Joe Jordan, administrator of the Office of Federal Procurement Policy at OMB. (Staff)
The government is raising the cap on the amount it will reimburse federal contractors for the salaries of top executives by 24 percent for fiscal 2012, according to an Office of Management and Budget memo published Dec. 4.
The salary that contractors can reimburse for most contracts will rise from $763,029 in fiscal 2011 to $952,308 for fiscal 2012. The rule does not set limits on the overall salary executives can earn.
Joe Jordan, administrator of the Office of Federal Procurement Policy at OMB, said in the memo the formula should be changed and replaced with “a more sensible limit on par with what the government pays its own executives and employees.”
He said the Obama administration proposes to replace the annual cap on salaries and tie it to the salary of the president — $400,000 — and apply it to all contracts across all agencies.
“These important reforms can save taxpayers hundreds of millions of dollars over what they will have to pay if the cap remains unchanged,” Jordan said.
The Professional Services Council (PSC), a trade group for service contractors, questioned the timing of the announcement and said in a statement it is an attempt to influence congressional debate over reimbursement for contractor executive compensation.
PSC President Stan Soloway said proposals under consideration would jeopardize the ability of agencies to recruit top talent, and would harm small and mid-size businesses. He added the PSC is willing to work out a new formula with the administration.
“This is not the time to stir the pot with unnecessary actions; it is time for serious conversations,” Soloway said.