Congress To Expand Coverage of Contractor Pay Cap The $694,000 cap on allowable contractor compensation would remain unchanged under the 2012 Defense Authorization bill now awaiting final votes in Congress. But House and Senate conferees agreed to extend the cap to cover all contractor employees, not just the five highest-paid executives, according to a summary by the Senate Armed Services Committee. The Senate had voted for a $400,000 cap, while President Obama proposed $200,000, equal to the salaries of cabinet members. The House and Senate were expected to vote on the defense bill before Congress’s scheduled holiday break begins on Dec. 16. With a possible government shutdown looming, leaders of both houses were also working to adopt a spending bill to fund federal programs for the rest of the fiscal year. The defense bill freezes 2012 DOD spending on contract services at 2010 levels It includes provisions to increase maximum grants under the Small Business Innovation Research Program. (See separate story.) The government’s compensation cap is now determined via a formula based on executive compensation in large corporations. Industry groups had opposed a lower cap, saying it would hinder recruiting of top talent. The cap affects only the amount the government will reimburse on cost-based contracts; contractors are free to pay as much as they choose. The authorization bill also blunts another idea floated by the Obama administration and opposed by industry. It prohibits the Defense Department from requiring contractors to disclose their political contributions. Last spring the administration said it was considering requiring such disclosure.