Monday, July 22, 2013

Commonsense Contractor Compensation Act of 2013

Its about time for our periodic update on contractor compensation. Our last update was on June 7 where the 2014 NDAA (National Defense Authorization Act) had come out of committee with a formula that would freeze the current cap except for a cost of living adjustment.We don't know whether that proposal will get too far, probably not.

There's a new bill that was simultaneously introduced in the Senate (S. 1192) and the House of Representatives (HR 2444) on June 19, 2013 that, if enacted, will cap everybody's salaries at the level of the Vice President's (currently $230,700). The purpose of the Act is " to implement common sense controls on taxpayer-funded salaries of government contractors by limiting reimbursement for excessive compensation.". The bill, which would apply to both Defense and civilian contracts reads:

Costs of compensation of contractor and subcontractor employees for a fiscal year, regardless of the contract funding source, to the extent that such compensation exceeds the rate payable for the Vice President under section 104 of title 3, United States Code, except that the head of an executive agency may establish one or more narrowly targeted exceptions for scientists, engineers, or other specialists upon a determination that such exceptions are needed to ensure that the executive agency has continued access to needed skills and capabilities.’

The bill also includes a reporting requirement for those "narrowly targeted" exceptions to the compensation caps. Within 90 days after the end of the fiscal year, agencies must report to Congress;

  • the total number of contractor employees, by executive agency, in the narrowly targeted exception positions described under subsection (a) during the preceding fiscal year;
  • the taxpayer-funded compensation amounts received by each contractor employee in a narrowly targeted exception position during such fiscal year; and
  • the duties and services performed by contractor employees in the narrowly targeted exception positions during such fiscal year.
Seems like there might be some privacy issues in such reports. In any event, this seems to be another Congressional posturing event as give the bill a 7 percent chance of getting out of the Senate Homeland Security and Governmental Affairs Committee and a 2 percent chance of ever getting out of House Armed Services Committee. 

By the way, the President's budget sets the cap at $400 thousand.

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