Bill Would Cap Contractor Salaries at $400k

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By on March 16, 2012 in Current Events with 21 Comments

Senators Barbara Boxer (D-CA) and Chuck Grassley (R-IA) have introduced legislation that would cap the reimbursement limit of government contractors’ salaries to the same as the President’s salary: $400,000.

The legislation is titled the Commonsense Contractor Compensation Act of 2012 and aims to save taxpayers money in that it touts that taxpayers are the ones who are ultimately reimbursing the contractor salaries. Currently government contractors can charge taxpayers $693,951 for the salaries of their top five employees, based on a federal executive compensation benchmark. Employees of government contractors outside of the top five can and do earn taxpayer-funded amounts in excess of the current benchmark.

The new bill would build on a previous measure by Senators Boxer and Grassley – which was passed as part of the National Defense Authorization Act in December – that set limits on taxpayer-funded salaries for defense contractor employees. It extended the $693,951 salary cap to all defense contractor employees, not just the top five.

The salary benchmark has nearly doubled in the last twelve years. From 1998 to 2010 the benchmark has grown 53 percent faster than the rate of inflation. According to a study from New York University, in 2005, the most recent year for which statistics have been compiled, there were 7.6 million government contractors, including 5.2 million defense contractors.

Speaking about the legislation, Grassley said, “The direct taxpayer-funded salaries of government contractors clearly need to be contained, and this legislation is designed to do so. There’s no justification for these payments to be higher than the salary of the President of the United States.”

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About the Author

Ian Smith is one of the co-founders of He enjoys writing about current topics that affect the federal workforce.