This is for those of you who missed the information on the new Cap on executive compensation. Most of us are nowhere near this cap! However, you should at least be aware of it.
Please note that this limit applies to only the largest contractors. Small and midsized contractors would not normally be able to claim compensation in this amount anyway without being challenged by DCAA as unreasonable. Not that one can't try to claim it as reasonable anyway.
The Office of Federal Procurement Policy published the maximum benchmark compensation amount that will be allowable under government contracts for the period 01/01/2021 through 12/31/21.
The new amount is $568,000, and applies to the five (5) most highly compensated employees in management positions at each home office and each segment of a contractor.
The compensation subject to this limitation includes wages, salary, bonuses, deferred compensation, and employer contributions to defined contribution pension plans.
All other elements of compensation are subject to the allowability provisions of the cost principles in FAR Part 31. This determination is required under Section 39 of the Office of Federal Procurement Policy (OFPP) Act (41 U.S.C. 435), as amended.
The benchmark compensation amount applies equally to both defense and civilian procurement agencies.
These Contractor Compensation Caps are applicable for Contracts Awarded after June 24, 2014 (FAR 31.205-6(p)(4)).
For Costs Incurred Cap Amount
1/1/2021 – 12/31/2021 $568,000
1/1/2020 – 12/31/2020 $555,000
1/1/2019 – 12/31/2019 $540,000