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Top U.S. lawmaker looks to rein in military contractors' pay

By Patricia Zengerle

WASHINGTON (Reuters) - A powerful U.S. lawmaker on Monday included a provision seeking to rein in the amount corporate executives can make from military contracts in the fiscal 2014 defense spending bill that Congress is expected to finalize in the coming weeks.

Republican U.S. Representative Howard McKeon of California, chairman of the House Armed Services Committee, included the plan in his version of the fiscal 2014 defense authorization act. The full committee will review the act on Wednesday.

McKeon's plan contains a provision that would prevent the largest defense contractors from including any compensation for their five top executives in their contracts.

It also would cap at $763,000 a year the amount that other employees could make in a contract, and tie any increase in that amount to growth in the economy, pulling back from current law, which would have allowed it to rise to $900,000 next year.

"The real issue here is getting the cutoff point back to a sane point," a senior committee aide told reporters before the plan was released.

A spokesman for the Aerospace Industries Association, the defense industry's largest trade group, said the proposal meant companies risked losing talent to other industries, including the pharmaceutical and high-tech sectors.

"If we cannot offer compensation levels to hire the exceptional people, we could find them going to work elsewhere and not available to build our cyber security systems, our aerospace systems, that we need to keep our nation, and our military personnel with the best defenses in the world," AIA's Chip Sheller said in an emailed statement.

The top executives at big defense companies, such as Lockheed Martin Corp, Boeing Co, Northrop Grumman Corp, and General Dynamics Co, can make $15 million to $32 million in total compensation.

Officials at a number of defense contractors, including Boeing, Raytheon Co and Northrop Grumman, declined comment.

Federal spending cuts in other areas - including reductions in defense spending and furloughs and pay freezes for government employees - have fueled the push for controls on the amount that executives at private companies make under military contracts.

Aides said the measure had bipartisan support, and some version was expected to pass both the Republican-controlled House and the Democratic-led Senate, as they consider the final version of the bill.

The White House also supports more control on contractors' pay. President Barack Obama's 2014 budget asks Congress to set a $400,000 annual limit on the amount of executive pay the government will reimburse federal contractors.

(Additional reporting by Andrea Shalal-Esa; Editing by Ros Krasny and Peter Cooney)

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