On June 26, 2013, the government published an interim rule that implements Section 803 of the National Defense Authorization Act for Fiscal Year 2012 by extending the application of the executive compensation benchmark from senior executives to all contractor employees working on Department of Defense, NASA, and Coast Guard contracts. The interim rule is effective as of its issuance date (June 26, 2013).
The executive compensation benchmark was established in 1998 by the Office of Federal Procurement Policy (“OFPP”) Act and is intended to reflect “the median amount of the compensation provided for all senior executives of all benchmark corporations for the most recent year for which data is available.” The Administrator, Office of Federal Procurement Policy, determines the executive compensation benchmark amount, which is published on the Office of Management and Budget website. The benchmark amount does not limit the amount of compensation that an executive may receive, but caps the amount that will be allowable under the FAR compensation cost principle (48 C.F.R. § 31.205-6(p)). The current benchmark amount is $763,029.
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