Senate bill revisits contractor pay cap

Friday - 3/16/2012, 5:18pm EDT

A bipartisan bill in the Senate is revisiting an effort to cap contractors' salaries.

The bill (S.2198), introduced Thursday by Sens. Barbara Boxer (D-Calif.) and Chuck Grassley (R-Iowa), would cap contractors' pay at what the President makes — about $400,000. The bill would also apply that cap to all contract employees — not just top executives.

Currently, contractors can charge up to $693,951 for their top five executives, according to a statutory formula.

The bill expands on an amendment sponsored by the two senators to the 2012 Defense authorization bill to cap defense contractors' pay at $400,000 and apply the cap to all defense contractor employees. The Senate had passed the bill in December with the amendment intact. However, the final version of the bill passed by the House extended that cap to all defense contractors but maintained the current cap at $698,951.

"There is simply no reason that taxpayers should fund government reimbursements for private contractor salaries at a rate more than three times what Cabinet secretaries earn," Boxer said in a release.

The cap was $250,000 in 1995 and has since increased more than 2-1/2 times, according to a January 2012 blog post from the Office of Management and Budget.

Federal union American Federation of Government Employees applauded the measure.

"Current federal employees have had their own salaries frozen for two years and new employees will have to pay four times as much in retirement contributions, saving the government $75 billion. Yet nothing is being done to trim out-of-control contractor spending," said AFGE National President John Gage in a statement.

The bill is not the first effort to target contractor compensation.

Last fall, President Obama recommended capping contractor salaries at $200,000, as part of his deficit reduction recommendations. And in September, Rep. Paul Tonko (D- N.Y.) introduced a bill to cap contractor pay at the same level of Cabinet-level secretaries or at about $200,000.

Federal News Radio's Jack Moore contributed to this story.

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