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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle B--Amendments to General Contracting Authorities, Procedures, and Limitations

P. L. 114-

House Conference Report. 114-270

(1) in subparagraph (B), by striking “; or” and inserting a semicolon;


(2) in subparagraph (C), by striking the period at the end and inserting “; or”; and


(3) by adding at the end the following new subparagraph:

“(D) to the extent such data—


“(i) relates to an offset agreement in connection with a contract for the sale of a weapon system or defense-related item to a foreign country or foreign firm; and

“(ii) does not relate to a contract or subcontract under the offset agreement for work performed in such foreign country or by such foreign firm that is directly related to the weapon system or defense-related item being purchased under the contract.”.

The House bill contained no similar provision.

The House recedes with an amendment that would provide for an exception to this limitation for subcontracts and contracts under the offset agreement for work performed in a foreign country that are directly-related to the weapon systems of defense-related item being purchased under the contract.

Senate Report 114-49 to accompany S. 1376 as it was reported out of the Senate Armed Services Committee.

Applicability of cost and pricing data and certification requirements (sec. 822)

The committee recommends a provision that would limit the applicability of the Truth in Negotiations Act (Public Law 87-653; 10 U.S.C. section 2306a) to offset agreements. The committee is also concerned that the use of contract types other than firm-fixed price are unnecessarily extending the period of performance of these contracts to address the completion of offset agreements.

The committee is aware that Department of Defense (DOD) contracting officials are being put in an untenable situation of overseeing offset agreements by a broad application of the Truth in Negotiations Act. The committee believes this appears to be a violation of the intent of the 1990 Presidential policy on offsets codified in the Defense Production Act Amendments of 1992 (Public Law 102-558, Title 1, Part C, section 123) by putting DOD in the position of negotiating, implementing, and being responsible for U.S. firms' offset agreements by applying fair and reasonable price criteria to these agreements. The committee reiterates that it is the policy of the U.S. government as codified in the Defense Production Act (Public Law 8109774) [error in committee report] that offsets for military exports are economically inefficient and distort markets. The committee believes it should not be the policy of the U.S. government to enforce these agreements through contracts. These agreements are strictly between the foreign government and private sector and the law states that ``the responsibility for negotiating and implementing offset arrangements, reside with the company involved.'' Thus, it is up to the foreign government to determine whether it is getting value from the offset agreement and the reasonableness of price paid by a foreign government for a U.S. company to execute an offset agreement should not be of concern to the DOD unless there are believed to be potential violations of the Foreign Corrupt Practices Act (section 78dd-1 of title 15, United States Code) or other criminal violations.