WASHINGTON (Reuters) – Congress is poised to nearly halve the salary cap for U.S. government contractors after years of dramatic increases driven by skyrocketing executive pay.
A broad budget bill that won approval by the House of Representatives on Thursday would lower the cap to $487,000 a person, down from its current level of $952,000. The Senate is expected to pass the bill next week.
The measure would be a partial victory for the White House, which for years has sought to rein in contractor reimbursements that fund salary and other personnel costs. In May, the White House proposed limiting the reimbursement level to $400,000 a person – the amount Barack Obama earns as president.
Office of Federal Procurement Policy
Office of Management and Budget
ATTN: Ms. Aisha Hasan
725 17th Street, N.W.
Washington, D.C. 20503
Submitted via regulations.gov
Subject: Public Comments on the Use of Cost Comparisons
Dear Ms. Hasan:
The Project On Government Oversight (POGO) provides the following public comment regarding the use of cost comparisons outlined at 78 Fed. Reg. 11232 (February 15, 2013). Founded in 1981, POGO is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government. POGO has a keen interest in government contracting matters, especially the important but often ignored issue of service contracting costs.
The Office of Federal Procurement Policy (OFPP) in the Office of Management and Budget (OMB) announced a public meeting on March 5, 2013, and requested public comments on “the practice of comparing the relative cost of performance by Federal employees versus contract performance in order to identify the most cost-effective source.” POGO hopes that all of the oral and written comments will be used to create a comprehensive cost comparison model that will be used when making human capital planning decisions.
Establishing a uniform, effective cost comparison model is one of the most, if not the most, important tasks facing the government today. This model, whether established by improving the A-76 process or building a new cost comparison process, must be initiated earlier in the human capital policy and planning phase. It also must compare the full life-cycle costs of outsourcing federal services to contractors with the costs of having those services performed by federal employees.
In a memo quietly published in Wednesday’s Federal Register, the White House procurement chief instructed defense and civilian agency heads to raise the cap on taxpayer funds that can be used to reimburse contracting companies for the pay packages of top executives.
Beginning with contracts let in fiscal 2012, the maximum reimbursement level is $905,308, an increase of $190,000. The cap is based on a formula mandated by law, according to the memo from Joe Jordan, administrator of the Office of Federal Procurement Policy.
“Under current law, the administration has no flexibility to depart from the statutory requirement that the cap be adjusted annually based on the application of the statutorily-mandated formula,” Jordan’s memo said. “The administration has strongly reiterated the need for reforms to the current statutory framework and Congress has considered several proposals to reform the compensation cap. To date, however, Congress has not revised the cap amount or the formula for adjusting the cap,” other than enacting a small change in 2011 expanding the cap on pay on defense contracts to cover all employees, rather than the five highest-paid. Continue reading “White House Makes Few Friends in Raising Contractor Pay Cap”
Taxpayers can be billed $952,000 per contractor employee under new rule
WASHINGTON – American Federation of Government Employees National President J. David Cox Sr. today expressed his outrage at the news that the cap on annual compensation paid to contractor employees using taxpayer dollars has been increased to an astounding $952,000.
The new limit announced by the Office of Management and Budget reflects a one-year increase of nearly $190,000 and a four-year increase of 55 percent. The compensation cap has nearly quadrupled since the mid-1990s.