What is FAR 52.204-10 – Reporting Executive Compensation and First-Tier Subcontract Awards?
FAR 52.204-10 requires the contractor to report executive compensation of first-tier subcontracts with a value of $30,000 unless an exemption applies. Contracting Officers are required to include the FAR clause 52.204-10, Reporting Executive Compensation and First-Tier Subcontract Awards, in all solicitations and contracts of $30,000 or more. A first-tier subcontract is a subcontract awarded directly by the contractor for the purpose of acquiring supplies or services for performance of a prime contract. This does not include long term arrangements between the prime and first-tier subcontractors for material or supplies that benefit multiple contracts.
What is the Reporting Requirement?
FAR 52.204-10 requires prime contractors, as part of its annual registration in the System for Award Management (SAM.gov), to report the names and total compensation of each of the five most highly compensated executives. This requirement is only applicable if the prime’s annual gross revenues from Federal contractors, subcontractors, grants, cooperative agreements in the preceding fiscal year were at least 80% and $25,000,000, and the public does not have access to the information through Security and Exchange Commission (SEC) filings.
Prime contractors are to report the five most highly compensated executives for the first-tier subcontractor based on the same criteria; if the subcontractor’s annual gross revenues from Federal contracts, loans, grants, cooperative agreements in the previous year exceed 80% and $25,000,000 and the public does not have access to the compensation information through SEC filings.
Prime contractors do not have to report subcontract awards when:
- The prime contractor’s gross income in the previous tax year from all sources is under $300,000 or,
- The subcontractor’s gross income in previous tax year from all sources is under $300,000.
Contracts in which the required reporting would disclose classified information are exempt from the prime and subcontract reporting requirement.
If the executive compensation is not reportable because the subcontractor meets an exemption or is already reporting the information, no further action is required by the prime. However, the procurement file of the prime contractor should include documentation detailing the exemption.
Is there a Time Period of when to Report the Information Into www.fsrs.gov?
Yes, the prime is required to report the executive compensation along with subcontract/PO information in www.fsrs.gov by the end of the month following the month of award of the subcontract. Additionally, the prime is required to report the information annually throughout the performance of the subcontract, if the subcontractor meets the criteria above.
Anything Else I Should be Aware of?
Yes. First-Tier subcontract awards should not be split to a value below the threshold to avoid the reporting requirements under this clause.
The FFATA requirement requires all reported information be made public. Prime contractors are responsible for notifying subcontractors that the information will be made public. A best practice would be to document this notification in writing and include it in the procurement file.
Do I Need a Written Policy?
Yes. There should be a written policy documenting the procedure for compensation collection, exemptions, the reporting requirement and time period for reporting in www.fsrs.gov and the process for notifying a subcontractor that the data will be public.
Redstone GCI assists contractors throughout the U.S. and internationally with understanding the Government’s expectations in reporting Executive Compensation.
Lynne is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to Commercial Item Determinations and support, Cost Accounting Standards, DFARS Business System Audits, Proposals, and Incurred Cost. Prior to joining Redstone Government Consulting, Lynne served in several capacities with DCAA and DCMA for over 35 years. Professional Experience Lynne began her career working with DCAA in the Honeywell Resident Office, Clearwater, FL in 1984. Lynne’s experience included various positions which involved conducting or reviewing forward proposals or rate audits, financial capability audits, progress payments, accounting and estimating systems, cost accounting standards, claims and disclosure statement reviews. She is an expert in FAR, DFARS, CAS and testified as an expert witness. Lynne assisted in drafting the commercial item guidance for DCAA Headquarters. Lynne was assigned as a Regional Technical Specialist where she provided guidance to 20 field offices on highly complex or technical issues relative to forward pricing, financial capability or progress payment issues. As an Assistant for Quality, she was involved in reviewing and ensuring audit reports were in compliance with policy and GAGAS as well as made NASBA certified presentations to the staff including but not limited to billing reviews, CAS, unallowable cost and progress payments. To enhance her experience in government contracting, Lynne accepted a position with DCMA in 2015 as part of the newly organized DCMA Cadre of Experts in the Commercial Item Group. This included performing reviews of prime contractor’s assertions and/or commercial item determinations as well as performing price analyses. Lynne was a project lead and later became a lead analyst where she engaged with the buying commands on requests and reviewed price analysis reviews performed by a team of 5 analysts. She also assisted the DCMA CPSR team relative to commercial items and co-instructed the Commercial Item Training presented to DCMA. Education Lynne earned a Bachelor of Science Degree in Accounting from the University of Central Florida. Certifications State of Florida Certified Public Accountant State of Alabama Certified Public Accountant Defense Acquisition Workforce Improvement Act (DAWIA) Level III- Auditing DAWIA Level III – Contracting