Rule Requires Federal Contractors to Disclose Executive Compensation and Subcontract Awards
A new interim rule has been issued requiring federal contractors to disclose the compensation of their five most highly compensated executives and any first-tier subcontract awards of $25,000 or more. The rule, aimed at providing more transparency in government contracts by making this information available to the public, was issued by the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration (the FAR Council).
These requirements do not apply to classified contracts, contracts with individuals, or contractors and subcontractors with a gross income less than $300,000. Contractors are only required to disclose the compensation of their top five executives if they receive at least 80 percent of their annual gross revenue and $25 million from federal awards and if the executives do not already publicly report compensation information.
These requirements will be phased in. From July 8, 2010, when the interim rule became effective, until September 30, 2010, only contractors with a prime contract award of $20 million or more must report newly awarded subcontracts. From October 1, 2010 to February 28, 2011, contractors with a prime contract award of $550,000 or more must report newly awarded subcontracts. Starting March 1, 2011, contractors with prime contract awards of $25,000 or more must report newly awarded subcontracts.
This rule amends the Federal Acquisition Regulation to implement the section of the Federal Funding Accountability and Transparency Act of 2006, which required the Office of Management and Budget to create a free, public website with contract award information. The interim rule notes that its reporting requirements "are sweeping in their breadth" and "may have a significant economic impact on a substantial number of small entities."
Rulemaking on Affirmative Action for Applicants and Employees with Disability
The OFCCP issued an advanced notice of proposed rulemaking inviting public comments regarding how to improve employment opportunities for individuals with disabilities. The OFCCP seeks information on how federal contractors and subcontractors can better monitor their recruitment efforts with respect to individuals with disabilities. In particular, the OFCCP is requesting information regarding the current efforts being made by federal contractors and subcontractors to meet their affirmative action obligations. The OFCCP wants to hear about employment practices that work well in recruiting, hiring and retaining people with disabilities.
Significantly, the OFCCP is also asking a series of questions which could lead to the transformation of the current program into a data based analysis comparing utilization of people with disabilities with the availability of individuals with disabilities in the workforce and the establishment of placement goals and timetables. The OFCCP asserts that requesting all applicants to voluntarily self-identify as to whether they are disabled will not violate the Americans with Disabilities Act. The OFCCP is also requesting information as to whether it can require government contractors to make all technology utilized by applicants, including internet and intranet web-site, kiosks and other technological links, fully accessible. This issue is also being addressed by the Department of Justice.
Proskauer will be monitoring this regulatory development closely and will keep you advised as to how this progresses and issues that develop as they arise.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
