more, drawing from its general pool of profits, including profits gleaned from
In January 2012, the White House wrote that "Congress put a cap on how much taxpayers would reimburse these executives in the 1990s, but that cap was tied to pay levels of the nation's top private-sector CEOs and other senior executives. As a result of skyrocketing CEO pay, the tab for taxpayers has soared to unreasonable heights in the intervening years."
"Just as the government must be prudent in paying its employees, it must also not overpay contractors," it said. But shortly afterward, with the White House faulting Congress, the cap was raised from $693,951.
Two years ago, the cap was applied to all employees of defense contractors, not just the top five employees, and the budget proposed by the president this month says the administration is redoubling its efforts to lower the cap to the level of the vice president's salary, about $250,000, and to apply it to all employees of non-defense contractors as well.
Stan Soloway of the Professional Services Council, a contractors group, said it is the latter that causes them consternation.
"The issue we're most concerned about is expanding it to include all employees, because if I'm required to get really high-end technology or analytic skills, I can't get them on a government contract."
The limits on defense contractor pay don't have an effect because the cap is so high, but lowering the limits to $250,000 would have a visible effect, he said.
Mr. Amey said the issue is coming to a head because the cap has nearly doubled in recent years and because for public employees, "we're talking about reductions, furloughs, and everything else. Meanwhile if trends follow, the 2013 compensation cap is going to be higher than $800,000."
The Eyak Corp., an Alaska Native business that uses its minority status to get contracts and is the sole bidder for most, paid its top five executives nearly $4 million last year, including $1.1 million to Keith Gordaoff.
Eyak's Brennan Cain said by email that companies must be able to "pay compensation they deem necessary to competitively retain executive talent against their commercial counterparts." He said the proposed reforms mean little to his company because it pays its executives out of corporate profits and does not bill the government directly at all for executive salaries.
"The compensation limits being discussed relate only to cost reimbursement contracts," he said, not the contracts with which his company deals, which are "firm-fixed-priced revenues which are subject to the government's price reasonableness analyses."
The proposed cap is calibrated to major publicly traded companies with at least $50 million in annual revenue, but advocates such as Mr. Amey point out that many government contractors are much smaller.
Harper Construction Co. of San Diego has 120 employees and paid its top executives $3.5 million last year, including $1.1 million for David Golden. No companies other than Eyak would return calls about their executives' compensation, despite the reliance on taxpayer funds.
Truland Systems Corp., an electrical contractor that said last year it had annual revenue of $56 million and has received roughly $223 million in federal contracts since 2007, including work for the General Services Administration and the Department of Homeland Security, paid its top five executives $11 million, including $5.9 million to Robert Truland. For most of its contracts, it was the only bidder.
Propulsion Controls Engineering, another firm that gets more than 80 percent of its revenue from the government, had as few as 120 employees and revenue of $27 million in 2012, yet paid its top five executives nearly $8 million, including $3.6 million to David P. Clapp.
(c)2013 The Washington Times (Washington, DC)
Distributed by MCT Information Services
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