A short article from Wiely Rein LLP on the finalize compensation cap rule. The cap remains at $487,000 for total compensation (wages, salary, bonuses, deferred compensation, and employer contributions to defined contribution pension plans). The Cap was set at what the Obama administration considered to be the equivalent of the Vice President compensation, however, it is only equivalent to the VP’s salary, excluding all the taxpayer perks that come with the position such as housing. So while contractors have to include everything with calculating total compensation against the Cap to ensure the government (taxpayers) does not pay too much to contractors, the taxpayers are not afforded the same protection when it comes to the VP.

A few important facts pointed out in the article.

  1. The interim rule was effective on June 24, 2014, so any contract awarded on or after June 24, 2014 this Cap applies.
  2. There are narrowly targeted exceptions that may impact your firm and you should dig into the regulations to understand these exception.
  3. For contractors with multi year contracts that started before June 24, 2014 you will be dealing with what is called Blended Caps. If applies to your company the last paragraph of this article points out where in the FAR is guidance on blended caps and DCAA requirements related to approved blended caps.

If you need further assistance feel free to contact us through our website at www.tdgovernmentsolutions.biz or email at tim.diguiseppe@tdgovernmentsolutions.biz

FAR-Council-Finalizes-Rule-Capping-Allowable-Compenation for all employees 10-2016