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

House Conference Report 109-360

SEC. 811. INTERNAL CONTROLS FOR PROCUREMENTS ON BEHALF OF THE DEPARTMENT OF DEFENSE.

(a) Inspector General Reviews and Determinations-

(1) IN GENERAL- For each covered non-defense agency, the Inspector General of the Department of Defense and the Inspector General of such non-defense agency shall, not later than March 15, 2006, jointly--

(A) review--

(i) the procurement policies, procedures, and internal controls of such non-defense agency that are applicable to the procurement of property and services on behalf of the Department by such non-defense agency; and

(ii) the administration of those policies, procedures, and internal controls; and

(B) determine in writing whether--

(i) such non-defense agency is compliant with defense procurement requirements;

(ii) such non-defense agency is not compliant with defense procurement requirements, but has a program or initiative to significantly improve compliance with defense procurement requirements; or

(iii) neither of the conclusions stated in clauses (i) and (ii) is correct in the case of such non-defense agency.

(2) ACTIONS FOLLOWING CERTAIN DETERMINATIONS- If the Inspectors General determine under paragraph (1) that the conclusion stated in clause (ii) or (iii) of subparagraph (B) of that paragraph is correct in the case of a covered non-defense agency, such Inspectors General shall, not later than June 15, 2007, jointly--

(A) conduct a second review, as described in subparagraph (A) of that paragraph, regarding such non-defense agency's procurement of property or services on behalf of the Department of Defense in fiscal year 2006; and

(B) determine in writing whether such non-defense agency is or is not compliant with defense procurement requirements.

(b) Compliance With Defense Procurement Requirements- For the purposes of this section, a covered non-defense agency is compliant with defense procurement requirements if such non-defense agency's procurement policies, procedures, and internal controls applicable to the procurement of products and services on behalf of the Department of Defense, and the manner in which they are administered, are adequate to ensure such non-defense agency's compliance with the requirements of laws and regulations that apply to procurements of property and services made directly by the Department of Defense.

(c) Memoranda of Understanding Between Inspectors General-

(1) IN GENERAL- Not later than 60 days after the date of the enactment of this Act, the Inspector General of the Department of Defense and the Inspector General of each covered non-defense agency shall enter into a memorandum of understanding with each other to carry out the reviews and make the determinations required by this section.

(2) SCOPE OF MEMORANDA- The Inspector General of the Department of Defense and the Inspector General of a covered non-defense agency may by mutual agreement conduct separate reviews of the procurement of property and services on behalf of the Department of Defense that are conducted by separate business units, or under separate governmentwide acquisition contracts, of such non-defense agency. In any case where such separate reviews are conducted, the Inspectors General shall make separate determinations under paragraph (1) or (2) of subsection (a), as applicable, with respect to each such separate review.

(d) Limitations on Procurements on Behalf of Department of Defense-

(1) LIMITATION DURING REVIEW PERIOD- After March 15, 2006, and before June 16, 2007, no official of the Department of Defense may, except as provided in subsection (e) or (f), order, purchase, or otherwise procure property or services in an amount in excess of $100,000 through a covered non-defense agency for which a determination described in paragraph (1)(B)(iii) of subsection (a) has been made under that subsection.

(2) LIMITATION AFTER REVIEW PERIOD- After June 15, 2007, no official of the Department of Defense may, except as provided in subsection (e) or (f), order, purchase, or otherwise procure property or services in an amount in excess of $100,000 through a covered non-defense agency that, having been subject to review under this section, has not been determined under this section as being compliant with defense procurement requirements.

(3) LIMITATION FOLLOWING FAILURE TO REACH MOU- Commencing on the date that is 60 days after the date of the enactment of this Act, if a memorandum of understanding between the Inspector General of the Department of Defense and the Inspector General of a covered non-defense agency cannot be attained causing the review required by this section to not be performed, no official of the Department of Defense, except as provided in subsection (e) or (f), may order, purchase or otherwise procure property or services in an amount in excess of $100,000 through such non-defense agency.

(e) Exception From Applicability of Limitations-

(1) EXCEPTION- No limitation applies under subsection (d) with respect to the procurement of property and services on behalf of the Department of Defense by a covered non-defense agency during any period that there is in effect a determination of the Under Secretary of Defense for Acquisition, Technology, and Logistics, made in writing, that it is necessary in the interest of the Department of Defense to continue to procure property and services through such non-defense agency.

(2) APPLICABILITY OF DETERMINATION- A written determination with respect to a covered non-defense agency under paragraph (1) is in effect for the period, not in excess of one year, that the Under Secretary shall specify in the written determination. The Under Secretary may extend from time to time, for up to one year at a time, the period for which the written determination remains in effect.

(f) Termination of Applicability of Limitations- Subsection (d) shall cease to apply to a covered non-defense agency on the date on which the Inspector General of the Department of Defense and the Inspector General of such non-defense agency jointly--

(1) determine that such non-defense agency is compliant with defense procurement requirements; and

(2) notify the Secretary of Defense of that determination.

(g) Identification of Procurements Made During a Particular Fiscal Year- For the purposes of subsection (a), a procurement shall be treated as being made during a particular fiscal year to the extent that funds are obligated by the Department of Defense for that procurement in that fiscal year.

(h) Definitions- In this section:

(1) The term `covered non-defense agency' means each of the following:

(A) The Department of the Treasury.

(B) The Department of the Interior.

(C) The National Aeronautics and Space Administration.

(2) The term `governmentwide acquisition contract', with respect to a covered non-defense agency, means a task or delivery order contract that--

(A) is entered into by the non-defense agency; and

(B) may be used as the contract under which property or services are procured for 1 or more other departments or agencies of the Federal Government.

The Senate amendment contained a provision (sec. 801) that would require the Department of Defense Inspector General, in consultation with the Inspectors General of nondefense agencies, to determine whether the policies, procedures, and internal controls of non-defense agencies for purchases on behalf of the Department of Defense are adequate to ensure compliance with defense procurement requirements of law and regulation.

The House bill contained no similar provision.

The House recedes with an amendment that would clarify the language of the provision and limit the joint reviews to the Department of the Interior, the Department of the Treasury, and the National Aeronautics and Space Administration.

Senate Report 109-69

The committee recommends a provision that would require the Department of Defense Inspector General, in consultation with applicable Inspector's General of nondefense agencies, to determine whether the policies, procedures, and internal controls of nondefense agencies for purchases on behalf of the Department of Defense are adequate to ensure compliance with defense procurement requirements of law and regulation. The provision would allow the Department to continue contracting after March 15, 2006, with any nondefense agency that is making significant progress toward implementing effective policies, procedures, and internal controls. The provision would prohibit contracting with nondefense agencies after March 15, 2007, if a required second Inspector General review determined that the nondefense agency was not compliant with defense procurement requirements. The provision would also authorize the Under Secretary of Defense for Acquisition, Technology and Logistics to continue contracting through a nondefense agency that has failed to implement appropriate policies, procedures, and internal controls, if he determines that it is necessary to do so in the interest of the Department.