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

Legislative Proposals Not Adopted

P. L. 116-92

House Conference Report 116-333

LPNAs from H. R. 2500 and S. 1790

The Senate bill contained a provision (sec. 810) that would lower the threshold at which the Department of Defense must comply with the rules of section 2533a of title 10, United States Code, known as the Berry Amendment, to $150,000.

The House amendment contained no similar provision.

The Senate recedes.

The House amendment contained a provision (sec. 823) that would require the Secretary of Defense to provide congressional defense committees with a notice of determination and to notify the public through the Federal Register before initiating changes to contract finance rates for progress payments or performance-based payments.

The Senate bill contained no similar provision.

The House recedes.

(a) Consistency In Establishment Of Rates For Progress Payments Or Performance-Based Payments.—Section 2307(a) of title 10, United States Code, is amended by inserting the following new paragraph:

“(3) Except as provided in subsection (g), the Secretary of Defense shall not establish a rate for progress payments or a rate for performance-based payments that is lower than the rate for progress payments or a rate for performance-based payments, as applicable, established by another head of an agency.”.

(b) Payment Authority.—Section 2307(a)(1) of title 10, United States Code, is amended in the matter preceding subparagraph (A) by striking “The head of any agency may” and inserting “The head of an agency may—”.

(c) Notice Of Revision To Rates For Progress Payments Or Performance-Based Payments.—

(1) TO CONGRESS.—The Secretary of Defense may not issue rules to revise the rate for progress payments or the rate for performance-based payments unless the Secretary provides the congressional defense committees with a notice of determination of need for such revision. This notice shall include—

(A) a justification, including the data and analysis supporting the justification, for the revision; and

(B) an assessment of how the revision will create a more effective acquisition process and benefit the defense industrial base.

(2) PUBLICATION.—The Secretary shall publish the notice required by paragraph (1) in the Federal Register not later than five business days after providing such notice to the congressional defense committees.

The House amendment contained a provision (sec. 824) that would amend section 2322a of title 10, United States Code, and codify existing Defense Federal Acquisition Regulations on noncommercial software rights as well as mandate, to the maximum extent practicable, that specially negotiated licenses be used for weapon systems noncommercial software.

The Senate bill contained no similar provision.

The House recedes.

Section 2322a of title 10, United States Code, is amended by adding at the end the following new subsections:

“(c) Rights To Noncommercial Computer Software.—As part of any negotiation for the acquisition of noncommercial computer software, the Secretary of Defense may not require a contractor to sell or otherwise relinquish to the Federal Government any rights to noncommercial computer software developed exclusively at private expense, except for rights related to—

“(1) corrections or changes to such software or related materials for such software furnished to the contractor by the Department of Defense;

“(2) such software or related materials for such software that is otherwise publicly available or that has been released or disclosed by the contractor or subcontractor without restrictions on further use, release, or disclosure, other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in such software or related materials to another party;

“(3) such software or related materials for such software obtained with unlimited rights under another contract with the Federal Government or as a result of such a negotiation; or

“(4) such software or related materials for such software furnished to the Department of Defense under a contract or subcontract that includes—

“(A) restricted rights in such software, limited rights in technical data, or government purpose rights, where such restricted rights, limited rights, or government purpose rights have expired; or

“(B) government purpose rights, where the contractor’s exclusive right to use such software or related materials for commercial purposes has expired.

“(d) Consideration Of Specially Negotiated Licenses.—The Secretary of Defense shall, to the maximum extent practicable, negotiate and enter into a contract with a contractor for a specially negotiated license for noncommercial computer software or related materials for such software necessary to support the product support strategy of a major weapon system or subsystem of a major weapon system.”.

The House amendment contained a provision (sec. 827) that would amend section 2410n of title 10, United States Code. This provision would create a requirement for conducting market research before purchasing a product listed in the Federal Prison Industries (FPI) catalog.

The Senate bill contained no similar provision.

The House recedes.

(a) Competition Requirements For Purchases From Federal Prison Industries.—Subsections (a) and (b) of section 2410n of title 10, United States Code, are amended to read as follows:

“(a) Market Research.—Before purchasing a product listed in the latest edition of the Federal Prison Industries catalog published under section 4124(d) of title 18, the Secretary of Defense shall conduct market research to determine whether such product—

“(1) is comparable to products available from the private sector; and

“(2) best meets the needs of the Department of Defense in terms of price, quality, and time of delivery.

“(b) Competition Requirement.—If the Secretary determines that a Federal Prison Industries product is not comparable to products available from the private sector and does not best meet the needs of the Department of Defense in terms of price, quality, or time of delivery, the Secretary shall use competitive procedures or make an individual purchase under a multiple award contract for the procurement of the product. In conducting such a competition or making such a purchase, the Secretary shall consider a timely offer from Federal Prison Industries.”.

(b) Effective Date.—The amendment made by subsection (a) shall take effect 60 days after the date of the enactment of this Act.

The House amendment contained a provision (sec. 828) that would amend section 818 of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115-91), which required post-award debriefings of the Department of Defense rating for each evaluation criteria and overall award decision, by reducing the award threshold for comprehensive debriefings from $100.0 million to $50.0 million.

The Senate bill contained no similar provision.

The House recedes.

Section 818(a)(1) of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 131 Stat. 1463; 10 U.S.C. 2305 note) is amended by striking “$100,000,000” each place it appears and inserting “$50,000,000”.

The House amendment contained a provision (sec. 831) that would amend chapter 137 of title 10, United States Code, by allowing the head of an agency to establish a preference for offerors that employ veterans on a full-time basis when awarding a contract for the procurement of goods or services for the Department of Defense.

The Senate bill contained no similar provision.

The House recedes.

(a) In General.—Chapter 137 of title 10, United States Code, is amended by adding at the end the following new section:

Ҥ 2339b. Preference for offerors employing veterans

“(a) Preference.—In awarding a contract for the procurement of goods or services for the Department of Defense, the head of an agency may establish a preference for offerors that employ veterans on a full-time basis. The Secretary of Defense shall determine the criteria for use of such preference.

“(b) Rule Of Construction.—Nothing in this section shall be construed to supercede any other provision of law establishing a preference for small business concerns owned and controlled by veterans or small business concerns owned and controlled by service-disabled veterans (as defined in section 3(q) of the Small Business Act (15 U.S.C. 632(q))).

“(c) Congressional Notification.—Prior to establishing the preference described in subsection (a), the Secretary of Defense shall provide a briefing to the Committee on Armed Services of the House of Representatives on—

“(1) a plan for implementing such preference, including—

“(A) penalties for an offeror that willfully and intentionally misrepresents the veteran status of the employees of the offeror in a bid submitted under subsection (a); and

“(B) reporting on use of such preference; and

“(2) the process for assessing and verifying offeror compliance with regulations relating to equal opportunity for veterans requirements.”.

(b) Clerical Amendment.—The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 2339a the following new item:

“2339b. Preference for offerors employing veterans.”.

The House amendment contained a provision (sec. 832) that would amend section 2372 of title 10, United States Code, to require Department of Defense contractors to report expenses incurred for independent research and development (IR&D) costs.

The Senate bill contained no similar provision.

The House recedes.

The conferees note that IR&D is initiated and conducted by Department of Defense contractors and the Department reimburses a portion of industry's costs. The conferees acknowledge that it is beneficial for the Department to understand what technologies its contractors are investing in beyond Department of Defense contracts. However, the conferees note that there is an ongoing Comptroller General review of recent changes to IR&D policies and the extent that recently funded IR&D projects align with the Department's modernization priorities as laid out in the National Defense Strategy. The conferees encourage the Department to use the findings from the Comptroller General's review as a basis for its IR&D strategy going forward, including what information is required to be reported by the contractor. Lastly, the conferees remind the Department that it should share information about contractor costs within the Department in a continuous and strategic manner, including in coordination with the Department's Chief Data Officer.

(a) Reporting On Independent Research And Development Costs.—Section 2372 of title 10, United States Code, is amended—

(1) in the second sentence of subsection (a), by striking “shall be reported” and all that follows through “indirect costs.” and inserting the following: shall be reported—

“(1) independently from other allowable indirect costs; and

“(2) annually by the contractor to the Defense Technical Information Center, who shall give access to the information to the Under Secretary of Defense for Research and Engineering, the Director of the Defense Contract Audit Agency, and the Director of the Defense Management Audit Agency.”.

(b) Report To Congress.—Such section is further amended by adding at the end the following new subsection:

“(f) Report To Congress.—Not later than March 31, 2020, and biennially thereafter, the Under Secretary of Defense for Research and Engineering, in coordination with the Director of the Defense Contract Management Agency, the Director of the Defense Contract Audit Agency, and the Defense Technical Information Center, shall submit to the congressional defense committees aggregate cost data on the independent research and development programs of the contractor. The report shall include—

“(1) an analysis of such programs completed during the two-year period preceding the date of the report, including the extent to which such programs align with the modernization priorities of the most recent national defense strategy (as described by section 113 of this title);

“(2) an estimate of the extent to which such programs produced, or sought to produce, disruptive technologies or incremental technologies;

“(3) with respect to each contractor subject to the reporting requirement under subsection (a)—

“(A) a comparison of the total amount of independent research and development costs submitted for reimbursement under the annual incurred cost proposal of such contractor and the amount reported to the Defense Technical Information Center; and

“(B) a summary of any issues relating to the ownership or distribution of intellectual property rights raised by such contractor relating to an independent research and development program of such contractor.”.

(c) Report To GAO.—The Secretary of Defense shall submit to the Comptroller General of the United States the first such report required under subsection (f) of section 2372 of title 10, United States Code (as added by subsection (a)), so that the Comptroller General may perform a review of the information provided in the report.

The Senate bill contained a provision (sec. 832) that would require the Air Force to assess its reliance on foreign sources for all microelectronics in precision guided munitions currently in production.

The House amendment contained no similar provision.

The Senate recedes.

The conferees direct the Under Secretary of Defense for Acquisition and Sustainment, not later than August 31, 2020, to brief the congressional defense committees on the reliance of the United States Armed Forces on foreign sources for microelectronics in precision guided munitions currently in production. The briefing should identify whether the microelectronics suppliers are single source or sole-source providers as well as which tier subcontractors supply the microelectronics. The briefing should also include an evaluation of the cybersecurity risk to precision guided munitions posed by foreign-made microelectronics.

(1) consider certain risks such as—

(A) where microelectronic components for all of the Air Force's precision-guided missiles currently in production were made;

(B) the contract tier level of the microelectronic components supplier; and

(C) which of the microelectronic components are cyber security concerns; and

(2) identify mitigation strategies.

The House amendment contained a provision (sec. 833) that would amend section 2372a(a) of title 10, United States Code, to require that contractors report expenses incurred for bid and proposal costs annually to the Defense Contract Audit Agency, who shall give access to the information to the Principal Director for Defense Pricing and Contracting.

The Senate bill contained no similar provision.

The House recedes.

“(1) independently from other allowable indirect costs; and

“(2) annually by the contractor to the Director of the Defense Contract Audit Agency, who shall give access to the information to the Principal Director for Defense Pricing and Contracting.”.

The House amendment contained a provision (sec. 835) that would require the Undersecretary of Defense for Acquisition and Sustainment to submit a report on requirements relating to consumption-based solutions to the congressional defense committees.

The Senate bill contained no similar provision.

The House recedes.

The conferees recognize the acquisition of supplies and services is still evolving and believe there is a place for consumption-based solutions. The conferees direct the Deputy Secretary of Defense in conjunction with the Chief Management Officer, the Undersecretary of Defense for Acquisition and Sustainment, and the Director, Cost Assessment and Program Evaluation, to report to the congressional defense committees by March 15, 2020, on the feasibility of using consumption-based solutions as a procurement option to include recommended definitions, processes, contract types, and funding approaches.

(a) Report.—The Undersecretary of Defense for Acquisition and Sustainment shall submit to the congressional defense committees a report on the feasibility of revising the Defense Federal Acquisition Regulation Supplement to include requirements relating to consumption-based solutions.

(b) Consumption-Based Solutions Defined.—The term “consumption-based solutions” means any combination of hardware or equipment, software, and labor or services that together provide a capability that is metered and billed based on actual usage and predetermined pricing per resource unit, and includes the ability to rapidly scale capacity up or down.

The House amendment contained a provision (sec. 851) that would require the Secretary of Defense to consult with the Federal Acquisition Security Council to comprehensively assess policies and contractors' systems relating to telecommunications and video surveillance services and equipment from foreign suppliers; to mitigate risks through a specific interagency debarment and suspension process; to promulgate guidance; and to issue regulation containing certain elements. The House amendment contained another provision (sec. 852) that would require the Secretary of Defense to procure certain telecommunications services or installations of telecommunications infrastructure on national security installations located on territories of the United States in the Pacific Ocean, only from American-owned or -operated companies, with a national security waiver.

The Senate bill contained similar provisions, (sec. 831) that would require the Secretary of Defense to modernize mitigation of risks to the integrity of the supply chain, to include those cited in recent studies on the defense industrial base, and (sec. 833) that would require the Secretary of Defense to amend policy and regulation to enhance the process for assessing and mitigating risks related to foreign ownership, control, or influence.

The House recedes with amendments to sec. 831 that would direct the Secretary to recommend revisions to certain statutory definitions, would more explicitly emphasize the role of suspension and debarment in supply-chain security, and would direct the Secretary to establish a process to re-assess companies who have addressed certain risks.

The conferees acknowledge that establishing blanket ``prohibitions'' in legislation can be well-intended and effective in some aspects, while also having unintended consequences. The conferees intend for the Department to be pro-active rather than reactive, in securing its supply chain. The conferees note there are multiple efforts in place and underway at the Department to address supply chain risks, and that similar efforts are being undertaken government-wide. The conferees encourage the Department to harmonize these activities where appropriate in ways that do not inhibit the Department from exercising its discretion in areas of national security interest. In this regard, the Department should pay specific attention to the procurement of telecommunications goods and services for use on installations in the Pacific Ocean.

(a) Assessment.—The Secretary of Defense, in consultation with the Federal Acquisition Security Council (established under section 1322 of title 41, United States Code) and the Director of the Office of Management and Budget, shall conduct a comprehensive assessment of—

(1) Department of Defense policies relating to covered equipment and services;

(2) covered equipment and services acquired or to be acquired for the Department; and

(3) systems of covered contractors to ensure the security of the supply chains of such covered contractor.

(b) Purpose.—The assessment described in subsection (a) shall include—

(1) an identification of instances in which the Federal Acquisition Security Council has identified supply chain risks (as defined in section 4713(k) of title 41, United States Code) that are specific to the defense industrial base and other threat assessments related to the procurement of covered articles (as defined in such section);

(2) an identification of and suggestions for guidance on the process of debarment and suspension (including debarment and suspension for nonprocurement programs and activities) of covered contractors to address supply chain risks relating to acquisitions for the Department of Defense, including acquisitions involving other executive agencies; and

(3) an identification of steps that could be taken to address situations identified under paragraphs (1) and (2) through the Interagency Suspension and Debarment Committee established under Executive Order No. 12549 (51 Fed. Reg. 6370).

(c) Actions Following Assessment.—Not later than 180 days after the date of the enactment of this Act, the Secretary shall, based on the results of the assessment required by subsection (a)—

(1) issue or revise guidance to ensure any entity within the Department of Defense that procures covered equipment and services implements a risk-based approach with respect to such a procurement that addresses—

(A) requirements for training personnel;

(B) the process for making sourcing decisions;

(C) with respect to a procurement of telecommunications equipment or video surveillance equipment, assurances relating to the traceability of parts of such equipment;

(D) the process for reporting suspect covered equipment and services; and

(E) corrective actions for the acquisition of suspect covered equipment and services (including actions to recover costs as described in subsection (d)(2));

(2) issue or revise guidance to ensure that remedial actions, including debarment or suspension, are taken with respect to a covered contractor who has failed to detect and avoid suspect covered equipment and services or otherwise failed to exercise due diligence in the detection and avoidance of such suspect covered equipment and services;

(3) establish a process for ensuring that a Department of Defense employee provide a written report to the appropriate Government authorities and the Government-Industry Data Exchange Program (or a similar program designated by the Secretary) not later than 60 days after such an employee becomes aware, or has reason to suspect that—

(A) any end item, component, part, or material contained in supplies purchased by or for the Department contains suspect covered equipment and services; or

(B) a covered contractor has provided suspect covered equipment and services; and

(4) establish a process for analyzing, assessing, and acting on reports of suspect covered equipment and services that are submitted in accordance with paragraph (3).

(d) Regulations.—

(1) IN GENERAL.—Not later than 270 days after the date of the enactment of this Act, the Secretary shall revise the Department of Defense Supplement to the Federal Acquisition Regulation to address the detection and avoidance of suspect covered equipment and services.

(2) CONTRACTOR RESPONSIBILITIES.—The revised regulations issued pursuant to paragraph (1) shall provide that—

(A) covered contractors who supply covered equipment or services are responsible for detecting and avoiding the use or inclusion of suspect covered equipment or services and for any contract modification or corrective action that may be required to remedy the use or inclusion of such suspect covered equipment or services; and

(B) the cost of suspect covered equipment or services and the cost of contract modification or corrective action that may be required to remedy the use or inclusion of such suspect covered equipment or services are not allowable costs under defense contracts, unless—

(i) the covered contractor has an operational system to detect and avoid suspect covered equipment or services that has been reviewed and approved by the Secretary pursuant to subsection (e)(2)(B);

(ii) suspect covered equipment or services were provided to the covered contractor as Government property in accordance with part 45 of the Federal Acquisition Regulation or were obtained by the covered contractor in accordance with regulations described in paragraph (3); and

(iii) the covered contractor discovers the suspect covered equipment or services and provides timely notice to the Government pursuant to paragraph (4).

(3) REQUIREMENTS FOR SUPPLIERS.—The revised regulations issued pursuant to paragraph (1) shall—

(A) require that covered contractors obtain covered equipment or services—

(i) from the original manufacturers of the equipment or their authorized dealers, or from suppliers that meet requirements of subparagraph (C) or (D) and, with respect to suppliers of telecommunications equipment or video surveillance equipment, that obtain such equipment exclusively from the original manufacturers of the parts of such equipment or their authorized dealers; and

(ii) that are not in production or currently available in stock from suppliers that meet requirements of subparagraph (C) or (D);

(B) establish requirements for notification of the Department, and for inspection, testing, and authentication of covered equipment and services that covered contractor obtains from an alternate supplier;

(C) establish qualification requirements, consistent with the requirements of section 2319 of title 10, United States Code, pursuant to which the Secretary may identify suppliers that have appropriate policies and procedures in place to detect and avoid suspect covered equipment and services; and

(D) authorize covered contractors to identify and use suppliers that meet qualification requirements, provided that—

(i) the standards and processes for identifying such suppliers comply with established industry standards; and

(ii) the selection of such suppliers is subject to review, audit, and approval by appropriate Department of Defense officials.

(4) REPORTING REQUIREMENT.—The revised regulations issued pursuant to paragraph (1) shall require that any covered contractor provide a written report to the appropriate Government authorities and the Government-Industry Data Exchange Program (or a similar program designated by the Secretary) not later than 60 days after such covered contractor becomes aware, or has reason to suspect that—

(A) any end item, component, part, or material contained in supplies purchased by or for the Department contains suspect covered equipment and services; or

(B) a supplier of a covered contractor has provided suspect covered equipment and services.

(e) Improvement Of Contractor Systems For Detection And Avoidance Of Suspect Covered Equipment And Services.—

(1) IN GENERAL.—Not later than 270 days after the date of the enactment of this Act, the Secretary shall implement a program to enhance the detection and avoidance of the acquisition of suspect covered equipment and services by covered contractors.

(2) ELEMENTS.—The program implemented pursuant to paragraph (1) shall—

(A) require covered contractors to establish policies and procedures to eliminate suspect covered equipment and services from the defense supply chain, which policies and procedures shall address—

(i) the training of personnel; and

(ii) with respect to a procurement of telecommunications equipment or video surveillance equipment, the inspection and testing of related materials and mechanisms to enable traceability of parts of such equipment; and

(B) establish processes for the review and approval of contractor systems for the detection and avoidance of the acquisition of suspect covered equipment and services by covered contractors, which processes shall be comparable to the processes established for contractor business systems under section 893 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (Public Law 111–383; 124 Stat. 4311; 10 U.S.C. 2302 note).

(f) Rule Of Construction.—Nothing in this section shall be construed to prohibit the Secretary from entering into a contract with a covered contractor to provide a service that connects to the facilities of a third party, such as backhaul, roaming, or interconnection arrangements.

(g) Report To Congress.—Not later than 180 days after completing the assessment required under subsection (a), the Secretary shall submit to the congressional defense committees a report on the results of the assessment and the actions taken following the assessment pursuant to subsection (c).

(h) Definitions.—In this section:

(1) COVERED EQUIPMENT AND SERVICES.—The term “covered equipment and services” means telecommunications equipment, telecommunications services, video surveillance equipment, and video surveillance services manufactured or controlled by an entity for which the principal place of business of such entity is located in foreign country that is an adversary of the United States, but does not include telecommunications equipment or video surveillance equipment (other than optical transmission components) that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles.

(2) COVERED CONTRACTOR.—The term “covered contractor” means a contractor or subcontractor (at any tier) that supplies covered equipment and services to the Department of Defense.

(3) EXECUTIVE AGENCY.—The term “executive agency” has the meaning given in section 133 of title 41, United States Code.

(4) SECRETARY.—The term “Secretary” means the Secretary of Defense.

(5) SUSPECT COVERED EQUIPMENT AND SERVICES.—The term “suspect covered equipment and services” means covered equipment and services that is from any source, or that is a covered article, subject to an exclusion order or removal order under section 1323(c) of title 41, United States Code.

* * * * *

SEC. 852. ASSURED SECURITY AGAINST INTRUSION ON UNITED STATES MILITARY NETWORKS.

(a) Prohibition.—Except as provided in this section, the Secretary of Defense shall only award contracts for the procurement of telecommunications equipment and services for national security installations in territories of the United States located in the Pacific Ocean to allowed contractors.

(b) Exception.—Subsection (a) shall not apply to contracts for the procurement of telecommunications equipment and services that—

(1) do not process or carry any information about the operations of the Armed Forces of the United States or otherwise concern the national security of the United States; or

(2) cannot route or redirect user data traffic or permit visibility into any user data or packets that such services or facilities transmit or otherwise handle.

(c) Waiver.—The Secretary of Defense may waive the restriction of subsection (a) upon a written determination that such a waiver is in the national security interests of the United States and either—

(1) a contractor that is not an allowed contractor would not have the ability to track, record, listen, or otherwise access data or voice communications of the Department of Defense through the provision of the telecommunications equipment or services; or

(2) a qualified allowed contractor is not available to perform the contract at a fair and reasonable price.

(d) Definitions.—In this section:

(1) ALLOWED CONTRACTOR.—The term “allowed contractor” means an entity (including any affiliates or subsidiaries) that is a contractor or subcontractor (at any tier)—

(A) for which the principal place of business of such entity is located in the United States or in a foreign country that is not an adversary of the United States; and

(B) that does not have significant connections, including ownership interests in, or joint ventures with, any entity identified in paragraph (f)(3) of section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Public Law 115–232; 132 Stat. 1918; 41 U.S.C. 3901 note).

(2) NATIONAL SECURITY INSTALLATION.—The term “national security installation” means any facility operated by the Department of Defense.

The House amendment contained a provision (sec. 853) that would strengthen defense supply chains by including security as a primary purpose for Department of Defense acquisition.

The Senate bill contained no similar provision.

The House recedes.

The conferees note other sections of the conference report that modernize the Department's supply chain risk mitigation efforts by requiring the Secretary of Defense to develop an analytical framework across the acquisition process, assign risk mitigation roles and responsibilities to organizations and individuals, and modernize access to data necessary to assess risk across the acquisition enterprise.

(a) Sense Of Congress.—Congress finds that to comprehensively address the supply chain vulnerabilities of the Department of Defense, defense contractors must be incentivized to prioritize security in a manner which exceeds basic compliance with mitigation practices relating to cybersecurity risk and supply chain security standards. Defense contractors can no longer pass unknown risks on to the Department of Defense but should be provided with the tools to meet the needs of the Department with respect to cybersecurity risk and supply chain security. Incentives for defense contractors will help stimulate efforts within the defense industrial base to minimize vulnerabilities in hardware, software, and supply chain services. The Department of Defense must develop policies and regulations that move security from a cost that defense contractors seek to minimize to a key consideration in the award of contracts, equal in importance to cost, schedule, and performance. The Department of Defense must also develop policies to assist small- and medium-sized manufacturers that provide goods or services in the supply chain for the Department to adopt robust cybersecurity standards.

(b) Inclusion Of Security As Primary Purpose For The Department Of Defense Acquisition.—

(1) IN GENERAL.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall the revise the statement of purpose in the Defense Federal Acquisition Regulation Supplement added by section 801(3) of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 131 Stat. 1449; U.S.C. 2302 note) to include the security of goods acquired by the Department of Defense as one of the primary objectives of Department of Defense acquisition. The Secretary shall revise applicable Department of Defense Instructions, regulations, and directives to implement the inclusion of security as a primary purpose of Department of Defense acquisition.

(2) CONGRESSIONAL NOTIFICATION.—The Secretary shall submit to the congressional defense committees—

(A) not later than 60 days before issuing the revisions described in paragraph (1), the proposed revisions; and

(B) not later than 180 days after the date of the enactment of this Act, recommendations for legislative action to implement the revisions described in this subsection.

(3) CONSULTATION.—The Secretary of Defense shall consult with the Director of the Hollings Manufacturing Extension Partnership (established under section 25 of the National Institute of Standards and Technology Act (15 U.S.C. 278k)) to provide education, guidance, and technical assistance to strengthen the cybersecurity of small- and medium-sized manufacturers that provide goods or services in the supply chain for the Department of Defense.

(c) Certification Of Risk.—

(1) IN GENERAL.—Before making a milestone decision with respect to a major defense acquisition program (as defined under section 2430 of title 10, United States Code), a major automated information system, or major system (as defined under section 2302d of title 10, United States Code), the vice chief of the Armed Force concerned shall issue a written assessment to the Vice Chief of the Joint Chiefs of Staff and the head of the Defense Acquisition Board stating the determination made by the vice chief of the armed force concerned of the risk to the supply chain associated with the procurement. Such assessment shall include—

(A) a description of actions taken to mitigate potential vulnerabilities associated with the procurement; and

(B) a certification from the Secretary of the military department concerned or the Vice Chief of the Joint Chief of Staff (as appropriate) that the procurement will not interfere with the operations of the military department conducting the procurement.

(2) AVAILABILITY TO THE CONGRESSIONAL DEFENSE COMMITTEES.—Upon request, the vice chief of the Armed Force concerned shall make available to the congressional defense committees a certification required under paragraph (1), along with the data on which such certification is based, not later than 15 days after the submission of a request.

(d) Disputes Relating To Acquisitions Decisions.—The Under Secretary of Defense for Intelligence, the Vice Chairman of the Joint Chiefs of Staff, the Vice Chief of Staff of the Army, the Vice Chief of Naval Operations, the Vice Chief of Staff of the Air Force, and the Assistant Commandant of the Marine Corps shall each have the authority to submit to the Secretary of Defense a written statement of dispute relating to a decision made by the Defense Acquisition Board with respect to an acquisition. A dispute submitted under this subsection shall include any reason why the decision fails to effectively address concerns regarding the item to be acquired.

The House amendment contained a provision (sec. 855) that would amend section 807 of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115-91) to require the Secretary of Defense to develop tools for supply chain risk mitigation policies during the requirements generation process.

The Senate bill contained a similar provision (sec. 831) which addressed this and several other matters pertaining to the defense industrial base.

The House recedes.

The conferees note the House provision was based on the work of the Advisory Panel on Streamlining and Codifying Acquisition Regulations established by section 809 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114-92). The conferees commend the work of the Panel and note that, since the Panel was established, it has made 98 recommendations across 3 report volumes and continues to identify areas where United States Code can be reorganized for clarity and efficiency. The Congress has enacted a number of the recommendations from the first two volumes in prior National Defense Authorization Acts and continues to carefully consider the recommendations of the Panel.

(a) Process For Enhanced Supply Chain Scrutiny.—Section 807(b) of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 131 Stat. 1456; 10 U.S.C. 2302 note) is amended—

(1) by redesignating paragraphs (5) through (9) as paragraphs (6) through (10), respectively; and

(2) by inserting after paragraph (4) the following new paragraph:

“(5) Development of tools for implementing supply chain risk management policies during the generation of requirements for a contract.”.

(b) Technical Amendment.—Subsection (a) of such section is amended by striking “Not later than” and all that follows through “the Secretary” and inserting “The Secretary”.

(c) Effective Date.—Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall revise the process established under section 807 of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 10 U.S.C. 2302 note) to carry out the requirements of this section.

The House amendment contained a provision (sec. 872) that would clarify that section 3(a)(2)(C) of the Small Business Act applies to the Small Business Administration (SBA). The section would align the size standards based on data to the Small Business Runway Extension Act of 2018 (Public Law 115-324) by changing the calculation from 3 years to 5 years. This section also would require the SBA to develop a transition plan for small businesses and Federal agencies to help them successfully navigate the transition from the previous 3-year calculation to the new 5-year calculation as mandated and would require that the System for Award Management be updated accordingly.

The Senate bill contained no similar provision.

The House recedes.

(a) Clarifying Amendment To The Small Business Runway Extension Act Of 2018.—Section 3(a)(2)(C) of the Small Business Act (15 U.S.C. 632(a)(2)(C)) is amended by inserting “(including the Administration when acting pursuant to subparagraph (A))” after “no Federal department or agency”.

(b) Finalization Of Small Business Runway Extension Act Of 2018 Rules.—The Administrator of the Small Business Administration shall issue a final rule implementing the Small Business Runway Extension Act of 2018 (Public Law 115–324) not later than December 17, 2019.

(c) Amendment To Size Standards For Certain Small Business Concerns.—

(1) SIZE STANDARDS FOR SMALL BUSINESS CONCERNS PROVIDING SERVICES.—Section 3(a)(2)(C)(ii)(II) of the Small Business Act (15 U.S.C. 632(a)(2)(C)(ii)(II)) is amended by striking “not less than”.

(2) SIZE STANDARDS FOR OTHER BUSINESS CONCERNS.—Section 3(a)(2)(C)(ii)(III) of the Small Business Act (15 U.S.C. 632(a)(2)(C)(ii)(III)) is amended by striking “not less than 3 years” and inserting “5 years”.

(d) Transition Plan For The Small Business Runway Extension Act Of 2018.—

(1) PLAN REQUIRED.—Not later than 30 days after the date of the enactment of this Act, the Administrator of the Small Business Administration shall implement a transition plan to assist business concerns and Federal agencies with compliance with the requirements of the Small Business Runway Extension Act of 2018 (Public Law 115–324).

(2) 3–YEAR CALCULATION FOR SIZE STANDARDS.—

(A) IN GENERAL.—The transition plan described under paragraph (1) shall include a requirement that, during the period beginning on December 17, 2018, and ending on the date that is 6 months after the date on which the Administrator issues final rules implementing the Small Business Runway Extension Act of 2018 (Public Law 115–324), allows the use of a 3-year calculation for a size standard to be applied to a business concern if the use of such 3-year calculation allows such concern to be considered a small business concern under section 3(a)(1) of the Small Business Act (15 U.S.C. 632(a)(1)).

(B) 3-YEAR CALCULATION DEFINED.—In this subsection, the term “3-year calculation” means—

(i) with respect to a business concern providing services described under clause (ii)(II) of such section, a determination of the size of such concern on the basis of the annual average gross receipts of such concern over a period of 3 years; and

(ii) with respect to a business concern described under clause (ii)(III) of such section, a determination of the size of such concern on the basis of data over a period of 3 years.

(e) Requirement To Update SAM.—Not later than 90 days after the date of the enactment of this Act, the System for Award Management (or any successor system) shall be updated to comply with the requirements of this Act.

The House amendment contained a provision (sec. 875) that would require the Small Business Administration to issue reports that assess its cybersecurity infrastructure, including determining the country of origin of its information technology components, and report cyber threats, breaches, and cyber attacks.

The Senate bill contained no similar provision.

The House recedes.

Section 10 of the Small Business Act (15 U.S.C. 639) is amended by inserting after subsection (a) the following:

“(b) Cybersecurity Reports.—

“(1) ANNUAL REPORT.—Not later than 180 days after the date of enactment of this subsection, and every year thereafter, the Administrator shall submit a report to the appropriate congressional committees that includes—

“(A) an assessment of the information technology (as defined in section 11101 of title 40, United States Code) and cybersecurity infrastructure of the Administration;

“(B) a strategy to increase the cybersecurity infrastructure of the Administration;

“(C) a detailed account of any information technology equipment or interconnected system or subsystem of equipment of the Administration that was manufactured by an entity that has its principal place of business located in China, Iran, Russia, or North Korea; and

“(D) an account of any cybersecurity risk or incident that occurred at the Administration during the 2-year period preceding the date on which the report is submitted, and any action taken by the Administrator to respond to or remediate any such cybersecurity risk or incident.

“(2) ADDITIONAL REPORTS.—If the Administrator determines that there is a reasonable basis to conclude that a cybersecurity risk or incident occurred at the Administration, the Administrator shall—

“(A) not later than 7 days after the date on which the Administrator makes that determination, notify the appropriate congressional committees of the cybersecurity risk or incident; and

“(B) not later than 30 days after the date on which the Administrator makes a determination under subparagraph (A)—

“(i) provide notice to individuals and small business concerns affected by the cybersecurity risk or incident; and

“(ii) submit to the appropriate congressional committees a report, based on information available to the Administrator as of the date which the Administrator submits the report, that includes—

“(I) a summary of information about the cybersecurity risk or incident, including how the cybersecurity risk or incident occurred; and

“(II) an estimate of the number of individuals and small business concerns affected by the cybersecurity risk or incident, including an assessment of the risk of harm to affected individuals and small business concerns.

“(3) RULE OF CONSTRUCTION.—Nothing in this subsection shall be construed to affect the reporting requirements of the Administrator under chapter 35 of title 44, United States Code, in particular the requirement to notify the Federal information security incident center under section 3554(b)(7)(C)(ii) of such title, or any other provision of law.

“(4) DEFINITIONS.—In this subsection:

“(A) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term ‘appropriate congressional committees’ means—

“(i) the Committee on Small Business and Entrepreneurship of the Senate; and

“(ii) the Committee on Small Business of the House of Representatives.

“(B) CYBERSECURITY RISK; INCIDENT.—The terms ‘cybersecurity risk’ and ‘incident’ have the meanings given such terms, respectively, under section 2209(a) of the Homeland Security Act of 2002.”.

The House amendment contained a provision (sec. 876) that would amend section 21(a) of the Small Business Act by adding cyber strategy training for Small Business Development Centers (SBDCs) and require the Small Business Administrator to establish, or certify, an existing cyber counseling certification program to certify employees at small business development centers (that have directly received a grant from the Administration) to provide assistance to small businesses for planning cybersecurity practices and strategies to respond to cyber attacks. The Small Business Administration would be authorized to reimburse SBDCs for employee certification costs up to $350,000 per fiscal year.

The Senate bill contained no similar provision.

The House recedes.

Section 21 of the Small Business Act (15 U.S.C. 648) is amended by adding at the end the following:

“(o) Cyber Counseling Certification Program For Lead Small Business Development Centers.—

“(1) CERTIFICATION PROGRAM.—The Administrator shall establish a cyber counseling certification program, or approve a similar existing program, to certify employees of lead small business development centers to provide cyber planning assistance to small business concerns.

“(2) NUMBER OF CERTIFIED EMPLOYEES.—The Administrator shall ensure that each lead small business development center has at least 1 employee, and not less than 10 percent of the total number of employees of the lead small business development center, certified in providing cyber planning assistance under this subsection.

“(3) CONSIDERATION OF SMALL BUSINESS DEVELOPMENT CENTER CYBER STRATEGY.—In carrying out this subsection, the Administrator, to the extent practicable, shall consider any cyber strategy methods included in the Small Business Development Center Cyber Strategy developed under section 1841(a)(3)(B) of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328; 130 Stat. 2662) and any cybersecurity outreach conducted pursuant to section 2209(l) of the Homeland Security Act of 2002.

“(4) REIMBURSEMENT FOR CERTIFICATION.—Subject to the availability of appropriations, the Administrator shall reimburse a lead small business development center in an amount not to exceed $350,000 in any fiscal year for costs relating to the certification of an employee of the lead small business development center under the program established under paragraph (1).

“(5) DEFINITIONS.—In this subsection:

“(A) CYBER PLANNING ASSISTANCE.—The term ‘cyber planning assistance’ means counsel and assistance to improve the cybersecurity infrastructure, awareness of cyber threat indicators, and cyber training programs for employees of a small business concern.

“(B) LEAD SMALL BUSINESS DEVELOPMENT CENTER.—The term ‘lead small business development center’ means a small business development center that has received a grant under this section.”.

The House amendment contained a provision (sec. 877) that would amend subparagraph (B) of section 1908(b)(2) of title 41, United States Code, to exempt certain contracts from the periodic inflation adjustments to the acquisition-related dollar threshold.

The Senate bill contained no similar provision.

The House recedes.

Subparagraph (B) of section 1908(b)(2) of title 41, United States Code, is amended by inserting “3131 to 3134,” after “sections”.

The House amendment contained a provision (sec. 878(d)) that would amend section 9(jj) of the Small Business Act (15 U.S.C. 638) to change references to ``The Director of the National Institutes of Health'' to ``A covered agency head'' which is defined as the Director of the National Institutes of Health (NIH) for NIH Small Business Technology Transfer (STTR) programs or the Secretary of Defense for Department of Defense STTR programs.

The Senate bill contained no similar provision.

The House recedes.

* * * * *

(d) Phase 0 Proof Of Concept Partnership Program For The Department Of Defense.—Section 9(jj) of the Small Business Act (15 U.S.C. 638) is amended—

(1) in paragraph (1), by striking “The Director of the National Institutes of Health” and inserting “A covered agency head”;

(2) by striking “The Director” each place it appears and inserting “A covered agency head”;

(3) by striking “the Director” each place it appears and inserting “a covered agency head”;

(4) in paragraph (2)—

(A) by amending subparagraph (A) to read as follows:


“(A) the term ‘covered agency head’ means—

“(i) with respect to the STTR program of the National Institutes of Health, the Director of the National Institutes of Health; or

“(ii) with respect to the STTR program of the Department of Defense, the Secretary of Defense;”; and

(B) in subparagraph (C), by striking “in the National Institutes of Health’s STTR program” and inserting “in either the STTR program of the Department of Defense or the STTR program of the National Institutes of Health”; and

(5) in paragraph (4)(A), by inserting “participating in the STTR program administered by such agency head” after “a qualifying institution”.

The House amendment contained a provision (sec. 885) that would require the Secretary of Defense to provide a briefing to congressional defense committees on the progress of the Trusted Capital Marketplace pilot program.

The Senate bill contained no similar provision.

The House recedes.

The conferees understand that the Secretary of Defense is intending to establish a Trusted Capital Marketplace pilot program to link technology startup companies with trusted sources of capital in areas relevant to defense missions. The conferees direct the Secretary of Defense to provide a briefing on the progress of the Trusted Capital Marketplace pilot program to the congressional defense committees to include plans for how the program will: align with critical defense requirements; use the acquisition flexibilities authorized under recent National Defense Authorization Acts; be coordinated with other research and engineering technology investment programs, including the Small Business Innovation Research program; and be managed and resourced so as to evolve into a stable, funded activity. The conferees direct the Secretary to provide this briefing no later than 6 months after the date of enactment of this Act.

Not later than December 15, 2019, the Secretary of Defense shall provide to the congressional defense committees a briefing on the progress of the Trusted Capital Marketplace pilot program (Solicitation number: CS–19–1701), to include plans for how the program will—

(1) align with critical defense requirements; and

(2) become self-sustaining.

The House amendment contained a provision (sec. 892) that would amend chapter 144 of title 10, United States Code, by inserting a new section requiring the Secretary of Defense to submit a report to the congressional defense committees assessing the domestic source content of procurements carried out in connection with major defense acquisition programs. This section would also require the Secretary of Defense to establish an information repository for the collection of domestic source content information.

The Senate bill contained no similar provision.

The House recedes.

(a) Sense Of Congress.—It is the sense of Congress that any equipment or products purchased for major defense acquisition programs (as defined in section 2430 of title 10, United States Code) should be manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States, and that any such equipment or products purchased by any entity of the Department of Defense should be American-made, provided that American-made equipment and products are of a quality similar to that of competitive offers and are available in a timely manner to meet mission requirements.

(b) In General.—Chapter 144 of title 10, United States Code, is amended by inserting after section 2436 the following new section:

Ҥ 2436a. Major defense acquisition programs: report and database on items manufactured in the United States

“(a) Report.—Beginning not later than one year after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees an annual report on the percentage of any items procured in connection with a major defense acquisition program that are manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States.

“(b) Database.—The Secretary of Defense shall establish a database for information related to items described in the report required under subsection (a) that can be used for continuous data analysis to inform acquisition decisions relating to major defense acquisition programs.”.

(c) Clerical Amendment.—The table of section at the beginning of such chapter is amended by inserting after the item relating to section 2436 the following new item:

“2436a. Major defense acquisition programs: report and database on items manufactured in the United States.”.

The House amendment contained a provision (sec. 894) that would deem the cost of participating in certain science, technology, engineering, and math (STEM) programs an allowable cost under a contract between the contractor and the Department of Defense.

The Senate bill contained no similar provision.

The House recedes.

The conferees note the importance of developing a world class cadre of technical talent who can perform critical STEM job functions in both government and industry, including a number which require security clearances. The conferees believe that a strong partnership between the defense industry and the Department of Defense can stimulate efforts to increase that pool of STEM talent. Therefore, the conferees direct the Secretary of Defense to enter into an arrangement with one or more academic institutions to study and develop policy options and recommendations to promote DOD-defense industry collaboration in STEM education activities. The conferees note that these partnerships should be primarily focused on developing collaborative DOD-industry activities relevant to: creating a clearable technical workforce to meet defense missions, supporting educational opportunities for defense sector personnel in both government and industry, and increasing educational opportunities for veterans and military dependents. Further, the study should focus on activities which are based on metrics and education best practices to ensure maximum effectiveness. The conferees direct that the study, accompanied by an assessment and plan for the Secretary to implement the recommended policy options, if appropriate, should be delivered to the congressional defense committees no later than October 1, 2020. The conferees direct that Secretary to ensure that the study is developed in consultation with industry, education experts, and all appropriate defense organizations with expertise in STEM education.

(a) In General.—Section 862 of National Defense Authorization Act for Fiscal Year 2012 (Public Law 112–181; 125 Stat. 1521; 10 U.S.C. note prec. 2191) is amended—

(1) in subsection (a), in the matter preceding paragraph (1)—

(A) by striking “Under Secretary of Defense for Acquisition, Technology, and Logistics” and inserting “Under Secretary of Defense for Research and Engineering”; and

(B) by striking “ensure that Department of Defense contractors” and inserting “encourage Department of Defense contractors to”; and

(2) by amending subsection (b) to read as follows:

“(b) Allowable Cost.—The cost of participating in activities described in subsection (a) to a Department of Defense contractor shall be deemed to be an allowable cost under a contract between the contractor and the Department of Defense.”.

(b) Implementation.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall issue such rules or guidance necessary to implement the amendments made by this section.

The House amendment contained a provision (sec. 898) that would require the Comptroller General of the United States to provide a report analyzing cost growth of major defense acquisition programs to the defense committees.

The Senate bill contained no similar provision.

The House recedes.

The conferees direct the Comptroller General of the United States to submit to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives a report analyzing the cost growth of major defense acquisition programs (as defined in section 2430 of title 10 United States Code) during the 15 fiscal years preceding the date of the enactment of this Act.

The Comptroller General shall submit to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives a report analyzing cost growth of major defense acquisition programs (as defined in section 2430 of title 10, United States Code) during the 15 fiscal years preceding the date of the enactment of this Act.

The House amendment contained a provision (sec. 899A) that would require the Secretary of Defense to submit to Congress a report on contracts performed in foreign countries for which the contract was terminated for convenience because of actions taken by the government of, or an entity located in, the foreign country that impeded the ability of the contractor to perform the contract.

The Senate bill contained no similar provision.

The House recedes.

(a) Report.—Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall submit to Congress a report on contracts performed in foreign countries for which the contract was terminated for convenience because of actions taken by the government of, or an entity located in, the foreign country that impeded the ability of the contractor to perform the contract. Such report shall include, for each contract so terminated—

(1) the specific contract type;

(2) the good or service that is the subject of the contract;

(3) the contracting entity within the Department of Defense;

(4) the annual and total value of the contract;

(5) the foreign countries involved in implementing the contract;

(6) an identification of the government of, or entity located in, the foreign country that impeded the ability of the contractor to perform the contract;

(7) the rationale, if any, for impeding the ability of the contractor to perform the contract, and an analysis of whether the rationale contradicted and requirements of the Federal Acquisition Regulation;

(8) the increased costs incurred by the Department of Defense because of the termination; and

(9) any additional information, as determined by the Secretary.

(b) Strategy.—The Secretary of Defense, in collaboration with the Secretary of State, shall develop a strategy and accompanying guidelines for contractors and other Federal Government employees involved in the performance of Department of Defense contracts in foreign countries to ensure such contracts are not subject to interference, contract meddling, or favoritism by government of, or an entity located in, the foreign country. Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall submit to Congress a report on the strategy and accompanying guidelines.

The House amendment contained a provision (sec. 899E) that would require the head of a Federal department or agency to initiate debarment proceedings for persons who willfully or repeatedly violate the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.).

The Senate bill contained no similar provision.

The House recedes.

The head of a Federal department or agency (as defined in section 102 of title 40, United States Code) shall initiate a debarment proceeding with respect to a person for whom information regarding a willful or repeated violation of the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.) as determined by a disposition described under subsection (c)(1) of section 2313 of title 41, United States Code, is included in the database established under subsection (a) of such section.

The House amendment contained a provision (sec. 899H) that would amend section 2313(c) of title 41, United States Code, to include information on any unpaid federal tax liability of covered persons in the federal awardee performance and integrity database.

The Senate bill contained no similar provision.

The House recedes.

Section 2313(c) of title 41, United States Code, is amended by adding at the end the following:

“(9) Any unpaid Federal tax liability of the person, but only to the extent all judicial and administrative remedies have been exhausted or have lapsed with respect to the Federal tax liability.”.

The House amendment contained a provision (sec. 899J) that would amend the pilot program established in section 827 of the National Defense Authorization Act for Fiscal Year 2018 to require contractors to reimburse the Department of Defense for direct costs incurred by the Department in support of hearings to adjudicate bid protests. The provision would also change the date on which the pilot program begins.

The Senate bill contained no similar provision.

The House recedes.

Section 827 of the National Defense Authorization Act for Fiscal Year 2018 (10 U.S.C. 2304 note) is amended—

(1) in subsection (a)—

(A) by inserting “direct” before “costs incurred”; and

(B) by striking “in processing” and inserting “by the Department in support of hearings to adjudicate”; and

(2) in subsection (b), by striking “two years after the date of the enactment of this Act” and inserting “60 days after the Secretary of Defense certifies in writing to the congressional defense committees that the Department of Defense has business systems that have been independently audited and that can accurately identify the direct costs incurred by the Department of Defense in support of hearings to adjudicate covered protests”.

The House amendment contained a provision (sec. 899M) that would require the Comptroller General of the United States to conduct a study on the contracting practices of the U.S. Army Corps of Engineers (USACE).

The Senate bill contained no similar provision.

The House recedes.

The conferees direct the Comptroller General of the United States to conduct a study on the contracting practices of USACE, with a specific focus on how USACE complies with and enforces the requirement to pay prevailing wages on federally financed construction jobs, as required by subchapter IV of chapter 31 of title 40, United States Code (commonly referred to as the Davis-Bacon Act). The study should consider the
following:

(1) Any programs or protocols USACE has in place for the purpose of carrying out its Davis-Bacon Act enforcement obligations as set forth in the Federal Acquisition Regulation.

(2) Any programs or protocols USACE has in place for the purpose of identifying and addressing independent contractor misclassification on projects subject to the Davis-Bacon Act.

(3) The frequency with which USACE conducts site visits on each covered project to monitor Davis-Bacon Act compliance.

(4) The frequency with which USACE monitors certified payroll reports submitted by contractors and subcontractors on each covered project.

(5) Whether USACE accepts and investigates complaints of Davis-Bacon Act violations submitted by third parties, such as contractors and workers' rights organizations.

(6) Whether USACE maintains a database listing all contractors and subcontractors who have, in one way or another, violated the Davis-Bacon Act and whether USACE consults this database as part of its contract award process.

(7) The frequency, over the last five years, with which USACE penalized, disqualified, terminated, or moved for debarment of a contractor for Davis-Bacon violations.

(8) How USACE verifies that the contractors it hires for its projects are properly licensed.

The conferees further direct the Comptroller General to submit a report that summarizes the results of the study, with recommendations for legislative or regulatory action that would improve the efforts of enforcing the requirement to pay prevailing wages on federally financed construction jobs, to the following committees not later than 1 year after the date of enactment of this Act to: the Committee on Education and Labor; the Committee on Armed Services; and the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Health, Education, Labor, and Pensions; the Committee on Armed Services; and the Committee on Commerce, Science, and Transportation of the
Senate.

(a) Study Required.—The Comptroller General of the United States shall conduct a study on the contracting practices of the Corps of Engineers, with a specific focus on how the Corps of Engineers complies with and enforces the requirement to pay prevailing wages on federally financed construction jobs, as required by subchapter IV of chapter 31 of title 40, United States Code (commonly referred to as the Davis-Bacon Act). The study shall consider the following:

(1) Any programs or protocols the Corps of Engineers has in place for the purpose of carrying out its Davis-Bacon Act enforcement obligations as set forth in the Federal Acquisition Regulation.

(2) Any programs or protocols the Corps of Engineers has in place for the purpose of identifying and addressing independent contractor misclassification on projects subject to the Davis-Bacon Act.

(3) The frequency with which the Corps of Engineers conducts site visits on each covered project to monitor Davis-Bacon Act compliance.

(4) The frequency with which the Corps of Engineers monitors certified payroll reports submitted by contractors and subcontractors on each covered project.

(5) Whether the Corps of Engineers accepts and investigates complaints of Davis-Bacon Act violations submitted by third parties, such as contractors and workers’ rights organizations.

(6) Whether the Corps of Engineers maintains a database listing all contractors and subcontractors who have, in one way or another, violated the Davis-Bacon Act and whether the Corps consults this database as part of its contract award process.

(7) The frequency, over the last five years, with which the Corps of Engineers penalized, disqualified, terminated, or moved for debarment of a contractor for Davis-Bacon violations.

(8) How the Corps of Engineers verifies that the contractors it hires for its projects are properly licensed.

(b) Report To Congress.—Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Education and Labor, the Committee on Armed Services, and the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Health, Education, Labor, and Pensions, the Committee on Armed Services, and the Committee on Commerce, Science, and Transportation of the Senate a report that summarizes the results of the study required under subsection (a), together with any recommendations for legislative or regulatory action that would improve the efforts of enforcing the requirement to pay prevailing wages on federally financed construction jobs.

The House amendment contained a provision (sec. 899N) that would require the Comptroller General of the United States to submit to the congressional defense committees a report on the use of defense business processes.

The Senate bill contained no similar provision.

The House recedes.

The Comptroller General of the United States shall submit to the congressional defense committees a report on the use of defense business processes (as described under section 2222 of title 10, United States Code) that includes—

(1) an analysis of the extent to which the Department of Defense is developing a culture that recognizes the importance of business processes to achieving operational success;

(2) an analysis of the extent to which the Department of Defense components are implementing business process reengineering initiatives necessary to achieving improved financial management;

(3) an analysis of the quality of financial management training provided to employees of the Department; and

(4) an identification of the steps taken by the Department of the Defense to institutionalize a culture that recognizes the importance of financial management.

The Senate bill contained a provision (sec. 5202) that would amend section 2371(e) of title 10, United States Code, to eliminate certain restrictions on the use of the authority and associated funds.

The House amendment contained no similar provision.

The Senate recedes.

The conferees note that current law already permits the Secretary to engage in research project transaction authorities with cost sharing from industry that is less than fifty percent of the total costs, as appropriate, to allow for delivering performance with affordability and speed as outlined in the National Defense Strategy. The conferees believe the Secretary should use research project transaction authorities to drive efficiency, adopt and implement new ideas, and leverage leading practices from industry and academia to positively impact and support acquisition, personnel, research, and operational processes.

(1) by striking paragraph (2);

(2) by striking paragraph (1)(B);

(3) in paragraph (1)(A), by striking “; and” and inserting a period; and

(4) by striking “(e) Conditions.—(1) The Secretary of Defense” and all that follows through “(A) to the maximum extent practicable” and inserting “(e) Conditions.—The Secretary of Defense, to the maximum extent practicable”.

(b) Conforming Amendment.—Section 2371b(b) of title 10, United States Code, is amended by striking “(b) Exercise Of Authority.—” and all that follows through “(2) To the maximum extent practicable” and inserting “(b) Exercise Of Authority.—To the maximum extent practicable”.

The Senate bill contained a provision (sec. 5801) that would require a report concerning Department of Defense contracts with companies or business entities that are owned or operated by, or affiliated with, the Government of the People's Republic of China or the Chinese Communist Party.

The House amendment contained no similar provision.

The Senate recedes.

Not later than 180 days after the date of the enactment of this Act, the conferees direct the Secretary of Defense to submit to the congressional defense committees a report describing all Department of Defense contracts with companies or business entities that are owned or operated by, or affiliated with, the Government of the People's Republic of China or the Chinese Communist Party.

The Senate bill contained a provision (sec. 6018) that would amend section 303 of the Defense Production Act of 1950 to provide authority through the Defense Production Act for the federal government to rapidly adopt supply chain security measures if a national security need arises.

The House amendment contained no similar provision.

The Senate recedes.

“(1) IN GENERAL.—The President may make available to an eligible entity described in paragraph (2) payments to increase the security of supply chains and supply chain activities, if the President certifies to Congress not less than 30 days before making such a payment that the payment is in the national security interests of the United States.

“(2) ELIGIBLE ENTITY.—An eligible entity described in this paragraph is an entity that—

“(A) is organized under the laws of the United States or any jurisdiction within the United States; and

“(B) produces—

“(i) one or more critical components;

“(ii) critical technology; or

“(iii) one or more products for the increased security of supply chains or supply chain activities.

“(3) DEFINITIONS.—In this subsection, the terms ‘supply chain’ and ‘supply chain activities’ have the meanings given those terms by the President by regulation under section 6019(b) of the National Defense Authorization Act for Fiscal Year 2020.”.

(b) Regulations.—

(1) IN GENERAL.—Not later than 90 days after the date of the enactment of this Act, the President shall prescribe regulations setting forth definitions for the terms “supply chain” and “supply chain activities” for the purposes of section 303(h) of the Defense Production Act of 1950 (50 U.S.C. 4533(h)), as added by subsection (a).

(2) SCOPE OF DEFINITIONS.—The definitions required by paragraph (1)—

(A) shall encompass—

(i) the organization, people, activities, information, and resources involved in the delivery and operation of a product or service used by the Government; or

(ii) critical infrastructure as defined in Presidential Policy Directive 21 (February 12, 2013; relating to critical infrastructure security and resilience); and

(B) may include variations for specific sectors or Government functions.