Obama administration urges Congress to cap contractor pay at president’s salary

Obama administration urges Congress to cap contractor pay at president’s salary

By Josh Hicks, Published: May 30, 2013 at 2:36 pm

(Carolyn Kaster/AP)

(Carolyn Kaster/AP)

The Obama administration on Thursday called for Congress to slow the growth of executive pay for government contractors, arguing that current compensation levels have grown excessive.

The White House budget office unveiled a legislative proposal that would prohibit the government from reimbursing private firms for salaries that exceed the president’s federal earnings, which are $400,000 per year, except when specialized skills are needed.

The plan would only affect payments that are made retroactively through so-called cost-reimbursement contracts. Under such agreements, which are often used when final costs are hard to predict, the government promises to pay whatever costs a company incurs as it completes a project — like a blank check with certain limits.

The administration proposal would not affect contracts with fixed prices, meaning firms could pay their executives whatever they wish under those agreements.

Congress established a formula in 1995 for limiting compensation with cost-reimbursement contracts. The government currently works with a cap that is based on the nation’s top private-sector CEOs and other senior executives.

The White House budget office said the reimbursement level has “skyrocketed” by more than 300 percent since Congress established the existing formula during the Clinton administration.

Under current law, the cap had to be raised to $763,000 for fiscal year 2011. Officials said the level will soon have to be raised once again to nearly $1 million per year for each executive.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s