[Federal Register Volume 79, Number 121 (Tuesday, June 24, 2014)]
[Rules and Regulations]
[Pages 35865-35867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14379]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 31
[FAC 2005-75; FAR Case 2014-012; Item III; Docket 2014-0012, Sequence
1]
RIN 9000-AM75
Federal Acquisition Regulation; Limitation on Allowable
Government Contractor Compensation Costs
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Interim rule.
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SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the
Federal Acquisition Regulation (FAR) to implement section 702 of the
Bipartisan Budget Act of 2013. In accordance with section 702, the
interim rule revises the allowable cost limit relative to the
compensation of contractor and subcontractor employees. Also, in
accordance with section 702, this interim rule implements the possible
exception to this allowable cost limit for scientists, engineers, or
other specialists upon an agency determination that such
[[Page 35866]]
exceptions are needed to ensure that the executive agency has continued
access to needed skills and capabilities.
DATES: Effective Date: June 24, 2014.
Comment Date: Interested parties should submit written comments to
the Regulatory Secretariat on or before August 25, 2014 to be
considered in the formulation of a final rule.
ADDRESSES: Submit comments identified by FAC 2005-75, FAR Case 2014-
012, by any of the following methods:
Regulations.gov: http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by searching for ``FAR Case
2014-012''. Select the link ``Comment Now'' that corresponds with ``FAR
Case 2014-012.'' Follow the instructions provided at the ``Comment
Now'' screen. Please include your name, company name (if any), and
``FAR Case 2014-012'' on your attached document.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW., 2nd Floor,
Washington, DC 20405.
Instructions: Please submit comments only and cite FAC 2005-75, FAR
Case 2014-012, in all correspondence related to this case. All comments
received will be posted without change to http://www.regulations.gov,
including any personal and/or business confidential information
provided.
FOR FURTHER INFORMATION CONTACT: Mr. Edward N. Chambers, Procurement
Analyst, at 202-501-3221 for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at 202-501-4755. Please cite FAC 2005-75, FAR Case 2014-
012.
SUPPLEMENTARY INFORMATION:
I. Background
The Bipartisan Budget Act of 2013 (Pub. L. 113-67) was enacted on
December 26, 2013. Section 702 of the law amended the allowable cost
limits of contractor and subcontractor employee compensation.
Specifically, section 702 revised the application of the compensation
cap, the amount of the cap, and the associated formula for annually
adjusting it. The existing formula for determining the limit on the
allowability of contractor and subcontractor employee compensation
costs under 41 U.S.C. 1127 was repealed. Section 702 of the law set the
initial limitation on allowable contractor and subcontractor employee
compensation costs at $487,000 per year, which will be adjusted
annually to reflect the change in the Employment Cost Index for all
workers as calculated by the Bureau of Labor Statistics.
This interim rule also implements the authority provided by 10
U.S.C. 2324(e)(1)(P) and 41 U.S.C. 4304(a)(16), as amended by section
702(a), in which Congress has authorized the head of executive agencies
to establish ``one or more narrowly targeted exceptions for scientists,
engineers, or other specialists upon a determination that such
exceptions are needed to ensure that the executive agency has continued
access to needed skills and capabilities.''
In section 702(c), Congress stated that the revised compensation
cap ``shall apply only with respect to costs of compensation incurred
under contracts entered into on or after the date that is 180 days
after the date of the enactment of this Act''. As the date of enactment
was December 26, 2013, 180 days after is June 24, 2014. Accordingly,
the revised compensation cap in this interim rule will apply to the
costs of compensation for all contractor and subcontractor employees
for contracts awarded, and costs incurred, on or after June 24, 2014.
II. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
III. Regulatory Flexibility Act
DoD, GSA, and NASA do not expect this rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
However, an Initial Regulatory Flexibility Analysis (IRFA) has been
prepared and is summarized as follows:
An analysis of data in the Federal Procurement Data System
(FPDS) revealed that most contracts awarded to small entities are
awarded on a fixed-price basis, and do not require application of
the cost principle contained in this rule.
The interim rule imposes no reporting, recordkeeping, or other
information collection requirements. The rule does not duplicate,
overlap, or conflict with any other Federal rules, and there are no
known significant alternatives to the rule.
The Regulatory Secretariat has submitted a copy of the IRFA to the
Chief Counsel for Advocacy of the Small Business Administration. A copy
of the IRFA may be obtained from the Regulatory Secretariat. DoD, GSA,
and NASA invite comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by this rule
in accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAC 2005-75, FAR Case
2014-012) in correspondence.
IV. Paperwork Reduction Act
The interim rule does not contain any information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
V. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense (DoD), the Administrator of General Services Administration
(GSA), and the Administrator of the National Aeronautics and Space
Administration (NASA) that urgent and compelling reasons exist to
promulgate this interim rule without prior opportunity for public
comment. This action is necessary because section 702 of Pub. L. 113-
67, signed into law on December 26, 2013, required that it shall apply
only with respect to the costs of compensation incurred under contracts
entered into on or after the date that is 180 days after the date of
the enactment of this Act (June 24, 2014). This statute revises the
allowable cost limit relative to the compensation costs of contractor
and subcontractor employees. Therefore, issuing an interim rule that is
effective upon publication, prior to the receipt of public comment will
allow agencies and contractors to implement the requirements of this
law by the required date of June 24, 2014. Pursuant to 41 U.S.C. 1707
and FAR 1.501-3(b), DoD, GSA, and NASA will consider public comments
received in response to this interim rule in the formation of the final
rule.
[[Page 35867]]
List of Subjects in 48 CFR Part 31
Government procurement.
Dated: June 13, 2014.
William Clark,
Acting Director, Office of Government-Wide Acquisition Policy, Office
of Acquisition Policy, Office of Government-Wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR part 31, as set forth
below:
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES
0
1. The authority citation for 48 CFR part 31 continues to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
0
2. Amend section 31.205-6 by--
0
a. Revising the heading of paragraph (p), and paragraphs (p)(1) and
(p)(2);
0
b. Redesignating paragraph (p)(3) as paragraph (p)(4); and
0
c. Adding a new paragraph (p)(3).
The revised and added text reads as follows:
31.205-6 Compensation for personal services.
* * * * *
(p) Limitation on allowability of compensation. (1) Senior
executive compensation limit for contracts awarded before June 24,
2014. (i) Applicability. This paragraph (p)(1) applies to the
following:
(A) To all executive agencies, other than DoD, NASA, and the Coast
Guard, for contracts awarded before June 24, 2014;
(B) To DoD, NASA, and the Coast Guard for contracts awarded before
December 31, 2011;
(ii) Costs incurred after January 1, 1998. Costs incurred after
January 1, 1998 for the compensation of a senior executive in excess of
the benchmark compensation amount determined applicable for the
contractor fiscal year by the Administrator, Office of Federal
Procurement Policy (OFPP), under 41 U.S.C 1127 as in effect prior to
June 24, 2014, are unallowable (10 U.S.C. 2324(e)(1)(P) and 41 U.S.C
4304(a)(16), as in effect prior to June 24, 2014). This limitation is
the sole statutory limitation on allowable senior executive
compensation costs incurred after January 1, 1998, under contracts
awarded before June 24, 2014, and applies whether or not the affected
contracts were previously subject to a statutory limitation on such
costs. (Note that pursuant to section 804 of Pub. L. 105-261, the
definition of ``senior executive'' in paragraph (p)(4) has been changed
for compensation costs incurred after January 1, 1999.)
(2) All employee compensation limit for contracts awarded before
June 24, 2014. (i) Applicability. This paragraph (p)(2) applies to DOD,
NASA, and the Coast Guard for contracts awarded on or after December
31, 2011 and before June 24, 2014;
(ii) Costs incurred after January 1, 2012. Costs incurred after
January 1, 2012, for the compensation of any contractor employee in
excess of the benchmark compensation amount, determined applicable for
the contractor fiscal year by the Administrator, Office of Federal
Procurement Policy (OFPP) under 41 U.S.C 1127 are unallowable (10
U.S.C. 2324(e)(1)(P)).
(3) All employee compensation limit for contracts awarded on or
after June 24, 2014. (i) Applicability. This paragraph (p)(3) applies
to all executive agency contracts awarded on or after June 24, 2014,
and any subcontracts thereunder;
(ii) Costs incurred on or after June 24, 2014. Costs incurred on or
after June 24, 2014, for the compensation of all employees in excess of
the benchmark compensation amount determined applicable for the
contractor fiscal year by the Administrator of the Office of Federal
Procurement Policy are unallowable. See http://www.whitehouse.gov/omb/procurement/cecp.
(iii) Exceptions. An agency head may establish one or more narrowly
targeted exceptions for scientists, engineers, or other specialists
upon a determination that such exceptions are needed to ensure that the
executive agency has continued access to needed skills and
capabilities. In making such a determination, the agency shall
consider, at a minimum, for each contractor employee in a narrowly
targeted excepted position--
(A) The amount of taxpayer funded compensation to be received by
each employee; and
(B) The duties and services performed by each employee.
* * * * *
[FR Doc. 2014-14379 Filed 6-23-14; 8:45 am]
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