§ 435. — Levels of compensation of certain contractor personnel not allowable as costs under certain contracts.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 41USC435]
TITLE 41--PUBLIC CONTRACTS
CHAPTER 7--OFFICE OF FEDERAL PROCUREMENT POLICY
Sec. 435. Levels of compensation of certain contractor personnel
not allowable as costs under certain contracts
(a) Determination required
For purposes of section 2324(e)(1)(P) of title 10 and section
256(e)(1)(P) of this title, the Administrator shall review commercially
available surveys of executive compensation and, on the basis of the
results of the review, determine a benchmark compensation amount to
apply for each fiscal year. In making determinations under this
subsection the Administrator shall consult with the Director of the
Defense Contract Audit Agency and such other officials of executive
agencies as the Administrator considers appropriate.
(b) Benchmark compensation amount
The benchmark compensation amount applicable for a fiscal year is
the median amount of the compensation provided for all senior executives
of all benchmark corporations for the most recent year for which data is
available at the time the determination under subsection (a) of this
section is made.
(c) Definitions
In this section:
(1) The term ``compensation'', for a fiscal year, means the
total amount of wages, salary, bonuses and deferred compensation for
the fiscal year, whether paid, earned, or otherwise accruing, as
recorded in an employer's cost accounting records for the fiscal
year.
(2) The term ``senior executives'', with respect to a
contractor, means the five most highly compensated employees in
management positions at each home office and each segment of the
contractor.
(3) The term ``benchmark corporation'', with respect to a fiscal
year, means a publicly-owned United States corporation that has
annual sales in excess of $50,000,000 for the fiscal year.
(4) The term ``publicly-owned United States corporation'' means
a corporation organized under the laws of a State of the United
States, the District of Columbia, the Commonwealth of Puerto Rico,
or a possession of the United States the voting stock of which is
publicly traded.
(5) The term ``fiscal year'' means a fiscal year established by
a contractor for accounting purposes.
(Pub. L. 93-400, Sec. 39, as added Pub. L. 105-85, div. A, title VIII,
Sec. 808(c)(1), Nov. 18, 1997, 111 Stat. 1837; amended Pub. L. 105-261,
div. A, title VIII, Sec. 804(c)(1), Oct. 17, 1998, 112 Stat. 2083.)
Codification
Another section 39 of Pub. L. 93-400 is classified to section 436 of
this title.
Amendments
1998--Subsec. (c)(2). Pub. L. 105-261 amended par. (2) generally.
Prior to amendment, par. (2) read as follows: ``The term `senior
executive', with respect to a corporation, means--
``(A) the chief executive officer of the corporation or any
individual acting in a similar capacity for the corporation;
``(B) the four most highly compensated employees in management
positions of the corporation other than the chief executive officer;
and
``(C) in the case of a corporation that has components which
report directly to the corporate headquarters, the five most highly
compensated individuals in management positions at each such
component.''
Effective Date of 1998 Amendment
Amendment by Pub. L. 105-261 applicable with respect to costs of
compensation of senior executives incurred after Jan. 1, 1999, under
covered contracts entered into before, on, or after Oct. 17, 1998, see
section 804(d) of Pub. L. 105-261, set out as a note under section 2324
of Title 10, Armed Forces.
Effective Date
Section 808(e) of Pub. L. 105-85 provided that: ``The amendments
made by this section [enacting this section and amending section 256 of
this title and section 2324 of Title 10, Armed Forces] shall--
``(1) take effect on the date that is 90 days after the date of
the enactment of this Act [Nov. 18, 1997]; and
``(2) apply with respect to costs of compensation incurred after
January 1, 1998, under covered contracts entered into before, on, or
after the date of the enactment of this Act.''
Regulations
Section 808(d) of Pub. L. 105-85 provided that: ``Regulations
implementing the amendments made by this section [see Effective Date
note set out above] shall be published in the Federal Register not later
than the effective date of the amendments under subsection (e) [see
Effective Date note set out above].''
Exclusive Applicability of Provisions Limiting Allowability of
Compensation for Certain Contractor Personnel
Section 808(f) of Pub. L. 105-85 provided that: ``Notwithstanding
any other provision of law, no other limitation in law on the
allowability of costs of compensation of senior executives under covered
contracts shall apply to such costs of compensation incurred after
January 1, 1998.''
Definitions for Purposes of Section 808 of Pub. L. 105-85
Section 808(g) of Pub. L. 105-85, as amended by Pub. L. 105-261,
div. A, title VIII, Sec. 804(c)(2), Oct. 17, 1998, 112 Stat. 2083,
provided that: ``In this section [enacting this section, amending
section 256 of this title and section 2324 of Title 10, Armed Forces,
and enacting provisions set out as notes under this section]:
``(1) The term `covered contract' has the meaning given such
term in section 2324(l) of title 10, United States Code, and section
306(l) of the Federal Property and Administrative Services Act of
1949 (41 U.S.C. 256(l)).
``(2) The terms `compensation' and `senior executives' have the
meanings given such terms in section 2324(l) of title 10, United
States Code, and section 306(m) of the Federal Property and
Administrative Services Act of 1949.''
Section Referred to in Other Sections
This section is referred to in section 256 of this title; title 10
section 2324.
