Procurement Information Circular
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 for the Heads of Executive Departments and Agencies via Federal Register Notice (Vol. 75, No. 72), dated 15 April 2010, revising the benchmark limitation on executive compensation under Government contracts for contractor fiscal year 2010 to $693,951. The $693,951 amount is to be used for contractor fiscal year 2010 and any subsequent contractor fiscal years unless and until revised by OFPP. This amount is based on data from commercially available surveys of executive compensation. The data used the median (50th percentile) amount of compensation accrued over a recent 12-month period for the top five highest paid executives of publicly traded companies with annual sales over $50 million. 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, 2010, 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 08-10 dated 30 July 2008.
EFFECTIVE DATE: This PIC is effective as dated and will remain in effect until canceled or superseded.
HEADQUARTERS CONTACT: Bill Roets, Office of Procurement, Contract Management Division, (202) 358-4483, email: email@example.com.
James A. Balinskas
Director, Contract Management Division