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Capping compensation isn't the answer to procurement troubles

Here they go again. Some members of Congress are pushing for reductions in compensation reimbursement for government contractors to be part of any continuing resolution passed this month.

The Professional Services Council is up in arms about it because Congress rejected the idea in favor of more study. That was just 60 days ago.

“This is an attempted end-run around the will of Congress,” PSC President and CEO Stan Soloway said in a statement.

A copy of the letter to the Senate Appropriations Committee is on the website of the American Federation of Government Employees, a union for federal employees.

Sens. Barbara Boxer, Chuck Grasseley and Joe Manchin II complain in the letter about how the compensation levels paid to contractors have grown faster than inflation. Salary reimbursements can reach $763,029,951 a year.

Yeah, that sounds high. And maybe the formula to calculate the reimbursement needs to be adjusted.

Soloway and PSC counter argue that competition will hold compensation in check. “Arbitrary caps and pay freezes on either the contractor or federal employee side are not the answer and could well do more harm than good,” he wrote.

I’m not going to take a stand on which side is right, but I agree with Soloway in that the Government Accountability Office is studying the issue, and Congress should wait for that report before taking action.

I know the intention of capping reimbursement is to lower costs, which is important. I also know that I’m not well versed in the regulatory intricacies of procurement. Still, I think the debate on reimbursement points to the real flaw in the way the government approaches contracting: a focus on process over results.

Nearly everyone, of all political stripes, agrees that the way the government buys goods and services is in desperate need of repair. Costs need to be lower, and efficiencies found.

But, to fix the system, shouldn’t you start at the end and work your way back? If you did that, do you really think you’d end up with compensation reimbursement? I doubt it.

The question should be whether the government is getting what it paid for? Is the contract delivering the intended results for the price being paid?

That’s where you start.

Posted by Nick Wakeman on Mar 07, 2013 at 7:24 PM


Reader Comments

Fri, Mar 8, 2013 Scott Amey DC

Heritage and the industry have pointed out the pay gap between the public and private sector. Why isn't it proper to raise the issue when contractor executives and employees are billed at a rate that exceeds the public and private sector rates? The proposed benchmark amount might be arbitrary, but we don't need a GAO report to tell us that $763,000 is out of line with all markets. Should we wait to debate this until OFPP sets the FY 2012 figure, which might approach or exceed $800K?

Fri, Mar 8, 2013 Oklahoma

The problem is too much focus on process, too much emphasis on checking the boxes, and too much emphasis on a "professional acquisition work force" instead of emphasis on writing clear, meaningful and tight requirements and holding the contractor accountable for acceptably produced, on-time and budget deliverables. The government needs more old-time contracting officers and systems engineers than "professional acquisition" employees. There is not punishment for poor performance.

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