PRESS RELEASE
-For Immediate Release-
October 18, 2012

Contact: Brian Gumm, (202) 683-4812, bgumm@ombwatch.org

Groups Call on Congress to Rein in Excessive Compensation
of Defense Department Contractors

WASHINGTON, Oct. 18, 2012—Today, a group of public interest organizations and unions wrote to the House and Senate Armed Services Committees, urging them to rein in excessive government compensation of Defense Department contractors. The groups strongly support an amendment to the National Defense Authorization Act of 2013 (S. 3254) that would lower the cap on such compensation.

The amendment, sponsored by Sen. Joe Manchin (D-WV), would decrease the amount contractors are allowed to charge the government for maximum employee compensation, from $763,029 to $230,700. The organizations asserted that it is fiscally irresponsible to allow private contractors to charge such exorbitant rates to the government, especially since federal budget cuts loom on the horizon.

Katherine McFate, President and CEO of OMB Watch, said, "Lowering the cap could save $5 billion dollars a year. This is money the nation could use for investments in infrastructure, job training, education, and more to help the middle class."

Since 1998, the compensation cap has more than doubled, and over the past dozen years, the increase in the cap has outpaced inflation by 53 percent. At the same time, an enlisted soldier's starting pay is under $20,000 a year, and an average American worker earns less than $43,000 annually.

"Taxpayers shouldn't be paying for contractors' multi-million dollar executive salaries when Americans are having a harder and harder time making ends meet," said Donald Cohen, Executive Director of In The Public Interest.

Christine L. Owens, Executive Director of the National Employment Law Project, concurred, saying, "While middle-class paychecks have been stagnant for decades, and roughly 40 percent of federal contract workers are struggling to get by on less than a living wage, it is a simple matter of fairness that taxpayers should not be expected to foot the bill for exorbitant CEO salaries for private contractors."

Ross Eisenbrey, Vice President of the Economic Policy Institute, concluded, "The Manchin amendment is an opportunity for members of Congress who complain about waste and abuse to do something real about it. It would save billions of dollars in wasteful, excessive executive compensation."

The full text of the letter is available at http://www.ombwatch.org/files/budget/joint_letter_on_contractor_compensation.pdf.

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