New Interim Rule: Executive Compensation

On July 8, 2010, the Federal Government, the Civilian Agency Acquisition Council, and the Defense Acquisition Regulations Council published an interim rule [75 Fed. Reg. 37414-20] amending the Federal Acquisition Regulation to implement the Federal Funding Accountability and Transparency Act of 2006 (as amended by the Government Funding Transparency Act of 2008). The interim rule¹ requires many federal contractors and subcontractors to report and make publicly available the total compensation of their top five executives. The prime contractors are required to report executive compensation information for themselves as well as their first-tier subcontractors. It becomes the responsibility of the prime contractors to inform all first-tier subcontractors about the new executive compensation provisions and obtain the needed information to fulfill their reporting obligations.

To ease the compliance burden on agencies and contractors, the government is slowly phasing in the requirements relating to reporting provisions for subcontractors. The phase-in reporting will be made according to the specified dates below:

• From July 8, 2010 through September 30, 2010, any newly awarded subcontract must be reported if the prime contract award amount was $20 million or more.

• From October 1, 2010 until February 28, 2011, any newly awarded subcontract must be reported if the prime contract award amount was $550, 000 or more and

• Starting March 1, 2011, any newly awarded subcontract must be reported if the prime contract award amount was $25,000 or more.