The Department of Defense (DoD), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) have issued an interim final rule extending the cap on salary reimbursements to federal contractors to a larger group of contractor employees. Specifically, the rule would apply the senior “benchmark executive compensation amount” (currently $763,029 and applicable only to the top five executives at government contractors) to all contractor employees working for the DoD, NASA, and the Coast Guard. This rule implements section 803 of the National Defense Authorization Act (NDAA) of 2012.

The rule applies to contracts awarded on or after December 31, 2011 for costs incurred after January 1, 2012. A separate proposed rule would make this cap retroactive to costs incurred after January 1, 2012 under contracts awarded before December 31, 2011.

These regulatory measures follow other recent efforts to limit federal contractor reimbursements for the costs of employee compensation. The Senate’s immigration reform bill (S. 744) includes an amendment (S. Amt. 1268) that would limit reimbursement of “the costs of compensation of all executives and employees of contractors” employed for border security purposes to the vice president’s salary ($230,700).

In addition, Sen. Barbara Boxer (D-CA) recently introduced the Commonsense Contractor Compensation Act of 2013 (S. 1192), a bill that would similarly tie the maximum amount of all government contractor salary reimbursement to the vice president’s salary.