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

   Show 58 more inserted paragraphsShow less

   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. MANAGEMENT CONTRACTS FOR MAJOR SYSTEMS ACQUISITIONS.

   Inserted: (a) Regulations Regarding Management Contracts.--

   Inserted: (1) Regulations required.--Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall prescribe regulations on management contracts for the acquisition by the Department of Defense of major systems.

   Inserted: (2) Content.--The regulations prescribed under paragraph (1) shall--

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

   Inserted: (i) 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: (ii) management contractors obtain access to technical data developed by the other participating contractors only to the extent necessary for the management contractors to execute their obligations under such management contracts;

   Inserted: (B) include specific measures to prevent--

   Inserted: (i) organizational conflicts of interest on the part of management contractors; and

   Inserted: (ii) the performance of inherently governmental functions by management contractors;

   Inserted: (C) require that a management contractor in a management contract with system responsibility use competitive procedures for each subcontract in excess of the simplified acquisition threshold, unless one of the circumstances described in paragraphs (1) through (3) of section 2304c(b) of title 10, United States Code, applies to the award of such subcontract; and

   Inserted: (D) prohibit a management contractor in a management contract without system responsibility from having any financial interest in the development or production of any individual element of the major weapon system, unless the Secretary of Defense determines in writing that it is necessary in the interest of the national defense for the management contractor to participate in the development or production of a particular element of the major weapon system.

   Inserted: (b) Regulations Prohibiting Pass-Through Charges.--

   Inserted: (1) Regulations required.--Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall prescribe regulations prohibiting pass-through charges on contracts or subcontracts (or task or delivery orders) that are entered into for or on behalf of the Department of Defense that are in excess of the simplified acquisition threshold.

   Inserted: (2) Scope of regulations.--The regulations prescribed under this paragraph shall not apply to any firm, fixed-price contract or subcontract (or task or delivery order) that is awarded on the basis of adequate price competition.

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

   Inserted: (1) The term "management contract" includes management contracts with system responsibility and management contracts without system responsibility.

   Inserted: (2) The term "management contract with system responsibility" means a Federal agency contract (or task or delivery order) for the development or production of a major system under which the prime contractor is not expected at the time of award to perform work constituting at least 20 percent of the cost of manufacturing the major system.

   Inserted: (3) The term "management contract without system responsibility" means a Federal agency contract (or task or delivery order) for the procurement of services, the primary purpose of which 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 "management contractor" means the prime contractor under a management contract.

   Inserted: (5) The term "major system" has the meaning given such term in section 2302d of title 10, United States Code.

   Inserted: (6) The term "pass-through charge" means a charge by a covered contractor or subcontractor for overhead or profit on work performed by a covered lower-tier contractor (other than charges for the direct costs of managing lower-tier contracts and overhead and profit based on such direct costs).

   Inserted: (7) The term "covered contractor" means the following:

   Inserted: (A) A contractor that assigns work accounting for more than 90 percent of the cost of contract performance (not including overhead or profit) to subcontractors.

   Inserted: (B) In the case of a contract providing for the development or production of more than one weapon system, a contractor that assigns work accounting for more than 90 percent of the cost of contract performance (not including overhead or profit) for any particular weapon system under such contract to subcontractors.

   Inserted: (8) The term "covered lower-tier contractor" means the following:

   Inserted: (A) With respect to a covered contractor described by paragraph (7)(A) in a contract, any lower-tier subcontractor under such contract.

   Inserted: (B) With respect to a covered contractor described by paragraph (7)(B) in a contract, any lower-tier subcontractor on a weapon system under such contract for which such covered contractor has assigned work accounting for more than 90 percent of the cost of contract performance (not including overhead or profit).

   Inserted: (9) 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.

   Inserted: (d) Effective Date.--The regulations prescribed under this section shall apply to contracts awarded for or on behalf of the Department of Defense on or after the date that is 90 days after the date of the enactment of this Act.

   Original wording

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

Read automatically from the Congressional Record. Check the original before relying on it.

As printed