PSC Opposes White House Executive Compensation Cap Reduction

Arlington, Va., Sept. 19, 2011—The Professional Services Council opposes today’s White House proposal to drastically reduce the cap on compensation reimbursed to federal contractor executives, which would expand the underpayment of government senior executives to their private sector partners.

In a statement, PSC President and CEO Stan Soloway said:

We strongly oppose the executive compensation cap proposal since it inappropriately ties company executive compensation to irrelevant government executive compensation levels. In fact, the proposed compensation cap is not even the ceiling amount paid to government employees and has been consistently documented as being far lower than appropriate comparable compensation in the private sector. Relying solely on the government scale would place both government agencies and private sector companies at a significant disadvantage in the competition for talent.

Moreover, for more than 30 years, the current executive compensation benchmark formula for government contractors has been based on the compensation paid to executives at companies of similar sizes. Additionally, long-standing government allowable cost regulations have limited the amount of executive compensation that can be charged to government contracts to that annual benchmark amount. Before arbitrarily capping the allowable cost amount, the government and industry should work together again on the long-overdue assessment of the current benchmark formula and update the benchmark formula as necessary. 

If companies and government agencies are to attract the best and brightest executives, which would certainly be in the best interests of both sectors, then they need to be able to be competitive in the marketplace.  Hence, we continue to believe the executive compensation cap should remain tied to the commercial, not the government, marketplace.

About PSC: PSC is the voice of the government professional and technical services industry. PSC’s nearly 350 member companies represent small, medium, and large businesses that provide federal agencies with services of all kinds, including information technology, engineering, logistics, facilities management, operations and maintenance, consulting, international development, scientific, social, environmental services, and more. Together, the trade association’s members employ hundreds of thousands of Americans in all 50 states. Follow PSC on Twitter @PSCSpeaks and @StanSoloway.