Tester: Cut tax-funded pay for contractor executives

Senator calls for lower salary cap to save taxpayer money

(U.S. SENATE) – Senator Jon Tester is calling on Senate leaders to cut the amount of taxpayer dollars that go to executives of government contractors.

The federal government limits the amount of a government contract that can be used to pay top executives. But that cap has more than tripled since 1995, far outpacing the rate of inflation. Reports indicate that it was recently increased to allow executives to be paid up to nearly $800,000 in taxpayer dollars – almost twice the salary of the President of the United States.

Tester, who recently cut the salary of the Postmaster General, says that current economic conditions should make executives more accountable to taxpayers – not less.

“At a time when our economy is rebuilding and Americans are still looking for work, it is imperative that we make responsible decisions about the use of every taxpayer dollar,” Tester said. “We need to fix this outdated formula.”

The salary cap limits the taxpayer contribution for a firm’s top five officials. 

Tester noted that lowering the cap will not hurt a company’s quality of work or its ability to offer competitive salaries, as it only limits the share of taxpayer dollars going toward an executive’s salary.

The salary cap is set by the Office of Federal Procurement Policy, which is guided by Congress.

Tester’s letter to Senator Dick Durbin (D-Ill.) and Senator Jerry Moran (R-Kan.), the leaders of the Senate’s Financial Services Subcommittee, is available below and online HERE.


May 15, 2012

The Honorable Richard J. Durbin             The Honorable Jerry Moran
Chairman                                                          Ranking Member
Subcommittee on Financial Services Subcommittee on Financial Services
133 Dirksen Senate Office Building     125 Hart Senate Office Building
Washington, D.C. 20510                            Washington, D.C. 20510

Dear Chairman Durbin and Ranking Member Moran:

As you prepare the Fiscal Year 2013 Financial Services and General Government Appropriations bill, I respectfully request that you include language to set the Executive Compensation Benchmark at a reasonable level appropriate to our current fiscal climate. Recent reports of a $70,000 increase to the cap coupled with the two-year freeze to federal employee salaries make it clear we need to fix this outdated formula.

As you know, the Office of Federal Procurement Policy, acting under congressional mandate, raised the maximum pay of the top five executives at eligible private companies to $763,029, nearly twice the salary of the President of the United States. This cap has more than tripled since 1995 and has far outpaced the rate of inflation and the growth of federal salaries. At a time when our economy is struggling, millions of Americans are unemployed, and our national debt continues to grow, it is imperative that we rework the Executive Compensation Benchmark formula to bring it in line with other federal employees’ pay.

I believe we can lower this cap without compromising the quality of the work provided by these government contractors. The benchmark is the amount that taxpayers contribute for the salary of the executives so reducing the cap would not keep these private companies from offering competitive salaries.

Thank you for your work on this issue and for all you do in balancing the many important priorities while crafting the Financial Services and General Government Appropriations bill. I welcome the opportunity to work with you on potential solutions to address this important issue.
Jon Tester