AFGE to White House: Proposal To Cap Contractor Pay Fatally Flawed

Proposal would lower compensation cap only for top five contractor executives

WASHINGTON, Jan. 31, 2012 /PRNewswire-USNewswire/ -- The Obama administration's proposal to lower the maximum compensation that government contractors can charge taxpayers is fatally flawed because the new cap would apply only to the five highest-paid executives at each company, the head of the American Federation of Government Employees said today.

"The White House might get a good sound bite by saying it's going after runaway contractor salaries, but its plan would still leave taxpayers paying inflated salaries for thousands of contractor employees," AFGE National President John Gage said.

Government contractors currently can charge taxpayers $693,951 a year for the compensation of a single employee, a benchmark that has more than doubled during the past 12 years. The benchmark could rise to nearly $750,000 in the coming weeks without congressional action.

In a blog post published today on the Office of Management and Budget's website, Leslie Field, the administration's acting official for government contracting, said the White House is renewing its push to lower the statutory pay cap to $200,000.

However, this statutory cap applies only to the top five executives at each contractor. Unless the statutory cap is lowered and applied to all contractor employees, thousands of contractors could continue to charge taxpayers for compensation that far exceeds $200,000 per employee, costing taxpayers tens of billions of dollars.

AFGE for years has proposed lowering and expanding the executive compensation cap to apply to any individual performing on a contract, rather than a limited number of management employees. As the House Armed Services Committee pointed out last year, "The Defense Contract Audit Agency has shown that there are lower-level executives not subject to the cap and non-executive employees who receive compensation in excess of the benchmark compensation amount."

Lowering the cap would not limit how much these contractor employees can earn, only how much can be charged to the government.

"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," Gage said.

The American Federation of Government Employees (AFGE) is the largest federal employee union, representing 625,000 workers in the federal government and the government of the District of Columbia.

For the latest AFGE news and information, follow us on Facebook and Twitter.

SOURCE American Federation of Government Employees

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