1. Commercial Items, Including Commercially Available Off-the-Shelf (COTS) Items

Comment: A number of respondents requested that the requirement to disclose executive compensation not apply to commercial item and COTS contracts. The respondents provided various reasons for the request including that the disclosure requirement--

Conflicts with the Federal Acquisition Streamlining Act of 1994 (Pub. L. 103-355);

Should not apply to privately held contracts; and

Is not supported by any evidence of a meaningful nexus between the amount a contractor pays in executive compensation and the likelihood the procuring agency is paying fair and reasonable prices for that contractor's goods and services.

A respondent indicated that FAR 52.204-10, Reporting Executive Compensation and First-Tier Subcontract Awards, is not an applicable commercial item clause as shown in FAR 52.301.

Response: The Transparency Act makes no exception for contracts involving the acquisition of commercial or COTS items, nor does it specifically state applicability to commercial items. The clause is shown as applicable to commercial items in FAR 52.301.

Pursuant to the requirements of 41 U.S.C 1906 (formerly 41 U.S.C. 430), the FAR Council has determined that it is not in the best interest of the Federal Government to exempt commercial item contracts from coverage under this rule, given that the Transparency Act was enacted to reduce "wasteful and unnecessary spending". Further, pursuant to the requirements of 41 U.S.C. 1907 (formerly 41 U.S.C. 431(a), and (b)), and 41 U.S.C. 104 (formerly 41 U.S.C. 431(c)) OFPP has determined that it is not in the best interest of the Government to exempt COTS items contracts from coverage under this rule (see 75 FR 39414). The Act required that OMB establish a free, public, Web site containing full disclosure of all Federal contract award information. Therefore, contracts for commercial items and COTS items must be reported.

FAR 52.204-10 is included in 52.212-5, Contract Terms and Conditions Required to Implement Statute or Executive Orders--Commercial Items, which is prescribed at 12.301(a)(4).

Comment: A respondent believed that not exempting commercial items conflicts with the Council's prior interpretation of the Transparency Act. The respondent stated that when establishing the Transparency Act Pilot program (FAR Case 2006-029), the Councils added Transparency Act to the list of laws not applicable to commercial item contracts. The respondent felt that the interim rule should have explained this reversal.

Response: There were decisions made for the purposes of implementing the Pilot on a limited basis that did not establish permanent policy for the implementation of the Transparency Act.