AASHTO (American Association of State Highway and Transportation Officials) has recently updated its National Compensation Matrix for 2021 and it is now available on the AASHTO website.

What is the National Compensation Matrix and who developed it?

According to AASHTO, State DOTs must obtain reasonable assurance that executive compensation costs claimed by engineering consultants are reasonable and otherwise allowable. To promote consistency in this process, a group was formed to prepare a National Compensation Matrix (NCM) for use in determining reasonable levels of executive compensation for engineering consultants in compliance with the criteria established in Section 7.5 of the AASHTO Uniform Audit & Accounting Guide.

The NCM Team, which included representatives from AASHTO, various State DOTs, the FHWA, ACEC, and independent CPAs, began deliberations on October 24, 2011 and issued the final form of the National Compensation Matrix on May 8, 2012.

What are the general rules and requirements regarding how to establish the reasonableness of executive compensation for engineering consultants?

Engineering consultants are responsible for demonstrating that claimed compensation costs are reasonable, and otherwise allowable, in compliance with FAR 31.205-6 and related case law. To meet this burden, consultants may either: (a) prepare a compensation analysis in accordance with procedures set forth in Section 7.5 of the Guide; or (b) use the National Compensation Matrix, a tool that establishes compensation amounts presumed reasonable for certain executive positions based on an engineering consultant’s gross revenue levels.

For more information about the National Compensation Matrix, please contact our Government Contracting Industry Group Co-Leaders David E. Shaffer, Director, Audit & Accounting at Email and Thomas Yankanich, Director, Audit & Accounting, at Email.

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