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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: April 23, 2002

SUBJECT: Federal Acquisition Regulation (FAR); Compensation for Personal Services

SOURCE: Federal Register, April 23, 2002, Vol. 67, No. 78, page 19951

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR 31.205-6, Compensation for Personal Services, be amended to improve its clarity without changing its meaning.

DATES: Comments on the proposed rule must be submitted by June 24, 2002.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2001-008@gsa.gov. Cite FAR case 2001-008 in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Jeremy Olson, 202-501-3221.

SUPPLEMENTAL INFORMATION: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have analyzed the cost principle at FAR 31.205-6 and have developed a proposal for clarifying most of it. The analysis excluded paragraph (j), which addresses pension costs; paragraph (k), which addresses deferred compensation other than pensions; and paragraph (o), which addresses postretirement benefits other than pensions. The Councils are planning to review these paragraphs later.

The proposed rule would revise FAR 31.205-6 as follows:

• In paragraph (a), the list of specific types of compensation would be removed because it is unnecessary.
  
  
• Paragraph (b)(2)(i) would be moved to new paragraph (a)(6) and expanded to cover members of "limited liabilities companies" because their compensation also requires special consideration.
  
  
• Paragraph (b) would be revised to consolidate all the reasonableness provisions, including those dealing with labor-management agreements currently addressed in paragraph (c).
  
  
• Delete the language in paragraph (b)(1) that places the burden of demonstrating reasonableness on the contractor because it is redundant of language currently in paragraph (a) of FAR 31.201-3, Determining Reasonableness. However, the introduction to the proposed rule states, "By removing this language, the Councils are not intending to imply that this burden has shifted to the government."
  
  
• Paragraph (h) would become new paragraph (g), and it would emphasize that backpay for underpaid work is allowable if required by a negotiated settlement, order, or court decree.
  
  
• Other changes would be made to clarify, improve the structure, and remove redundancies throughout the cost principle.

In addition, the proposed rule would add to FAR 31.001, Definitions, the following definition for "compensation for personal services": "all remuneration paid currently or accrued, in whatever form and whether paid immediately or deferred, for services rendered by employees to the contractor."

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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