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B-161604 1 (1968-05-13)

handle is hein.gao/gaobaaegf0001 and id is 1 raw text is: I~A ED )COMPTR B-161604 Dear Mr. Chairman: -?_4 I W. - .- iNot to be rekcGd outsi e G 2 .r exccpt on VI C Z Pc P pt;-Y of Lg>~' L:..,a .-.ccrd of vi~ich is h~ crt Rep~3~n Zort LDcpartment The accompanying report presents the results of our survey into the review and approval oficontrattor executive arnd professional com- pensatio--f $25,000 or moe a year by admirdstrative contracting of- ficera of'te Department of Defense and certain other Federal agencies. This survey was made in response to your- letter of M Iay 17, 197,-ex pressing your interest in the efforts being made to control salaries of employees of contractor; who derive a significant portion o t ,usi- ness fron Government contracts. W. l t-. We conducted this survey to obtain informrntion on the agencies' rnaagement systems established for the review, evaluation, and ap- proval of contractor em-loyee compensation and to observe these man- agement systems in operationf. The $25,000-or-maore criterion has been set forth in several of the agencies' procurement instructions and/or directives as the salary level rcquiring Pocial attention by ad- ministrative contracting officers. In general, our survey indicated that administrative contracting officers, in-dis chargng their responsibilities for the review and ap- proval of contractor executive and professional compensation (herein- ,ter referred to as executive compensation), need: (1) more clearly defined standards or criteria for determining the reasonableness of contractor executive compensation, (2) definitive procedures for evalu- ating contractor executive compen-ation, and (3) Li some instances, personnel knowledgeable in compensation. mattsrs who can assist the adrninstrative contracting officers in performing their assigned tasks in this area of contract administration. We did not make an in-depth and comprehensive review of this aspect of contract administration. However, the survey data that we obtained from the headquarters level of seven Government agencies and from 36 of their contract administration components indicated that, in general, the reviews performed by administrative contracting officers were superficial and rot effective because these oaicers lacked a sound basis for determining the reasonableness of the execu- tive compensation established by the contractors. Although there were 1t Oi'sb1 -) OLLER GENERAL OF THE UNITED STATES WASHINGTON, D.C. 0548 1-1a 7_1.3, 1968 MIS - C19K.21 Egi,

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