CFR Part: "48 CFR Parts 31 and 52"
RIN Number: "RIN 9000-AM38"
Citation: "79 FR 31195"
Document Number: "FAC 2005-74; FAR Case 2012-017; Item III; Docket No. 2012-0017, Sequence No. 1"
"Rules and Regulations"
SUMMARY: DoD, GSA, and
EFFECTIVE DATE: Effective:
FOR FURTHER INFORMATION CONTACT: Mr.
DoD, GSA, and
Section 803(c)(2) stated that the expanded reach of the compensation cap "shall apply with respect to costs of compensation incurred after
A technical correction was published in the
Three respondents submitted comments on the interim rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the
A. Summary of Significant Changes
Based on a review of the public comments, discussed below, the Councils have concluded that no change to the interim rule is necessary.
B. Analysis of Public Comments
1. Retroactive Application of Rule Not Appropriate
Comment: Respondents submitted comments stating that it was inappropriate to retroactively apply the rule. These comments included:
(a) The interim rule creates a breach of contract per case law cited in the
(b) The interim rule's premise that section 803 of the NDAA must automatically prevail for contracts signed prior to the effective date of the rule but after enactment of the NDAA is incorrect. It is well established in the Federal Courts that a contract that conflicts with Federal statute should still be honored.
(c) Case law has established that statutory language which explicitly requires the issuance of implementing regulations is not self-executing but instead takes effect upon the promulgation of implementing regulations.
(d) The Government was mistaken in its conclusion that the holdings in the
(e) The retroactive application of this rule is expressly prohibited per FAR 1.108(d).
Response: Section 803(c)(2) states that the expanded reach of the compensation cap "shall apply with respect to costs of compensation incurred after
FAR 1.108(d) does not expressly prohibit retroactive application of FAR changes, but instead states that unless otherwise specified, FAR changes apply to solicitations issued on or after the effective date of the change. In this instance, however, section 803(c)(2) of the National Defense Authorization Act for Fiscal Year 2012 explicitly states that that the expanded reach of the compensation cap "shall apply with respect to costs of compensation incurred after
2. Exceptions for Scientists and Engineers Must Be Addressed
Comment: One respondent believed that the expansion of the executive compensation cap to all contractor employees and the exceptions for scientists and engineers must align. Any future Defense Federal Acquisition Supplement rule relative to exception for scientist and engineers would be in conflict with this interim rule.
Response: This rule does not prohibit DoD from considering an exception for scientists and engineers.
3. Urgent and Compelling Determination Inappropriate
Comment: One respondent stated that the urgent and compelling determination in the preamble was inappropriate. These comments included the following:
(a) The statement in the preamble that urgent and compelling reasons exist to issue an interim rule without public comment was reached in error because the interim rule does impose reporting, recordkeeping, or other information collection requirements.
(b) The 18-month time period to issue the interim rule is inconsistent with the statement that urgent and compelling reasons existed to issue the interim rule. If truly urgent and compelling, the interim rule would have been issued much sooner.
Response: There are no reporting or record keeping burdens associated with the interim or final rule that require the approval of the
4. Impact on Contractors' Ability To Perform
Comment: One respondent stated that application of an arbitrary cap on the compensation of all contractor employees will reduce contractors' ability to attract and retain experienced and talented individuals and will jeopardize contractors' ability to support Government mission critical requirements. The respondent also believed that the rule was a disincentive and created a barrier to commercial and small businesses entering the Federal Government market. With tight profit margins on Federal Government contracts, companies will evaluate viability of entering such a market that now imposes executive compensation caps which will lower profit margins even more.
Response: GAO Report 13-566, issued
5. Financial Impact on Contractors
Comment: One respondent commented that this rule will have a direct impact on company cash flows that will act as a disincentive to contractors considering entering the Government market. Furthermore, this rule will lower profit margins and have a negative impact on cash flow which will force current contractors out of the Government market and weaken the defense industrial base.
Response: The FAR was revised to implement section 803 of the National Defense Authorization Act for Fiscal Year 2012 that mandated the expansion of the application of the contractor employee compensation cap.
6. Potential To Reduce Industrial Base
Comment: One respondent believed that application of this rule is contrary to Government policy to encourage small business participation in the Government market. In fact, contractors are given specific requirements for small business participation in Government contracts and this rule impacts the ability of contractors to comply with these requirements.
Response: This rule was established to implement the National Defense Authorization Act for Fiscal Year 2012. The Councils do not anticipate that this rule will have a significant economic impact on a substantial number of small businesses.
7. Additional Recordkeeping Requirements
Comment: Some respondents stated that the statement "imposes no reporting, recordkeeping, or other information collection requirements" is unrealistic since contractors will need to adjust their accounting systems to capture data required by this rule and maintain more than one billing structure.
Response: The rule does not contain any additional information collection requirements that require the approval of the
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated
IV. Regulatory Flexibility Act
DoD, GSA, and
DoD, GSA, and
The rule imposes no reporting, recordkeeping, or other information collection requirements. The rule does not duplicate, overlap, or conflict with any other Federal rules, and there are no known significant alternatives to the rule.
No comments were filed by the Chief Counsel for Advocacy of the
Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the
V. Paperwork Reduction Act
The final rule does not contain any information collection requirements that require the approval of the
List of Subjects in 48 CFR Parts 31 and 52
Interim Rule Adopted As Final Without Change
Accordingly, the interim rule amending 48 CFR parts 31 and 52 which was published in the
[FR Doc. 2014-12408 Filed 5-29-14;
BILLING CODE 6820-EP-P
Most Popular Stories
- National Retail Federation Reduces Sales Forecast
- Pandora Tumbles in Late Trading
- Sporty Ford Fiesta Fires on All 3 Cylinders
- Stop-Start Engines Save Gas, Reduce Emissions
- World Tensions Don't Curb Enthusiasm for Stocks
- Russia Fears Lasting Damage From Ukraine Crisis
- Visa, Amazon Results Drag Down the Street
- U.K. Economy Surpasses Pre-Crisis Peak
- Hispanic Leader Goes the Extra Mile
- Ohio State Band Chief Fired After Probe