Federal Register / Vol. 63, No. 90 / Monday, May 11, 1998 /Rules and Regulations 25779

(d)(1) and (d)(3), paragraph (g)

introductory text, paragraph (g)(3) and

the concluding text of paragraph (g),

redesignating paragraphs (h)(1) through

(h)(5) and (i) as paragraphs (i)(1)

through (i)(5) and (j), revising newly

designated paragraphs (i)(1) and (j),

adding new paragraph (h), and revising

paragraph (k) introductory text and

paragraph (k)(3) to read as follows:’’

2. On page 51798, in the first column,

second line from the bottom, insert the

designation ‘‘(1)’’ after the

designation‘‘(i)’’ and before the word

‘‘If’’.

3. On page 51798, in the second

column, insert 5 asterisks in a line

following paragraph (i)(1) and

proceeding paragraph (j).

Magalie Roman Salas,

Secretary.

[FR Doc. 98–12411 Filed 5–8–98; 8:45 am]

BILLING CODE 6712–01–M

DEPARTMENT OF ENERGY

48 CFR Part 970

RIN 1991–AB43

Acquisition Regulation: Limitation on

Allowability of Compensation for

Certain Contractor Personnel

AGENCY: Department of Energy.

ACTION: Final rule.

SUMMARY: The Department of Energy

(DOE) amends its Acquisition

Regulation to incorporate the statutory

provisions contained in Section 808 of

the National Defense Authorization Act

for Fiscal Year 1998 (Pub. L. 105–85).

Section 808 establishes a cap on

allowable compensation costs for

certain officers of Department of

Defense and civilian agency contractors

which applies to costs of compensation

incurred after January 1, 1998 for

executive compensation.

DATES: This rule is effective on May 11,

1998.

ADDRESSES: Terrence D. Sheppard,

Office of Policy (HR–51), Office of

Procurement and Assistance Policy,

Department of Energy, 1000

Independence Avenue S.W.,

Washington, D.C. 20585.

FOR FURTHER INFORMATION CONTACT:

Terrence D. Sheppard (202) 586–8193;

e-mail terry.sheppard@hq.doe.gov; fax

(202) 586–0545.

SUPPLEMENTARY INFORMATION:

I. Background

II. Section by Section Analysis

III. Procedural Requirements

A. Review Under Executive Order 12866

B. Review Under Executive Order 12988

C. Review Under the Paperwork Reduction

Act

D. Review Under the National

Environmental Policy Act

E. Review Under Executive Order 12612

F. Review Under Small Business

Regulatory Enforcement Fairness Act of

1996

G. Review Under the Unfunded Mandates

Reform Act of 1995

I. Background

This notice amends the Department of

Energy Acquisition Regulation (DEAR)

based on provisions contained in

Section 808 of the National Defense

Authorization Act for Fiscal Year 1998

(Pub. L. 105–85). Section 808

establishes a cap on allowable

compensation costs for certain officers

of Department of Defense and civilian

agency contractors which applies to

costs of compensation incurred after

January 1, 1998, under covered

contracts entered into before, on, or after

the date of enactment of the Act. Section

808 states that 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, are unallowable.

Further, 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.

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.

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.

The term ‘‘senior executive’’, with

respect to a corporation, means the chief

executive officer of the corporation or

any individual acting in a similar

capacity for the corporation; the four

most highly compensated employees in

management positions of the

corporation other than the chief

executive officer; and 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.

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.

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 and the voting stock of which is

publicly traded.

The term ‘‘fiscal year’’ means a fiscal

year established by a contractor for

accounting purposes.

II. Section by Section Analysis

1. The authority for Part 970 is

restated.

2. Section 970.3102–2, Compensation

for personnel services, is revised by

adding a new paragraph (q) which

addresses the statutory compensation

limits.

3. Section 970.5204–13(d)(8) is

revised by adding a new paragraph (viii)

which addresses the statutory

compensation limits.

4. Section 970.5204–14(d)(8) is

revised by adding a new paragraph (viii)

which addresses the statutory

compensation limits.

III. Procedural Requirements

A. Review Under Executive Order 12866

Today’s regulatory action has been

determined not to be a ‘‘significant

regulatory action’’ under Executive

Order 12866, ‘‘Regulatory Planning and

Review,’’ (58 FR 51735, October 4,

1993). Accordingly, this action was not

subject to review under that Executive

Order by the Office of Information and

Regulatory Affairs of the Office of

Management and Budget (OMB).

B. Review Under Executive Order 12988

With respect to the review of existing

regulations and the promulgation of

new regulations, section 3(a) of

Executive Order 12988, ‘‘Civil Justice

Reform,’’ 61 FR 4729 (February 7, 1996),

imposes on Executive agencies the

general duty to adhere to the following
25780 Federal Register / Vol. 63, No. 90 / Monday, May 11, 1998 /Rules and Regulations

requirements: (1) Eliminate drafting

errors and ambiguity; (2) write

regulations to minimize litigation; and

(3) provide a clear legal standard for

affected conduct rather than a general

standard and promote simplification

and burden reduction. With regard to

the review required by section 3(a),

section 3(b) of Executive Order 12988

specifically requires that Executive

agencies make every reasonable effort to

ensure that the regulation: (1) Clearly

specifies the preemptive effect, if any;

(2) clearly specifies any effect on

existing Federal law or regulation; (3)

provides a clear legal standard for

affected conduct while promoting

simplification and burden reduction: (4)

specifies the retroactive effect, if any; (5)

adequately defines key terms; and (6)

addresses other important issues

affecting clarity and general

draftmenship under any guidelines

issued by the Attorney General. Section

3(c) of Executive Order 12988 requires

Executive agencies to review regulations

in light of applicable standards in

section 3(a) and section 3(b) to

determine whether they are met or it is

unreasonable to meet one or more of

them. The Department of Energy has

completed the required review and

determined that, to the extent permitted

by law, the regulations meet the relevant

standards of Executive Order 12988.

C. Review Under the Paperwork

Reduction Act

No new information or recordkeeping

requirements are imposed by this

rulemaking. Accordingly, no OMB

clearance is required under the

Paperwork Reduction Act of 1980 (44

U.S.C. 3501 et seq.).

D. Review Under the National

Environmental Policy Act

DOE has concluded that promulgation

of this rule falls into a class of actions

which would not individually or

cumulatively have significant impact on

the human environment, as determined

by DOE’s regulations (10 CFR Part 1021,

Subpart D) implementing the National

Environmental Policy Act of 1969

(NEPA) (42 U.S.C. 4321 et seq.).

Specifically, this rule is categorically

excluded from NEPA review because

the amendments to the DEAR do not

change the environmental effect of the

rule being amended (categorical

exclusion A5). Therefore, this rule does

not require an environmental impact

statement or environmental assessment

pursuant to NEPA.

E. Review Under Executive Order 12612

Executive Order 12612 (52 FR 41685,

October 30, 1987) requires that

regulations, rules, legislation, and any

other policy actions be reviewed for any

substantial direct effects on States, on

the relationship between the National

Government and the States, or in the

distribution of power and

responsibilities among the various

levels of Government. If there are

sufficient substantial direct effects, then

the Executive Order requires the

preparation of a federalism assessment

to be used in all decisions involved in

promulgating and implementing a

policy action. This rule revises certain

policy and procedural requirements.

States which contract with DOE will be

subject to this rule. However, DOE has

determined that this rule will not have

a substantial direct effect on the

institutional interests or traditional

functions of the States.

F. Review Under Small Business

Regulatory Enforcement Fairness Act of

1996

As required by 5 U.S.C. 801, the

Department of Energy will report to

Congress promulgation of the rule prior

to its effective date. The report will state

that it has been determined that the rule

is not a ‘‘major rule’’ as defined by 5

U.S.C. 804(3).

G. Review Under the Unfunded

Mandates Reform Act of 1995

The Unfunded Mandates Reform Act

of 1995 (Pub. L. 104–4) generally

requires a Federal agency to perform a

detailed assessment of costs and

benefits of any rule imposing a Federal

Mandate with costs to State, local or

tribal governments, or to the private

sector, of $100 million or more. This

rulemaking only affects private sector

entities, and the impact is less than

$100 million.

List of Subjects in 48 CFR Part 970

Government procurement.

Issued in Washington, DC on April 22,

1998.

Richard H. Hopf,

Deputy Assistant Secretary for Procurement

and Assistance Management.

For the reasons set out in the

preamble, Chapter 9 of Title 48 of the

Code of Federal Regulations is amended

as set forth below.

PART 970—DOE MANAGEMENT AND

OPERATING CONTRACTS

1. The authority citation for Part 970

continues to read as follows:

Authority: Sec. 161 of the Atomic Energy

Act of 1954 (42. U.S.C. 2201), sec 644 of the

Department of Energy Organization Act,

Public Law 95–91 (42 U.S.C. 7254).

2. Section 970.3102–2 is amended by

adding a new paragraph (q) to read as

follows:

970.3102–2 Compensation for personal

services.

* * * * *

(q) Limitation on allowability of

compensation for certain contractor

personnel. Costs incurred for

compensation of a senior executive in

excess of the benchmark compensation

amount determined applicable for the

contractor fiscal year by the

Administrator, Office of Federal

Procurement Policy, are unallowable.

Allowable costs of executive

compensation shall be determined

pursuant to Federal Acquisition

Regulation 31.205–6(p).

3. Section 970.5204–13 is amended by

adding a new paragraph (d)(8)(viii)

immediately after paragraph (d)(8)(vii)

and before the Note to read as follows:

970.5204–13 Allowable costs and fixed-fee

(management and operating contracts).

* * * * *

(d)(8) * * *

(viii) Compensation of a senior

executive, provided that such

compensation does not exceed the

benchmark compensation amount

determined applicable for the contractor

fiscal year by the Administrator, Office

of Federal Procurement Policy. Costs of

executive compensation shall be

determined pursuant to Federal

Acquisition Regulation 31.205–6(p).

* * * * *

4. Section 970.5204–14 is amended by

adding a new paragraph (d)(8)(viii)

immediately after paragraph (d)(8)(vii)

and before the Note to read as follows:

970.5204–14 Allowable costs and fixed-fee

(support contracts).

* * * * *

(d)(8) * * *

(viii) Compensation of a senior

executive, provided that such

compensation does not exceed the

benchmark compensation amount

determined applicable for the contractor

fiscal year by the Administrator, Office

of Federal Procurement Policy. Costs of

executive compensation shall be

determined pursuant to Federal

Acquisition Regulation 31.205–6(p).

* * * * *

[FR Doc. 98–12413 Filed 5–8–98; 8:45 am]

BILLING CODE 6450–01–P