Contractor pay capped at $200,000? It may be a reality if some members of congress get their way.
A salary of $200,000 may be a lot of money, especially in today’s economy, but that doesn’t make a cap the right thing to do.
Several amendments on Capitol Hill have called for capping taxpayer reimbursement of contractor salaries at $200,000 per year. An op-ed from the American Federation of Government Employees criticized that the amendments hadn’t been considered, calling it a “modest restraint on contractor compensation.”
My question is what happened to free market capitalism where supply and demand drives the cost of labor? If one contractor wants to pay their people working on a government contract $500,000 per year then they have to pass along the bill rates to the government to support that. If another contractor can pay their people doing the same job $175,000 per year, they’re more likely to have a lower cost in their proposal, and will therefore be more likely to win the contract.
If the government acquisition and contracting model functions correctly, there is no reason to put a limit on salaries. Competition and market will drive and determine bill rates and salaries, and contractors who overpay their employees won’t be able to sustain that business model.
Contractors perform functions (many of them critical and dangerous) for our government that it is unable to perform for itself. Recently I was approached with the opportunity to go into Afghanistan and do some work for four months, because there were not enough Department of the Army civilians interested in taking on the dangerous assignment. Contractors are compensated for taking on those risks, and many times a higher salary is a part of that compensation.
If the government determines it doesn’t have the internal capabilities to perform a job then they must be willing to pay a market rate for a contractor to do that work. Salaries will be based on the number of companies with qualified individuals to perform the work, and the more companies (and more skilled applicants) able to do the job, the lower those salaries will be. If the government needs a specific, niche, highly skilled and cleared contractor workforce (as is often the case), then they will likely need to pay a higher salary for those individuals. The job needs to be done, and if the government wants it done bad enough then they must be willing to pay for it.
It is true that government employees sometimes make less than contractors, but government employees also generally have more benefits and greater job security. Contractors work at the whim and need of the government. If the government doesn’t need a high-paid contractor to do that job, then they can eliminate the contract.
The bottom line is the federal government has many other places to cut expenditures in the budget before they need to worry about capping contractor salaries. Let the market, and the acquisition process, determine the salary rate.
Do you think contractor caps are called for? Why or why not?
Troy is an Army brat and the father of combat medic. He is also a retired Infantry Senior NCO with multiple combat tours, in addition to several stateside deployments. Troy retired from the Army not long after switching careers from the Information Technology Consulting industry to becoming a Contractor for the US Army. He serves on several task-forces and enjoys still visiting and working with soldiers every day. Troy is also a recognized and multiple-award winning military blogger who writes at www.bouhammer.com, and a familiar person in many social media circles.