HOME  |  CONTENTS  |  DISCUSSIONS  BLOG  |  QUICK-KITs|  STATES

Loading

How To Use the NDAA Pages

Back to NDAA Contents

TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle EóOther Matters

P. L. 112-

House Conference Report 112-705

SEC. 864. REPORT ON ALLOWABLE COSTS OF COMPENSATION OF CONTRACTOR EMPLOYEES.

(a) Report Required- Not later than 120 days after the date of the enactment of this Act, the Comptroller General of the United States shall submit to Congress a report on the effect of reducing the allowable costs of contractor compensation of employees to the amount payable to the President under section 102 of title 3, United States Code, or to the amount payable to the Vice President under section 104 of such title.

(b) Matters Covered- The report shall include, at a minimum, the following:

(1) An estimate of the total number of contractor employees whose allowable costs of compensation in each of fiscal years 2010, 2011, and 2012 would have exceeded the amount of allowable costs under section 2324(e)(1)(P) of title 10, United States Code.

(2) An estimate of the total number of contractor employees whose allowable costs of compensation in each of fiscal years 2010, 2011, and 2012 exceeded the amount payable to the President under section 102 of title 3, United States Code.

(3) An estimate of the total number of contractor employees whose allowable costs of compensation in fiscal year 2012 exceeded the amount payable to the Vice President under section 104 of title 3, United States Code.

(4) An estimate of the total number of contractor employees in fiscal year 2012 that could have been characterized as falling within a narrowly targeted exception established by the Secretary of Defense under section 2324(e)(1)(P) of title 10, United States Code, as a result of the amendment made by section 803(a)(2) of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81; 125 Stat. 1485).

(5) A description of the duties and services performed in fiscal year 2012 by employees who were characterized by their employers as falling within a narrowly targeted exception described in paragraph (4).

(6) An assessment of whether the compensation amounts provided in fiscal year 2012 to employees who were characterized by their employers as falling within a narrowly targeted exception described in paragraph (4) were provided in a manner consistent with private sector practice.

(7) An assessment of the extent to which contractor employees received compensation in the form of vested or unvested stock options.

(8) An assessment of the potential impact on the Department of Defense, contractors of the Department of Defense, and employees of such contractors of adjusting the amount of allowable costs of contractor compensation to the amount specified in paragraph (2) or the amount specified in paragraph (3).

(9) Such recommendations as the Comptroller General considers appropriate.

Report on allowable costs of compensation of contractor employees (sec. 864)

The Senate amendment contained a provision (sec. 842) that would reduce the limitation on allowable compensation for defense contractor employees from the median amount of compensation provided to senior executives in large United States corporations (currently $763,000) to the maximum level of compensation for federal employees, which is set at the annual salary of the Vice President of the United States (currently $230,700). The provision would also require a report by the Department of Defense Inspector General on allowable costs of employee compensation.

The House bill contained no similar provision.

The House recedes with an amendment that would require a report by the Comptroller General on allowable costs of employee compensation. The conferees conclude that Congress should have the benefit of this review before mandating a new or revised cap on such compensation.

Senate Report 112-173

Maximum amount of allowable costs of compensation of contractor employees (sec. 842)

The committee recommends a provision that would amend section 2324(e)(1)(P) of title 10, United States Code, to reduce the limitation on allowable compensation for defense contractor employees from the median amount of compensation provided to senior executives in large United States corporations (currently 763,000) to the maximum level of compensation for federal employees, which is set at the annual salary of the Vice President of the United States (currently $230,700).

Section 808 of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 108-85) limited the amount of contractor executive compensation allowable for reimbursement under federal contracts to a benchmark based on the median amount of compensation provided to senior executives in large United States corporations, as calculated by the Office of Federal Procurement Policy (OFPP). The OFPP website indicates that the benchmark amount, which was set at $432,851 on January 1, 2004, was increased to $763,029 on April 22, 2012--an increase of more than 75 percent in just 8 years.

At a time when most Americans are seeing little or no increase in their paychecks and budget constraints require the Department of Defense to find efficiencies in all areas, the committee concludes that increases of this magnitude are unsupportable. The committee notes that section 2324(e)(1)(P) authorizes the Secretary of Defense to establish narrowly targeted exceptions to the limitation on allowable compensation, where such exceptions are needed to ensure that the Department of Defense has continued access to scientists, engineers, and others with unique and needed skills and capabilities.

 

 

 

 

 

ABOUT  l CONTACT