D. Paperwork Burden

Comments: A respondent was concerned about the potential unintended and unnecessary burden the rule will have on wholesale distributors who distribute products for hundreds of vendors who will independently report the same information. The respondent believed that the rule will impose additional burdens and costs that will affect the healthcare system in general, as the information required to be reported by prime contractors is duplicative of information separately required of first-tier subcontractors. A respondent was concerned with the rule's assumption that the executive compensation is an annual reporting requirement. The respondent suggested that the Councils' estimate does not take into account time required to provide information from privately held companies, and that the estimated cost is based on the number of firms that may have to report, not the actual number of reports required because of contract awards. The respondent believed that using contract awards is clearly a better basis for estimating the reporting requirements. The respondent also believed that some executive compensation data will need reporting multiple times, and that the rule does not exempt firms that have previously disclosed in the current fiscal year from reporting a second, third, or hundredth time.

Response: The time required to conduct research and obtain information specifically for the disclosure of compensation information, especially from first-tier subcontractors, was not considered in the public reporting burden published with the interim rule. FAR 52.204-10(d) provides that the contractor is required to report the five most highly compensated executives for each first-tier subcontractor. Many of the required subcontract award data elements will be pre-populated by the Government. Information not pre-populated (e.g., first-tier subcontractor name, address, primary place of performance subcontract number, subcontract amount, description of product or service, etc.), should be readily known or available to the contractor to permit ease in reporting. Disclosing compensation and the first-tier subcontract award information may require updating, but such updating will be infrequent and, at best, not more than once a year. The rule will have an impact on all Government contractors including healthcare wholesale distributors. However, because the reporting system is designed to pre-populate disclosures from CCR into FSRS, wholesale distributors will not necessarily independently report the same information for hundreds of vendors that will also disclose the required compensation information. The revisions to the definition of "first-tier subcontractor" allow some flexibility for the contractor to determine its first-tier subcontractors. FAR 52.204-10(a) eliminates the potential for contractors reporting vendor agreements that benefit multiple contracts and/or are generally considered a part of a contractor's general and administrative expenses or indirect cost. The reporting requirements are not necessarily new, and were first introduced to Government contractors on September 6, 2007, under FAR case 2006-029, and later on March 31, 2009, as part of the reporting requirements for the American Recovery and Reinvestment Act of 2009, under FAR case 2009-009. The reporting requirements in these FAR cases provided Government contractors, first-tier subcontractors, and those wishing to do business with the Government ample time to anticipate implementation of the statutory reporting requirements, and the ability to comply with the requirements once they became mandatory.