LIMITATION ON ALLOWABILITY OF COMPENSATION FOR CERTAIN CONTRACTOR PERSONNEL.

SEC. 808. LIMITATION ON ALLOWABILITY OF COMPENSATION FOR CERTAIN CONTRACTOR PERSONNEL. (a) Certain Compensation Not Allowable as Costs Under Defense Contracts.—(1) Subsection (e)(1) of section 2324 of title 10, United States Code, is amended by adding at the end the following: “(P) Costs of compensation of senior executives of contractors for a fiscal year, regardless of the contract funding source, to the extent that such compensation exceeds the benchmark compensation amount determined applicable for the fiscal year by the Administrator for Federal Procurement Policy under section 39 of the Office of Federal Procurement Policy Act (41 U.S.C. 435).”. (2) Subsection (1) of such section is amended by adding at the end the following: “(4) The term ‘compensation’, for a year, means the total amount of wages, salary, bonuses and deferred compensation for the year, whether paid, earned, or otherwise accruing, as recorded in an employer’s cost accounting records for the year. “(5) The term ‘senior executive’, with respect to a contractor, means— “(A) the chief executive officer of the contractor or any individual acting in a similar capacity for the contractor; “(B) the four most highly compensated employees in management positions of the contractor other than the chief executive officer; and “(C) in the case of a contractor that has components which report directly to the contractor’s headquarters, the five most highly compensated employees in management positions at each such component. “(6) The term ‘fiscal year’ means a fiscal year established by a contractor for accounting purposes.”. (b) Certain Compensation Not Allowable as Costs Under Non-Defense Contracts.—(1) Subsection (e)(1) of section 306 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 256) is amended by adding at the end the following: “(P) Costs of compensation of senior executives of contractors for a fiscal year, regardless of the contract funding source, to the extent that such compensation exceeds the benchmark compensation amount determined applicable for the fiscal year by the Administrator for Federal Procurement Policy under section 39 of the Office of Federal Procurement Policy Act (41 U.S.C. 435).”. (2) Such section is further amended by adding at the end the following: “(m) Other Definitions.—In this section:111 STAT. 1837 “(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 executive’, with respect to a contractor, means— “(A) the chief executive officer of the contractor or any individual acting in a similar capacity for the contractor; “(B) the four most highly compensated employees in management positions of the contractor other than the chief executive officer; and “(C) in the case of a contractor that has components which report directly to the contractor’s headquarters, the five most highly compensated individuals in management positions at each such component. “(3) The term ‘fiscal year’ means a fiscal year established by a contractor for accounting purposes.”. (c) Levels of Compensation Not Allowable.—(1) The Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.) is amended by adding at the end the following: “SEC. 39. 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, United States Code, and section 306(e)(1)(P) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 256(e)(1)(P)), 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) 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 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; and111 STAT. 1838 “(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. “(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.”. (2) The table of sections in section 1(b) of such Act is amended by adding at the end the following: “Sec. 39. Levels of compensation of certain contractor personnel not allowable as costs under certain contracts.”. (d) Regulations.—Regulations implementing the amendments made by this section shall be published in the Federal Register not later than the effective date of the amendments under subsection (e). (e) Effective Date.—The amendments made by this section shall— (1) take effect on the date that is 90 days after the date of the enactment of this Act; 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. (f) Exclusive Applicability.—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. (g) Definitions.—In this section: (1) The term “covered contract” has the meaning given such term in section 2324(1) of title 10, United States Code, and section 306(1) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 256(1)). (2) The terms “compensation” and “senior executive” have the meanings given such terms in section 2324(1) of title 10, United States Code, and section 306(m) of the Federal Property and Administrative Services Act of 1949.