PSC: Contractor Compensation Cap Reduction Restricts Competition, Market Access

Arlington, VA., October 19, 2012 – The Professional Services Council issued the following statement today opposing section 842 of the Senate Armed Services Committee’s reported version of the National Defense Authorization Action for Fiscal Year 2013 (S. 3254) that would set a cap on allowable contractor compensation under Defense Department contracts at $230,700.

In response to yet another letter sent to the congressional armed services committees by several federal employee labor unions and others supporting the Senate committee’s proposal, and echoing PSC’s long-standing position, PSC President and CEO Stan Soloway said:

PSC opposes establishing an arbitrary contractor compensation reimbursement cap at $230,700. The reality is that this proposed limitation would deprive the government of access to critical skills, such as those currently in high demand to defend government networks from cyber intrusions. Existing limitations on compensation for federal employees are already hindering the government’s ability to recruit and retain highly skilled professionals. While it may seem that this proposal could address the issue, it fails to recognize that federal contractors have to compete for top talent with companies that operate exclusively in the commercial sector. PSC has long opposed this and other proposals that would drive critical skills away from the federal marketplace. PSC is no more supportive of caps on federal employee compensation than we are of this misguided proposal.

Also, while supporters of the provision repeatedly assert significant cost savings associated with the reduction, there has not been a comprehensive analysis of whether such savings would actually be realized. A far wiser path forward would focus on giving agencies more flexibility in how they hire, compensate, and develop different employee groups, rather than imposing sweeping pay and hiring freezes. 


About PSC: PSC has been the voice of the government professional and technical services industry for 40 years. 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.