By: Scott H. Amey, J.D.
On the same day that the President spoke eloquently and fervently about the rising income inequality in the United States, the ever-contractor-friendly Office of Federal Procurement Policy (OFPP) in the Office of Management and Budget (OMB) increased the maximum amount of contractor compensation that can be charged to government contracts from a mere $763,029 per employee per year to what OFPP apparently considers a much more reasonable $952,308 per employee per year. This increase primarily affects the employees of the largest government contractors—most notably defense and information technology firms. So taxpayers are now on the hook for paying up to nearly $1 million for every one of these contractor executives or employees every year.
OMB tried to excuse its scheme to enrich the wealthiest contractor executives and employees by including shallow lamentations that on the surface appear to decry the need for such a large increase in allowable compensation (OFPP acted similarly when the cap was raised in 2012). The OFPP notice essentially cries that “Congress makes us do it,” but the truth is, raising the contractor compensation cap is a discretionary act, which OFPP has managed to turn into a nearly annual contractor feeding frenzy—this year it becomes a massive holiday bonus for contractors, all while agencies are being asked to do more with less.
To add a final insult to injury, OFPP made the change retroactive to January 1, 2012, for most firms.
So contractors, enjoy your yearly increase in taxpayer-funded riches, courtesy of OFPP. We can only hope that one day someone in the Administration takes a close look at what goes on in that office, and turns the place into a legitimate public policy shop rather than another lobbying outfit for contractors on the public dole. I guess that will only happen when Congress—the Senate in particular—requires it to do so.