PSC: GAO Compensation Study Insufficient; Fails to Provide Needed Clarity

Arlington, VA, June 19, 2013—The Professional Services Council (PSC) today strongly criticized a new Government Accountability Office (GAO) report that seems to indicate that arbitrary caps on allowable contractor employee compensation would only affect a few very large companies.  The report was the result of a directive contained in the fiscal year 2013 defense authorization bill.

PSC President and CEO Stan Soloway issued the following statement in response to the June 19 report:

The GAO report has some interesting data insofar as it relates to a relatively miniscule sample of the government contracting sector, but as a tool for policymaking it is sorely lacking in both context and depth.

The sample size of 27 companies is simply too limited and the analysis does not take into account how the proposed caps match up against the demands of the broader marketplace for talent, which is where companies, like the government, must be able to compete. In the end, that is the most important and relevant question. Unfortunately it remains unanswered. 

For those job categories where the proposed cap levels might be adequate today, there is no assessment in the report on the impacts of a fixed cap in later years. Moreover, the report’s “finding” that the current cap on executive compensation has risen faster than inflation or commercial salaries generally is itself questionable, since the formula upon which that cap is based is specifically predicated on commercial executive compensation.

In addition, the report makes the same cardinal error proponents of the salary caps often make: it conflates the terms “salary” and “compensation.” The president’s “salary” may only be $400,000, but if it were subjected to the same definition used in law to determine allowable contractor “compensation” (which includes benefits, bonuses, and other, immediately taxable elements), it would almost certainly be well into the millions of dollars, once one accounts for everything from food and transportation to housing and security, that is provided at taxpayer expense. As such, it’s not even a baseline worth measuring against.


About PSC: PSC is the voice of the government professional and technical services industry. PSC’s more than 360 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.