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The Federal Funding Accountability and Transparency Act of 2006, as amended by Section 6202 of Public Law 110-252, or "the Transparency Act" has resulted in new disclosure requirements for entities receiving Federal grants and procurement contracts.  Implemented to establish additional accountability for government spending through public disclosure, the objective of the Transparency Act is to limit government waste.  The new regulations will attempt to accomplish this goal through new reporting requirements for prime contractors and grant recipients by making available certain information to the public. 

Entities subject to the Transparency Act are all non-Federal entities receiving any procurement contract or grant with over $25,000 in total funding.  These requirements apply to all business types, but exclude any awards funded in whole or in part with funds under the American Recovery and Reinvestment Act of 2009, "the Recovery Act" as well as other exceptions.  Note that there are separate but similar reporting requirements for Federal funding under the Recovery Act.

In addition to other information, entities subject to the Transparency Act must report the total compensation of their five most highly compensated executives.  This information must be reported in connection with the entity's registration with the Central Contractor Registration.  Total compensation includes salary and bonus, stock options / awards / SARS, changes in pension values, earnings under non-equity incentive plans, deferred compensation, or other compensation.  This information will be made available to the public at www.usaspending.gov. 

Another reporting requirement relates to subcontracts and subawards made on or after October 1, 2010.  All entities subject to the requirements of the Transparency Act are required to report information related to their first-tier subcontractors / subawardees, with subcontracts / subawards  in excess of $25,000 that do not include Recovery Act funding (subject to exceptions).  By the end of the month following the execution of a subcontract / subaward, the prime contractor / grantor must report details of the agreement to the FFATA Subaward Reporting System (FSRS).  The information required to be reported includes:
Name, location, NAICS code, CFDA number of the entity receiving the award
Amount, title, and purpose of the award
Transaction type
Names and total compensation of the 5 most highly compensated officers of the recipient entity in the preceding fiscal year (subject to exceptions).
Effective October 1, 2010 this requirement is applicable to all Federal grants.  Procurements under Federal contracts will be phased in as follows:
Effective October 1, 2010 – subcontracts over $550,000 must be reported.
Effective March 1, 2011 – all subcontracts over $25,000 must be reported.
The requirement to report compensation for the five highest paid executives is exempted for those contractors / grantees and subcontractors / subawardees who did not receive at least 80% and $25,000,000 or more of their annual gross revenues from federal procurement contracts / subcontracts and Federal financial assistance awards / subawards subject to the Transparency Act.

The Transparency Act, has implemented these reporting requirements in attempt to control government waste.  While creating more accountability as it pertains to Federal spending, it does represent a significant change in the degree to which prime contractors and grant recipients must disclose information once thought of as highly confidential.  As such information will be made available to the public, this will have a considerable impact on all prime contractors and grant recipients.

For more information please contact Rubino & McGeehin at 301.564.3636, or please visit www.rubino.com.