Hunton Employment & Labor Perspectives

On May 24, 2024, the Federal Acquisition Regulatory Council (FAR Council) issued a notice and request for comments regarding a proposed information collection for federal contractors—FAR 52.204-10(d)(2) for first-tier subcontract information and FAR 52.204-10(d)(3) for executive compensation of first-tier subcontractors. The proposed rule notes this type of collection was previously approved, and there is now a renewed focus.[1]

In their notice in the Federal Register, the FAR Council invited the public to comment on the proposed information collection. The FAR Council is open to comments regarding whether the information has practical utility, how to enhance the quality of information gathered, and insight on the accuracy of the projected burden of the information collection. The annual burden of the information collection is predicted to include 42,231 respondents, 266,169 total annual responses, and an anticipated total of 506,617 hours. The FAR Council is also seeking comments on how to minimize the burden for those responding. The deadline to submit comments for consideration is July 23, 2024.

The proposed information collection requires procurement federal contractors to report first-tier subcontractor awards. Specifically, the information reported would include the name of the subcontractor, the date and amount of the subcontractor award, and the subcontractor’s physical address and primary performance location. Additionally, the report requests the prime contract number, awarding agency name and code, funding agency name and code, and government contracting office code.

The proposed information collection also requires prime federal contractors to report the executive compensation for their first-tier subcontractor’s five most highly compensated executives. The prime contractor would only be required to report this information if 80 percent or more of the first-tier subcontractor’s annual gross revenue in the preceding fiscal year was from Federal contracts, loans, grants, cooperative agreements, and other forms of Federal financial assistance, and the amount received exceeded $25,000,000. Additionally, the prime contractor does not have to report this information if the public already has access to the compensation information through other periodic reports filed.

This proposed information collection is an indication of future reporting requirements for federal contractors down the road. While this information collection only asks for first-tier subcontractor reporting, future information collections are likely to require second or third-tier subcontractor reporting. More in-depth reporting becomes increasingly burdensome for federal contractors, especially if they do not currently have the information they are being asked to report. If this proposed information collection is implemented, federal contractors will need to establish processes and mechanisms to timely gather the information they are required to report from their first-tier subcontractors.

Through this information collection, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) will be able to identify additional subcontractors subject to their regulations. Subcontractors who may have previously relied on flying under the radar will no longer be able to. Regardless of the outcome of this proposed information collection, prime federal contractors should expect some type of increased standard for subcontractor reporting in the near future.

[1] The prior rule was approved for a six month period in 2010.