news

Congressman Paul Tonko (D-NY) released the following statement in response to the Office of Management and Budget (OMB) announcement that the benchmark compensation amount for contractor executives and employees will be increased to $952,308. Prior to this increase, government contractors could bill taxpayers as much as $763,029 to pay for their salaries. This increase of nearly $190,000 can be retroactively applied to costs incurred on all contracts since January 1, 2012. The increase is statutorily required, and based on a formula that has allowed the benchmark to rise automatically since 1998.

“At a time when Congress shows no urgency to even maintain SNAP or unemployment benefits, it is unconscionable and disgusting to spend taxpayer dollars on skyrocketing salaries for executives and CEOs. This shows a complete lack of reality to what is going on in the homes of middle-class, hard-working families in places like Upstate New York and across the entire nation,” said Tonko.

Rep. Tonko is the author of H.R. 2444, the Commonsense Contractor Compensation Act, which would rein in exorbitant taxpayer-funded salaries by capping the maximum reimbursement for all contractors at the Vice President’s salary ($230,700). Earlier this year, a U.S. Government Accountability Office (GAO) report surveyed 27 contractors, representing 7% of all Department of Defense contracts in Fiscal Year 2012, and found that reducing the compensation cap to $230,700, the Vice President’s salary, would have saved taxpayers $358 million in Fiscal Year 2012 from the surveyed companies alone.

Currently, the cap applies only to the salaries of defense contractors and the five highest compensated executives of non-defense contractors. Other employees of non-defense contractors can potentially earn taxpayer-funded amounts in excess of the current cap. Tonko’s legislation also includes a narrow exemption to the cap for scientists, engineers, and other specialists if an agency determines it is necessary to ensure access to individuals with specialized skills.

The measure would only limit what an executive or other employee is paid by the federal government. The employee could still receive additional compensation from the contractor’s other revenue streams.

# # #