Business

Bipartisan Budget Bill Includes Compromise on Contractor Pay

Among the many issues tackled by the Bipartisan Budget Act of 2013 is the cap on federal contractor pay, recently raised to nearly $1 million a person. While trade groups, unions, and advocacy groups agree a lower cap is needed, they vary the level and how to keep in check.

Among the many issues tackled by the Bipartisan Budget Act of 2013 is the cap on federal contractor pay, recently raised to nearly $1 million a person. While trade groups, unions, and advocacy groups agree a lower cap is needed, they vary on the level and how to keep it in check.

Nearly everyone agrees something needs to be done about contractor salaries. But the question is, how far should it go?

The Bipartisan Budget Act of 2013, the compromise deal which looks likely to pass the Senate this week, meets the issue about halfway—cutting back the rate, set based on private-sector salaries, by half. That’s not enough for some groups, but too much for others. More on the debate below:

Cutting back: The current maximum salary federal contractors can receive for their services is $952,308 a person, an amount announced in early December by the White House’s Office of Management and Budget. OMB officials say their office is hamstrung by a law requiring it to continue raising the rate cap, which had stood at $763,029. Since then, a series of proposals have suggested lowering this cap significantly. In May, the OMB suggested dropping it to $400,000, equivalent to the president’s salary; a standalone bill proposed by a group of senators, most of them Democrats, suggested a $230,700 cap, the same salary as the vice president; and an agreement reached during negotiations on the National Defense Authorization Act would have lowered the cap to $625,000. If the budget bill passes in its current form, the rate would be something of a compromise—at $487,000, it would be half the current cap and lower than the NDAA rate, but still higher than other suggested levels. As Reuters notes, the $487,000 level matches the $340,650 cap first set in 1998 when adjusted for inflation.

The concerns raised: While support seems nearly universal for cutting the contractor rate cap in some way, various groups are mixed on the final result. The advocacy group Center for Effective Government argues in a blog post that while the lower cap might help in some ways, the Bipartisan Budget Act ultimately “targets the wrong crowd,” cutting benefits for government employees while allowing contractors to continue to receive large monthly pension checks. Meanwhile, the Professional Services Council, an association focused on contractors, tells Government Executive that the formula in use should change, keeping in mind the market at large and the skills needed by the contractors. “It should be tied to a fair and reasonable level of compensation that protects the government from egregious salaries but enables companies to attract the best talent and put it to work for the government,” said Stan Soloway, the association’s president and CEO. Soloway says that the group was content with the $625,000 cap set by the defense bill. Federal workers groups such as the National Treasury Employees Union and the American Federation of Government Employees, whose members have faced furloughs and benefit changes in recent years, said they back the changes but wish they went even further.

(iStock/Thinkstock)

Ernie Smith

By Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

Got an article tip for us? Contact us and let us know!


Comments