To establish limitations on excess charges under time-and-materials contracts and labor-hour contracts of the Department of Defense.

1. Adds SEC. 807. LIMITATION ON EXCESS CHARGES UNDER TIME-AND-MATERIALS AND LABOR-HOUR CONTRACTS at the end of subtitle A of title VIII

   Adds a section

   In S. 1042 · Placed on Calendar Senate

   (f) Defense Acquisition University Defined.--In this section, the term "Defense Acquisition University" means the Defense Acquisition University established pursuant to section 1746 of title 10, United States Code.

   Inserted: SEC. 807. LIMITATION ON EXCESS CHARGES UNDER TIME-AND-MATERIALS AND LABOR-HOUR CONTRACTS.

   Inserted: (a) Regulations Required.--Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall prescribe regulations governing the the terms and conditions of time-and-materials contracts and labor-hour contracts entered into for or on behalf of the Department of Defense.

   Inserted: (b) Limitation on Excess Charges.--

   Inserted: (1) In general.--The regulations prescribed pursuant to subsection (a) shall authorize the use of a time-and-materials contract or a labor-hour contract for or on behalf of the Department of Defense only if the contract provides for acquiring supplies or services on the basis of--

   Inserted: (A) direct labor hours provided by the prime contractor at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; and

   Inserted: (B) the reimbursement of the prime contractor for the reasonable costs (including overhead, general and administrative expenses, and profit, to the extent permitted under the regulations) of subcontracts for supplies and subcontracts for services, except as provided in paragraph (2).

   Inserted: (2) Subcontractor labor hours.--Direct labor hours provided by a subcontractor may be provided on the basis of specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit only if such hourly rates are set forth in the contract for that specific subcontractor.

   Inserted: (c) Department of Defense Purchases Through Contracts Entered by Non-defense Agencies.--The regulations prescribed pursuant to subsection (a) shall include appropriate measures to ensure compliance with the requirements of this section in all Department of Defense purchases through non-defense agencies.

   Inserted: (d) Effective Date.--The regulations prescribed pursuant to subsection (a) shall take effect on the date that is 90 days after the date of the enactment of this Act, and shall apply to--

   Inserted: (1) all contracts awarded for or on behalf of the Department of Defense on or after such date; and

   Inserted: (2) all task or delivery orders issued for or on behalf of the Department of Defense on or after such date, regardless whether the contracts under which such task or delivery orders are issued were awarded before, on, or after such date.

   Original wording

   At the end of subtitle A of title VIII, add the following:

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As printed