To provide for improved assessment of public-private competition for work performed by civilian employees of the Department of Defense.

1. Adds Subtitle F--Public-Private Competitions SEC. 856. PUBLIC-PRIVATE COMPETITION FOR WORK PERFORMED BY CIVILIAN EMPLOYEES OF THE DEPARTMENT OF DEFENSE on page 184, between lines 16 and 17

   Adds a sectionPrinted page

   Inserted: Subtitle F--Public-Private Competitions SEC. 856. PUBLIC-PRIVATE COMPETITION FOR WORK PERFORMED BY CIVILIAN EMPLOYEES OF THE DEPARTMENT OF DEFENSE.

   Inserted: (a) Limitation.--Section 2461(b) of title 10, United States Code, is amended by adding at the end the following new paragraph:

   Inserted: "(5)(A) Notwithstanding subsection (d), a function of the Department of Defense performed by 10 or more civilian employees may not be converted, in whole or in part, to performance by a contractor unless the conversion is based on the results of a public-private competition process that--

   Inserted: "(i) formally compares the cost of civilian employee performance of that function with the costs of performance by a contractor;

   Inserted: "(ii) creates an agency tender, including a most efficient organization plan, in accordance with Office of Management and Budget Circular A-76, as implemented on May 29, 2003;

   Inserted: "(iii) requires continued performance of the function by civilian employees unless the competitive sourcing official concerned determines that, over all performance periods stated in the solicitation of offers for performance of the activity or function, the cost of performance of the activity or function by a contractor would be less costly to the Department of Defense by an amount that equals or exceeds the lesser of $10,000,000 or 10 percent of the most efficient organization's personnel-related costs for performance of that activity or function by Federal employees; and

   Inserted: "(iv) ensures that the public sector bid would not be disadvantaged in the cost comparison process by a proposal of an offeror to reduce costs for the Department of Defense by not making an employer-sponsored health insurance plan available to the workers who are to be employed in the performance of such function under a contract or by offering to such workers an employer-sponsored health benefits plan that requires the employer to contribute less towards the premium or subscription share than that which is paid by the Department of Defense for health benefits for civilian employees under chapter 89 of title 5.

   Inserted: "(B) Any function that is performed by civilian employees of the Department of Defense and is proposed to be reengineered, reorganized, modernized, upgraded, expanded, or changed in order to become more efficient shall not be considered a new requirement for the purpose of the competition requirements in subparagraph (A) or the requirements for public-private competition in Office of Management and Budget Circular A-76.

   Inserted: "(C) A function performed by more than 10 Federal Government employees may not be separated into separate functions for the purposes of avoiding the competition requirement in subparagraph (A) or the requirements for public-private competition in Office of Management and Budget Circular A-76.

   Inserted: "(D) The Secretary of Defense may waive the requirement for a public-private competition under subparagraph (A) in specific instances if--

   Inserted: "(i) the written waiver is prepared by the Secretary of Defense or the relevant Assistant Secretary of Defense, Secretary of a military department, or head of a Defense Agency;

   Inserted: "(ii) the written waiver is accompanied by a detailed determination that national security interests are so compelling as to preclude compliance with the requirement for a public-private competition; and

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   Inserted: "(iii) a copy of the waiver is published in the Federal Register within 10 working days after the date on which the waiver is granted, although use of the waiver need not be delayed until its publication.".

   Inserted: (b) Inapplicability to Best-Value Source Selection Pilot Program.--(1) Paragraph (5) of section 2461(b) of title 10, United States Code, as added by subsection (a), shall not apply with respect to the pilot program for best-value source selection for performance of information technology services authorized by section 336 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136; 117 Stat. 1444; 10 U.S.C. 2461 note).

   Inserted: SEC. 857. PERFORMANCE OF CERTAIN WORK BY FEDERAL GOVERNMENT EMPLOYEES.

   Inserted: (a) Guidelines.--(1) The Secretary of Defense shall prescribe guidelines and procedures for ensuring that consideration is given to using Federal Government employees on a regular basis for work that is performed under Department of Defense contracts and could be performed by Federal Government employees.

   Inserted: (2) The guidelines and procedures prescribed under paragraph (1) shall provide for special consideration to be given to contracts that--

   Inserted: (A) have been performed by Federal Government employees at any time on or after October 1, 1980;

   Inserted: (B) are associated with the performance of inherently governmental functions;

   Inserted: (C) were not awarded on a competitive basis; or

   Inserted: (D) have been determined by a contracting officer to be poorly performed due to excessive costs or inferior quality.

   Inserted: (b) New Requirements.--(1) No public-private competition may be required under Office of Management and Budget Circular A-76 or any other provision of law or regulation before the performance of a new requirement by Federal Government employees commences, the performance by Federal Government employees of work pursuant to subsection (a) commences, or the scope of an existing activity performed by Federal Government employees is expanded. Office of Management and Budget Circular A-76 shall be revised to ensure that the heads of all Federal agencies give fair consideration to the performance of new requirements by Federal Government employees.

   Inserted: (2) The Secretary of Defense shall, to the maximum extent practicable, ensure that Federal Government employees are fairly considered for the performance of new requirements, with special consideration given to new requirements that include functions that--

   Inserted: (A) are similar to functions that have been performed by Federal Government employees at any time on or after October 1, 1980; or

   Inserted: (B) are associated with the performance of inherently governmental functions.

   Inserted: (c) Use of Flexible Hiring Authority.--The Secretary shall include the use of the flexible hiring authority available through the National Security Personnel System in order to facilitate performance by Federal Government employees of new requirements and work that is performed under Department of Defense contracts.

   Inserted: (d) Inspector General Report.--Not later than 180 days after the enactment of this Act, the Inspector General of the Department of Defense shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the compliance of the Secretary of Defense with the requirements of this section.

   Inserted: (e) Definitions.--In this section:

   Inserted: (1) The term "National Security Personnel System" means the human resources management system established under the authority of section 9902 of title 5, United States Code.

   Inserted: (2) The term "inherently governmental function" has the meaning given that term in section 5 of the Federal Activities Inventory Reform Act of 1998 (Public Law 105-270; 112 Stat. 2384; 31 U.S.C. 501 note).

   Inserted: SEC. 858. COMPETITIVE SOURCING REPORTING REQUIREMENT.

   Inserted: Not later than February 1, 2005, the Inspector General of the Department of Defense shall submit to Congress a report addressing whether the Department of Defense--

   Inserted: (1) employs a sufficient number of adequately trained civilian employees--

   Inserted: (A) to conduct satisfactorily, taking into account equity, efficiency and expeditiousness, all of the public-private competitions that are scheduled to be undertaken by the Department of Defense during the next fiscal year (including a sufficient number of employees to formulate satisfactorily the performance work statements and most efficient organization plans for the purposes of such competitions); and

   Inserted: (B) to administer any resulting contracts; and

   Inserted: (2) has implemented a comprehensive and reliable system to track and assess the cost and quality of the performance of functions of the Department of Defense by service contractors.

   Original wording

   On page 184, between lines 16 and 17, insert the following:

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As printed