Section 702 of the Bipartisan budget Act of 2013 (BBA) established a cap of $487,000 per year on the amount the Federal Government will reimburse contractors employee compensation on contracts with defense and civilian agencies. By law, this amount must be adjusted annually to reflect the change in the Employment Cost Index for all workers, as calculated by the Department of Labor, Bureau of Labor Statistics (BLS). This cap applies to all contracts awarded after June 24, 2014.
The cap has been adjusted each year since it was instituted. For costs incurred in 2018, the cap now sits at $525,000. See the table below for adjusted cap amounts for all years.
Note, these compensation caps limits the reimbursement of compensation costs for all contractor employees on all contracts awarded by all executive agencies of the Government after June 24, 2014. For caps on executive compensation on contracts awarded prior to that date, see Allowable Compensation Costs.
One final note, these caps do not limit what contractors can pay to their employees. It only limits was contractors can request reimbursement from the Government.
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