I am currently a contractor working for a DOD contract company as an application developer. I will begin the process of converting over to a full time employee of the DOD company here soon. Recently my manager at the DOD company ask me what I am currently making pay wise so that he can make sure I get put in at the right pay grade. By me giving him that information did I lose my chance to negotiating my salary? Thank you!
Very likely the only "salary" information he knew about you was what he was paying your contracting company (as opposed to what they paid you). So yeah, you probably left money on the table here.
What to do at this point:
1) Ask for a bump up.
This is an excellent time, your salary is in flux. It's possible he's actually lowering the amount in his budget by making you perm anyway.
Probably speed is of the essence here rather than force of argument, i.e. if you can spend a minute or ten and gather proof you're underpaid do that, but don't take days.
Edit because of conversation and my reply was too long.
DWill23: do you feel like asking for a 15% bump is too much or should I let him be the judge on that?
Things get weird when we're talking conversion. I got a +45% raise one time and another I ended up with less money. The important numbers (which you might not have access to) are "your current Bill rate" and then "your employee cost" (your pay + taxes + benefits). Ideally you'd be trying to keep those numbers the same if it's in your benefit.
Failing that, if you're good with a bump of 15% sure, ask for that and/or lead with him figuring out what to offer. What you don't want to have happen is a currently-low level of pay being set in stone and then ending up with single digit percentage raises after that.