A Federal Register notice has requested public comments on “alternative measures” for capping the reimbursement of contractor employee compensation.  This notice follows a June 24, 2014 interim rule from the Department of Defense (“DOD”), the General Services Administration, and the National Aeronautics and Space Administration that implements Section 702 of the Bipartisan Budget Act of 2013.

Section 702 set a $487,000/year cap on the amount of contractor-paid compensation that defense and civilian agencies will reimburse—a development we discussed in December 2013.  For the moment, the Section 702 cap must be adjusted annually to reflect changes in the Bureau of Labor Statistics’ Employment Cost Index.  Still, Section 702 also directed the Office of Management and Budget and DOD to report to Congress on “alternative benchmarks and industry standards for compensation . . . .”  Thus, this notice “seek[s] public input on alternative benchmarks that would provide a more appropriate measure of allowable compensation,” including “appropriate inflators” to use in lieu of the Employment Cost Index.

Comments must be submitted by October 16, 2014, with the subject “Report on Benchmark Alternatives.”