To require quarterly reports on audits of task or delivery order contracts and other contracts related to security and reconstruction activities in Iraq and Afghanistan and to address irregularities identified in such reports.

1. Adds SEC. 824. REPORTS ON CERTAIN DEFENSE CONTRACTS IN IRAQ AND AFGHANISTAN at the end of subtitle C of title VIII

   Adds a section

   In S. 1042 · Placed on Calendar Senate

   (c) Action Plan.--Not later than three months after receiving the report of the risk assessment team under subsection (a)(4), the Secretary of Defense shall develop and submit to the congressional defense committees a plan of actions for addressing the areas of vulnerability identified in the report. If the Secretary determines that no action is necessary with regard to an area of vulnerability, the report shall include a discussion of the rationale for that determination.

   Inserted: SEC. 824. REPORTS ON CERTAIN DEFENSE CONTRACTS IN IRAQ AND AFGHANISTAN.

   Inserted: (a) Quarterly Reports.--

   Inserted: (1) In general.--Not later than 90 days after the date of the enactment of this Act, and every 90 days thereafter, the Secretary of Defense shall submit to the appropriate committees of Congress a report that lists and describes each task or delivery order contract or other contract related to security and reconstruction activities in Iraq and Afghanistan in which an audit conducted by an investigative or audit component of the Department of Defense during the 90-day period ending on the date of such report resulted in a finding described in subsection (b).

   Inserted: (2) Coverage of subcontracts.--For purposes of this section, any reference to a contract shall be treated as a reference to such contract and to any subcontracts under such contract.

   Inserted: (b) Covered Finding.--A finding described in this subsection with respect to a task or delivery order contract or other contract described in subsection (a) is a finding by an investigative or audit component of the Department of Defense that the contract includes costs that are unsupported, questioned, or both.

   Inserted: (c) Report Information.--Each report under subsection (a) shall include, with respect to each task or delivery order contract or other contract covered by such report--

   Inserted: (1) a description of the costs determined to be unsupported, questioned, or both; and

   Inserted: (2) a statement of the amount of such unsupported or questioned costs and the percentage of the total value of such task or delivery order that such costs represent.

   Inserted: (d) Withholding of Payments.--In the event that any costs under a task or delivery order contract or other contract described in subsection (a) are determined by an investigative or audit component of the Department of Defense to be unsupported, questioned, or both, the appropriate Federal procurement personnel may withhold from amounts otherwise payable to the contractor under such contract a sum of up to 100 percent of the total amount of such costs.

   Inserted: (e) Release of Withheld Payments.--Upon a subsequent determination by the appropriate Federal procurement personnel, or investigative or audit component of the Department of Defense, that any unsupported or questioned costs for which an amount payable was withheld under subsection (d) has been determined to be allowable, or upon a settlement negotiated by the appropriate Federal procurement personnel, the appropriate Federal procurement personnel may release such amount for payment to the contractor concerned.

   Inserted: (f) Inclusion of Information on Withholding and Release in Quarterly Reports.--Each report under subsection (a) after the initial report under that subsection shall include the following:

   Inserted: (1) A description of each action taken under subsection (d) or (e) during the period covered by such report.

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   Inserted: (2) A justification of each determination or negotiated settlement under subsection (d) or (e) that appropriately explains the determination of the applicable Federal procurement personnel in terms of reasonableness, allocability, or other factors affecting the acceptability of the costs concerned.

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

   Inserted: (1) The term "appropriate committees of Congress" means--

   Inserted: (A) the Committees on Appropriations, Armed Services, and Homeland Security and Governmental Affairs of the Senate; and

   Inserted: (B) the Committees on Appropriations, Armed Services, and Government Reform of the House of Representatives.

   Inserted: (2) The term "investigative or audit component of the Department of Defense" means any of the following:

   Inserted: (A) The Office of the Inspector General of the Department of Defense.

   Inserted: (B) The Defense Contract Audit Agency.

   Inserted: (C) The Defense Contract Management Agency.

   Inserted: (D) The Army Audit Agency.

   Inserted: (E) The Naval Audit Service.

   Inserted: (F) The Air Force Audit Agency.

   Inserted: (3) The term "questioned", with respect to a cost, means an unreasonable, unallocable, or unallowable cost.

   Original wording

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

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

As printed