Should there be caps on contractor pay?

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This topic contains 11 replies, has 8 voices, and was last updated by  Lisa Pierson 8 years, 6 months ago.

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  • #151367

    President Obama is once again calling for a limit on how much government contracting executives can make.

    The Washington Post’s Federal Eye reports that this comes just as the House is set to vote on a bill that would freeze the pay of federal and congressional employees.

    Currently, some federal contracts allow firms to bill agencies over $600,000 for incurred costs, including salaries. Thus, some highly-skilled contractors earn more than top-level feds and the President himself. Congress has linked the contractor pay cap to compensation levels in the private sector since the mid-1990’s.

    Last year, lawmakers voted to expand the cap to all government contractors, but President Obama doesn’t think this goes far enough.

    What do you think? Should a cap exist? Or will this discourage contractors?

  • #151389

    Lisa Pierson

    I think that a definite cap should exist for contractors especially when their sitting side-by-side a full time employee making twice to 2.5 times as much for the same work. It also provide resentment in the work place and demotivates your staff that is committed to the agency as the value of their true worth. My two cents.

  • #151387

    This is so true. It came up in one of our meetings the other day (yet again.) We do all the work here, then it goes to a contractor making a huge salary who compiles a pretty report and turns it in to management. Then management gets all excited about what great work the contractor did. Really?

    It’s demoralizing. We have minimal operating funds so the majority of our staff is structured to be paid from ‘soft’ funding. We have to put together budget proposals for those funds. The people who have jurisdiction over those funds nit pick us to death and sometimes return them to us discounted based on how much time is left in the fiscal year. Our staff was already doing the work and we still need to get paid the full amount. (As the budget analyst I am always telling them NOT to work before we get the paperwork back. The old, why by the cow if the milk’s free.) Yet those same people have contractors that are receiving hundreds of thousands and they discount a $3000 proposal from us. We have to submit a new proposal for every fiscal year. The contractor submits one proposal and can work off that for years. We have to justify our worth every year.

  • #151385

    Steve Radick

    As one of the hated contractors :), I’d like to jump in and say that we tend to get a bad rap here in these sorts of discussions about salaries. However, a vast majority of the contractors that you’re working side-by-side with are making very similar salaries – the average salary of the government contractor is inflated by those C-suite execs who make millions. Government employees also tend to have much more job security. Many contractors lose their jobs when their contract ends. It’s not like they just move on to the next project. Some do, but many don’t. Contractors, like any other company, also lay people off when needed.

    I’m not saying that one side is right or one side is wrong – just that the grass isn’t always greener on the other side and that stereotypes about both are generally misguided.

  • #151383

    Lisa Pierson


    you make a good point as a once contractor myself, let me correct my initial statement and state it as the Contracting company is often paid better than the contractor. And your correct, as a contractor your job security can be precarious especially if your PO money runs out or the contract ends, you’re sitting at home earning no pay.

    How the contractor is actually paid is often determined by the contracting company and how much of a cut they take from their employees.

  • #151381

    Steve Radick


    See, now that I think we can all agree on – our contracting companies don’t pay people like me enough 🙂

  • #151379

    Doniele Ayres

    When the IGCE (Independent Government Cost Estimate) is done the rate should be in the same range as the equivalent GS position. I would think this would bring a greater balance in the salary amounts.

  • #151377

    Ron Falcone

    Another thing that gets lost in the shuffle is that we tend to focus primarily on salaries. We also need to look at the total compensation package — especially benifits — in most cases the federal employees beneifts are more favorable than industry. When you compare the total comp package the gap converges.

  • #151375

    Raymond Clark

    What people fail to realize about contractors is that the government doesn’t pay their salaries. The company does. The government negotiates a price for products and or services based on standard accepted cost models. The company then decides how many workers, with what skills, and experience are needed and pays them within the bounds of the total contract.

    I’ve also been a contractor and a civilian employee. The government has no business setting contractor saleries. Want cheaper salaries, review the contractural cost standards that drive them.

    I love my contractor buddies! We in the Defense Department can’t live without them; and I mean that literally.

  • #151373

    Peter G. Tuttle

    Capping salaries won’t save much in comparison to what really need to be saved. Your big ticket savings will come from slashing programs, organizations, staff and supporting contracts that are not “really” needed to achieve the fundamental purpose of government in supporting the Nation. This being said, the hard part will be to arrive at conclusions about what’s not really necessary since both federal and contractor jobs (not to mention empires) are at stake. We are at a point where truly hard, gut-wrenching, decisions must be made.

  • #151371

    Jaime Gracia

    Arbitrarily setting limits of government contractor pay is not only bad policy, but especially detrimental to small businesses. It is hard to fathom how this Administration can punish a small business entrepreneur, who takes enormous risk in a very challenging market, creates jobs and value for the taxpayer, only to not be able to not be properly compensated for the risk assumption under the guise that their compensation is “excessive.”

    It is a fact that rewarding top talent is vital for commercial firms to compete. This discussion on “salary” is also skewed, because it is fuzzy math and weighted averages for personnel. As a contractor and owner of a small business, it does get a bit tiring of hearing this argument over and over again, especially given the CBO report of last week that feds have higher total compensation packages than contractors, especially given education levels and the very generous federal benefit program that I can not even come close to offering. Do I think that should be capped? Absolutely not, federal employees perform vital missions all day across the board, and it is earned. Why should I be punished?

    Has it not dawned on Administrative officials at the disparity between this proposed change, and the fact that companies such as General Electric pay their top executives hundreds of millions of dollars in total compensation, yet these firms pay little to any taxes?

    Let’s put this conversation to bed, and let’s focus on more productive efforts like improving performance, saving taxpayers money, and creating meaningful relationships to working better together. Why do these efforts not get more attention?

  • #151369

    You are absolutely right on those points. There are lots of pros and cons to every process change. It would not be beneficial in the long run to put a cap on contractors. The market changes constantly, up and down. Once a cap is in place for government, it would take an act of Congress to reverse it.

    What the company gets paid isn’t what the contractor gets paid. As a contractor at one time, I didn’t get any benefits, just a large salary. I did much better working private sector jobs for benefits and salary than as a contractor or federal employee. Even my 401ks were better than my retirement package with the government. I get more satisfaction out of my government job. All the rules and regulations that surround all the funding make me a little anxious sometimes, being a budget analyst, extremely challenging and a bit dangerous. They are meant to ensure the taxpayer gets their monies worth, but then it bogs down the processes which costs the taxpayer more money. Putting a cap on contractors would cost more in the end because it cannot be kept up to date to reflect the market.

    We have way too many inane laws and regulations, that shouldn’t be on the books now. They were considered important at one time but quickly became outdated and are, for the most part just ignored. I think every now and then some lawyer dredges up an obscure law to go after or protect someone.

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