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FAC Requires Reporting of Executive Compensation, Subcontracts



The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have issued Federal Acquisition Circular 2005-44, which contains one rule amending the Federal Acquisition Regulation. The rule addresses reporting executive compensation and first-tier subcontract awards. This interim rule is effective July 8, 2010. Comments on the rule, identified by FAR Case 2008-039, are due by September 7, 2010. The FAC also contains a Small Entity Compliance Guide. For the text of FAC 2005-44, see 70,002.123.

Implements Transparency


The interim rule implements Section 2 of the Federal Funding Accountability and Transparency Act of 2006 (PL 109-282, 31 USC 6101), as amended by Section 6202 of the Government Funding Transparency Act of 2008 (PL 110-252), which requires the Office of Management and Budget to establish a free public website containing full disclosure of all federal contract award information. The 2006 Transparency Act required reporting of subcontract awards by contractors and subcontractors. This Act's initial phase was conducted as a pilot program to test the collection and accessibility of the subcontract data. The FAR Councils issued a final rule in FAC 2005-20 to implement the pilot program. To minimize the burden on prime contractors and small businesses, the pilot program applied to contracts with a value greater than $500,000,000 and required the awardees to report all subcontract awards exceeding $1,000,000 to the Accountability and Transparency Act database at http://www.esrs.gov. The 2008 Transparency Act required the Director of OMB to include an additional reporting element, requiring contractors and subcontractors to disclose information on the names and total compensation of their five most highly compensated officers. Accordingly, this interim rule revises FAR Subpart 4.14 and the contract clause at FAR 52.204-10 to require contractors to report executive compensation and first-tier subcontractor awards on contracts expected to be $25,000 or more, except for classified contracts and contracts with individuals. This award data will be available to the public at http://www.usaspending.gov. The rule makes corresponding technical changes to FAR 12.503, FAR 42.1501, FAR 52.212-5, and FAR 52.213-4.

Phased-In Reporting


The reporting requirements for the award data will be phased in according to the schedule in FAR 52.204-10(e). Until September 30, 2010, any newly awarded subcontract must be reported if the prime contract award amount was $20,000,000 or more. From October 1, 2010, until February 28, 2011, any newly awarded subcontract must be reported if the prime contract award amount was $550,000 or more. The $25,000 threshold goes into effect starting March 1, 2011. By the end of the month following the month of contract award, and annually thereafter, the contractor must report the names and total compensation of each of the five most highly compensated executives for the contractor's preceding fiscal year. Unless otherwise directed by the contracting officer, by the end of the month following the month of award of a first-tier subcontract, and then annually, the contractor must report the names and total compensation of each of the five most highly compensated executives for the first-tier subcontractor's preceding fiscal year. There would be a $300,000 gross income exception for prime contractors and subcontractors. Also, data quality requirements would apply to agencies and contractors.

































 






 

 

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )

     
  
 

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