More pressure to limit contractor pay

Two members of the Senate last week introduced bipartisan legislation that would limit contractor salaries paid by federal tax dollars to $400,000—the same as the president’s salary.

The bill, dubbed the Commonsense Contractor Compensation Act of 2012 (S. 2198), was introduced March 15 by Sens. Barbara Boxer (D-Calif.) and Chuck Grassley (R-Iowa).

Under the current federal executive compensation benchmark, tax-funded salaries earned by a government contractor’s top five executives are limited to $693,951—a cap the lawmakers say has almost doubled over the past 12 years. Moreover, according to a release from the two senators, “employees of government contractors outside of the top five can and do earn taxpayer-funded amounts in excess of the current benchmark.”

S. 2198 would extend the $400,000 cap would to cover all contractor employees.

“The direct taxpayer-funded salaries of government contractors clearly need to be contained, and this legislation is designed to do so,” Grassley said in a press statement. “There’s no justification for these payments to be higher than the salary of the president of the United States.”

While the bill would limit taxpayer-provided compensation, contractors would not be limited from paying employees additional amounts out of their own revenues, the lawmakers pointed out.

Reader Comments

Fri, Mar 23, 2012 Sam Davidson Vienna, Va

This article states that the $693,951 salary cap pertains to the top five management level employees only. It is my understanding tht the NDAA for Fiscal Year 2012 made the cap applicable to all employees. The Commonsense Contractor Compensation Act of 2012 (S.2198)reduces the cap to $400,000 and applies it to all employees.

Wed, Mar 21, 2012

Govt bureaucrats should keep the focus on where it belongs - encouraging real competition - and stay out of private business matters.

Wed, Mar 21, 2012

The president's salary is arbitrary, since most if not all recent presidents and contenders are millionaires and will leave office in 4 or 8 years and command high speaking fees, etc. That is hardly akin to a salary for a CAREER. I was doing math last night with my son, who is very bright, and he had to translate $6,804,916 or something to words. I told him some people around MD, DC, VA who are CEOs of successful companies make that much a year, and that he was smart enough to be one of them some day. But maybe by that time, salaries / motivation will be capped. How sad. And he was born in Russia, where there is a TRUE 1% vs. 99%. While we are very far from that now, we do seem to be heading in that direction.

Wed, Mar 21, 2012

So if I create a business liek Apple or Microsoft and do work for the government, as CEO I'm not entitled to make more than 400k ? What nonsense!

Tue, Mar 20, 2012 Gary OH

The issue is not whether execs are overpaid, it is that the gov could control salaries. A slippery slope of the worst magnitude. Using this rationale, the gov could set salaries at every level. Exactly the opposite of what the US stands for. BTW, exec salaries are paid out of overhead, eventually back to profits.

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