Senate-passed Defense bill would cap contractor pay

Barbara Boxer, D-Calif., offered the amendment, along with Sens. Chuck Grassley, R-Iowa; and Jay Rockefeller, D-W.Va Barbara Boxer, D-Calif., offered the amendment, along with Sens. Chuck Grassley, R-Iowa; and Jay Rockefeller, D-W.Va Bill Clark/Newscom
The 2012 Defense authorization bill, which the Senate passed Thursday night in a 93-7 vote, includes an amendment to cap the amount that defense contractors can be reimbursed for any employee's salary at $400,000.

Such a cap is opposed by many in the contractor community, and the Obama administration has favored a lower cap that would apply only to senior executives.

The amendment, approved by voice vote, was offered by Sens. Barbara Boxer, D-Calif.; Chuck Grassley, R-Iowa; and Jay Rockefeller, D-W.Va.

Under current law, a contractor can charge taxpayers $693,951 for the salaries of each of its five highest-paid employees, based on a formula adopted in the late 1990s.

"Taxpayers should not be on the hook for exorbitant government contractor salaries," Boxer said in a statement. "This amendment ensures that no defense contractor will make more in taxpayer funds than the president of the United States."

Grassley said, "We can't afford to waste increasingly limited defense dollars. This amendment goes after an unnecessary expenditure by containing runaway spending in a type of contract used extensively by the Department of Defense."

The House-passed version of the Defense bill would extend the current cap of slightly less than $700,000 to all employees.

The Boxer amendment is opposed by an alliance of contractors called the Acquisition Reform Working Group. In a Nov. 29 letter, the group warned it "could force companies to reduce its employees' compensation; in turn, these shrinking salaries will make the defense sector less attractive to top talent, which could then negatively impact DoD missions."

The harm to defense companies from lowering the cap, the contractors continued, "would be further compounded by broadening the scope of application to cover all federal contractor employees; highly skilled innovators and technology experts would likely focus their skill sets on the commercial market, thus eliminating the government's ability to develop effective critical mission solutions."

Debate on the Senate floor was tinged by the week's broader political dispute over whether to raise taxes on the wealthy to pay for an extension of a "holiday" on Social Security taxes.

Majority Leader Harry Reid, D-Nev., said, "while targeting the middle class, Republicans proposed to do nothing to cut back on excessive subsidies for many large corporations that benefit from government contracts." Reid said the contractors, who now total 5 million, "caught fire during the Republican control of the presidency."

Minority Leader Mitch McConnell, R-Ky., said his party's proposal to pay for the Social Security holiday by extending the freeze on federal pay, "is a much smarter approach to extending the temporary payroll tax cut than the one proposed by Democrats involving permanent tax hikes on job creators."

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:

  • 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.

    View
  • 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.

    View
  • 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.

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

    A Look Into the Next Generation of Emergency Services

    View
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    View
  • 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.

    View
  • 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.

    View

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