81 FR 13833 - Office of Federal Procurement Policy; Determination of Statutory Formula Benchmark Compensation Amount for Certain Executives and Contractor Employees
OFFICE OF MANAGEMENT AND BUDGET Federal Register Volume 81, Issue 50 (March 15, 2016)
Federal Register Volume 81, Issue 50 (March 15, 2016)
| Page Range | 13833-13834 | |
| FR Document | 2016-05766 |
[Federal Register Volume 81, Number 50 (Tuesday, March 15, 2016)] [Notices] [Pages 13833-13834] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-05766] ======================================================================= ----------------------------------------------------------------------- OFFICE OF MANAGEMENT AND BUDGET Office of Federal Procurement Policy; Determination of Statutory Formula Benchmark Compensation Amount for Certain Executives and Contractor Employees AGENCY: Office of Federal Procurement Policy, Office of Management and Budget. ACTION: Notice. ----------------------------------------------------------------------- SUMMARY: The Office of Management and Budget is publishing the attached memorandum to the Heads of Executive Departments and Agencies announcing that the ``benchmark compensation amount'' for certain executives and contractor employees in terms of costs allowable under Federal Government covered contracts during the contractor's fiscal years 2013 and 2014 is $980,796 and $1,144,888, respectively. These statutory formula cap determinations are required under Section 39 of the Office of Federal Procurement Policy Act, as amended (41 U.S.C. 1127). These benchmark compensation amounts apply to both defense and civilian agencies for their respective applicable periods, but only for contracts awarded before June 24, 2014. FOR FURTHER INFORMATION CONTACT: Raymond Wong, Office of Federal Procurement Policy, at 202-395-6805. Anne E. Rung, Administrator, Office of Federal Procurement Policy. MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES FROM: Anne E. Rung, Administrator, Office of Federal Procurement Policy. SUBJECT: Determination of the Statutory Formula Benchmark Compensation Amount for Fiscal Years 2013 and 2014 for Certain Executives and Contractor Employees, Pursuant to Section 39 of the Office of Federal Procurement Policy Act, as amended (41 U.S.C. 1127) This memorandum sets forth the benchmark compensation amount for certain employees of Federal Government contractors as required by Section 39 of the Office of Federal Procurement Policy (OFPP) Act, as amended (41 U.S.C. 1127, otherwise known as the statutory formula cap) for the cost allowability purposes of section 4304(a)(16) of title 41 and section 2324(e)(1)(P) of title 10 for covered contracts awarded before June 24, 2014. For covered contracts awarded on or after June 24, 2014, a new cap applies pursuant to section 702 of the Bipartisan Budget Act of 2013 (BBA), Pub. L. 113-67, December 26, 2013. For contracts awarded prior to June 24, 2014, section 1127 limits the reimbursement or allowability of compensation costs under Federal Government contracts as implemented at Federal Acquisition Regulation (FAR) 31.205-6(p). In less technical terms, the statutory formula cap places a ceiling on the total annual compensation costs the Federal Government will reimburse a contractor for the compensation package the contractor provides to certain of its employees for work done pursuant to certain Federal Government covered contracts. This statutory formula cap applies to limit the reimbursement of the compensation costs of certain contractor senior executives on covered contracts with civilian and defense agencies. Additionally, as a result of changes made by section 803 of the National Defense Authorization Act for FY 2012, Public Law 112-81, December 31, 2011, for covered contracts with defense agencies (i.e., DOD, NASA and Coast Guard), the statutory formula cap was expanded to cover all other contractor employees and applies to the compensation costs incurred after [[Page 13834]] December 31, 2011. With both civilian and defense agencies, the statutory formula cap applies only when the contractor is performing covered contracts that are of either a cost-reimbursable nature or other cost-based nature. Section 1127 sets out a formula for determining the cap amount. Specifically, the statutory formula cap amount is set at the median (50th percentile) amount of compensation provided, over the most recent year for which data is available, to the five most highly compensated employees in management positions at each home office and each segment of all publicly-owned U.S. companies with annual sales over $50 million. The determination is based on analysis of data made available by the Securities and Exchange Commission. Compensation means the total amount of wages, salaries, bonuses, restricted stock, deferred and performance incentive compensation, and other compensation for the year, whether paid, earned, or otherwise accruing, as recorded in the employer's cost accounting records for the year. Since enactment of the statutory formula in 1998, the cap has increased more than 300%. In 2010, the President began calling on Congress to replace the current statutory formula cap with a lower, more sensible limit that is on par with what the Government pays its own executives and employees. In December 2013, with the Administration's strong support, Congress reformed the ceiling on the reimbursement of contractor employee compensation. Section 702 of the BBA replaced section 1127 with a new cap of $487,000 to be adjusted annually to reflect the change in the Employment Cost Index for all workers as calculated by the Bureau of Labor Statistics (otherwise known as the BBA cap). The new $487,000 BBA cap provides a reasonable level of compensation for high value Federal contractor employees while ensuring taxpayers are not saddled with paying excessive compensation costs. On June 24, 2014, the Federal Acquisition Regulatory Council issued an interim rule to amend the Federal Acquisition Regulation to reflect the new BBA cap and issuance of a final rule is pending. However, the new $487,000 BBA cap applies on a prospective basis only to contracts awarded on or after June 24, 2014. Because the statutory formula cap continues to apply to contracts awarded before June 24, 2014, the Administration is compelled by statute to determine the statutory formula cap amount for FYs 2013 and 2014 in accordance with the statutory formula set forth in section 1127 to address these pre- existing contracts. After consultation with the Director of the Defense Contract Audit Agency, OFPP has determined, pursuant to the requirements of section 1127, that the statutory formula cap amount for the ceiling on the compensation of a contractor employee covered by this provision is $980,796 for FY 2013, and $1,144,888 for FY 2014. Each of these statutory formula cap amounts applies to limit the reimbursement, by the Government to the contractor, of the costs of compensation for certain contractor employees for costs incurred on all covered contracts, at the beginning of the contractor FY that begins January 1 for the respective year (or pro-rated over that portion of the contractor FY that includes January 1 for the respective year). The statutory formula cap amount (i.e., $980,796) for FY 2013 is applicable to compensation costs incurred on all covered contracts during the period of January 1, 2013 through December 31, 2013 for the contractor's fiscal year. The statutory formula cap amount (i.e., $1,144,888) for FY 2014 is applicable on all covered contracts to compensation costs incurred as of January 1, 2014 and continues in subsequent contractor FYs, unless and until revised by OFPP. As explained above, this statutory formula cap applies only to covered contracts awarded before June 24, 2014 for both defense and civilian procurement agencies to limit the reimbursement of the compensation costs for certain contractor employees. Employers continue to have the discretion to compensate their employees at any level they deem appropriate. The statutory formula cap only limits how much the Government will reimburse the contractors for the services of those affected employees. Questions concerning this memorandum may be addressed to Raymond Wong, OFPP, at 202-395-6805. [FR Doc. 2016-05766 Filed 3-14-16; 8:45 am] BILLING CODE P
![Federal Register / Vol. 81, No. 50 / Tuesday, March 15, 2016 / Notices 13833
individual’s military discharge papers, • Enhance the quality, utility, and for contracts awarded before June 24,
the appropriate branch of military clarity of the information to be 2014.
service, or the Department of Veterans’ collected; and FOR FURTHER INFORMATION CONTACT:
Affairs. Without a claimant’s military • Minimize the burden of the Raymond Wong, Office of Federal
information, a SWA cannot adequately collection of information on those who Procurement Policy, at 202–395–6805.
determine the eligibility of ex- are to respond, including through the
servicemembers and would not be use of appropriate automated, Anne E. Rung,
properly able to administer the program. electronic, mechanical, or other Administrator, Office of Federal Procurement
UCXA section 3 and Social Security Act technological collection techniques or Policy.
section 303(a)(6) authorize this other forms of information technology, MEMORANDUM FOR THE HEADS OF
information collection. See 5 U.S.C. e.g., permitting electronic submission of EXECUTIVE DEPARTMENTS AND
8523; 42 U.S.C. 503(a)(6). responses. AGENCIES
This information collection is subject Agency: DOL–ETA.
to the PRA. A Federal agency generally FROM: Anne E. Rung, Administrator,
Title of Collection: Unemployment
cannot conduct or sponsor a collection Office of Federal Procurement Policy.
Compensation for Ex-Servicemembers SUBJECT: Determination of the
of information, and the public is Handbook.
generally not required to respond to an Statutory Formula Benchmark
OMB Control Number: 1205–0176. Compensation Amount for Fiscal
information collection, unless it is Affected Public: Individuals or
approved by the OMB under the PRA Years 2013 and 2014 for Certain
Households; State, Local, and Tribal Executives and Contractor Employees,
and displays a currently valid OMB Governments.
Control Number. In addition, Pursuant to Section 39 of the Office of
Total Estimated Number of Federal Procurement Policy Act, as
notwithstanding any other provisions of Respondents: 102,735.
law, no person shall generally be subject amended (41 U.S.C. 1127)
Total Estimated Number of
to penalty for failing to comply with a This memorandum sets forth the
Responses: 107,816.
collection of information that does not benchmark compensation amount for
Total Estimated Annual Time Burden:
display a valid Control Number. See 5 certain employees of Federal
2,139 hours.
CFR 1320.5(a) and 1320.6. The DOL Government contractors as required by
Total Estimated Annual Other Costs Section 39 of the Office of Federal
obtains OMB approval for this Burden: $0.
information collection under Control Procurement Policy (OFPP) Act, as
Number 1205–0176. Dated: March 9, 2016. amended (41 U.S.C. 1127, otherwise
OMB authorization for an ICR cannot Michel Smyth, known as the statutory formula cap) for
be for more than three (3) years without Departmental Clearance Officer. the cost allowability purposes of section
renewal, and the current approval for [FR Doc. 2016–05809 Filed 3–14–16; 8:45 am] 4304(a)(16) of title 41 and section
this collection is scheduled to expire on BILLING CODE 4510–FW–P
2324(e)(1)(P) of title 10 for covered
March 31, 2016. The DOL seeks to contracts awarded before June 24, 2014.
extend PRA authorization for this For covered contracts awarded on or
information collection for three (3) more after June 24, 2014, a new cap applies
OFFICE OF MANAGEMENT AND
years, without any change to existing pursuant to section 702 of the Bipartisan
BUDGET
requirements. The DOL notes that Budget Act of 2013 (BBA), Pub. L. 113–
existing information collection Office of Federal Procurement Policy; 67, December 26, 2013.
requirements submitted to the OMB Determination of Statutory Formula For contracts awarded prior to June
receive a month-to-month extension Benchmark Compensation Amount for 24, 2014, section 1127 limits the
while they undergo review. For reimbursement or allowability of
Certain Executives and Contractor
additional substantive information compensation costs under Federal
Employees
about this ICR, see the related notice Government contracts as implemented
published in the Federal Register on AGENCY: Office of Federal Procurement at Federal Acquisition Regulation (FAR)
August 12, 2015 (80 FR 48339). Policy, Office of Management and 31.205–6(p). In less technical terms, the
Interested parties are encouraged to Budget. statutory formula cap places a ceiling on
send comments to the OMB, Office of ACTION: Notice. the total annual compensation costs the
Information and Regulatory Affairs at Federal Government will reimburse a
the address shown in the ADDRESSES SUMMARY: The Office of Management contractor for the compensation package
section within thirty (30) days of and Budget is publishing the attached the contractor provides to certain of its
publication of this notice in the Federal memorandum to the Heads of Executive employees for work done pursuant to
Register. In order to help ensure Departments and Agencies announcing certain Federal Government covered
appropriate consideration, comments that the ‘‘benchmark compensation contracts. This statutory formula cap
should mention OMB Control Number amount’’ for certain executives and applies to limit the reimbursement of
1205–0176. The OMB is particularly contractor employees in terms of costs the compensation costs of certain
interested in comments that: allowable under Federal Government contractor senior executives on covered
• Evaluate whether the proposed covered contracts during the contracts with civilian and defense
collection of information is necessary contractor’s fiscal years 2013 and 2014 agencies. Additionally, as a result of
for the proper performance of the is $980,796 and $1,144,888, changes made by section 803 of the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
functions of the agency, including respectively. These statutory formula National Defense Authorization Act for
whether the information will have cap determinations are required under FY 2012, Public Law 112–81, December
practical utility; Section 39 of the Office of Federal 31, 2011, for covered contracts with
• Evaluate the accuracy of the Procurement Policy Act, as amended (41 defense agencies (i.e., DOD, NASA and
agency’s estimate of the burden of the U.S.C. 1127). These benchmark Coast Guard), the statutory formula cap
proposed collection of information, compensation amounts apply to both was expanded to cover all other
including the validity of the defense and civilian agencies for their contractor employees and applies to the
methodology and assumptions used; respective applicable periods, but only compensation costs incurred after
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![13834 Federal Register / Vol. 81, No. 50 / Tuesday, March 15, 2016 / Notices
December 31, 2011. With both civilian 1127 to address these pre-existing April, 2016. The purpose of the
and defense agencies, the statutory contracts. meetings is for panel review, discussion,
formula cap applies only when the After consultation with the Director of evaluation, and recommendation of
contractor is performing covered the Defense Contract Audit Agency, applications for financial assistance
contracts that are of either a cost- OFPP has determined, pursuant to the under the National Foundation on the
reimbursable nature or other cost-based requirements of section 1127, that the Arts and Humanities Act of 1965.
nature. statutory formula cap amount for the DATES: See SUPPLEMENTARY INFORMATION
Section 1127 sets out a formula for ceiling on the compensation of a section for meeting dates.
determining the cap amount. contractor employee covered by this ADDRESSES: The meetings will be held at
Specifically, the statutory formula cap provision is $980,796 for FY 2013, and Constitution Center at 400 7th Street
amount is set at the median (50th $1,144,888 for FY 2014. Each of these SW., Washington, DC 20506. See
percentile) amount of compensation statutory formula cap amounts applies SUPPLEMENTARY INFORMATION for meeting
provided, over the most recent year for to limit the reimbursement, by the room numbers.
which data is available, to the five most Government to the contractor, of the
highly compensated employees in FOR FURTHER INFORMATION CONTACT:
costs of compensation for certain
management positions at each home contractor employees for costs incurred Elizabeth Voyatzis, Committee
office and each segment of all publicly- on all covered contracts, at the Management Officer, 400 7th Street
owned U.S. companies with annual beginning of the contractor FY that SW., Room 4060, Washington, DC
sales over $50 million. The begins January 1 for the respective year 20506; (202) 606–8322; evoyatzis@
determination is based on analysis of (or pro-rated over that portion of the neh.gov.
data made available by the Securities contractor FY that includes January 1 SUPPLEMENTARY INFORMATION: Pursuant
and Exchange Commission. for the respective year). The statutory to section 10(a)(2) of the Federal
Compensation means the total amount formula cap amount (i.e., $980,796) for Advisory Committee Act (5 U.S.C.
of wages, salaries, bonuses, restricted FY 2013 is applicable to compensation App.), notice is hereby given of the
stock, deferred and performance costs incurred on all covered contracts following meetings:
incentive compensation, and other during the period of January 1, 2013 1. DATE: April 1, 2016.
compensation for the year, whether through December 31, 2013 for the TIME: 8:30 a.m. to 5:00 p.m.
paid, earned, or otherwise accruing, as contractor’s fiscal year. The statutory ROOM: Virtual Panel.
recorded in the employer’s cost formula cap amount (i.e., $1,144,888) This meeting will discuss
accounting records for the year. for FY 2014 is applicable on all covered applications for Next Generation Ph.D.:
Since enactment of the statutory contracts to compensation costs Planning Grants, submitted to the Office
formula in 1998, the cap has increased incurred as of January 1, 2014 and of Challenge Grants.
more than 300%. In 2010, the President continues in subsequent contractor FYs, 2. DATE: April 4, 2016.
began calling on Congress to replace the unless and until revised by OFPP. As TIME: 8:30 a.m. to 5:00 p.m.
current statutory formula cap with a explained above, this statutory formula ROOM: Virtual Panel.
lower, more sensible limit that is on par cap applies only to covered contracts This meeting will discuss
with what the Government pays its own awarded before June 24, 2014 for both applications for Next Generation Ph.D.:
executives and employees. In December defense and civilian procurement Planning Grants, submitted to the Office
2013, with the Administration’s strong agencies to limit the reimbursement of of Challenge Grants.
support, Congress reformed the ceiling the compensation costs for certain 3. DATE: April 5, 2016.
on the reimbursement of contractor TIME: 8:30 a.m. to 5:00 p.m.
contractor employees.
employee compensation. Section 702 of Employers continue to have the ROOM: 4002.
the BBA replaced section 1127 with a discretion to compensate their This meeting will discuss
new cap of $487,000 to be adjusted employees at any level they deem applications on the subjects of World
annually to reflect the change in the appropriate. The statutory formula cap Art and Culture, for Museums, Libraries
Employment Cost Index for all workers only limits how much the Government and Cultural Organizations: Planning
as calculated by the Bureau of Labor will reimburse the contractors for the Grants, submitted to the Division of
Statistics (otherwise known as the BBA services of those affected employees. Public Programs.
cap). The new $487,000 BBA cap Questions concerning this 4. DATE: April 6, 2016.
provides a reasonable level of memorandum may be addressed to TIME: 8:30 a.m. to 5:00 p.m.
compensation for high value Federal Raymond Wong, OFPP, at 202–395– ROOM: Via Conference Call.
contractor employees while ensuring 6805. This meeting will discuss
taxpayers are not saddled with paying applications on the subjects of U.S.
[FR Doc. 2016–05766 Filed 3–14–16; 8:45 am]
excessive compensation costs. On June History and Culture, for Museums,
24, 2014, the Federal Acquisition BILLING CODE P
Libraries and Cultural Organizations:
Regulatory Council issued an interim Planning Grants, submitted to the
rule to amend the Federal Acquisition Division of Public Programs
Regulation to reflect the new BBA cap NATIONAL FOUNDATION ON THE 5. DATE: April 6, 2016.
and issuance of a final rule is pending. ARTS AND THE HUMANITIES TIME: 8:30 a.m. to 5:00 p.m.
However, the new $487,000 BBA cap ROOM: Virtual Panel.
applies on a prospective basis only to Meetings of Humanities Panel This meeting will discuss
asabaliauskas on DSK3SPTVN1PROD with NOTICES
contracts awarded on or after June 24, AGENCY: National Endowment for the applications for Next Generation Ph.D.:
2014. Because the statutory formula cap Humanities. Planning Grants, submitted to the Office
continues to apply to contracts awarded ACTION: Notice of meetings. of Challenge Grants.
before June 24, 2014, the Administration 6. DATE: April 7, 2016.
is compelled by statute to determine the SUMMARY: The National Endowment for TIME: 8:30 a.m. to 5:00 p.m.
statutory formula cap amount for FYs the Humanities will hold twenty-three ROOM: 4002.
2013 and 2014 in accordance with the meetings of the Humanities Panel, a This meeting will discuss
statutory formula set forth in section federal advisory committee, during applications on the subjects of History
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Document Created: 2016-03-15 04:07:01
Document Modified: 2016-03-15 04:07:01
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice. | |
| Contact | Raymond Wong, Office of Federal Procurement Policy, at 202-395-6805. | |
| FR Citation | 81 FR 13833 |
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