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Contractors looking for updates to the statutory allowable cost limits on employee compensation may be looking in the wrong place.  But what was once lost can easily be found, at least for the moment, by simply navigating to a different website.

The Cost Principles and the Compensation Cap

FAR 31.205-6(p)(4) governs the allowable compensation of contractor and subcontractor employees.  It promulgates section 702 of the Bipartisan Budget Act of 2013 (“BBA”), which set an initial limit on allowable contractor and subcontractor employee compensation costs at $487,000 per year.  “Compensation” is defined broadly to include the total amount of wages, salary, bonuses, deferred compensation, and employer contributions to defined contribution pension plans.  According to the BBA, the cap is to be adjusted annually based on the Employment Cost Index calculated by the Bureau of Labor Statistics.  The BBA repealed the prior existing formula for determining the relevant compensation cap under 41 U.S.C. § 1127 and applies to contracts awarded on or after June 24, 2014.  It also provided agencies with the authority to establish “one or more narrowly targeted exceptions” for certain specialists.

Continue Reading Hidden in Plain Sight: Where, Oh Where, Have the Compensation Caps Gone?

In a recent decision, the Court of Federal Claims rejected the Government’s motion to dismiss a lawsuit filed under the Tucker Act seeking to recover “risk corridors” payments pursuant to §1342 of the Affordable Care Act. In Health Republic Insurance Co. v. U.S. (Jan. 10, 2017), the Court held that “HHS is required to make annual risk corridors payments to eligible qualified health plans” under the ACA, and that the “plaintiff’s claim for unpaid risk corridors payments is ripe for adjudication.” The Court – which based its decision on several factors, including the risk corridors program’s purpose of stabilizing insurance premiums in the health insurance marketplace – also held that even if the ACA were ambiguous and the court were to apply a Chevron deference analysis, HHS has interpreted the program to require annual payments, and the agency’s own actions (i.e., making partial annual payments) indicate it believes the program is annual in nature.

On January 29, 2015, the FAR Council published a final rule amending the Federal Acquisition Regulation (FAR) to strengthen existing regulations against trafficking in persons. The new rule, which will be effective March 2, 2015, includes a variety of new compliance provisions that will impact government contractors of all shapes and sizes. The agencies first published a proposed rule on September 26, 2013, implementing Executive Order 13627 and the National Defense Authorization Act for Fiscal Year 2013, to strengthen the government’s zero-tolerance policy regarding contractors engaging in prohibited trafficking activities. The proposed rule enhanced the existing FAR clause in all government contracts (which prohibits trafficking in persons, procuring commercial sex acts, and using forced labor) by adding mandatory notification of possible violations, reporting channels for employees, investigation mechanisms, and subcontractor monitoring and flow down requirements, among other requirements.

The proposed rule left contractors with many lingering questions regarding their compliance obligations and, while the final rule answered some questions, many questions remain. One thing is clear – contractors should pay attention and determine whether, and to what extent, this final rule will impact them. Continue Reading New Compliance Requirements to Prevent Trafficking: What do the rules require? What contractors are subject to them? What questions remain?

On December 9, 2014, the Office of Federal Contract Compliance Programs (OFCCP) within the Department of Labor (DOL) issued a final rule implementing the President’s July 2014 Executive Order 13672, which prohibits federal contractors from discriminating on the basis of sexual orientation or gender identity. The rule requires contractors and subcontractors to add “gender identity” and “sexual orientation” to the Equal Opportunity Clause and to their solicitations or advertisements for employment, but it does not require them to solicit such information from applicants or employees, to set placement goals, or to maintain or analyze any data on those categories. Companies that wish to learn more about this rule might be interested in a December 5 open forum hosted by DOL and DOL’s Frequently Asked Questions regarding this rule. In response to questions from industry about the rule, a DOL spokesperson indicated additional meetings with stakeholders will be scheduled and further guidance will be issued.