2010-8641. Determination of Benchmark Compensation Amount for Certain Executives

AGENCY:

Office of Federal Procurement Policy, OMB.

ACTION:

Notice.

SUMMARY:

The Office of Management and Budget is publishing the attached memorandum to the Heads of Executive Departments and Agencies concerning the determination of the benchmark compensation amount for certain executives that will be allowable under Government contracts during contractors' Fiscal Year 2010—$693,951. This determination is required under Section 39 of the Office of Federal Procurement Policy Act, 41 U.S.C. 435, as amended. The benchmark compensation amount applies equally to both defense and civilian procurement agencies.

FOR FURTHER INFORMATION CONTACT:

Raymond Wong, Office of Federal Procurement Policy, Office of Management and Budget, telephone at 202-395-6805 and e-mail: [e-mail].

Daniel I. Gordon,

Administrator, Office of Federal Procurement Policy.

Memorandum for the Heads of Executive Departments and Agencies

From: Daniel I. Gordon, Administrator, Office of Federal Procurement Policy.

Subject: Determination of Benchmark Compensation Amount for Certain Executives, Pursuant to Section 39 of the Office of Federal Procurement Policy Act, 41 U.S.C. 435, as amended.

This memorandum sets forth the benchmark compensation amount for certain executives as required by Section 39 of the Office of Federal Procurement Policy (OFPP) Act, as amended. Under Section 39, the benchmark compensation amount for certain executives is 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 benchmark compensation benchmark amount for certain executives established by Section 39 limits the allowability of compensation costs under Government contracts as implemented at FAR 31.205-6(p), limiting the amount of reimbursable executive compensation. The benchmark compensation amount for certain executives does not limit the compensation that an executive may otherwise receive. This amount is based upon a review of commercially available surveys of executive compensation that analyze the relevant data made available by the Securities and Exchange Commission. More specifically, as required by Section 39 of the OFPP Act, the determination is made on the median (50th percentile) amount of compensation over a recent 12-month period for the five most highly compensated employees in management positions at each home office and each segment of all publicly-owned companies with annual sales over $50 million. Compensation for the fiscal year means the total amount of wages, salary, bonuses and deferred compensation for the year, whether paid, earned, or otherwise accruing, as recorded in the employer's cost accounting records for the year. After consultation with the Director of the Defense Contract Audit Agency, we have determined pursuant to the requirements of Section 39 that the benchmark compensation amount for certain executives for the contractors' Fiscal Year (FY) 2010 is $693,951. This amount is for contractors' FY 2010 and subsequent contractor fiscal years, unless and until revised by OFPP. The benchmark compensation amount for certain executives applies to contract costs incurred after January 1, 2010, under covered contracts of both the defense and civilian procurement agencies as specified in Section 39 of the OFPP Act, 41 U.S.C. 435, as amended.

Questions concerning this memorandum may be addressed to Raymond Wong, OFPP, at 202-395-6805.