Photo of Sharmistha DasPhoto of Charles BaekPhoto of Elizabeth BuehlerPhoto of Nicole Owren-Wiest

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  The BBA repealed the prior existing formula for determining the relevant compensation cap under 41 U.S.C. § 1127 and applies to contracts awarded on or after June 24, 2014.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.


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Photo of Daniel R. FormanPhoto of Amy Laderberg O'SullivanPhoto of John E. McCarthy Jr.Photo of Olivia LynchPhoto of Christian Curran

On March 22, 2018, the Department of Defense (DoD), Office of the Under Secretary of Defense issued a Class Deviation letter to the heads of all Department of Defense agencies requiring, effective immediately, that every DoD agency ensure that its contracting officers implement the recommendations for enhanced post-award debriefings set forth in Section 818 of the 2018 National Defense Authorization Act (NDAA).

The direction makes clear that DoD agencies are to provide unsuccessful offerors who are given a debriefing in accordance with FAR 15.506(d) the opportunity to “submit additional questions related to the debriefing within two business days after receiving the debriefing.”  The agency will then be required to “respond in writing to the additional questions submitted by an unsuccessful offeror within five business days after receipt of the questions” and must hold the debriefing open until it “delivers its written responses to the unsuccessful offeror.”


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Photo of Peter J. EyrePhoto of J. Chris HailePhoto of Steve McBradyPhoto of Brian Tully McLaughlinPhoto of Gail D. Zirkelbach

On March 1, the President announced his intention to impose tariffs of 25% on all imported steel and 10% on all imported aluminum. A more formal announcement of the tariffs is expected in the coming week and, while many might have been surprised by the timing of the President’s initial statement, it came after a 10-month process of investigation by the U.S. Department of Commerce, culminating with its January 2018 recommendation for tariffs or quotas to protect U.S. producers. The Commerce Department reports are available here and here.

When finalized, these tariffs could have significant impacts on contractors across a range of industries, increasing costs of performance and restricting available supply. Domestic prices are expected to rise, and foreign suppliers may turn their focus to other markets. Supply disruptions are possible, particularly in the short term. To protect themselves, federal contractors who manufacture or use products with steel or aluminum should examine existing contracts, re-evaluate bids being developed, and consider revisions to standard contract terms.


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Everyone can agree that professional employees should be compensated fairly and properly—both for the benefit of the employees and to ensure successful contract performance. However, a recent GAO decision could provide a loophole for agencies to forego the very evaluation designed to ensure that fair and proper compensation.

Contractors competing for work involving meaningful numbers of professional employees—and, in particular, incumbents seeking to prevent newcomers from undercutting their established professional compensation—should take note.


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Crowell & Moring is hosting Government Contracts 101 in our Washington, D.C., office on Thursday, October 26, 2017.  This all-day event will last from 8:30 a.m. to 6:30 p.m. at 1001 Pennsylvania Ave, N.W., and provide an overview of the full scope of issues that government contractors face on a daily basis.  We will cover

Photo of David B. RobbinsPhoto of Peter J. Eyre

Suspension and debarment practice in 2017 is very different than it was just five or 10 years ago, and it continues to evolve.  Historically active programs, such as the Department of the Air Force, show few actions initiated in the last three months, while the Environmental Protection Agency has been heavily involved in excluding contractors and awardees.  Awareness of the current activity level and preferences of relevant agency suspension and debarment offices is one key to successfully managing your relationship with key federal agencies.  But successfully navigating the current suspension/debarment landscape is often more complicated than a single agency analysis.

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Photo of Gail D. ZirkelbachPhoto of Kris D. MeadePhoto of Christine B. HawesPhoto of Jason M. CrawfordPhoto of Charles BaekPhoto of Jillian Ambrose

On January 13, 2017, the FAR Council released a final rule (available here) that: (1) prohibits agencies from contracting with entities that require employees/subs to sign internal confidentiality agreements or statements that restrict the lawful reporting of waste, fraud, or abuse; and (2) requires bidders on federal contracts to certify that they do not utilize such agreements. Starting on January 19, 2017, the rule will apply to all solicitations and contracts using fiscal year 2015 funds and subsequent fiscal year funds, unless the solicitation or contract already contains a comparable provision/clause.

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Photo of David B. RobbinsPhoto of Jason M. CrawfordPhoto of Laura J. Mitchell Baker

The suspension and debarment regulations at Federal Acquisition Regulation (FAR) Subpart 9.4 are focused on the present responsibility of a contractor.  Yet, the records of past, inactive exclusions are available for public view in perpetuity on the System for Award Management website (SAM.gov).   In a recent article (linked here) published in BNA’s Federal Contracts

Photo of Peter J. Eyre

Today, the Department of Defense (DoD), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) (collectively, the “FAR Council”) proposed amendments and revisions to the Federal Acquisition Regulation (FAR) that would require some government contractors to indicate whether they publicly disclose greenhouse gas (GHG) emissions and/or quantify corporate GHG reduction goals. Comments

Photo of Kate M. Growley, CIPP/G, CIPP/US

Companies of all sizes are increasingly subject to the practical and legal implications of today’s cybersecurity environment, and contractors are no exception.  On May 26, 2016, at 11:00 AM Eastern, Crowell & Moring attorneys David Bodenheimer, Evan Wolff, and Kate Growley will lead a discussion highlighting some of the past year’s most significant cyber contracting