Canceled by PIC 03-07


Procurement Information Circular

June 27, 2001


PURPOSE: To provide guidance on the revised limitation on executive compensation.

BACKGROUND: Based on 10 U.S.C. 2324(e)(1)(P) and 41 U.S.C. 256(e)(1)(P), FAR 31.205-6(p) limits the amount of allowable compensation under Government contracts for senior executives to the benchmark amount determined by the Administrator, Office of Federal Procurement Policy (OFPP). The limitation became effective for civilian agency contracts commencing January 1, 1998.

GUIDANCE: The OFPP Administrator issued a memorandum, dated May 3, 2001, revising the benchmark limitation on executive compensation under Government contracts for contractor fiscal year 2001 from $353,010 to $374,228. The $374,228 amount is to be used for contractor fiscal year 2001 and any subsequent contractor fiscal years unless and until revised by OFPP. The limitation applies to the five most highly compensated employees at each home office and segment of a contractor. The limitation amount applies to contract costs incurred after January 1, 2001, under defense and civilian agency contracts, whether or not the contract was previously subject to a statutory limitation on compensation. Compensation in excess of the benchmark limitation is unallowable.

CANCELLATION: This PIC supersedes PIC 00-05 dated May 30, 2000.

EFFECTIVE DATE: This PIC is effective as dated and shall remain in effect until canceled or superseded.

HEADQUARTERS CONTACT: Ronald Lentz, Code HK, (202) 358-1064, e-mail:


R. Scott Thompson
Director, Contract Management Division