Amendment to defense authorizations would cap contractor pay

By Jack Moore
Federal News Radio

An amendment to the 2012 Defense Authorization Bill — which lays out policy and spending priorities for the Defense Department — would cap taxpayer-funded contractor compensation at $400,000.

The “Commonsense Defense Contractor Compensation” amendment is sponsored by Sens. Barbara Boxer (D-Calif.), Chuck Grassley (R-Iowa) and Jay Rockefeller (D-W.Va.).

It would apply the $400,000 cap — the same salary the President draws — to all contracting employees.


Under current executive compensation limits set in 1998, contractors can charge up to $693,951 for the salaries of their top five executives. However, that benchmark, which has grown 53 percent faster than inflation over the past 12 years, doesn’t apply to all contractor employees.

The push for capping government compensation to contractors has ramped up in recent months, amid competing proposals to trim the deficit and an ever-widening pay gap between federal employees and contractors.

“Especially in these difficult economic times, there is no reason taxpayers should fund government reimbursements for private contractor salaries that are over three times the pay earned by Cabinet secretaries,” Boxer said in a release. “Contractors are free to pay their employees whatever they want, but there must a common-sense limit on how much they can earn when taxpayers are footing the bill.”

The Senate plan represents a compromise between the current compensation benchmarks and a plan introduced by President Barack Obama — as part of his deficit-cutting recommendations — to limit pay to $200,000.

Both Boxer and Grassley previously called for the supercommitee, tasked with cutting as much as $1.5 trillion from the deficit over 10 years — to consider limiting the compensation of contracting executives.

Industry groups have denounced plans to limit compensation to employees, saying it hinders the ability to attract talent and interferes in market competitiveness.

Follow Jack on Twitter at @Jack_WFED.


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