense contractors at the level of the vice president’s salary, which is currently $230,700.” The budget document then urges Congress to “expand the Senate’s proposal to cover all contractor employees -- both defense and civilian -- and pass a law that allows agencies to pay above this cap on an exception basis only, when it is necessary to ensure the agency has continued access to the skills and capabilities of specialists to achieve mission outcomes.”

Stan Soloway, president and CEO of the Professional Services Council, which has long opposed lowering the caps as an inhibitor of the industry quest for talent, called the new language “disappointing, counterintuitive and counterproductive. It mixes two issues,” he told Government Executive. The debate started with “a fair discussion about capping allowable costs for the top five because of some egregious salaries,” he said. “But extending the cap to all employees is nonsensical. No company in this economy is going to bid more than they have to do the work well. And certain areas of talent may cost them more than the cap allows since the cap is not just about salary, but all things.”

Setting the cap at the vice president’s salary, he added, is “ludicrous” since the “full burden” of that pay package gets into millions of dollars.

Scott Amey, general counsel for the nonprofit Project on Government Oversight, in a blog expressed hope that Congress will take up the question this year with bipartisan support. “The compensation formula is out of step with economic realities,” he wrote, “and as a result, taxpayers are paying billions in contractor compensation that is above anything earned by federal employees -- including the president -- and the majority of the private sector.”

(Image via Nata-Lia/Shutterstock.com)

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

    Download
  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

    Download
  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

    Download
  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

    Download
  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security

    Download

When you download a report, your information may be shared with the underwriters of that document.