The Senate Homeland Security and Governmental Affairs Committee is recommending that the deficit supercommittee extend the pay freeze on federal employees for an additional year and raise their pension contribution.

In a joint letter, Chairman Joe Lieberman (I-Conn.) and ranking member Susan Collins (R-Maine) write that federal employees "must sacrifice as part of an urgent need to curtail the cost of the federal government and reduce the national debt."

"As a strong supporter of our federal workforce, we say this with regret, because we are asking many dedicated, hard-working, and patriotic public servants to pay a price for fiscal and economic conditions for which they are not responsible," they write. "But people across the country are struggling, most especially those who are suffering from historic levels of unemployment, and all Americans, including those of us in the public sector, must help get our country out of the hole we are in."

The Joint Select Committee on Deficit Reduction, or "supercommittee," is tasked with finding at least $1.3 trillion in savings by the end of November, thanks to Congress' August deal to raise the debt ceiling. If the panel of 12 lawmakers doesn't come to an agreement -- or Congress fails to approve them -- agencies face automatic across-the-board cuts.

Federal employees are worried that the panel's recommendations will include cuts to their benefits, and union officials have argued that they have already sacrificed enough.

The Office of Management and Budget is directing agencies to cut between 5 and 10 percent from their fiscal 2013 budget requests, a move that may lead to a diminished workforce. And the current two-year pay freeze -- implemented by President Obama -- will save an estimated $60 billion.

But Lieberman and Collins assert that extending the pay freeze for one more year will potentially save $32 billion "without significant disruption to agency mission and activities." That freeze should also be extended to the legislative branch, they write.

The senators also call President Obama's proposal to raise employees' pension contribution by 1.2 percent "reasonable." Changing the retirement system to no longer give employees credit for unused sick leave may also be necessary, they write; the Congressional Budget Office has estimated that the cost of the benefit is $561 million over the next decade.

The letter urges careful consideration of the "High-5" proposal. Supported by both Republicans and Democrats, it would base retirement payouts on the highest five years of an employee's salary, rather than the current three years. Any change, they write, "must be structured in a way to limit the negative effects on those closest to retirement who would be most affected by such a change."

Lieberman and Collins also warn against across-the-board cuts to the federal workforce, describing such proposals as "unwise."

"This approach could force agencies to rely on a less efficient mix of personnel, including more expensive contract personnel, and have the counterproductive effect of actually raising the cost of achieving the agency's mission," they write. "Generally, the most effective way of reducing the cost of government programs is not by imposing rigid hiring restrictions, but by capping appropriations levels and reducing missions."

Carper's IT proposal

The letter comes one day after Democrats on the House Oversight and Government Reform Committee asked the supercommittee to target federal contractors rather than government employees (E&ENews PM, Oct. 13).

The Senate oversight committee similarly recommends capping the federal reimbursement for the pay of all federal contractor executives, who can now charge the government almost $700,000 annually.

Sen. Tom Carper (D-Del.), who heads the Homeland Security and Governmental Affairs subpanel on federal financial management, also released his proposal to the supercommittee today. In it, he offers several ideas for cutting federal waste, including better management of IT spending and contractor payments.

The government's $80 billion IT portfolio, he wrote, is "often so poorly managed that a significant portion of these expenditures are lost to waste and inefficiency." To cut down on duplicative websites and failed IT systems, Carper suggests greater transparency and legislation that holds the Office of Management and Budget responsible for ensuring success.

Improper payments are another rampant problem: OMB estimates that federal agencies wasted $125 billion through such payments in 2010. The "Improper Payments Elimination and Recovery Improvement Act" -- sponsored by Carper and Collins -- mandates the establishment of a governmentwide "do not pay list."