The Washington Post

Obama administration urges Congress to cap contractor pay at president’s salary

(Carolyn Kaster/AP) (Carolyn Kaster/AP)

The Obama administration on Thursday called for Congress to slow the growth of executive pay for government contractors, arguing that current compensation levels have grown excessive.

The White House budget office unveiled a legislative proposal that would prohibit the government from reimbursing private firms for salaries that exceed the president’s federal earnings, which are $400,000 per year, except when specialized skills are needed.

The plan would only affect payments that are made through so-called cost-reimbursement contracts. Under such agreements, which are often used when final costs are hard to predict, the government promises to pay whatever costs a company incurs as it completes a project — like a blank check with certain limits.

The administration proposal would not affect fixed-price contracts, meaning the salary cap would have no direct bearing on executive compensation in those cases.

Congress established a formula in 1995 for limiting compensation with cost-reimbursement contracts. The government currently works with a cap that is based on the nation’s top private-sector CEOs and other senior executives.

The White House budget office said the reimbursement level has “skyrocketed” by more than 300 percent since Congress established the existing formula during the Clinton administration.

Under current law, the cap had to be raised to $763,000 for fiscal year 2011. Officials said the level will soon have to be raised once again to nearly $1 million per year for each executive.

For more federal news, visit The Federal Eye, The Fed Page and Post Politics. To connect with Josh Hicks, follow his Twitter feed, friend his Facebook page or e-mail josh.hicks@washpost.comE-mail with news tips and other suggestions.

Josh Hicks covers Maryland politics and government. He previously anchored the Post’s Federal Eye blog, focusing on federal accountability and workforce issues.

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