[Federal Register Volume 61, Number 133 (Wednesday, July 10, 1996)]
[Rules and Regulations]
[Pages 36305-36306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17469]
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DEPARTMENT OF DEFENSE
48 CFR Part 231
[DFARS Case 96-D314]
Defense Federal Acquisition Regulation Supplement; 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
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to implement Section 8086 of Public Law 104-61 by placing a ceiling on
allowable individual compensation under DoD contracts that are awarded
after July 1, 1996, when payments are from funds appropriated in fiscal
year 1996.
DATES: Effective date: July 10, 1996.
Comment date: Comments on the interim rule should be submitted in
writing to the address shown below on or before September 9, 1996, to
be considered in the formulation of the final rule.
ADDRESSES: Interested parties should submit written comments to:
Defense Acquisition Regulations Council, Attn: Ms. Sandra G. Haberlin,
PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC
20301-3062. Telefax number (703) 602-0350. Please cite DFARS Case 96-
D314 in all correspondence related to this issue.
FOR FURTHER INFORMATION CONTACT: Ms. Sandra G. Haberlin, (703) 602-
0131.
SUPPLEMENTARY INFORMATION:
A. Background
Section 8086 of the National Defense Appropriations Act for Fiscal
Year 1996 (Pub. L. 104-61) limits allowable costs for individual
compensation to $200,000 per year unless the Office of Federal
Procurement Policy (OFPP) establishes in the Federal Acquisition
Regulations guidance governing the allowability of individual
compensation. On June 10, 1996, OFPP advised that it has determined
that it will not alter the $200,000 ceiling on allowable individual
compensation costs contained in the Public Law. This restriction
applies to DoD contracts awarded after July 1, 1996, when payments are
from funds appropriated in fiscal year 1996.
The interim DFARS rule amends 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 definition
of compensation found in the FAR cost principle.
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. This rule implements Section 8086 of the National Defense
Appropriations Act for Fiscal Year 1996 (Pub. L. 104-61) and applies to
all DoD contracts issued after July 1, 1996. An interim rule is
necessary to 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 July 1, 1996,
using fiscal year 1996 funds. However, comments received in response to
the publication of this interim 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
contracts awarded to small entities use simplified acquisition
procedures or are awarded on a competitive, fixed-price basis, and
therefore the cost principles do not apply. In addition, this interim
DFARS rule applies only to DoD contractors who incur individual
compensation costs in excess of $200,000 per year in performing new
contracts awarded after July 1, 1996, using funds appropriated in
fiscal year 1996. An initial regulatory flexibility analysis has
therefore not been performed. Comments are invited from small
businesses 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
[[Page 36306]]
separately and cite 5 U.S.C. 601, et seq. (DFARS Case 96-D314), in
correspondence.
D. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (Pub. L. 104-13) does not apply
because the interim rule does not impose any additional reporting or
recordkeeping requirements which require the approval of the Office of
Management and Budget under 44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Part 231
Government procurement.
Michele P. Peterson,
Executive Editor, 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:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES
2. Section 231.205-6 is amended by revising paragraph (a)(2) to
read as follows:
231.205-6 Compensation for personal services.
(a)(2)(i) 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
(Section 8117 of Pub. L. 103-335).
(ii) Costs for individual compensation in excess of $200,000 per
year are unallowable under DOD contracts that are awarded after July 1,
1996, and are funded by fiscal year 1996 appropriations (Section 8086
of Pub. L. 104-61).
* * * * *
3. Section 231.303 is amended by revising paragraph (3) to read as
follows:
231.303 Requirements.
* * * * *
(3) The limitations on allowable individual compensation at
231.205-6(a)(2) (i) and (ii) also apply to this subpart.
4. Section 231.603 is revised to read as follows:
231.603 Requirements.
The limitations on allowable individual compensation at 231.205-
6(a)(2) (i) and (ii) also apply to this subpart.
5. Section 201.703 is revised to read as follows:
231.703 Requirements.
The limitations on allowable individual compensation at 231.205-
6(a)(2) (i) and (ii) also apply to this subpart.
[FR Doc. 96-17469 Filed 7-9-96; 8:45 am]
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