Obama Moves to Cap Executive Pay for Government Contractors

Image: Obama Moves to Cap Executive Pay for Government Contractors

Friday, 31 May 2013 01:09 PM

By Sandy Fitzgerald

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President Barack Obama will ask Congress next week to limit the amount of executive pay the government reimburses federal contractors to $400,000, the same annual salary he makes as the world's most powerful chief executive.

According to The Hill, without a limit being set, the executive pay scale the government allows for private contractors doing government work will rise to $950,000 this year – up from the current $763,000 the government reimburses contractors for each of up to five top executives.

The president's cap proposal will be put to the test during upcoming House Armed Services Committee hearings, where members will discuss compensation limits for defense contractors while working on the National Defense Authorization bill for 2014.

Unions representing federal workers are pushing for the cap as well, saying the reduced pay scale will lower the federal deficit while helping to protect full-time government employees from being laid off.

Stan Soloway, president of the Professional Service Council that represents government contractors, insists that $950,000 is not high, compared to what the executives would make working for high-tech firms in the private sector. But he suggested that a freeze at the current reimbursement level of $763,000 would be acceptable if lawmakers consider increases in the future.

"If you follow compensation rates at billion dollar companies or large non-profits you know that is not exorbitant," Soloway told The Hill, adding that the president's salary is an "arbitrary" and unfair comparison method for determining a limit to executive pay among contractors.

Soloway also asserted that many contractors who do business solely with the government would lose their profit margins if they have to pay top executives at market rates without the help of government reimbursement.




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