[Federal Register Volume 60, Number 5 (Monday, January 9, 1995)]
[Rules and Regulations]
[Pages 2330-2331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-312]
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DEPARTMENT OF DEFENSE
48 CFR Part 231
Defense Federal Acquisition Regulation Supplement; Allowable
Individual Compensation
AGENCY: Department of Defense (DoD).
ACTION: Interim rule with request for comments.
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SUMMARY: The Director of Defense Procurement has issued an interim rule
that places a ceiling on allowable individual compensation under DoD
contracts.
DATES: Effective date: December 14, 1994.
Comment date: Comments on the interim rule should be submitted in
writing at the address shown below on or before March 10, 1995, to be
considered in the formulation of a final rule.
ADDRESSES: Interested parties should submit written comments to:
Defense Acquisition Regulations Council, ATTN: Mr. Eric R. Mens,
PDUSD(A&T)DP/DAR, IMD 3D139, 3062 Defense Pentagon, Washington, DC
20301-3062. Telefax number (703) 602-0350. Please cite DFARS Case 94-
D318 in all correspondence.
FOR FURTHER INFORMATION CONTACT:
Mr. Eric R. Mens, (703) 602-0131.
SUPPLEMENTARY INFORMATION:
A. Background
Section 8117 of the Department of Defense Appropriations Act, 1995
(Public Law 103-335), limits allowable costs for individual
compensation to $250,000 per year. This restriction applies to DoD
contracts awarded after April 15, 1995, when payments are from funds
appropriated in fiscal year 1995.
The interim DFARS rule revises DFARS Subpart 231.2, Contracts with
Commercial Organizations; Subpart 231.3, Contracts with Educational
Institutions; Subpart 231.6, Contracts with State, Local, and Federally
Recognized Indian Tribal Governments; and Subpart 231.7, Contracts with
Nonprofit Organizations to implement the statutory ceiling on allowable
individual compensation costs. In supplementing the cost principle at
FAR 31.205-6, this DFARS rule relies upon the same definition of
compensation found in the FAR cost principle, i.e., ``all remuneration
paid currently or accrued, in whatever form and whether paid
immediately or deferred, for services rendered by employees to the
contractor.''
B. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense to issue this rule as an interim rule. Compelling reasons
exist to promulgate this rule without prior opportunity for public
comment because section 8117 of the Defense Appropriations Act for
Fiscal Year 1995 (Public Law 103-335) applies to DoD contracts awarded
after April 15, 1995, using funds appropriated in FY 1995. An interim
rule will ensure that DoD contracting activities become aware of the
statutory ceiling on allowable individual compensation costs when
forward pricing contracts which will be awarded after April 15, 1995,
using FY 1995 funds. However, comments received in response to the
publication of this rule will be considered in formulating the final
rule.
C. Regulatory Flexibility Act
The interim rule is not expected to have a significant economic
impact on a substantial number of small entities within the meaning of
the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because most
small entities are not subject to the contract cost principles in FAR
Part 31 or DFARS Part 231. The contract cost principles normally apply
where contract award exceeds $500,000 and the price is based on
certified cost or pricing data. Most contracts awarded to small
entities are awarded on a competitive, fixed-price basis. This interim
DFARS rule applies only to DoD contractors which incur individual
compensation costs in excess of $250,000 per year in performing new
contracts awarded after April 15, 1995, using funds appropriated in FY
1995. An Initial Regulatory Flexibility Analysis has, therefore, not
been performed. Comments are invited from small business entities and
other interested parties. Comments from small entities concerning the
affected DFARS Subparts will also be considered in accordance with
section 610 of the Act. Such comments must be submitted separately and
cite DFARS Case 94-D318 in correspondence.
[[Page 2331]]
D. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 96-511) does not apply because
the interim rule does not impose any additional reporting or
recordkeeping requirements which require the approval of OMB under 44
U.S.C. 3501 et seq.
List of Subjects in 48 CFR Part 231
Government procurement.
Claudia L. Naugle,
Deputy Director, Defense Acquisition Regulations Council.
Therefore, 48 CFR Part 231 is amended as follows:
1. The authority citation for 48 CFR Part 231 continues to read as
follows:
PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
2. Section 231.205-6 is amended by adding a new paragraph (a)(2)
preceding the existing paragraph (g)(2)(i) to read as follows:
231.205-6 Compensation for personal services.
(a)(2) Costs for individual compensation in excess of $250,000 per
year are unallowable under DoD contracts that are awarded after April
15, 1995, and are funded by fiscal year 1995 appropriations (Public Law
103-335).
* * * * *
3. Section 231.303 is amended by adding paragraph (3) to read as
follows:
231.303 Requirements.
(1) * * *
(2) * * *
(3) The limitation on allowable individual compensation at
231.2205-6(a)(2) also applies to this subpart.
4. Section 231.603 is amended by redesignating paragraphs (1)
through (15) as (i) through (xv) and redesignating paragraphs (11) (i)
and (ii) as paragraphs (xi) (A) and (B); designating the introductory
text as paragraph (1); and adding a new paragraph (2) to read as
follows:
231.603 Requirements.
* * * * *
(2) The limitation on allowable individual compensation at 231.205-
6(a)(2) also applies to this subpart.
5. Section 231.703 is revised to read as follows:
231.703 Requirements.
(1) Under 10 U.S.C. 2324(e), the costs cited in 231.603(a) are
unallowable.
(2) The limitation on allowable individual compensation at 231.205-
6(a)(2) also applies to this subpart.
[FR Doc. 95-312 Filed 1-6-95; 8:45 am]
BILLING CODE 5000-04-M
