Sponsor Salary Restrictions: Department of Defense


This document describes compensation limits imposed by the Department of Defense (DOD) on senior personnel working under a DOD contract award(s).


The Department of Defense sets compensation limits in compliance with the National Defense Appropriation Act (NDAA). NDAA Section 808 for Fiscal Year 1998 (Public Law 105-85) requires the Office of Federal Procurement Policy (OFPP) to review surveys of executive compensation and determine a benchmark amount of allowable compensation for senior contractor personnel. The determined compensation amount remains in effect for subsequent fiscal years until revised by OFPP. Implementation of NDAA Section 808 is in the Code of Federal Regulations (48 CFR Part 31), Section 31.205-6, Compensation for personal services.

In Section 803 of the recently-enacted National Defense Authorization Act for FY 2012 (H.R. 1540; P.L. 112-81, December 31, 2011 (NDAA), the applicability of the existing cap was extended to any contractor employee performing under a 'covered contract" under 10 U.S.C 2324 (which are contracts awarded by the Department of Defense, the Coast Guard, and NASA). This new extension applies to "costs of compensation incurred after January 1, 2012."

Salary Limitation

The current limit is $763,029.


The salary limitation applies to:


Senior executive

Effective January 2, 1999, senior contractor personnel are the five most highly compensated employees in management positions at each home office and each segment of the contractor, whether or not the home office or segment reports directly to the contractor’s headquarters.

Prior to January 2, 1999, "senior executive" means


National Defense Authorization Act

Code of Federal Regulations (48 CFR Part 31), Section 31.205-6, Compensation for personal services.

Federal Register

Federal Acquisition Circular

Change History



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