Tuesday, July 13, 2010

New Reporting Requirements for Government Contractors - Part 2

Yesterday we discussed one of the two main provisions of FAC (Federal Acquisition Circular) 2005-44 issued on July 8th, 2010 - the new requirement for prime Government contractors to report the awards of subcontracts. Today we will highlight the provisions of the Circular that require the disclosure of executive compensation information. Both of these provisions come from The Federal Funding Accountability and Transparency Act (FFATA) of 2008, a Law designed to empower American's with "... the ability to hold the government accountable for each spending decision. The end result is to reduce wasteful spending in the government".

Who has to report? The executive compensation reporting requirement applies to contractors and subcontractors who, in their preceding fiscal year, received 80 percent or more of their annual gross revenues form Federal sources and those Federal revenues were more than $25 million, and the public does not already have access to the information (such as through SEC reporting requirements).

What is compensation? Compensation includes salaries, bonuses, stock, stock options, stock appreciation rights, earnings for services under non-equity incentive plans, changes in pension values and above-market earnings on deferred compensation which is not tax qualified (see FAR 52.204-10(a)).

Who are executives? Executives are officers, managing partners, or any other employee in management position. The regulation applies to the top five highest compensated executives.

Where is the information reported? The information is reported at http://www.ccr.gov/.

Does the requirement apply to subcontractors? Yes, first-tier subcontractors only.

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