Bloomberg Government: Measure to Dock Federal Executive Bonuses Weakened by U.S. Panel
By Nick Taborek
May 11, 2012

(Bloomberg) -- A U.S. congressional committee weakened a proposal that would have automatically eliminated the bonuses of top federal executives whose agencies missed targets for awarding contracts to small businesses.
 
The bonus-busting measure was proposed in January by Representative Sam Graves, a Missouri Republican who asked that it be incorporated in the House defense authorization bill.
 
The $554 billion military package approved yesterday by the House Armed Services Committee excluded the penalty. It instead incorporated a measure urging agencies to award 25 percent of all direct contracts to small companies, an increase from 23 percent. Executives would be evaluated based on their efforts to meet the target.
 
“We compromised on how to hold senior executives accountable,” Graves, chairman of the House Small Business Committee, said in an e-mailed statement.
 
The defense authorization bill requires that senior executives involved in acquisition be evaluated partly on how well they communicate “the importance of achieving the agency’s small business contracting goals.”
 
That language is “just as vague as everything else when it comes to small business programs,” said Brian Reeder, a spokesman for the Petaluma, California-based American Small Business League.
 
Missed Goals
 
Reeder said he was disappointed the defense panel didn’t include the bonus provision.
 
“We thought that docking bonuses for executives in the government was a perfect way to get them to really hit their goal,” he said in a telephone interview. “The problem with small business programs is no one is really held accountable for their goals and that’s why they don’t work.”
 
The U.S. government has missed its small business contracting goal each year for at least the past decade. Eleven of 24 agencies didn’t meet their goals in fiscal 2010, according to the Small Business Administration.
 
The Professional Services Council, an Arlington, Virginia-based group that represents about 350 contractors, said in a March letter that it opposed the bonus-eliminating bill.
 
Graves’ bill would prevent all senior government executives, even those who aren’t involved in acquisition, from receiving bonuses the year after their agencies miss targets for small-business contracting.
 
“It would be the equivalent of you not getting a bonus because one of your other colleagues wasn’t doing a very good job,” Roger Jordan, vice president of government relations at the Professional Services Council, said in a March interview.
 
Top Executives
 
The group also opposed raising the small business goal because it said the government doesn’t yet have a clear picture of how much work small businesses actually do for federal agencies, the organization said in its letter.
 
There were 7,893 senior executives in the federal government as of December 2010, according to a Congressional Research Service report published in April 2011. They include chief information officers and strategic advisers for intelligence and space programs.
 
The executives, who act as links between political appointees who lead federal agencies and the civil servants who staff them, earn between $119,554 and $179,700 a year and may be eligible for performance bonuses of as much as 20 percent of their salary.
 
A top-earning executive would be eligible for performance pay as high as $35,940. The maximum annual amount an executive is permitted to receive, including special recognition such as a Presidential award, is $230,700, according to the CRS report.
 
The full House will consider the defense legislation as early as next week.
 
The defense authorization bill is H.R. 4310. Graves’ bill is H.R. 3850.