Senators propose new cap on contractor pay

As the Senate nears consideration of the Defense authorization bill, three senators have added a new wrinkle to the ongoing debate over the level of contractor executive compensation that should be reimbursed with taxpayer dollars.

On Thursday, Sens. Barbara Boxer, D-Calif.; Chuck Grassley, R-Iowa; and Jay Rockefeller, D-W.Va., introduced an amendment that would lower the current cap from nearly $700,000 for top executives to $400,000 (the level of the president's pay), while extending the cap's reach to all contractor employees. The Obama administration this fall proposed setting the cap at $200,000 for top executives.

"Especially in these difficult economic times, there is no reason taxpayers should fund government reimbursements for private contractor salaries that are over three times the pay earned by Cabinet secretaries," Boxer said in a statement. "Contractors are free to pay their employees whatever they want, but there must a common-sense limit on how much they can earn when taxpayers are footing the bill."

The salary benchmark from 1998 to 2010 grew 53 percent faster than the rate of inflation, the senators said. Co-sponsors include Sens. Al Franken, D-Minn.; Claire McCaskill, D-Mo.; and Sherrod Brown, D-Ohio.

The proposed $400,000 cap applied to a contractor's entire staff was welcomed by the American Federation of Government Employees, which has long sought the change. "Federal employees have had their own salaries frozen for two years to help reduce the deficit, yet nothing is being done to trim out-of-control contractor spending," AFGE National President John Gage said. "Taxpayers should not be on the hook for these outrageous salaries that no one in government earns -- not federal employees, not members of Congress and not even the president of the United States."

But contractor groups worry that the change will deter their ability to attract top executive talent. Trey Hodgkins, senior vice president for national security and federal procurement policy at TechAmerica, told Government Executive that any move to abandon the statutory formula put in place in 1997 could upset contracting companies' balance between salaries on their commercial side and salaries on their public contracts side. He said the Congressional Budget Office examined a similar proposal offered by the Pentagon and determined "it doesn't score as a savings in any way."

Stan Soloway, president and chief executive officer of the Professional Services Council, criticized an earlier version of the Boxer group's proposal offered in October to Congress' super committee. He said the plan "ignores two critical realities," one being a "growing pay gap" between the government and the private sector that challenges the government's ability to tap top talent both in-house and from contractors. Also, he said, the government already has "full authority to reject contractor wages that the government determines are neither fair nor reasonable."

The House version of the Defense bill would extend the $700,000 cap to all employees; the current Senate version would extend it to a broader group of executives. The Senate is likely to take up the Defense bill right after Thanksgiving, sources said.

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

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

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


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