FAR Rule Amended to Require Subcontract and Executive Compensation Reporting

7.21.2010 - Posted in E&B Alerts - Government Contracts

Recently, the Federal Acquisition Regulation (FAR) § 52.204-10, "Reporting Executive Compensation and First-Tier Subcontract Awards," was amended to incorporate subcontract reporting requirements for first-tier subcontracts and executive compensation under the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The new clause must be included in all new unclassified contract awards valued at $25,000 or more. Additionally, all indefinite delivery contracts whose ordering periods extend beyond July 8, 2010 must also be modified to include the clause. Importantly, "first-tier subcontract" as defined by the rule "excludes supplier agreements with vendors, such as long-term arrangements for materials or supplies that would normally be applied to a contractor's general and administrative expenses or indirect costs."

The reporting requirement will be phased-in over a nine-month period. Effective immediately, any newly awarded subcontract must be reported if the prime contract award was greater than or equal to $20,000,000. As of October 1, 2010, the rule imposes this reporting obligation on prime contracts equal to or greater than $550,000. Finally, as of March 1, 2011, all subcontracts under prime contracts of at least $25,000 must be reported.

Under the rule, contractors are responsible for reporting the following information for each first-tier subcontract via the FFATA Subaward Reporting System (FSRS) portal:

  1. Unique Identifier (DUNS Number) for the subcontractor and its parent company;

  1. Name of the subcontractor;

  1. Amount of the subcontract award;

  1. Date of the subcontract award;

  1. Description of the products or services (including construction) being provided;

  1. Subcontract number (assigned by contractor);

  1. Subcontractor's physical address, including the Congressional District;

  1. Subcontractor's primary performance location, including the Congressional District;

  1. The prime contract number, and order number if applicable;

  1. Awarding agency name and code;

  1. Funding agency name and code;

  1. Government contracting office code;

  1. Treasury Account Symbol (TAS); and

  1. The applicable North American Industry Classification System code (NAICS).


Additionally, contractors are required to report the names and total compensation of each of the five most highly compensated executives for themselves and any first-tier subcontractor awarded a contract of $25,000 or greater at the end of the month following the award and annually thereafter if (i) the contractor or subcontractor received more than $25,000,000 of annual gross revenue from Federal contracts and subcontracts, loans, grants, and cooperative agreements (and the total of such federal revenue is 80% or more of the firm's total revenue); and (ii) the public does not otherwise have access to information about the compensation of the executives through reports filed under the Securities Exchange Act or the Internal Revenue Code.

The text of FAR 52.204-10 is available athttps://www.acquisition.gov/FAR/current/html/52_200_206.html#wp1141649. For more information, please contact­ Mark Blando at [email protected] or (612) 236-0160.