In a recent article by Joe Jordan, Administrator of the Office of Federal Procurement Policy, the Obama Administration announced it will be sending to Congress a legislative proposal to cap reimbursement for government contractor executive compensation. Jordan wrote that under current law, contractors can seek reimbursement for executive salaries, bonuses and other compensation up to the level of the country’s top private sector CEOs. The cap for that reimbursement was raised to $693,000 for Fiscal Year 2010, to $763,000 in Fiscal Year 2011 “as a result of Congressional inaction,” and is scheduled to be raised again to more than $950,000 for Fiscal Year 2012.
The proposal seeks to cap the reimbursement for executive compensation to match the President’s salary – currently $400,000 – for all defense and civilian cost-reimbursement contracts. The proposal will have an exemption for circumstances where the agency determines additional payment is necessary to “ensure that it has access to specialized skills required to support mission requirements.” The article emphasizes that “nothing in the proposal limits the amount contractors pay their executives,” noting that the proposal only impacts the level of reimbursement that can be sought from the government. But isn’t reimbursement the most important point for many government contractors?
Stay tuned for further update as the legislation progresses through Congress.
Brian Stolarz is the attorney responsible for the content of this article.