24226 Federal Register / Vol. 77, No. 78 / Monday, April 23, 2012 / Notices 

(202) 693–3010 (this is not a toll-free 

number). 

Questions of interpretation and/or 

enforcement of regulations referenced in 

this notice may be directed to: Michael 

S. Jones, Acting Administrator, Office of 

Policy Development and Research, 

Employment and Training 

Administration, U.S. Department of 

Labor, Room N–5641, 200 Constitution 

Avenue NW., Washington, DC 20210; 

telephone: (202) 693–3700 (this is not a 

toll-free number). 

This notice is available through the 

printed Federal Register and 

electronically via the http:// 

www.gpo.gov/fdsys/browse/ 

collection.action?collectionCode=FR 

Web site. Copies of this notice may be 

obtained in alternative formats (Large 

Print, Braille, Audio Tape or Disc), upon 

request, by calling (202) 693–0023 (not 

a toll-free number). TTY/TDD callers 

may dial toll-free (877) 889–5627 to 

obtain information or request materials 

in alternative formats. 

SUPPLEMENTARY INFORMATION: OMB has 

approved under the PRA information 

collection requirements contained in 

recently revised final regulations under 

the Immigration and Nationality Act 

published by the Department of Labor in 

the Federal Register on February 21, 

2012. See 77 FR 10038. The purpose of 

the Final Rule was to amend the H–2B 

regulations at 20 CFR part 655, Subpart 

A governing the certification of 

temporary employment of 

nonimmigrant workers in temporary or 

seasonal non-agricultural employment 

to provide for increased worker 

protections and improve program 

integrity. 

On April 8, 2012, OMB approved the 

Department’s information collection 

request under Control Number 1215– 

0466, thus giving effect to the 

requirements, as announced and 

published in the Federal Register on 

February 21, 2012, under the PRA. The 

current expiration date for OMB 

authorization for this information 

collection is April 30, 2015. 

Signed in Washington, this 16th day of 

April, 2012. 

Jane Oates, 

Assistant Secretary, Employment and 

Training Administration. 

[FR Doc. 2012–9613 Filed 4–20–12; 8:45 am] 

BILLING CODE 4510–FP–P 

OFFICE OF MANAGEMENT AND 

BUDGET 

Office of Federal Procurement Policy 

Determination of Benchmark 

Compensation Amount for Certain 

Executives 

AGENCY: Office of Federal Procurement 

Policy, OMB. 

ACTION: Notice. 

SUMMARY: The Office of Management 

and Budget is publishing the attached 

memorandum to the Heads of Executive 

Departments and Agencies announcing 

that $763,029 is the ‘‘benchmark 

compensation amount’’ for certain 

executives in terms of costs allowable 

under Federal Government contracts 

during contractors’ fiscal year 2011. 

This determination is required under 

Section 39 of the Office of Federal 

Procurement Policy Act, as amended (41 

U.S.C. 1127; formerly, 41 U.S.C. 435). 

The benchmark compensation amount 

applies to both defense and civilian 

agencies. 

FOR FURTHER INFORMATION CONTACT: 

Raymond Wong, Office of Federal 

Procurement Policy, at 202–395–6805. 

Lesley A. Field, 

Acting Administrator, Office of Federal 

Procurement Policy. 

MEMORANDUM FOR THE HEADS OF 

EXECUTIVE DEPARTMENTS AND 

AGENCIES 

FROM: Lesley A. Field, Acting 

Administrator, Office of Federal 

Procurement Policy 

SUBJECT: Determination of Benchmark 

Compensation Amount for Certain 

Executives, Pursuant to Section 39 of 

the Office of Federal Procurement 

Policy Act, as amended (41 U.S.C. 

1127) 

This memorandum sets forth the 

benchmark compensation amount for 

certain executives as required by 

Section 39 of the Office of Federal 

Procurement Policy (OFPP) Act, as 

amended (41 U.S.C. 1127; formerly, 41 

U.S.C. 435). The statutory benchmark 

amount limits the allowability of 

compensation costs under Federal 

Government contracts as implemented 

at FAR 31.205–6(p). In less technical 

terms, the statute places a cap on the 

amount of contractor-paid executive 

compensation that the Federal 

Government will reimburse, in the case 

of those contractors that are performing 

contracts that are of a cost-reimbursable 

or other cost-based nature. It should be 

noted that, while the statute places a 

cap on the amount that the Federal 

Government will reimburse the 

contractor, the statute does not limit the 

amount of compensation that the 

contractor actually pays to its 

executives; contractors can, and do, 

provide compensation to their 

executives that exceed the statutory 

benchmark compensation amount. 

Section 39 of the OFPP Act sets out 

a formula for determining the 

benchmark compensation amount. 

Specifically, the benchmark amount is 

set at the median (50th percentile) 

amount of compensation over a recent 

12-month period for the five most 

highly compensated employees in 

management positions at each home 

office and each segment of all publiclyowned companies with annual sales 

over $50 million, and the determination 

is based on analysis of data made 

available by the Securities and 

Exchange Commission. Compensation 

for the fiscal year means the total 

amount of wages, salaries, bonuses, 

restricted stock, deferred and 

performance incentive compensation, 

and other compensation for the year, 

whether paid, earned, or otherwise 

accruing, as recorded in the employer’s 

cost accounting records for the year. 

After consultation with the Director of 

the Defense Contract Audit Agency, 

OFPP has determined, pursuant to the 

requirements of Section 39, that the 

benchmark compensation amount for 

certain executives for the contractors’ 

fiscal year (FY) 2011 is $763,029. This 

amount is for contractors’ FY 2011 and 

subsequent contractor fiscal years, 

unless and until revised by OFPP. This 

benchmark compensation amount 

applies to contract costs incurred after 

January 1, 2011, under covered 

contracts of both the defense and 

civilian procurement agencies as 

specified in Section 39. 

This past fall, the Administration 

proposed that Congress, starting with 

FY 2011, replace the existing statutory 

formula for calculating the cap on the 

amount that the Federal Government 

will reimburse Federal contractors (both 

defense and civilian). This proposal was 

contained in the President’s Plan for 

Economic Growth and Deficit 

Reduction, which is on OMB’s Web site 

at http://www.whitehouse.gov/sites/ 

default/files/omb/budget/fy2012/assets/ 

jointcommitteereport.pdf. In place of the 

formula that is in Section 39, the 

President’s Plan proposed (on page 21) 

that Congress put in place a 

reimbursement cap that would be equal 

to the pay rate for the Federal 

Government’s most senior executives, 

who are the heads of the 15 Cabinet 

departments and certain other highlevel officials. These senior-most 


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Federal Register / Vol. 77, No. 78 / Monday, April 23, 2012 / Notices 24227 

Federal officials are paid at the rate set 

for positions at Level I of the Executive 

Schedule (5 U.S.C. 5312). During 

calendar year 2011, the pay for Level I 

positions was $199,700, as set forth in 

Schedule 5 to Executive Order 13561 of 

December 22, 2010 (75 FR 81817, 81822; 

December 29, 2010). 

The President’s proposal was in 

response to the fact that the existing 

statutory formula (enacted in 1997) has 

resulted in the reimbursement cap 

tripling since the mid-1990s: whereas 

the reimbursement ceiling for 1995 was 

$250,000, the statutory formula has 

resulted in substantial annual increases 

in the subsequent years, so that by FY 

2010 the reimbursement ceiling had 

reached $693,951. And, as this notice 

announces, the statutory formula has 

resulted in a reimbursement ceiling for 

FY 2011 of $763,029. This is an increase 

in just one year of nearly $70,000—and 

of 10%—in the amount that the 

taxpayers can be required to reimburse 

Federal contractors for the 

compensation that the contractors have 

decided to pay their executives. This 

rate of growth in the cap (both from 

1995 onward, and in this most recent 

year) has far outpaced the rate of 

inflation, the rate of growth of privatesector salaries generally, and the rate of 

growth of Federal salaries—forcing our 

taxpayers to reimburse contractors for 

levels of executive compensation that 

cannot be justified for Federal contract 

work. 

This is the direct result of the fact that 

the statutory formula sets the 

reimbursement ceiling, and increases it 

from one year to the next, by reference 

to considerations that have no 

relationship to the type of work that 

contractors are actually performing 

under Federal contracts that are costreimbursable or are otherwise costbased. As noted above, the formula 

under Section 39 requires that the 

reimbursement ceiling be set, and 

adjusted annually, by reference to the 

amount that equals the following: the 

median (50th percentile) amount of 

compensation, over a recent 12-month 

period, that all publicly-owned 

companies with annual sales over $50 

million have paid to their five most 

highly compensated employees in 

management positions at each home 

office and each segment. It is this 

formula, and not any comparable 

improvement in contractor performance 

(and the benefits that the taxpayers 

receive from these contracts), that has 

resulted in the one-year increase of 

$70,000 (10%) from FY 2010 to FY 

2011, and the tripling from 1995 to FY 

2011, in the amount that the taxpayers 

can be required to reimburse Federal 

contractors for the compensation that 

the contractors have chosen to pay to 

their senior executives. 

By proposing to replace the existing 

statutory formula with a reimbursement 

cap that is tied to the salary of a Cabinet 

official (such as the Secretary of 

Defense), the President’s Plan would 

bring parity between the amount that 

the American public pays for the senior 

executives of the Federal Government 

and for the senior executives of those 

contractors who perform work for the 

Federal Government on a costreimbursable or other cost-based 

arrangement. (As is the case with the 

current formula under Section 39 of the 

OFPP Act, the proposal in the 

President’s Plan would not impose any 

limits on the amount of compensation 

that a contractor pays to its executives; 

the proposed cap at the level of the 

salaries of Cabinet officials would limit 

only how much the taxpayers will 

reimburse the contractors for the 

compensation decisions that the 

contractors have chosen.) 

To date, Congress has not adopted the 

Administration’s proposal to replace the 

existing statutory formula for 

determining the reimbursement cap. 

However, in Section 803 of the recentlyenacted National Defense Authorization 

Act for FY 2012 (H.R. 1540; P.L. 112– 

81, December 31, 2011) (NDAA), 

Congress did extend the applicability of 

the existing cap to any contractor 

employee performing under a ‘‘covered 

contract’’ under 10 U.S.C. 2324 (which 

are contracts awarded by the 

Department of Defense, the Coast Guard, 

and NASA), with the exception that 

‘‘the Secretary of Defense may establish 

one or more narrowly targeted 

exceptions for scientists and engineers 

upon a determination that such 

exceptions are needed to ensure that the 

Department of Defense has continued 

access to needed skills and 

capabilities.’’ 

The effect of this new statutory 

provision is that, while the cap on 

reimbursement based on the Section 39 

formula is retained, it will now apply to 

more employees—essentially all 

employees performing covered contracts 

for the Department of Defense, Coast 

Guard, and NASA (with narrowly 

targeted exceptions). This means that, 

for the first time, there will be a 

statutory cap (at the Section 39 level) on 

reimbursement for employee 

compensation for all employees 

performing under covered contracts, 

rather than only for a limited number of 

executives as has been the rule under 

Section 39 until now. 

However, this broader application of 

the Section 39 cap does not apply to FY 

2011. That is because Section 803 of the 

NDAA provides that its amendments 

‘‘shall apply with respect to costs of 

compensation incurred after January 1, 

2012.’’ Accordingly, the benchmark 

compensation amount in this notice, for 

FY 2011, applies only to the same 

limited number of contractor executives 

as did the Section 39 caps for FY 2010 

and prior years. The broader application 

called for in Section 803 of the NDAA 

will be implemented through regulation 

and addressed in future notices. 

Questions concerning this 

memorandum may be addressed to 

Raymond Wong, OFPP, at 202–395– 

6805. 

[FR Doc. 2012–9747 Filed 4–20–12; 8:45 am] 

BILLING CODE P 

NATIONAL SCIENCE FOUNDATION 

Proposal Review Panel for Social and 

Economic Sciences; Notice of Meeting 

In accordance with the Federal 

Advisory Committee Act (Pub. L. 92– 

463 as amended), the National Science 

Foundation announces the following 

meeting: 

Name: Site visit review of the 

Nanoscale Science and Engineering 

Center (NSEC) at Arizona State 

University by the Division Social and 

Economic Sciences (#10748). 

Dates & Times: 

May 2, 2012; 7 p.m.–9 p.m. 

May 3, 2012: 7:45 a.m.–9:15 p.m. 

May 4, 2012: 8 a.m.–3:30 p.m. 

Place: Arizona State University, 

Tempe, AZ. 

Type of Meeting: Part open. 

Contact Person: Dr. Frederick Kronz, 

Program Director; Science, Technology 

and Society Program; Division of Social 

and Economic Sciences, Room 990, 

National Science Foundation, 4201 

Wilson Boulevard, Arlington, VA 22230, 

Telephone (703) 292–7283. 

Purpose of Meeting: To provide 

advice and recommendations 

concerning further support of the NSEC 

at the Arizona State University. 

Agenda: 

Wednesday, May 2, 2012 

7 p.m.–9 p.m. Closed—Executive 

Session 

Thursday, May 3, 2012 

7:45 a.m.–4:30 p.m. Open—Review 

of the NSEC 

4:15 p.m.–5:45 p.m. Closed— 

Executive Session 

5:45 p.m.–9:15 p.m. Open—Poster 

Session; Dinner 


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