Overview
FAR Subpart 4.14 implements the Federal Funding Accountability and Transparency Act (FFATA), requiring federal contractors to report data regarding first-tier subcontract awards and the total compensation of their five most highly compensated executives. This subpart aims to provide public transparency for federal spending, making the reported data accessible via USAspending.gov.
Key Rules
- Threshold for Applicability: These requirements apply to all contracts with a total value of $40,000 or more.
- Reporting Scope: Reporting is strictly limited to first-tier subcontractors; contractors are not required to report on lower-tier subcontractors under this specific subpart.
- Executive Compensation: Contractors must report the total compensation of their top five highest-paid executives (and those of their first-tier subcontractors) if they meet specific revenue thresholds defined in the associated contract clause.
- Exemptions:
- Classified information is never required to be disclosed.
- Entities that had a gross income of less than $300,000 in the previous tax year are exempt from reporting requirements.
- System Integration: Data from the Federal Procurement Data System (FPDS) pre-populates the Federal Subcontract Reporting System (FSRS) to assist contractors in reporting.
Responsibilities
- Contracting Officers (COs):
- Must insert the clause 52.204-10 in all solicitations and contracts valued at $40,000 or more (unless the contract is exempt from FPDS reporting).
- Responsible for correcting data in FPDS if a contractor identifies errors that prevent accurate reporting.
- Must exercise contractual remedies and document failures in the contractor’s performance evaluation (CPARS) if the contractor fails to comply.
- Agencies:
- Must review contractor reports on a quarterly basis to ensure consistency with contract information.
- Must notify contractors of inconsistencies and require corrections or explanations.
- Contractors:
- Must report required subcontract and executive compensation data via fsrs.gov.
- Must notify the CO if FPDS data is incorrect and interferes with their ability to report.
Practical Implications
- Public Disclosure Sensitivity: Contractors and first-tier subcontractors must be aware that executive compensation becomes public record via USAspending.gov. This can be a point of sensitivity for private companies or those in highly competitive markets.
- Compliance Linked to Past Performance: Failure to comply with these reporting requirements is not just a clerical oversight; it is a matter of record that can negatively impact a contractor’s CPARS (Contractor Performance Assessment Reporting System) rating, potentially damaging their ability to win future government work.
- Administrative Burden on Small Contracts: Because the threshold is relatively low ($40,000), even small businesses must maintain the administrative capacity to track subcontractor awards and report them timely in the FSRS system.
- Data Integrity: Since FSRS relies on FPDS for pre-population, errors made by the government at the time of award (such as using a generic entity identifier) can create significant compliance hurdles for the contractor, necessitating active communication between the contractor and the CO to resolve data mismatches.