June 20, 2013
Tim Kauffman
[email protected]

Revenge of the Taxpayers: Outrageous Contractor Compensation Under Attack

WASHINGTON – American Federation of Government Employees National President J. David Cox Sr. today praised Sen. Joe Manchin of West Virginia for successfully attaching an amendment to the Senate immigration reform bill that would limit annual taxpayer subsidies to compensation for border security contractors to no more than the salary of the Vice President.

The Senate voted 72-26 to add the amendment to the Border Security, Economic Opportunity, and Immigration Modernization Act (S 744).

“Senator Manchin appreciates the sacrifices that so many working- and middle-class Americans have made because of the economy, and he knows that modest sacrifices must now be imposed on the top 1% of the federal government’s contractors,” Cox said.

“Enactment of Senator Manchin’s cap won’t prevent contractor employees from being highly paid. However, the cap will ensure that taxpayers don’t have to pay more than $237,000 per year toward the compensation of those contractor employees. Contractor employees may, of course, continue to have those taxpayer subsidies generously supplemented by their employers.”

Cox also saluted Senators Barbara Boxer of California and Charles Grassley of Iowa for introducing bipartisan legislation yesterday (S 1192, the Commonsense Contractor Compensation Act) that would cap annual taxpayer subsidies for all federal contractors at $237,000. Almost identical House legislation (HR 2444) was also introduced by Representatives Paul Tonko of New York and Jackie Speier of California.

This forceful legislative assault on privilege, excess, and conspicuous consumption follows yesterday’s Government Accountability Office report on the Impact of Reducing the Cap on Employee Compensation Costs (GAO-13-566), which vindicated AFGE’s estimate that capping taxpayer-subsidized compensation for all contractors at approximately $237,000 annually would save the nation at least $50 billion over 10 years.

In reviewing a small number of contracts, GAO determined that the number of contractors who make in excess of the Vice President’s salary is significant, that almost all of them work for large contractors, and that a cap set at the Vice President’s salary would save taxpayers almost $500 million per year.

The GAO report did not even look at fixed-price contracts, let alone the universe of relevant government contracts, so the annual savings actually would be far greater. Finally, despite many protestations, contractors offered GAO no proof that a more modest cap would prevent them from recruiting and retaining employees in specialized professions.

The Manchin amendment and the Boxer and Tonko bills would allow the federal government unfettered discretion to exempt contractor employees who work in specialized professions. However, GAO’s report suggests that much stronger enforcement mechanisms may be necessary because contractors are likely to play name games, changing job titles arbitrarily in order to falsely claim exemptions.

“Contractors have always managed until today to avoid recorded votes on their lavish, taxpayer-subsidized compensation,” Cox said. “In the House, a Rules Committee subservient to contractors always prevented Representatives Tonko and Speier from offering reform amendments, including one to change the egregious provision in the recent FY14 House National Defense Authorization Act, which allows contractors to keep their ill-gotten gains. However, contractors don’t have that protection in the Senate, and now they face a formidable bipartisan coalition of Senators in Boxer, Manchin, and Grassley, who have the audacity to think that the richest federal contractors should be required to make the same sort of sacrifices American families have been making for years.”

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