Appendix G - Approval Procedures for Contractor Salaries

1. Purpose

This appendix provides guidelines for use when considering contractor salaries, and procedures for approval of contractor salaries exceeding the maximum salary level for Senior Executive Service level ES-6.

2. Procedures

(a) General. Personnel compensation negotiated and payable under USAID contracts should be at the minimum levels necessary to attract needed technical services in a competitive market. Rates should be determined by the market place where the types of services are obtained. Using such criteria, very few salaries should approach or exceed the ES-6 level. Actual discussions with contractors concerning salaries should be held only by persons authorized to negotiate and execute contracts (see AIDAR Appendix A).

(b) In accordance with 731.205-6, 731-371(b) and 731.772, approval of contractors salaries exceeding the maximum for Executive Service Level 6 are to be based upon a Memorandum from the technical office through the cognizant Assistant Administrator or Mission Director and the Contracting Officer to the Procurement Executive for approval. The reasonableness of proposed salaries exceeding the ES-6 level must be evaluated by the appropriate technical office in terms of the technical competence required, scope of supervisory responsibilities involved, and the relationship of the proposed salary level to the individual's customary salary level for similar work. The Contracting Officer shall clear the Memorandum if he/she concurs with the action. If he/she does not concur, a memorandum explaining the reasons shall be attached to the approval request and forwarded with it to the Procurement Executive. Increases in the ES-6 salary levels are not, and shall not be by themselves, the basis for upward salary increases of institutional contractor employees. Proposals for revisions should be considered normally when contracts are renewed or amended, and must be fully reviewed and negotiated to ensure that increases are not automatically granted without corresponding increases in the quality or quantity of services rendered. It is the Contracting Officer's responsibility to scrutinize increases as a matter of good business practice whenever USAID negotiations deal with any salaries payable under contracts. Salaries below the ES-6 maximum level should also be fully justified, even though formal approval procedures may not be involved. The justification should be a part of the negotiation memorandum and placed in the contract file.