Kelley Urges Support for Contractor Cap, Sequestration-Ending Amendments

Press Release June 12, 2013

Washington, D.C.—The leader of the nation’s largest independent union of federal employees called on the House Rules Committee to make in order two proposed amendments to defense legislation. The first would cap at the level of the vice president’s pay the salary that government contactors can be reimbursed by taxpayers. The second would bring an end to sequestration through fiscal 2014.

In a letter yesterday to committee members, President Colleen M. Kelley of the National Treasury Employees Union (NTEU) urged favorable action on an amendment to be offered by Rep. Paul Tonko (D-N.Y.) that would cap the reimbursement for contractors at $230,700. At present, that amount is $763,000—but shortly will reach more than $950,000.

Kelley also shared her strong support for an amendment to be offered by Rep. Chris Van Hollen (D-Md.) that would replace the current costly and damaging sequester through fiscal 2014 with a balanced approach of spending cuts and new revenue.

The Rules Committee is scheduled to meet today to take up the fiscal 2014 National Defense Authorization Act.

On the Tonko amendment, Kelley wrote that “NTEU strongly believes that at a time when our economy is struggling, millions of Americans are unemployed and our national debt and deficit continue to grow, taxpayers should not fund salary reimbursements for private contractors that are more than three times higher than the salary of the Vice President of the United States.”

As for the Van Hollen amendment, President Kelley reiterated her often-expressed view that the cuts mandated by sequestration have adversely impacted the ability of federal agencies to accomplish their missions, and will result in unpaid furloughs at many agencies.

“Many of these agencies have seen their budgets reduced in recent years,” she wrote, adding that “without action by Congress to replace the sequester, their budgets will be further depleted, further impairing their ability to provide critical services the American people rely on.”

Along with Rep. Tonko, the NTEU leader has been one of the most vocal proponents of reining in the runaway contractor salary reimbursement obligation of taxpayers. While private companies are free to pay their employees whatever they choose, those doing business with the government are limited by law in the amount of reimbursement for salaries they can collect from taxpayers.

The formula was set in law in 1995 and is based on compensation for highly-paid chief executive officers and other senior executives in the private sector. Since its inception at in the mid-1990s, the cap will have risen by some 300 percent.

Recently, the White House has said it will call on Congress to abolish the current formula and instead tie the reimbursement cap to the president’s salary, while expanding its reach to all defense and civilian cost-reimbursement contracts. The president currently earns $400,000 per year.

As the largest independent federal union, NTEU represents 150,000 employees in 31 agencies and departments.

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