To regulate management contracts, require an Analysis of Alternatives for major acquisition of the Department of Defense and impose additional limitations on certain leases and charters.

1. Adds SEC. 807. MODIFICATION OF REQUIREMENTS APPLICABLE TO CONTRACTS AUTHORIZED BY LAW FOR CERTAIN MILITARY MATERIEL 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. MODIFICATION OF REQUIREMENTS APPLICABLE TO CONTRACTS AUTHORIZED BY LAW FOR CERTAIN MILITARY MATERIEL.

   Inserted: (a) Inclusion of Combat Vehicles Under Requirements.--Section 2401 of title 10, United States Code, is amended--

   Inserted: (1) by striking "vessel or aircraft" each place it appears and inserting "vessel, aircraft, or combat vehicle";

   Inserted: (2) in subsection (c), by striking "aircraft or naval vessel" each place it appears and inserting "aircraft, naval vessel, or combat vehicle";

   Inserted: (3) in subsection (e), by striking "aircraft or naval vessels" each place it appears and inserting "aircraft, naval vessels, or combat vehicle"; and

   Inserted: (4) in subsection (f)--

   Inserted: (A) by striking "aircraft and naval vessels" and inserting "aircraft, naval vessels, and combat vehicle"; and

   Inserted: (B) by striking "such aircraft and vessels" and inserting "such aircraft, vessels, and combat vehicle".

   Inserted: (b) Additional Information for Congress.--Subsection (b) of such section is amended--

   Inserted: (1) in paragraph (1)--

   Inserted: (A) in subparagraph (B), by striking "and" at the end;

   Inserted: (B) in subparagraph (C), by striking the period at the end and inserting "; and"; and

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   Inserted: (C) by adding at the end the following new subparagraph:

   Inserted: "(D) the Secretary has certified to those committees--

   Inserted: "(i) that entering into the proposed contract as a means of obtaining the vessel, aircraft, or combat vehicle is the most cost-effective means of obtaining such vessel, aircraft, or combat vehicle; and

   Inserted: "(ii) that the Secretary has determined that the lease complies with all applicable laws, Office of Management and Budget circulars, and Department of Defense regulations."; and

   Inserted: (2) by adding at the end the following new paragraphs:

   Inserted: "(3) Upon receipt of a notice under paragraph (1)(C), a committee identified in paragraph (1)(B) may request the Inspector General of the Department of Defense or the Comptroller General of the United States to conduct a review of the proposed contract to determine whether or not such contract meets the requirements of this section.

   Inserted: "(4) If a review is requested under paragraph (3), the Inspector General of the Department of Defense or the Comptroller General of the United States, as the case may be, shall submit to the Secretary and the congressional defense committees a report on such review before the expiration of the period specified in paragraph (1)(C).".

   Inserted: (c) Applicability of Acquisition Regulations.--Such section is further amended--

   Inserted: (1) by redesignating subsection (f) as subsection (g); and

   Inserted: (2) by inserting after subsection (e) the following new subsection (f):

   Inserted: "(f)(1) If a lease or charter covered by this section is a capital lease or a lease-purchase--

   Inserted: "(A) the lease or charter shall be treated as an acquisition and shall be subject to all applicable statutory and regulatory requirements for the acquisition of aircraft, naval vessels, or combat vehicles; and

   Inserted: "(B) funds appropriated to the Department of Defense for operation and maintenance may not be obligated or expended for the lease or charter.

   Inserted: "(2) In this subsection, the terms 'capital lease' and 'lease-purchase' have the meanings given those terms in Appendix B to Office of Management and Budget Circular A-11, as in effect on the date of the enactment of the National Defense Authorization Act for Fiscal Year 2006.".

   Inserted: (d) Conforming and Clerical Amendments.--

   Inserted: (1) The heading of such section is amended to read as follows:

   Inserted: "Sec. 2401. Requirement for authorization by law of certain contracts relating to vessels, aircraft, and combat vehicles".

   Inserted: (2) The table of sections at the beginning of chapter 141 of such title is amended by striking the item relating to section 2401 and inserting the following new item:

   Inserted: "Sec. 2401. Requirement for authorization by law of certain contracts relating to vessels, aircraft, and combat vehicles.".

   Inserted: SEC. 808. REQUIREMENT FOR ANALYSIS OF ALTERNATIVES FOR MAJOR DEFENSE ACQUISITION PROGRAMS.

   Inserted: (a) Requirement.--

   Inserted: (1) In general.--Chapter 144 of title 10, United States Code, is amended by inserting after section 2431 the following new section:

   Inserted: "Sec. 2431a. Major defense acquisition programs: requirement for analysis of alternatives

   Inserted: "(a) No major defense acquisition program may be commenced before the completion of an analysis of alternatives with respect to such program.

   Inserted: "(b) For the purposes of this section, a major defense acquisition program is commenced when the milestone decision authority approves entry of the program into the first phase of the acquisition process applicable to the program.".

   Inserted: (2) Clerical amendment.--The table of sections at the beginning of chapter 144 of such title is amended by inserting after the item relating to section 2431 the following new item:

   Inserted: "2431a. Major defense acquisition programs: requirement for analysis of alternatives.".

   Inserted: (b) Effective Date.--The amendments made by subsection (a) shall take effect on the date of the enactment of this Act, and shall apply with respect to major defense acquisition programs commenced on or after that date.

   Inserted: SEC. 809. REPORT ON USE OF LEAD SYSTEM INTEGRATORS IN THE ACQUISITION OF MAJOR SYSTEMS.

   Inserted: (a) Report Required.--Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees a report on the use of lead system integrators for the acquisition by the Department of Defense of major systems.

   Inserted: (b) Contents.--The report required by subsection (a) shall include a detailed description of the actions taken, or to be taken (including a specific timetable), and the current regulations and guidelines regarding--

   Inserted: (1) the definition of the respective rights of the Department of Defense, lead system integrators, and other contractors that participate in the development or production of any individual element of the major weapon system (including subcontractors under lead system integrators) in intellectual property that is developed by the other participating contractors in a manner that ensures that--

   Inserted: (A) the Department of Defense obtains appropriate rights in technical data developed by the other participating contractors in accordance with the requirements of section 2320 of title 10, United States Code; and

   Inserted: (B) lead system integrators obtain access to technical data developed by the other participating contractors only to the extent necessary to execute their contractual obligations as lead systems integrators;

   Inserted: (2) the prevention or mitigation of organizational conflicts of interest on the part of lead system integrators;

   Inserted: (3) the prevention of the performance by lead system integrators of functions closely associated with inherently governmental functions;

   Inserted: (4) the appropriate use of competitive procedures in the award of subcontracts by lead system integrators with system responsibility;

   Inserted: (5) the prevention of organizational conflicts of interest arising out of any financial interest of lead system integrators without system responsibility in the development or production of individual elements of a major weapon system; and

   Inserted: (6) the prevention of pass-through charges by lead system integrators with system responsibility on systems or subsystems developed or produced under subcontracts where such lead system integrators do not provide significant value added with regard to such systems or subsystems.

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

   Inserted: (1) The term "lead system integrator" includes lead system integrators with system responsibility and lead system integrators without system responsibility.

   Inserted: (2) The term "lead system integrator with system responsibility" means a prime contractor for the development or production of a major system if the prime contractor is not expected at the time of award, as determined by the Secretary of Defense for purposes of this section, to perform a substantial portion of the work on the system and the major subsystems.

   Inserted: (3) The term "lead system integrator without system responsibility" means a contractor under a contract for the procurement of services whose primary purpose is to perform acquisition functions closely associated with inherently governmental functions with regard to the development or production of a major system.

   Inserted: (4) The term "major system" has the meaning given such term in section 2302d of title 10, United States Code.

   Inserted: (5) The term "pass-through charge" means a charge for overhead or profit on work performed by a lower-tier contractor (other than charges for the direct costs of managing lower-tier contracts and overhead and profit based on such direct costs) that does not, as determined by the Secretary for purposes of this section, promote significant value added with regard to such work.

   Inserted: (6) The term "functions closely associated with inherently governmental functions" has the meaning given such term in section 2383(b)(3) of title 10, United States Code.

   Original wording

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

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As printed