March 16, 2012
Tim Kauffman/Enid Doggett

Union Applauds Lawmakers for Proposing Sharp Reduction in Taxpayer-Funded Contractor Compensation

WASHINGTON – The nation’s largest federal employee union today commended a bipartisan group of senators for introducing legislation that would sharply lower the compensation that all federal contractors can charge taxpayers.

The American Federation of Government Employees for years has been calling attention to runaway contractor payments. Government contractors currently can charge taxpayers $693,951 a year for each of their five most highly paid executives, a benchmark that has more than doubled during the past 12 years. Other contractor employees are not subject to the cap and can earn far larger salaries that are subsidized by taxpayers.

Today a bipartisan group of senators introduced a bill that would cap the reimbursement rate at the president’s salary, currently $400,000, and apply it to all contractor employees. Lowering the cap would not limit how much these contractor employees can earn, only how much can be charged to the government.

“Current federal employees have had their own salaries frozen for two years and new employees will have to pay four times as much in retirement contributions, saving the government $75 billion. Yet nothing is being done to trim out-of-control contractor spending,” AFGE National President John Gage said. “Taxpayers should not be on the hook for these outrageous salaries that no one in government earns – not federal employees, not members of Congress and not even the President of the United States.”

The bill was introduced by Sens. Barbara Boxer, D-Calif., and Charles Grassley, R-Iowa.

A similar bill introduced in the House by Rep. Paul Tonko, D-N.Y., would lower the cap to $200,000 and apply it to all contractors.

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