White House reopens debate over contractor pay

Unsatisfied with the contractor pay reforms in the fiscal 2012 Defense authorization act, the White House on Tuesday called on Congress to again take up a proposal that President Obama offered last fall to cap contractor pay that is reimbursable by the government at $200,000.

Lesley Field, acting administrator of the Office of Federal Procurement Policy, wrote in a blog post Tuesday that Congress should go beyond the "modest changes" made in December and "end the overpayment" of contractors.

"The president believes that asking the American people to pay a 250 percent-plus raise for contracting executives just doesn't make sense -- especially in the current fiscal environment," she wrote. "He proposed to end this excessive reimbursement by abolishing the outdated statutory formula and instead bringing the cap down to a level on par with what the government pays its own executives -- approximately $200,000."

Field stressed that contractors are free to pay their executives at any level they choose, but the reimbursement rate from the government -- which is currently at $693,951 -- should come down.

Under the law, she wrote, the Office of Management and Budget "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 -- and taxpayers will continue to have their hard-earned resources spent reimbursing contractor executives far in excess of what can be justified."

The authorization act expanded the existing $693,951 cap "to cover all contractor employees (instead of only a company's five most highly paid executives, as provided in current law)," a Senate Armed Services Committee summary stated. The law made an exception for scientists and engineers "if necessary to ensure continued DoD access to needed skills and capabilities."

The contracting community generally applauded the recent change, saying it would continue to allow them to pay competitive salaries to attract top talent that otherwise might go to firms that do not depend on government contracts.

Criticism of the administration's proposal came from the American Federation of Government Employees, which objected to the fact that the White House proposal would apply only to the top five highest-paid executives in a contracting firm. "The White House might get a good sound bite by saying it's going after runaway contractor salaries," National President John Gage said Tuesday, "but its plan would still leave taxpayers paying inflated salaries for thousands of contractor employees."