OFPP Issues Notice Raising the Amount of Executive Compensation Eligible for Reimbursement as an Allowable Cost

February 19, 2014

OFPP Issues Notice Raising the Amount of Executive Compensation Eligible for Reimbursement as an Allowable Cost

On December 4, 2013, the Office of Federal Procurement Policy (OFPP) published a notice announcing that reimbursements for executive and employee compensation under federal government contracts would be capped at $952,308 for contracts signed after January 2012. OFPP made this determination pursuant to Section 39 of the Office of Federal Procurement Policy Act (Pub. L. 93-400), as amended, which establishes a mandatory formula for determining the compensation cap. The cap applies to both civilian and defense agencies and limits the total annual compensation that the federal government may reimburse a contractor for compensation paid to employees working under a federal government contract. OFPP’s notice was published as discussions regarding revisions to the way the compensation cap is determined were underway in both the House of Representatives and the Senate. (78 Fed. Reg. 72930, 12/4/2013.)






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