White House proposal capping contractor payments falls short, union says

WASHINGTON, May 30, 2013 /PRNewswire-USNewswire/ -- The Obama administration's proposal to lower the cap on government contractor compensation doesn't go nearly far enough to level the playing field between lavishly paid contractors and front-line federal workers, the head of the largest federal employee union said today.

"The administration's proposal is completely inadequate.  It still requires taxpayers to reimburse contractors for exorbitant sums, while federal employees are suffering pay freezes and cuts due to furloughs," AFGE National President J. David Cox Sr. said.

Earlier this year, as part of its fiscal 2014 budget submission, the administration said it would urge Congress to cap payments to government contractors at the Vice President's salary, currently $230,700, expanding on a proposal that had been included in the Senate's version of the 2013 National Defense Authorization Bill.

However, the proposal announced today by the Office of Management and Budget would set the cap at the President's salary, currently $400,000, far more than what OMB had proposed in its budget just one month ago. In addition, agencies would be able to ignore the cap entirely if they determined they couldn't recruit and retain employees with specialized skills. The new cap also wouldn't go into effect for 180 days after being signed into law.

It should be noted that the $400,000 cap would exclude contractors working under fixed-price contracts, which account for 60% of the government's annual spending on service contracts, and instead apply only to cost-reimbursement contracts.

"We have been calling attention to obscene levels of taxpayer largesse for contractors for years.  The administration's effort fails to impose meaningful sacrifice on contractors and seems like a half-measure designed to stave off real reform that would save taxpayers significant amounts," Cox said. "While federal employees and other working- and middle-class Americans are being forced to make enormous sacrifices again and again, this new, weaker proposal is downright insulting."

Last year, OMB increased the maximum annual salary that government contractors can charge taxpayers for each of their five most highly paid executives from $693,951 in fiscal 2010 to $763,029 in fiscal 2011. In fact, the cap has tripled since the mid-1990s. This year it will soar to an astounding $950,000.

"Federal employees have had their pay frozen for three straight years, and more than 800,000 employees are being furloughed without pay for up to 11 days this year under sequestration," Cox said. "And the best the administration can do impose this small change that will affect less than half of all service contracts."

The American Federation of Government Employees (AFGE) is the largest federal employee union, representing 670,000 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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