Inverted Corporations
Federal Acquisition Circular (FAC) 2005-34, issued July 1, 2009, contains a new interim rule prohibiting the US Government from contracting with "inverted corporations". As defined in the rule, an inverted corporation is one that "that used to be incorporated in the United States, or used to be a partnership in the United States, but now is incorporated in a foreign country, or is a subsidiary whose parent corporation is incorporated in a foreign country." As the rule explains, the reason a corporation would do this is to avoid United States taxes on business income generated in foreign countries. Countries such as Bermuda, Barbados, and the Cayman Islands are well known tax havens; but the statute is not restricted to just those countries however. Another term in wide use for these corporations is ‘‘corporate expatriate’’. Congress has enacted both contract statutes and tax statutes to try to discourage corporations from expatriating themselves, and this new rule implements those statutory requirements in the FAR. The complete rule (and promulgating comments) can be perused here.
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Recovery Accountability and Transparency Board Checklist
The Recovery Accountability and Transparency Board (RATB) recently released a checklist designed to assist Federal agencies in avoiding fraud, waste, and abuse in the award of Recovery Act funds. Read the list here.
Combat Laser Pointers
In February 2006, “*2,000 Green Laser Pointers Rushed to Troops in Iraq described the innovative approach of American troops in Iraq, which had been picked up the US Army’s Rapid Fielding Initiative. In a great victory for Power Point warriors everywhere, American troops had discovered that same powerful but eye-safe green laser pointers used in their civilian jobs were much more effective than bright spotlights, when it came to stopping oncoming vehicles without the need for gunfire. That’s a very important consideration in counterinsurgency campaigns, where maintaining the support of the populace and acting as its protector forms the foundation of the American approach.
Read more...
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EADS Overtakes Boeing as No. 1 A&D Company
The global aerospace and defense industry is worth more than $595 billion per year. The 10 largest aerospace and defense firms, in terms of revenue, in 2008 were: 1. EADS
2. Boeing
3. Lockheed Martin
4. Northrop Grumman
5. BAE Systems
6. General Dynamics
7. Raytheon
8. United Technologies
9. Finmeccanica
10. GE Aviation EADS revenue last year was $62.3 billion compared with Boeing's $60.9 billion. From the report: EADS, the multi-country European aerospace company with an initial public offering and formation in 2000, edged out Boeing as the world's largest A&D company in sales revenue. EADS recorded sales revenue of $62.3 billion in 2008, up 10.6% over 2007. EADS' strong 2008 revenue performance is attributable to higher deliveries of commercial aircraft, helicopters, higher sales of commercial satellites, and revenue growth in its defense programs. . . . Boeing's sales revenue declined by 8.3% in 2008 to $60.9 billion. The decline in Boeing revenue was primarily due to lower revenues at Boeing Commercial Airplanes (BCA), resulting from fewer deliveries following a work stoppage. The International Association of Machinists and Aerospace Workers (IAM) went on labor strike following the expiration of their collective bargaining agreement in 2008. Boeing delivered 104 fewer than expected airplanes due to this IAM labor strike. Overall, Boeing experienced a sales revenue decline of $5.5 billion in 2008. Had this decline not occurred, the industry would have experienced 8.9% sales revenue growth, a 12% increase over the 7.9% industry growth cited earlier. Deloitte also compared stock performance among companies and evaluated the commercial aircraft and defense industries. (Read the full report.
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OFPP Establishes Executive Compensation Ceiling for FY 2009
The OMB's Office of Federal Procurement Policy (OFPP) has published its annual Executive Compensation Benchmark in the Federal Register. The 2009 Executive Compensation Benchmark ($684,181) establishes the FY 2009 ceiling for Executive Compensation for those contractors subject to the allowability requirements of the FAR 31.205-6 (Compensation) Cost Principle. Compensation amounts (as calculated pursuant to the Cost Principle) in excess of the OFPP Benchmark are unallowable for the top 5 highest-paid executives of the corporation and each of its segments. It is important to note, however, that compensation amounts below the ceiling value are still subject to the "reasonableness" test of allowability. View the full notice here
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