The Executive Compensation limit for government contractors, as established by Section 702 of the Bipartisan Budget Act of 2013 (BBA; Pub. L. 113-67, December 26, 2013), for the year ending December 31, 2018, is $525,000. The calculation for the allowable compensation limit is based on the Prior Year’s Compensation limit times the change in the Employment Cost Index prepared by the Bureau of Labor Statistics (BLS), illustrated by the formula and calculations below:
Current FY Cap Amount = Prior FY Cap Amount x CY ECI/PY ECI for all workers as per BLS table 4.
This BBA cap replaces the previous statutory formula cap for contracts awarded as of June 24, 2014. This new cap limits the total compensation costs that can be reimbursed or claimed not only for executives but for all contractors’ employees as well.
For those preparing their incurred cost submission (ICS) for the FYE 2017, the maximum allowable compensation that can be claimed is $512,000 instead of the $487,000 limit many contractors have been using for several years. Both for the direct and indirect employees. However, the Executive Compensation Schedule (Supplemental B) will still only reflect the top five executives of the business.
If you have further questions about Executive Compensation or Incurred Cost Submissions, please contact our government contracting specialists or Donna Dominguez at 301.231.6200.