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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: August 3, 2001

SUBJECT: Federal Acquisition Regulation (FAR); Signing and Retention of High-Technology Workers

SOURCE: Federal Register, August 3, 2001, Vol. 66, No. 150, page 40837

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Withdrawal of Proposed Rule

SYNOPSIS: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have agreed to withdraw the proposed revision to Federal Acquisition Regulation (FAR) 31.205-34, Recruitment Costs, which would have made allowable signing and retention bonuses that contractors often must offer in order to recruit and retain workers that have critical technical skills.

EDITOR'S NOTE: For more on the proposed rule being withdrawn, see the December 28, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Signing and Retention of High-Technology Workers."

FOR FURTHER INFORMATION CONTACT: Jeremy Olson, Procurement Analyst, 202-501-3221.

SUPPLEMENTAL INFORMATION: On December 28, 2000, the Councils published a proposal to amend FAR 31.205-34 to explicitly allow signing bonuses to recruit, as well as retention bonuses to retain, employees with critical skills (such as scientists and engineers in the software and systems integration fields). The Councils viewed this revision as a clarification since the FAR does not explicitly disallow those types of expenses.

Some of those responding to the proposed rule expressed concern that the rule (1) is more restrictive than current FAR provisions, (2) may result in decreased use of bonuses, and (3) makes it more difficult for government contractors to compete with other employers for workers with critical technical skills. After review of the comments, the Councils have concluded that the proposed rule is unnecessary, since recruitment and retention bonuses are already allowable costs on government contracts if they are reasonable and allocable. Therefore, the proposed rule is withdrawn from consideration.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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