The next paycheck for some federal contractors will be a lot a smaller. Or at least the portion paid by Uncle Sam.
The Defense Department, General Services Administration and NASA issued an interim rule on Tuesday to lower the maximum reimbursable pay for federal contractors by nearly half. The rule goes into effect immediately.
Congress passed the new cap as part of the 2013 Bipartisan Budget Act, enacted late last year to set the spending levels for fiscal years 2014 and 2015. The law reduced the cap from $952,308 to $487,000, a 49 percent decrease. All new contracts signed, or costs incurred on old contracts, on or after Tuesday will only reimburse private employees at the new rate. Contracted companies can pay their employees more, but must do so on their own dime.
The reduction is coupled with a recently finalized rule that expanded the cap to all contract employees working with Defense, GSA and NASA, rather than just the five highest paid executives. That rule drew the ire of the federal contracting community -- in part because it was retroactive to 2012. The new reduction also angered contractors.
The cap spiked to its recent $952,308 figure at the beginning of 2013. It had previously been $763,029. Some lawmakers have advocated setting the reimbursable cap rate at the president’s salary of $400,000, while others have supported the vice president’s salary of $230,700 as a more appropriate benchmark.
Federal contractors have called the new cap “arbitrary,” saying it would hurt smaller companies that cannot afford to pay their employees more than what they receive from the government.
While agencies have been finalizing plans to ensure the contractor workforce is not overpaid, lawmakers have been busy making sure the same is true for civilian federal employees.
The Senate Homeland Security and Governmental Affairs Committee on Wednesday passed the Border Patrol Agent Pay Reform Act, which reforms the overtime system for Border Patrol officers. The bill would save $70 million annually by eliminating “administratively uncontrollable overtime,” which was designed to keep agents hot in pursuit of criminals on the clock.
Reports have surfaced that employees were exploiting the system, however, and even the union representing the Border Patrol workforce had conceded the system was “bloated.” The legislation aims to provide more predictability to agents’ work schedules and paychecks.
“Establishing a new pay schedule will get more agents on the borders and make our nation more secure while actually saving taxpayers money,” said Sen. Jon Tester, the bill’s sponsor. “It’s a win across the board.”