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Congressman Paul Tonko has introduced legislation in the House of Representatives that will cap runaway salaries being paid by taxpayers to government contractors, many of whom earn more than twice as much as the President of the United States. The Stop Excessive Payments to Government Contractors Act of 2011 (H.R. 2980) will restrict the salary contractors can earn from taxpayers, keeping it under the level earned by cabinet level secretaries (about $200,000 per year).

Congressman Tonko unveiled the legislation during a news conference this morning at the Commission on Economic Opportunity in Troy, to highlight how community programs are being asked to sacrifice while other wasteful government spending practices continue. Congressman Tonko was joined by National Federation of Federal Employees Local 2109 President Timothy Ostrowski and Katie Fike, Director of Program Planning and Evaluation at CEO.

“The reality is that the American people cannot afford to pay unlimited salaries to government contractors, some of whom make far and above the salaries of our highest government officials,” said Congressman Tonko. “The price tag is just too high. This common sense legislation sets a fair and reasonable cap that will save billions in taxpayer dollars.”

"Federal employees have had to tighten their belts and sacrifice to help during these difficult times, and we believe it's appropriate to ask the same of government contractors," said National Federation of Federal Employees Local 2109 President Timothy Ostrowski. "We'd like to thank Congressman Tonko for introducing this common sense legislation which will put needed controls on spending and help save taxpayer dollars."

“Federal cuts are causing our community action programs to scale back and lay off staff members, at precisely the time that we are needed more than ever to help people get back on their feet and survive in this difficult economy,” said Katie Fike, Director of Program Planning and Evaluation at the Commission on Economic Opportunity. “We agree with Congressman Tonko’s approach to cut back on wasteful government programs so we can continue to invest in our communities and help those most in need.”

Current federal law caps the amount contractors can charge taxpayers for a single employee at $693,000 per year – double what it was in 1998, growing an outrageous 53% faster than the rate of inflation. But that cap only applies to the top five executives at each contractor. For all other employees, there is no limit to what a contractor can charge to taxpayers. That means for a workforce that’s between two and three times the size of the official federal workforce, there is no limit on the amount of taxpayer dollars that most contractors are paid.

The Stop Excessive Payments to Government Contractors Act of 2011 would correct that problem by capping salary reimbursements from taxpayers for all contractor employees, saving tens of billions of dollars over the next decade.

This legislation does not affect the salaries that employees of government contractors make in the private market – companies are free to pay whatever they like. However, taxpayers cannot afford to reimburse contractors for such extreme compensation. A study released last week by the Project on Government Oversight found that the federal government pays billions more in taxpayer dollars to hire contractors than it would if it instead hired federal employees to perform the same services. The study showed that the government’s contract billing rates are nearly two times higher than federal employees receive in total compensation.

The Stop Excessive Payments to Government Contractors Act of 2011 has been referred to the House Committee on Oversight and Government Reform, and the House Committee on Armed Services.

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