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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


April 2007
Vol. VIII, No. 4

CONTENTS


GSA Administrator Points Finger at IG As Primary Source of Controversy and Woes
Executive Compensation Benchmark Raised to $597,912
The FEMAAR is Abolished
FAC 2005-16 Tidies Up Some Loose Ends
Numbered Synopsis Notes Proposed for Deletion
DOD Undertakes a Little More Spring Cleaning



GSA Administrator Points Finger at IG
As Primary Source of Controversy and Woes

In a statement prepared for her testimony before the House Committee on Oversight and Government Reform on March 28, 2007, General Services Adminstrator Lurita Doan placed the blame for most of her recent tribulations squarely on the General Services Administration (GSA) Office of Inspector General (OIG), characterizing her relationship with the OIG as one that was allowed to "fester."

Doan claimed that the OIG was retaliating against her for examining the OIG's fiscal controls and financial management. "The OIG was not comfortable with this first serious review of their internal spending decisions and budget review...the IG fiercely resisted this effort, and many of the visits, information, and reports that have been provided to you and other members of Congress over the past several months stem from this disagreement."

The GSA administrator characterized her attempt to award a $20,000 contract without competition to a firm run by a "professional friend" as an "error" and a "procedural mistake" -- one that was excusable because GSA's Chief of Staff and General Counsel saw that the contract was terminated and "not a penny of taxpayer dollars was spent."Doan addresses several other issues involving the OIG:

For more on the allegations that precipitated this hearing, see the February 2007 Federal Contracts Perspective article "House Government Reform Committee to Investigate GSA Administrator's Alleged Contract-Steering."



Executive Compensation Benchmark Raised to $597,912

Paul Denett, the Office of Federal Procurement Policy (OFPP) administrator, has decided to increase the "benchmark compensation amount" for senior executives by $51,223, from $546,689 to $597,912 -- a 9.4% increase. This figure is "the median amount of the compensation provided for all senior executives of all benchmark corporations [those with annual sales in excess of $50 million] for the most recent year..." It was determined based on commercially available surveys and after consultation with the director of the Defense Contract Audit Agency.

The $597,912 is the maximum amount of compensation (that is, wages, salary, bonuses, deferred compensation, and employer contributions to defined contribution pension plans) that is allowable under federal contracts for "the five most highly compensated employees in management positions at each home office and each segment of the contractor." However, the benchmark compensation amount is not a limit on the compensation an executive may receive -- $597,912 is the maximum allowable amount the government will reimburse contractors for their senior executives' compensation. See paragraph (p) of FAR 31.205-6, Personal Compensation.

The benchmark compensation amount applies to contract costs incurred after January 1, 2007, for contractor fiscal year 2007 and subsequent contractor fiscal years unless and until revised by OMB, which is required to set the benchmark compensation amount annually.



The FEMAAR is Abolished

The Federal Emergency Management Administration (FEMA) is abolishing the FEMA Acquisition Regulation (FEMAAR) because FEMA was transferred to the Department of Homeland Security (DHS) on March 1, 2003, and is now subject to the Homeland Security Acquisition Regulation (HSAR) (http://www.dhs.gov/xlibrary/assets/opnbiz/cpo_hsar_finalrule.pdf).

FEMA believes it is important to make this action effective as soon as possible not only to remove inapplicable regulatory text, but to be consistent with DHS uniform department-wide acquisition regulations.



FAC 2005-16 Tidies Up Some Loose Ends

Federal Acquisition Circular (FAC) 2005-16 consists of several housekeeping rules, none of which makes any signifcant changes to the Federal Acquisition Regulation (FAR).



Numbered Synopsis Notes Proposed for Deletion

Several FAR changes were proposed last month that would delete synopses notes, address title evidence, require subcontractor reporting, and require a new certification on tax delinquency.



DOD Undertakes a Little More Spring Cleaning

Spring is in the air, so the Department of Defense decided to continue its spring cleaning by addressing several "loose ends."



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