RGCI - 2023 Compensation Cap Update

Executive Compensation Limit for Government Contractors

  • Year ending December 31, 2022:  $589,000
  • Year ending December 31, 2023:  $619,000

Section 702 of the Bipartisan Budget Act (BBA) of 2013 provides the calculation to be used in determining the compensation limit for government contractors. While contractors may provide compensation which is greater than this cap, these excess dollars will be unallowable. Of note, Section 702 provides a waiver of the cap amount, if approved by the head of an executive agency, for scientists, engineers, or other specialists “upon determination that such exceptions are needed to ensure that the executive agency has continued access to needed skills and capabilities.”

In order to be considered allowable, contractors must also consider 31.205-6, to include reasonableness of compensation  (In other words, compensation which is less than the cap, is NOT automatically considered to be reasonable!).  While engaging in compensation planning for 2023, we encourage you to review and adhere to your policies and document your processes and findings when benchmarking for compensation reasonableness. If, while doing your due diligence, you find that employees are significantly above the benchmark, consider and maintain documentation to support these compensation decisions.

Our experienced team of previous DCAA auditors and compensation professionals are here to support you in this process and throughout an audit.

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Written by John Shire and Sheri Buchanan

John Shire and Sheri Buchanan

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle.

Topics: Employee & Contractor Compensation, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)