As Austerity Shrinks Government Budgets, Contractor CEO Pay and Public Costs Set to Rise

In the midst of shrinking federal spending on infrastructure, scientific research, Head Start, and other government programs, the costs of government contractor executives’ salaries and compensation are set to soar unless Congress takes action. This is another example of how current government policies transfer resources to the wealthy and away from the programs that broadly support and grow a vibrant middle class.

The maximum amount a government contractor can charge taxpayers for employees’ salaries is about to rise at least 25 percent in the next few weeks, from $763,029 to more than $950,000 – nearly $1 million. This comes as federal employees have seen pay freezes – justified on the basis of saving public dollars – and as most Americans have seen stagnant incomes over the past several years. It also comes as federal spending is reduced through the Budget Control Act of 2011 and sequestration. Continue reading “As Austerity Shrinks Government Budgets, Contractor CEO Pay and Public Costs Set to Rise”

White House proposal capping contractor payments falls short, union says

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White House proposal capping contractor payments falls short, union says

Half-hearted proposal doesn’t come close to matching sacrifices incurred by federal employees

WASHINGTON, May 30, 2013 /PRNewswire-USNewswire/ — The Obama administration’s proposal to lower the cap on government contractor compensation doesn’t go nearly far enough to level the playing field between lavishly paid contractors and front-line federal workers, the head of the largest federal employee union said today.

“The administration’s proposal is completely inadequate.  It still requires taxpayers to reimburse contractors for exorbitant sums, while federal employees are suffering pay freezes and cuts due to furloughs,” AFGE National President J. David Cox Sr. said. Continue reading “White House proposal capping contractor payments falls short, union says”

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. Continue reading “Obama administration urges Congress to cap contractor pay at president’s salary”

As a Federal Employee and Taxpayer – I’m Tired of Paying for Your HIGH Salaries!

Office of Management and Budget

Office of Federal Procurement Policy Cost Accounting Standards Board Executive Compensation, Benchmark Maximum Allowable Amount

For 2011, the allowable costs were set at $763,029!

The allowability of the compensation costs for the senior executives of Government contractors is capped by statute (10 U.S.C. 2324(e)(1)(p)  and 41 U.S.C. 256(e)(1)(p)) at a benchmark executive compensation amount.  The benchmark amount does not limit the amount of compensation that an executive may otherwise receive.  However, the compensation costs in excess of the benchmark amount are unallowable costs for Government contract purposes.  While the benchmark executive compensation amount is the maximum allowable amount of compensation costs for certain executives of Government contractors, the benchmark amount as applied to a particular executive is not necessarily a safe harbor.  Without regard to the benchmark compensation amount, the allowable compensation costs for each affected executive are still subject to the Federal Acquisition Regulation and the Cost Accounting Standards as applicable and appropriate to the circumstances, e.g., reasonableness and allocability.  The Executive Compensation Cap is implemented at FAR 31.205-6(p). Continue reading “As a Federal Employee and Taxpayer – I’m Tired of Paying for Your HIGH Salaries!”