The Federal Times has run a new lead article, Government to Pay Contractor Executives More, explaining the increase in what government contractors can expect their executives to receive in compensation. It casts a little doubt on the politicians' mantra about how much money privatization and outsourcing will save, no? Here's an excerpt (but the entire article is worth reading):
The government is raising the cap on what it pays contractors' top five executives to $723,029, a 10 percent increase, federal procurement officials announced Monday. The cap, up from $693,951, applies to contract costs for compensation — including wages, salary, bonuses and deferred compensation — incurred after Jan. 1, 2011, according to a notice published in the Federal Register. It applies only to a contractor's top five executives; other contractor employees can earn more. The cap is based on a federal executive compensation formula that pleases neither the administration nor federal employee unions.
Here is the union perspective (good point, I thought):
"Current federal employees have had their own salaries frozen for two years and new employees will have to pay four times as much in retirement contributions, saving the government $75 billion. Yet nothing is being done to trim out-of-control contractor spending," said John Gage, national president of the American Federation of Government Employees.
And here is the exec's perspective (a little harder to sympathize):
Industry advocates oppose efforts to tie contractor compensation to federal employee salaries. That would hurt contractors' ability to find talent in the competitive private sector, much like low federal pay has been a barrier to attracting and retaining highly skilled federal workers, Stan Soloway, president of the Professional Services Council trade association, said in a statement.
But wait, I thought privatization was supposed to be cheaper than having government workers do the same task. Why is it a crisis that the contractor might have to work for as low a wage as government workers?
Here's Obama's Appointee (being sensible, I think, but the point made is disturbing):
"This rate of growth in the cap (both from 1995 onward, and in this most recent year) has far outpaced the rate of inflation, the rate of growth of private-sector salaries generally, and the rate of growth of federal salaries — forcing our taxpayers to reimburse contractors for levels of executive compensation that cannot be justified for federal contract work," Lesley Field, acting administrator of the Office of Federal Procurement Policy, said in the notice.