OMB tightens reporting screws on subcontracts, executive pay

Administration unveils interim rule that demands more dollar details from contractors.

The Obama administration continued its course toward tougher contractor oversight with an interim rule requiring contractors to report executive salaries and first-tier subcontracts.

The Office of Management and Budget has directed that regulators amend the Federal Acquisition Regulation (FAR) to initiate the subcontract award reporting under the Federal Funding Accountability and Transparency Act of 2006, according to a notice in today’s Federal Register.

The interim rule phases in the reporting requirements for subcontracts of more than $25,000.

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Until Sept. 30, any newly awarded subcontract must be reported if the prime contract award amount is $20 million or more.

From Oct. 1, 2010, until Feb. 28, 2011, any newly awarded subcontract must be reported if the prime contract award amount was $550,000 or more.

Starting March 1, 2011, any newly awarded subcontract must be reported if the prime contract award amount was $25,000 or more.

Contractors’ reported information will be posted on

Contractors will also have to tell the government how much they’re paying employees.

By the end of the month following the month when a contract was awarded, and annually from then on, the contractor must report the names and total compensation of each of the five highest paid executives for the contractor’s preceding completed fiscal year, the notice states.

For example, for a contract awarded on July 8, the company would have to report the salaries by Aug. 31.

Executives include officers, managing partners or any other employees in management positions. Their compensation includes salaries , bonuses, awarded stocks and more, according to the notice.

Companies must report the compensation information to the Central Contractor Registration.

The public won’t have access to the specific information.

The requirement to report executives’ compensation applies to companies that earn at least 80 percent of their annual gross revenue from federal contracts and other federal funding and if they received $25 million or more in contracts or another form of federal funding, the notice states.

“The reporting requirements of the Transparency Act are sweeping in their breadth, and are intended to empower the American taxpayer with information that may be used to demand greater fiscal discipline from both executive and legislative branches of government,” regulators wrote in the notice.

Officials are taking comments on the rule through Sept. 7 as they draft the final rule, the notice states.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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