Union says Congress can save money by lowering amount paid for contractor salaries

Joe Davidson
Columnist January 29, 2013

As policymakers prepare for the across-the-board budget cuts known as sequestration, the largest federal employee union is taking the opportunity to press a pet peeve — large payments to federal contractors.

Labor leaders, including those with the American Federation of Government Employees (AFGE), have long pushed Congress to lower payments for contractor salaries. The cap on Defense Department contractor pay now stands at $763,000, which is much more than President Obama makes.

Joe Davidson writes the Federal Diary, a column about the federal workplace that celebrated its 80th birthday in November 2012. View Archive

AFGE said billions of dollars could be saved each year if the cap were set at $200,000, as the Obama administration has proposed. A cap would not prevent contractors from paying their employees more, but it would limit the amount the government provides for contractor salaries.

“Think about it,” said AFGE President J. David Cox. Billions of dollars could be cut “from federal spending over the next decade with no impact on government services, simply by subsidizing these almost unimaginably wealthy contractor employees at a slightly less generous level.”

Stan Soloway, president of the Professional Services Council, which represents contractors, said the cap was put in place for two reasons: to “ensure companies can attract top executive talent but also ensure the government is not subsidizing egregious executive salaries.”

The role of stewardship in the Merit System Principles.

Lowering the cap, he added, could “deny both the contractor and the government access to the talent it needs.”

The Obama administration also has pushed Congress to lower the amount paid to contractors. A year ago, a blog post from Leslie Field, acting administrator of the Office of Management and Budget’s office of federal procurement policy, said Obama wants “Congress to scrap an outdated law that requires taxpayers to foot the bill for excessive payments to CEOs and other senior executives of companies that contract with the Government.”

Because of that law, Field said taxpayers “have their hard-earned resources spent reimbursing contractor executives far in excess of what can be justified.”

In December, Congress considered, but did not approve a proposal to lower the cap. Instead, Congress told the Government Accountability Office to study the effect of reducing contractor compensation.

“Congress has had no problem freezing wages for one group of federal workers, yet many lawmakers have turned a blind eye to the outrageous salaries earned by another group,” Cox said. “Both workforces are paid for by American taxpayers. What’s the difference?”

Poll: Workers’ opinions

With the federal government going through an extended period of shrinking budgets, government managers will have to become better stewards of the workforce.

That’s the message from a Merit Systems Protection Board (MSPB) report issued Tuesday.

The report is based on a survey of more than 42,000 federal workers. Although done in 2010, the survey has lessons that are relevant today as supervisors increasingly try to figure out how to get the job done with fewer resources.

Having few resources, namely staffers, is the reason the report was issued so long after the survey was done, according to MSBP.

“If agencies find they can no longer ‘do more with less,’ they may need to make hard decisions about what they can do with the resources they have,” says the report on “Managing Public Employees in the Public Interest.”

Dealing with workers who are not getting the job done can be a difficult task for managers. Federal managers are not very good at that, according to the surveyed employees. The managers also don’t fare well, in the eyes of employees, when it comes to making hard decisions about using their diminished resources.

Less than a quarter of federal employees said their agencies deal with poor performers effectively. Only 29 percent said their organizations eliminate unnecessary functions and positions.

On the positive side, agencies rate better, although not great, on standards of conduct, training and guarding the public interest. Sixty-four percent of employees said their agencies hold employees to high standards of conduct. Sixty percent said they get the necessary training and their agencies put the public interest first.

“Employees are being asked to make personal and professional sacrifices and they need to feel confident that leaders are using limited resources wisely,” MSPB Chairwoman Susan Tsui Grundmann said in a news release. “That requires agency leaders to make tough choices about the programs, functions or positions that they can support.”

Previous columns by Joe Davidson are available at wapo.st/JoeDavidson.

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