March 26, 1998
DP (DAR)
In reply refer to
MEMORANDUM FOR DIRECTORS OF DEFENSE AGENCIES DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT,
ASN (RD&A) /ABM
DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE (CONTRACTING), SAF/AQC DEPUTY ASSISTANT SECRETARY OF TNE ARMY (PROCUREMENT)
DEPUTY DIRECTOR (ACQUISITION), DEFENSE LOGISTICS AGENCY
SUBJECT: Limitation on Allowability of Compensation for Certain Contractor Personnel
We have amended Part 231 of the Defense Federal Acquisition Regulation Supplement (DFARS) to remove certain limitations on individual compensation coats. Federal Acquisition Regulation 31.205-6(p), as revised on February 23, 1998, by Federal Acquisition Circular 97-04 (63 FR 9066), contains the sole statutory limitation on allowable senior executive compensation costs incurred after January 1, 1998, under new or previously existing contracts.
This final DFARS rule is effective immediately, and will be included in a future Defense Acquisition Circular.
Eleanor R. Spector
Director, Defense Procurement
Attachment
(f)(l) In accordance with Section 8122 of Pub. L. 104-61, and similar sections in subsequent Defense appropriations acts, costs for bonuses or other payments in excess of the normal salary paid by the contractor to an employee, that are part of restructuring costs associated with a business combination, are unallowable under DOD contracts funded by fiscal year 1996 or subsequent appropriations. This limitation does not apply to severance payments or early retirement incentive payments. (See 231.205-70(b) for the definitions of "business combination" and "restructuring costs.")
(2) The cognizant administrative contracting officer may waive the prohibition in 231.303(1) if the governing body of the institution of higher education requests the waiver to simplify the institution's overall management of DoD cost reimbursements under DoD contracts.
([3]) Under 10 U.S.C. 2249, the costs cited in 231.205-22(a) are unallowable.
Under 10 U.S.C. 2249, the costs cited in 231.205-22(a) are unallowable.
Under 10 U.S.C. 2249, the costs cited in 231.205-22(a) are unallowable.