Nov 2010 , Vol. VI, No.1

So you Think Your Compensation is Private - Not if you are an Executive for a Government Contractor or Subcontractor that Earns Substantial Income from Federal Projects

Builders and Contractors Exchange
Weekly Bulletin: 29 NOV 2010

So you think your compensation is private - not if you are an executive for a government contractor or subcontractor that earns substantial income from federal projects
By: Mike Sterling

LAW TIPS

A new interim rule, effective July 8, 2010, amends the Federal Acquisition Regulations (FAR) to implement section 2 of the Federal Funding Accountability and Transparency Act of 2006 and Government Funding and Transparency Act of 2008, which requires the Office of Management of the Budget (OMB) to establish a free, public website containing full disclosure of all Federal contract award information. This rule requires contractors to report executive compensation and first-tier subcontract awards on contracts and orders expected to be $25,000 or more. The requirement will be phased in three stages: Until September 30, 2010 any newly awarded subcontract must be reported if the prime contract award amount was $20M or more. From October 1, 2010, until February 28, 2011, any newly awarded subcontract must be reported if the prime contract award amount was $550K or more. Starting March 1, 2011, any newly awarded subcontract must be reported if the prime contract award amount was $25,000 or more.

According to the July 8, 2010 edition of the Federal Register, “the reporting requirements of the Transparency Act are sweeping in their breadth, and are intended to empower the American taxpayer with information that may be used to demand greater fiscal discipline from both the executive and legislative branches of Government.”  The Transparency Act reporting requirements, apply to all businesses (large, small, disadvantaged, veteran-owned and HUBZone) that sell to the Government. Contracting Officers are required to include a revised clause, FAR 52.204-10, to require reporting in all solicitations and contracts equal to or greater than $25,000, including Delivery Orders under existing IDIQ contracts. Contractors and subcontractors are exempt if their gross income from all sources is less than $300K. The executive financial disclosure will be required for the five most highly compensated executives, but only if a contractor or subcontractor received at least 80% of its annual gross revenue and $25M or more from Federal awards during the prior tax year. The rule requires contractors to report first-tier subcontract data at http://www.fsrs.gov. The rule also requires contractors to report the names and total compensation of each of the contractor’s five most highly compensated executives at http://www.ccr.gov., and the contractor is required to make a similar report for subcontractors at http://www/fsrs.gov.

Authored by attorneys, these articles are meant to bring awareness to these topics and are not intended to be used as legal advice.  For more information, contact Mike at 757-446-8626 or Bill Franczek at 757-446-8600.  Visit www.vanblk.com , for our library of Construction Law Tips.  Suggestions for a topic? E-mail bfranczek@vanblk.com.