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

Subtitle D—Provisions Relating to Contracts in Support of Contingency Operations in Iraq or Afghanistan

P. L. 112-81

House Conference Report 112-329

(a) Prohibition-

(1) IN GENERAL- Not later than 30 days after the date of the enactment of this Act, the Secretary of Defense shall revise the Department of Defense Supplement to the Federal Acquisition Regulation to authorize the head of a contracting activity, pursuant to a request from the Commander of the United States Central Command under subsection (c)(2)--

(A) to restrict the award of Department of Defense contracts, grants, or cooperative agreements that the head of the contracting activity determines in writing would provide funding directly or indirectly to a person or entity that has been identified by the Commander of the United States Central Command as actively supporting an insurgency or otherwise actively opposing United States or coalition forces in a contingency operation in the United States Central Command theater of operations;

(B) to terminate for default any Department contract, grant, or cooperative agreement upon a written determination by the head of the contracting activity that the contractor, or the recipient of the grant or cooperative agreement, has failed to exercise due diligence to ensure that none of the funds received under the contract, grant, or cooperative agreement are provided directly or indirectly to a person or entity who is actively supporting an insurgency or otherwise actively opposing United States or coalition forces in a contingency operation in the United States Central Command theater of operations; or

(C) to void in whole or in part any Department contract, grant, or cooperative agreement upon a written determination by the head of the contracting activity that the contract, grant, or cooperative agreement provides funding directly or indirectly to a person or entity that has been identified by the Commander of the United States Central Command as actively supporting an insurgency or otherwise actively opposing United States or coalition forces in a contingency operation in the United States Central Command theater of operations.

(2) TREATMENT AS VOID- For purposes of this section:

(A) A contract, grant, or cooperative agreement that is void is unenforceable as contrary to public policy.

(B) A contract, grant, or cooperative agreement that is void in part is unenforceable as contrary to public policy with regard to a segregable task or effort under the contract, grant, or cooperative agreement.

(b) Contract Clause-

(1) IN GENERAL- Not later than 30 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 require that--

(A) the clause described in paragraph (2) shall be included in each covered contract, grant, and cooperative agreement of the Department that is awarded on or after the date of the enactment of this Act; and

(B) to the maximum extent practicable, each covered contract, grant, and cooperative agreement of the Department that is awarded before the date of the enactment of this Act shall be modified to include the clause described in paragraph (2).

(2) CLAUSE DESCRIBED- The clause described in this paragraph is a clause that--

(A) requires the contractor, or the recipient of the grant or cooperative agreement, to exercise due diligence to ensure that none of the funds received under the contract, grant, or cooperative agreement are provided directly or indirectly to a person or entity who is actively supporting an insurgency or otherwise actively opposing United States or coalition forces in a contingency operation; and

(B) notifies the contractor, or the recipient of the grant or cooperative agreement, of the authority of the head of the contracting activity to terminate or void the contract, grant, or cooperative agreement, in whole or in part, as provided in subsection (a).

(3) COVERED CONTRACT, GRANT, OR COOPERATIVE AGREEMENT- In this subsection, the term `covered contract, grant, or cooperative agreement' means a contract, grant, or cooperative agreement with an estimated value in excess of $100,000 that will be performed in the United States Central Command theater of operations.

(c) Identification of Contracts With Supporters of the Enemy-

(1) IN GENERAL- Not later than 30 days after the date of the enactment of this Act, the Secretary, acting through the Commander of the United States Central Command, shall establish a program to use available intelligence to review persons and entities who receive United States funds through contracts, grants, and cooperative agreements performed in the United States Central Command theater of operations and identify any such persons and entities who are actively supporting an insurgency or otherwise actively opposing United States or coalition forces in a contingency operation.

(2) NOTICE TO CONTRACTING ACTIVITIES- If the Commander of the United States Central Command, acting pursuant to the program required by paragraph (1), identifies a person or entity as actively supporting an insurgency or otherwise actively opposing United States or coalition forces in a contingency operation, the Commander may notify the head of a contracting activity in writing of such identification and request that the head of the contracting activity exercise the authority provided in subsection (a) with regard to any contracts, grants, or cooperative agreements that provide funding directly or indirectly to the person or entity.

(3) PROTECTION OF CLASSIFIED INFORMATION- Classified information relied upon by the Commander of the United States Central Command to make an identification in accordance with this subsection may not be disclosed to a contractor or a recipient of a grant or cooperative agreement with respect to which an action is taken pursuant to the authority provided in subsection (a), or to their representatives, in the absence of a protective order issued by a court of competent jurisdiction established under Article III of the Constitution of the United States that specifically addresses the conditions upon which such classified information may be so disclosed.

(d) Nondelegation of Responsibilities-

(1) CONTRACT ACTIONS- The authority provided by subsection (a) to restrict, terminate, or void contracts, grants, and cooperative agreements may not be delegated below the level of the head of a contracting activity.

(2) IDENTIFICATION OF SUPPORT OF ENEMY- The authority to make an identification under subsection (c)(1) may not be delegated below the level of the Commander of the United States Central Command.

(e) Reports- Not later than March 1 of each of 2013, 2014, and 2015, the Secretary shall submit to the congressional defense committees a report on the use of the authority provided by this section in the preceding calendar year. Each report shall identify, for the calendar year covered by such report, each instance in which the Department of Defense exercised the authority to restrict, terminate, or void contracts, grants, and cooperative agreements pursuant to subsection (a) and explain the basis for the action taken. Any report under this subsection may be submitted in classified form.

(f) Other Definition- In this section, the term `contingency operation' has the meaning given that term in section 101(a)(13) of title 10, United States Code.

(g) Sunset- The authority to restrict, terminate, or void contracts, grants, and cooperative agreements pursuant to subsection (a) shall cease to be effective on the date that is three years after the date of the enactment of this Act.

The House bill contained a provision (sec. 821) that would allow the Secretary of Defense to void a contract, upon a determination that a foreign entity or individual performing on the contract is directly engaged in hostilities or is substantially supporting forces that are engaged in hostilities against the United States or its coalition partners.

The Senate amendment contained a similar provision (sec. 861).

The House recedes with an amendment clarifying that the authority provided by the section is available only to the Department of Defense.

House Report 112-078

SECTION 821--RESTRICTIONS ON AWARDING CONTRACTS IN SUPPORT OF CONTINGENCY OPERATIONS IN IRAQ OR AFGHANISTAN TO ADVERSE ENTITIES

This section would allow the Secretary of Defense to void a contract, or require the prime contractor to void a subcontract under a contract, in support of contingency operations in the Republic of Iraq or the Islamic Republic of Afghanistan, if the Secretary determines that a foreign entity or foreign individual performing on the contract, or a task or delivery order, is directly engaged in hostilities or is substantially supporting forces that are engaged in hostilities against the U.S. or its coalition partners.

Senate Report 112-26

Prohibition on contracting with the enemy in the United States Central Command Theater of Operations (sec. 861)

The committee recommends a provision that would authorize the head of a contracting activity to void a contract or restrict the award of future contracts to a contractor who has been determined by the Commander of United States Central Command to be actively opposing U.S. forces in Afghanistan. The provision would also authorize the termination for default of a contractor who fails to exercise due diligence to ensure that none of the funds under a contract are awarded to persons who are actively opposing U.S. forces in Afghanistan.

As a result of the establishment of Task Force 2010 and Task Force Spotlight last year, U.S. forces in Afghanistan have begun to fuse intelligence and contracting efforts to establish better oversight over contracting and subcontracting in Afghanistan. This improved oversight has revealed instances in which some contractors or subcontractors are working directly or indirectly with insurgents and powerbrokers who are actively working against U.S. forces in Afghanistan.

The Department of Defense has informed the committee that time-consuming legal procedures could be required under current law before such contracts could be terminated. As a result, U.S. taxpayer money could continue to flow to persons supporting enemy forces for weeks or even months after the problem has been identified. On March 15, 2011, the Commander, United States Forces Afghanistan, testified that legislation addressing this issue would `be very helpful to us' and `the sooner the better.'

The committee concludes that contracts with the enemy have the potential to seriously undermine U.S. national security objectives in the Central Command Theater of Operations and should be considered to be void as against public policy.