OFPP calls for end to exec pay benchmark

Battle stations!

As the Obama administration fired a cannonball toward the Capitol Jan. 31 with a message to end the Executive Compensation Benchmark, all sides of the debate quickly took their usual battle-ready positions. They had their talking points honed in on the target.

Lesley Field, acting administrator of the Office of Federal Procurement Policy in the Office of Management and Budget, sent a straightforward message on OMB’s blog. She urged members of Congress to end the "outdated" benchmark, which the administration believes compensates contractors' employees too much.

If Congress doesn’t end it, the benchmark will rise again.

“OMB will soon be forced to publish a notice in the Federal Register that raises the cap even higher—tens of thousands of dollars above what it was in 2010,” Field warned in her post.

The mark could rise to as much as $750,000, according to estimates. It’s set currently at the 2010 level (Dan Gordon, former OFPP administrator, didn’t raise the benchmark in 2011), which allows the government to compensate executives up to $693,951. Make note that companies can pay their employees more than that. This benchmark is the limit on how much the government will contribute to their salaries.

OFPP officials determine the amount of compensation based on available surveys on executive pay at publicly traded U.S. companies with more than $50 million in annual sales.

In her post, Field said Congress needs to cap the reimbursements at $200,000, which is the most the government will pay its own executives. President Barack Obama proposed the option last fall as a means of saving money.

“Just as the government must be prudent in paying its employees, it must also not overpay contractors,” Field wrote.

Taking battle stations after Field’s blog went online, the American Federation of Government Employees released a statement saying Congress needs to dump the benchmark.

“Federal employees have had their pay frozen for two years, saving taxpayers $60 billion over 10 years, and many are losing their jobs as part of an arbitrary downsizing push. Yet OMB continues to push a policy that rewards overpaid contractors with salaries far in excess of what our highest paid federal employees earn, all on the taxpayers’ dime,” AFGE National President John Gage said.

So too, the Professional Services Council reacted, saying OMB and Congress should not just dump the benchmark. A $200,000 cap would make it hard for businesses to attract top-talent into the federal marketplace. They’ll opt for companies serving the private sector, with their typically bigger paychecks.

“While we agree that the formula needs to be revisited, particularly in light of austerity measures elsewhere in government, we believe that arbitrarily and drastically reducing the reimbursement cap will hurt the government’s ability to obtain the right skills due to the immense competition for talent with the commercial marketplace, where compensation levels for such talent are routinely higher, such as for cybersecurity skills,” said Alan Chvotkin, executive vice president and counsel for the council.

With all sides at their battle stations, they now watch for any movement in the Capitol.

But Congress has already done something about the cap in the fiscal 2012 National Defense Authorization Act. It didn’t go as far as some congressional advocates, the administration and labor unions want. However, for defense contracts, the new law puts all contractors’ employees under the compensation benchmark, instead of just the top five executives.

Field has launched her cannonball eastward. But no one can be sure that it struck any lawmakers, knocking new thinking into their heads. All there is to do is wait.

Posted by Matthew Weigelt on Feb 02, 2012 at 6:04 AM