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LEGISLATIVE PROVISIONS NOT ADOPTED

From House Conference Report 112-705

Sections of House and Senate Bills Not Enacted

Prohibition on contracting with persons that have business operations with state sponsors of terrorism

The House bill contained a provision (sec. 803) that would prohibit the Department of Defense from entering contracts with persons that have business operations with state sponsors of terrorism.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 803. PROHIBITION ON CONTRACTING WITH PERSONS THAT HAVE BUSINESS OPERATIONS WITH STATE SPONSORS OF TERRORISM.

(a) Prohibition- The Department of Defense may not enter into a contract for the procurement of goods or services with any person that has business operations with a state sponsor of terrorism.

(b) Definitions- In this section:

(1) STATE SPONSOR OF TERRORISM- The term `state sponsor of terrorism' means any country the government of which the Secretary of State has determined has repeatedly provided support for acts of international terrorism pursuant to--

(A) section 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)) (as continued in effect pursuant to the International Emergency Economic Powers Act);

(B) section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371); or

(C) section 40 of the Arms Export Control Act (22 U.S.C. 2780).

(2) BUSINESS OPERATIONS- The term `business operations' means engaging in commerce in any form, including acquiring, developing, maintaining, owning, selling, possessing, leasing, or operating equipment, facilities, personnel, products, services, personal property, real property, or any other apparatus of business or commerce.

(3) PERSON- The term `person' means--

(A) a natural person, corporation, company, business association, partnership, society, trust, or any other nongovernmental entity, organization, or group;

(B) any governmental entity or instrumentality of a government, including a multilateral development institution (as defined in section 1701(c)(3) of the International Financial Institutions Act (22 U.S.C. 262r(c)(3))); and

(C) any successor, subunit, parent entity, or subsidiary of, or any entity under common ownership or control with, any entity described in subparagraph (A) or (B).

One-year extension of temporary limitation on aggregate annual amount available for contract services

The Senate amendment contained a provision (sec. 821) that would extend for 1 year the limitation on aggregate annual spending for contract services in section 808 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81).

The House bill contained no similar provision.

The Senate recedes.

The conferees note that the level of authorized spending for contract services is addressed elsewhere in this conference report.

SEC. 821. ONE-YEAR EXTENSION OF TEMPORARY LIMITATION ON AGGREGATE ANNUAL AMOUNT AVAILABLE FOR CONTRACT SERVICES.

Section 808 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81; 125 Stat. 1489) is amended--

(1) by striking `fiscal year 2012 or 2103' each place it appears and inserting `fiscal year 2012, 2013, or 2014'; and

(2) by striking `fiscal years 2012 and 2013' each place it appears and inserting `fiscal years 2012, 2103, and 2014'.

Enhancement of review of acquisition process for rapid fielding of capabilities in response to urgent operational needs

The House bill contained a provision (sec. 831) that would strike the requirement in section 804 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (Public Law 111-383) that the streamlined acquisition process for rapid fielding of capabilities in response to urgent operational needs be used only for capabilities that can appropriately be acquired under fixed-price contracts.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 831. ENHANCEMENT OF REVIEW OF ACQUISITION PROCESS FOR RAPID FIELDING OF CAPABILITIES IN RESPONSE TO URGENT OPERATIONAL NEEDS.

Section 804(b)(3) of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (Public Law 111-383; 124 Stat. 4256; 10 U.S.C. 2302 note) is amended--

(1) by inserting `and' at the end of subparagraph (B);

(2) by striking `; and' at the end of subparagraph (C) and inserting a period; and

(3) by striking subparagraph (D).

Location of contractor-operated call centers in the United States

The House bill contained a provision (sec. 832) that would require that any call center operated pursuant to a Department of Defense contract be located in the United States.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 832. LOCATION OF CONTRACTOR-OPERATED CALL CENTERS IN THE UNITED STATES.

The Secretary of Defense shall ensure that any call center operated pursuant to a contract entered into by the Secretary or by the head of any of the military departments is located in the United States.

Consideration and verification of information relating to effect on domestic employment of award of defense contracts

The House bill contained a provision (sec. 833) that would authorize Department of Defense officials to consider information relating to the effect on employment in the United States in making award decisions for competitive proposals.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 833. CONSIDERATION AND VERIFICATION OF INFORMATION RELATING TO EFFECT ON DOMESTIC EMPLOYMENT OF AWARD OF DEFENSE CONTRACTS.

(a) In General- Section 2305(a) of title 10, United States Code, is amended by adding at the end the following new paragraph:

`(6)(A) The head of an agency, in issuing a solicitation for competitive proposals, shall state in the solicitation that the agency may consider information (in this paragraph referred to as a `jobs impact statement') that the offeror may include in its offer related to the effects on employment within the United States of the contract if it is awarded to the offeror.

`(B) The information that may be included in a jobs impact statement may include the following:

`(i) The number of jobs expected to be created in the United States, or the number of jobs retained that otherwise would be lost, if the contract is awarded to the offeror.

`(ii) The number of jobs created or retained in the United States by the subcontractors expected to be used by the offeror in the performance of the contract.

`(iii) A guarantee from the offeror that jobs created or retained in the United States will not be moved outside the United States after award of the contract.

`(C) The contracting officer may consider the information in the jobs impact statement in the evaluation of the offer.

`(D) The agency may request further information from the offeror in order to verify the accuracy of the information in the jobs impact statement.

`(E) In the case of a contract awarded to an offeror that submitted a jobs impact statement with the offer for the contract, the agency shall, not later than six months after the award of the contract and annually thereafter for the duration of the contract or contract extension, assess the accuracy of the jobs impact statement.

`(F) The Secretary of Defense shall submit to Congress an annual report on the frequency of use within the Department of Defense of jobs impact statements in the evaluation of competitive proposals.'.

(b) Revision of Federal Acquisition Regulation- The Federal Acquisition Regulation shall be revised to implement the amendment made by this section.

Requirement to include trafficking in persons in performance assessments of defense contractors

The House bill contained a provision (sec. 835) that would require the inclusion of trafficking in persons in any performance assessment of a defense contractor or subcontractor.

The Senate amendment contained no similar provision.

The House recedes.

The issue of trafficking in persons by defense contractors, subcontractors, and by labor recruiters, brokers, and agents for such contractors and subcontractors, is comprehensively addressed elsewhere in the conference report.

SEC. 835. REQUIREMENT TO INCLUDE TRAFFICKING IN PERSONS IN PERFORMANCE ASSESSMENTS OF DEFENSE CONTRACTORS.

(a) Performance Assessments to Include Evaluation of Trafficking in Persons- With respect to any performance assessment of a defense contractor or subcontractor of such a contractor, or any labor recruiter, broker, or other agent used by the contractor or subcontractor, the Secretary of Defense shall include an evaluation of trafficking in persons.

(b) Trafficking in Persons Defined- In this section, the term `trafficking in persons' has the meaning provided the term `severe form of trafficking in persons' in section 103 of the Trafficking Victims Protection Act of 2000 (22 U.S.C. 7102).

Short title

The Senate amendment contained a provision (sec. 860) that would provide a short title for the wartime subcontracting subtitle of the bill.

The House bill contained no similar provision.

The Senate recedes.

SEC. 860. SHORT TITLE.

This subtitle may be cited as the `Wartime Contracting Reform Act of 2012'.

 
Professional education for Department of State personnel on acquisition for Department of State support and participation in overseas contingency operations

The Senate amendment contained a provision (sec. 873) that would require the Secretary of State to develop and administer a course of professional education on acquisition for specified Department of State personnel.

The House bill contained no similar provision.

The Senate recedes.

The conferees agree on the importance of professional education on acquisition matters for key personnel responsible for contract support in overseas contingency operations and expect the Department of State to take appropriate steps to ensure the development and implementation of suitable training courses. The conferees intend to work with the committees of jurisdiction in the Senate and the House of Representatives to ensure proper oversight of these efforts.

SEC. 873. PROFESSIONAL EDUCATION FOR DEPARTMENT OF STATE PERSONNEL ON ACQUISITION FOR DEPARTMENT OF STATE SUPPORT AND PARTICIPATION IN OVERSEAS CONTINGENCY OPERATIONS.

(a) Professional Education Required- The Secretary of State shall develop and administer for Department of State personnel specified in subsection (b) a course of professional education on acquisition by the Department of State for Department of State support for, and participation in, overseas contingency operations.

(b) Covered Department of State Personnel- The Department of State personnel specified in this subsection are as follows:

(1) The Chief Acquisition Officer of the Department of State.

(2) Personnel of the Department designated by the Chief Acquisition Officer, including contracting officers and other contracting personnel.

(3) Such other personnel of the Department as the Secretary of State shall designate for purposes of this section.

(c) Elements-

(1) CURRICULUM CONTENT- The course of professional education under this section shall include appropriate content on the following:

(A) Contingency contracting.

(B) Contingency program management.

(C) The strategic impact of contracting costs on the mission and activities of the Department of State.

(D) Such other matters relating to acquisition by the Department for Department support for, or participation in, overseas contingency operations as the Secretary of State considers appropriate.

(2) PHASED APPROACH- The course of professional education may be broken into two or more phases of professional education with curriculum or modules of education suitable for the Department of State personnel specified in subsection (b) at different phases of professional advancement within the Department.

(d) Definitions- In this section:

(1) The term `contingency contracting' means all stages of the process of acquiring property or services by the Department of State for Department of State support for, and participation in, overseas contingency operations.

(2) The term `contingency program management' means the process of planning, organizing, staffing, controlling, and leading specific acquisition programs and activities of the Department of State for Department of State support for, and participation in, overseas contingency operations.

(3) The term `overseas contingency operation' means a military operation outside the United States and its territories and possessions that is a contingency operation (as that term is defined in section 101(a)(13) of title 10, United States Code).

Public availability of database of senior Department of Defense officials seeking employment with defense contractors

The Senate amendment contained a provision (sec. 877) that would require that information in the database established pursuant to section 847(b) of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181) be made available to the public.

The House bill contained no similar provision.

The Senate recedes.

The conferees note that the database established pursuant to section 847(b) consists of written legal opinions prepared by DOD ethics officials and provided to DOD personnel on an individual basis to help guide their conduct.

SEC. 877. PUBLIC AVAILABILITY OF DATABASE OF SENIOR DEPARTMENT OF DEFENSE OFFICIALS SEEKING EMPLOYMENT WITH DEFENSE CONTRACTORS.

Section 847(b) of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181; 10 U.S.C. 1701 note) is amended by adding at the end the following new paragraph:

`(3) PUBLIC AVAILABILITY OF INFORMATION- The Secretary of Defense shall make available online to the public any information contained in the database or repository required under paragraph (1) that is not confidential, personal, or proprietary in nature.'.

 
Additional bases for suspension or debarment

The Senate amendment contained a provision (sec. 881A) that would provide for mandatory consideration of suspension or debarment in certain circumstances.

The House bill contained no similar provision.

The Senate recedes.

SEC. 881A. ADDITIONAL BASES FOR SUSPENSION OR DEBARMENT.

(a) In General- Not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulation shall be revised to provide for the automatic referral of a person described in subsection (b) to the appropriate suspension and debarment official for a determination whether or not the person should be suspended or debarred.

(b) Covered Persons- A person described in this subsection is any person as follows:

(1) A person who has been charged with a Federal criminal offense relating to the award or performance of a contract of an executive agency.

(2) A person who has been alleged, in a civil or criminal proceeding brought by the United States, to have engaged in fraudulent actions in connection with the award or performance of a contract of an executive agency.

(3) A person that does not maintain an office within the United States and has been determined by the head of a contracting agency of an executive agency to have failed to pay or refund amounts due or owed to the Federal Government in connection with the performance of a contract of the executive agency.

(c) Definitions- In this section:

(1) The term `executive agency' has the meaning given that term in section 133 of title 41, United States Code.

(2) The term `person' has the meaning given that term in section 1 of title 1, United States Code.

Comptroller General of the United States review of use by the Department of Defense, the Department of State, and the United States Agency for International Development of urgent and compelling exception to competition

The Senate amendment contained a provision (sec. 883) that would require the Government Accountability Office (GAO) to review the use by the Department of Defense (DOD), the Department of State, and the United States Agency for International Development of the unusual and compelling urgency exception to full and open competition.

The House bill contained no similar provision.

The Senate recedes.

The conferees direct the Comptroller General to report to the appropriate congressional committees by not later than 1 year after the date of the enactment of this Act on the use of the urgent and compelling exception by the DOD, the Department of State, and the United States Agency for International Development. The Comptroller General's report should address, at a minimum, the following: (1) the pattern of use of the exception by acquisition organizations; (2) the range of items or services acquired through the use of the exception; (3) the process for reviewing and approving justifications involving the exception; (4) whether the justifications meet the requirements of the Federal Acquisition Regulation; (5) the extent to which the exception is used as a basis for sole-source procurements, and whether such use is justified; and (6) agency compliance with the statutory requirement to limit the duration of contracts awarded pursuant the exception.

SEC. 883. COMPTROLLER GENERAL OF THE UNITED STATES REVIEW OF USE BY THE DEPARTMENT OF DEFENSE, THE DEPARTMENT OF STATE, AND THE UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT OF URGENT AND COMPELLING EXCEPTION TO COMPETITION.

(a) Review Required- The Comptroller General of the United States shall review each of the following:

(1) The use by the Department of Defense of the unusual and compelling urgency exception to full and open competition provided in section 2304(c)(2) of title 10, United States Code.

(2) The use by each of the Department of State and the United States Agency for International Development of the unusual and compelling urgency exception to full and open competition provided in section 3304(a)(2) of title 41, United States Code.

(b) Matters To Be Reviewed- The review of the use of an unusual and compelling urgency exception required by subsection (a) shall include a review of the following:

(1) The pattern of use of the exception by acquisition organizations within the Department of Defense, the Department of State, and the United States Agency for International Development in order to determine which organizations are commonly using the exception and the frequency of such use.

(2) The range of items or services being acquired through the use of the exception.

(3) The process for reviewing and approving justifications involving the exception.

(4) Whether the justifications for use of the exception typically meet the relevant requirements of the Federal Acquisition Regulation applicable to the use of the exception.

(5) The extent to which the exception is used to solicit bids or proposals from only one source and the extent to which such sole-source procurements are appropriately documented and justified.

(6) The compliance of the Department of Defense, the Department of State, and the United States Agency for International Development with the requirements of section 2304(d)(3) of title 10, United States Code, or section 3304(c)(1)(B) of title 41, United States Code, as applicable, that limit the duration of contracts awarded pursuant to the exception and require approval for any such contract in excess of one year.

(c) Report- Not later than one year after the date of the enactment of this Act, the Comptroller General shall submit to the appropriate committees of Congress a report on the review required by subsection (a), including a discussion of each of the matters specified in subsection (b). The report shall include any recommendations relating to the matters reviewed that the Comptroller General considers appropriate.

(d) Appropriate Committees of Congress Defined- In this section, the term `appropriate committees of Congress' means--

(1) the Committee on Armed Services, the Committee on Foreign Relations, the Committee on Homeland Security and Governmental Affairs, and the Committee on Appropriations of the Senate; and

(2) the Committee on Armed Services, the Committee on Foreign Affairs, the Committee on Oversight and Government Reform, and the Committee on Appropriations of the House of Representatives.

Authority to provide fee-for-service inspection and testing by Defense Contract Management Agency for certain critical equipment in the absence of a procurement contract

The Senate amendment contained a provision (sec. 884) that would authorize the Defense Contract Management Agency (DCMA) to accept reimbursement from a manufacturer or assembler for testing and inspection of an item when the nature of the item requires such inspection or testing as a precondition to government acceptance of the item under a future government contract.

The House bill contained no similar provision.

The Senate recedes.

The conferees understand that the Department of Defense (DOD) requested this authority to enable contractors who choose to proceed with the development of new defense products at their own risk to have those products tested and qualified in advance of the award of a contract, shortening the lead times necessary to meet military requirements. However, the conferees are concerned that the proposed legislation included no mechanisms to ensure that: (1) small businesses that cannot afford to pay for inspection or testing have equal access to the program; and (2) the program is used only for high priority military needs and not to advantage particular manufacturers or products in a competitive market. The conferees are also concerned that DCMA may not be the most appropriate, or the only, testing resource that should be made available for the purpose of pre-award testing. The conferees remain open to a future legislative proposal that addresses these issues.

SEC. 884. AUTHORITY TO PROVIDE FEE-FOR-SERVICE INSPECTION AND TESTING BY DEFENSE CONTRACT MANAGEMENT AGENCY FOR CERTAIN CRITICAL EQUIPMENT IN THE ABSENCE OF A PROCUREMENT CONTRACT.

(a) Authority- Section 2539b of title 10, United States Code, is amended--

(1) in subsection (a)--

(A) in paragraph (3), by striking `and' at the end;

(B) in paragraph (4), by striking the period at the end and inserting `; and'; and

(C) by adding at the end the following new paragraph:

`(5) make available to any person or entity, in advance of the award of a procurement contract, through contracts or other appropriate arrangements and subject to subsection (c), the services of the Defense Contract Management Agency for testing and inspection of items when such testing and inspection is determined by such Secretary to be critical to a specific program of the Department of Defense.';

(2) by redesignating subsections (c) and (d) as subsections (d) and (e), respectively; and

(3) by inserting after subsection (b) the following new subsection (c):

`(c) DCMA Services- Services of the Defense Contract Management Agency may be made available under subsection (a)(5) only if the contract or other arrangement for those services--

`(1) holds the United States harmless if the items covered by the contract or other arrangement (whether or not tested and inspected under the contract or other arrangement) are not subsequently ordered by or delivered to the United States under a procurement contract entered into after the contract or other arrangement is entered into; and

`(2) holds the United States harmless against any claim arising out of the inspection and testing, or the use in any commercial application, of the equipment tested and inspected by the Defense Contract Management Agency under the contract or other arrangement.'.

(b) Fees- Subsection (d) of such section, as redesignated by subsection (a)(2) of this section, is amended--

(1) in the first sentence, by striking `and (a)(4)' and inserting `, (a)(4), and (a)(5)'; and

(2) in the second sentence--

(A) by inserting `, travel, and other incidental overhead expenses' after `salaries'; and

(B) by inserting `or inspection' before the period at the end.

(c) Use of Fees- Subsection (e) of such section, as so redesignated, is amended by striking `and (a)(4)' and inserting `, (a)(4), and (a)(5)'.

Report by the suspension and debarment officials of the military departments and the Defense Logistics Agency

The Senate amendment contained a provision (sec. 889) that would require the suspension and debarment officials of the military departments and the Defense Logistics Agency (DLA) to report to the congressional defense committees on the timeliness of suspension and debarment processes and decisions.

The House bill contained no similar provision.

The Senate recedes.

The conferees direct the suspension and debarment officials of the military departments and DLA, in coordination with Department of Defense officials responsible for preparing suspension and debarment cases, to report to the congressional defense committees on: (1) target goals for preparing and processing suspension and debarment cases; (2) average times for preparing and processing suspension and debarment cases; and (3) if the military department or DLA is not meeting target goals, an explanation for the shortcoming and a description of actions that have been taken or will be taken to ensure that target goals for preparing and processing suspension and debarment cases are met in the future.

SEC. 889. REPORT BY THE SUSPENSION AND DEBARMENT OFFICIALS OF THE MILITARY DEPARTMENTS AND THE DEFENSE LOGISTICS AGENCY.

(a) Report Required- Not later than 60 days after the date of the enactment of this Act, the suspension and debarment official of each agency specified in subsection (b) shall submit to the congressional defense committees a report on the suspension and debarment activities of such official containing the information specified in subsection (c).

(b) Covered Agencies- The agencies specified in this subsection are the following:

(1) The Department of the Army.

(2) The Department of the Navy.

(3) The Department of the Air Force.

(4) The Defense Logistics Agency.

(c) Covered Information- The information specified in this subsection to be included in the report of a suspension and debarment official under subsection (a) is the following:

(1) The number of open suspension and debarment cases of such official as of the date of such report.

(2) The current average processing time for suspension and debarment cases.

(3) The target goal of such official for average processing time for suspension and debarment proposals.

(4) If the average time required for such official to process suspension and debarment proposals is more than twice the target goal specified under paragraph (3)--

(A) an explanation why the average time exceeds the target goal by more than twice the target goal; and

(B) a description of the actions to be taken by such official to ensure that the average processing time for suspension and debarment proposals meets the target goal.

Annual report on defense contracting fraud

The Senate amendment contained a provision (sec. 889B) that would require the Department of Defense to report annually on contracts awarded to companies that have previously been indicted for, settled charges of, been fined for, or been convicted of fraud.

The House bill contained no similar provision.

The Senate recedes.

SEC. 889B. ANNUAL REPORT ON DEFENSE CONTRACTING FRAUD.

(a) Annual Study and Report- The Secretary of Defense shall conduct an annual study on defense contracting fraud and submit a report containing the findings of such study to the congressional defense committees.

(b) Report Contents- The report required under subsection (a) shall include with respect to the most recent reporting period the following elements:

(1) An assessment of the total value of Department of Defense contracts entered into to with contractors that have been indicted for, settled charges of, been fined by any Federal department or agency for, or been convicted of fraud in connection with any contract or other transaction entered into with the Federal Government.

(2) Recommendations by the Inspector General of the Department of Defense or other appropriate Department of Defense official regarding how to penalize contractors repeatedly involved in fraud in connection with contracts or other transactions entered into with the Federal Government, including an update on implementation by the Department of any previous such recommendations.

Assessment of outreach for small business concerns owned and controlled by women and minorities required before conversion of certain functions to contractor performance

The House bill contained a provision (sec. 1696) that would require the Department of Defense to conduct outreach to certain categories of small businesses before outsourcing certain functions to private sector entities.

The Senate amendment contained no similar provision.

The House recedes.

The conferees expect the Department of Defense to conduct outreach to all categories of small businesses and to other qualified entities before outsourcing functions performed by federal employees.

SEC. 1696. ASSESSMENT OF OUTREACH FOR SMALL BUSINESS CONCERNS OWNED AND CONTROLLED BY WOMEN AND MINORITIES REQUIRED BEFORE CONVERSION OF CERTAIN FUNCTIONS TO CONTRACTOR PERFORMANCE.

No Department of Defense function that is performed by Department of Defense civilian employees and is tied to a certain military base may be converted to performance by a contractor until the Secretary of Defense conducts an assessment to determine if the Department of Defense has carried out sufficient outreach programs to assist small business concerns owned and controlled by women (as such term is defined in section 8(d)(3)(D) of the Small Business Act) and small business concerns owned and controlled by socially and economically disadvantaged individuals (as such term is defined in section 8(d)(3)(C) of the Small Business Act) that are located in the geographic area near the military base.

Assessment of small business programs transition

The House bill contained a provision (sec. 1615) that would require that the Secretary of Defense select an entity outside the Department of Defense (DOD) to conduct an independent review and assessment of the transition of technologies developed by small business.

The Senate amendment contained no similar provision.

The House recedes.

The conferees note that the Government Accountability Office (GAO) is currently conducting a comprehensive body of work to assess how well the Department is managing, developing, and transitioning technologies across its science and technology enterprise. The first review, which is currently underway, assesses DOD and military service programs dedicated to facilitating the transition of technologies to major weapon acquisition programs or directly to the field. The conferees direct the Comptroller General to ensure that future GAO reviews performed under this body of work include an assessment of the transition of technologies developed by small businesses through the Small Business Innovative Research (SBIR) program, including: (1) an analysis of technologies developed under the SBIR program and the extent to which such technologies were incorporated into major weapon systems or major automated information systems; (2) an analysis of established or ad hoc procedures to allow program offices to monitor, evaluate, and transition small business-developed technologies into their programs; and (3) additional actions that may be needed to improve DOD and the military services' processes for monitoring, evaluating, and transitioning small business-developed technologies for use in major weapon systems or major automated information systems (including any appropriate data collection and measures of effectiveness and performance).

SEC. 1615. ASSESSMENT OF SMALL BUSINESS PROGRAMS TRANSITION.

(a) Independent Review and Assessment- Not later than 30 days after the date of the enactment of this Act, the Secretary of Defense shall select an appropriate entity outside the Department of Defense to conduct an independent review and assessment of the transition of technologies developed by small business, such as those developed under the Small Business Innovation Research Program, into major weapon systems and major automated information systems for the Department of Defense.

(b) Elements- The review and assessment required by subsection (a) shall include the following:

(1) An analysis of a representative sample of major weapon systems and major automated information systems to determine the content of the systems from small businesses, including components transitioned from the Small Business Innovation Research Program.

(2) An analysis of established or ad hoc processes to allow program offices to monitor, evaluate, and transition small business-developed technologies into their program.

(3) Recommendations for developing a systematic and sustained process for monitoring, evaluating, and transitioning small business-developed technologies for use by the entire defense acquisition system of the Department of Defense, including data collection and measures of effectiveness and performance.

(c) Report-

(1) REPORT REQUIRED- Not later than 120 days after the date of the enactment of this Act, the entity conducting the review and assessment under subsection (a) shall submit to the Secretary and the congressional defense committees a report containing--

(A) the results of the review and assessment; and

(B) recommendations for improving the process for managing the transition and integration of technologies developed by small business (including under the Small Business Innovation Research Program) into major weapons systems and major automated information systems.

(2) ADDITIONAL EVALUATION REQUIRED- Not later than 30 days after the date on which the congressional defense committees receive the report required by paragraph (1), the Secretary shall submit to such committees an evaluation by the Secretary of the results and recommendations contained in such report.

(d) SBIR Program Defined- In this section, the term `Small Business Innovation Research Program' has the meaning provided such term by section 2500(11) of title 10, United States Code.

Limitation on contracting

The House bill contained a provision (sec. 1697) that would prohibit a federal agency from entering into any contract unless a preference is given to small business concerns owned and controlled by service-disabled veterans.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 1697. LIMITATION ON CONTRACTING.

No agency may enter into a contract using procedures that do not give to small business concerns owned and controlled by veterans (as that term is defined in section 3(q)(3) of the Small Business Act (15 U.S.C. 632(q)(3)) that are included in the database under section 8127(f) of title 38, United States Code, any preference available with respect to such contract, except for a preference given to small business concerns owned and controlled by service-disabled veterans (as that term defined in section 3(q)(2) of the Small Business Act (15 U.S.C. 632(q)(2)).

Office of Hearings and Appeals

The House bill contained a provision (sec. 1682) that would establish an Office of Hearings and Appeals within the Small Business Administration.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 1682. OFFICE OF HEARINGS AND APPEALS.

(a) Chief Hearing Officer- Section 4(b)(1) of the Small Business Act is amended by adding at the end the following: `One shall be designated at the time of his or her appointment as the Chief Hearing Officer, who shall head and administer the Office of Hearings and Appeals within the Administration.'.

(b) Office of Hearings and Appeals Established in Administration- Section 5 of the Small Business Act (15 U.S.C. 634) is amended by adding at the end the following:

`(i) Office of Hearings and Appeals-

`(1) IN GENERAL- There is established in the Administration an Office of Hearings and Appeals--

`(A) to impartially decide such matters, where Congress designates that a hearing on the record is required or which the Administrator designates by regulation or otherwise; and

`(B) which shall contain the Administration's Freedom of Information/Privacy Acts Office.

`(2) CHIEF HEARING OFFICER- The Chief Hearing Officer shall be a career member of the Senior Executive Service and an attorney duly licensed by any State, commonwealth, territory, or the District of Columbia.

`(A) DUTIES- The Chief Hearing Officer shall--

`(i) serve as the Chief Administrative Law Judge; and

`(ii) be responsible for the operation and management of the Office of Hearings and Appeals, pursuant to the rules of practice established by the Administrator.

`(B) ALTERNATIVE DISPUTE RESOLUTION- The Chief Hearing Officer may also assign a matter for mediation or other means of alternative dispute resolution.

`(3) ADMINISTRATIVE LAW JUDGES-

`(A) IN GENERAL- An administrative law judge shall be an attorney duly licensed by any State, commonwealth, territory, or the District of Columbia.

`(B) CONDITIONS OF EMPLOYMENT- (i) An administrative law judge shall serve in the excepted service as an employee of the Administration under section 2103 of title 5, United States Code, and under the supervision of the Chief Hearing Officer.

`(ii) Administrative law judge positions shall be classified at Senior Level, as such term is defined in section 5376 of title 5, United States Code.

`(iii) Compensation for administrative law judge positions shall be set in accordance with the pay rates of section 5376 of title 5, United States Code.

`(C) TREATMENT OF CURRENT PERSONNEL- An individual serving as a Judge in the Office of Hearings and Appeals (as that position and office are designated in section 134.101 of title 13, Code of Federal Regulations (as in effect on January 1, 2012)) on the effective date of this subsection shall be considered as qualified to be and redesignated as administrative law judges.

`(D) POWERS- An administrative law judge shall have the authority to conduct hearings in accordance with sections 554, 556, and 557 of title 5, United States Code.'.

Pilot program to assist in the growth and development of advanced small business concerns

The House bill contained a provision (sec. 1611) that would establish a pilot program under which certain contracts would be set aside for competition among advanced small business concerns.

The Senate amendment contained no similar provision.

The House recedes.

The conferees remain concerned by the difficulties that businesses have had after graduating from small business programs or growing to exceed the size standards for participation in such programs. A separate provision in this conference report would require an independent assessment of federal procurement contracting performance of the Department of Defense related to small business concerns. The assessment to be conducted pursuant to this provision would include an examination of the transition challenges faced by businesses that graduate from small business programs or grow to exceed the size standards for participation in such programs and provide recommendations on steps that should be taken to help ensure the continued health of such businesses.

SEC. 1611. PILOT PROGRAM TO ASSIST IN THE GROWTH AND DEVELOPMENT OF ADVANCED SMALL BUSINESS CONCERNS.

(a) Establishment of Pilot Program- The Secretary of Defense shall establish a pilot program within the Department of Defense to assist in the growth and development of advanced small business concerns in accordance with this section.

(b) Requirements of Pilot Program-

(1) RESTRICTED COMPETITION FOR CERTAIN CONTRACTS- Under the pilot program and except as provided under paragraph (2)(B), competition for contract awards may be restricted to advanced small business concerns if--

(A) the anticipated award price of the contract (including options) is reasonably expected to exceed $25,000,000;

(B) the Procurement Center Representative of the Small Business Administration or the Director of Small Business Programs of the Department of Defense determines that, if the contract were not awarded under the pilot program, the contract would likely be awarded to an entity other than a small business concern;

(C) there is a reasonable expectation that at least two advanced small business concerns will submit offers with respect to the contract;

(D) such advanced small business concerns agree to the requirements specified in section 15(o) of the Small Business Act (15 U.S.C. 644(o)) (relating to percentage of work under the contract to be performed by the concern), except that work performed by other advanced small business concerns or by small business concerns shall be considered as work performed by the prime contractor for purposes of such requirements; and

(E) the contract award can be made at a fair market price.

(2) ELIGIBILITY-

(A) ADVANCED SMALL BUSINESS CONCERN- An entity shall be considered an advanced small business concern and eligible for participation in the pilot program if the entity--

(i) is independently owned and operated and is not dominant in its field of operation; and

(ii) has fewer than--

(I) twice the number of employees the Small Business Administration has assigned as a size standard to the North American Industrial Classification Standard code in which the entity is operating; or

(II) three times the average annual receipts the Small Business Administration has assigned as a size standard to the North American Industrial Classification Standard code in which the entity is operating.

(B) SMALL BUSINESS CONCERN- Notwithstanding paragraph (1), a small business concern may submit an offer for any contract under the pilot program.

(3) CONSIDERATION AND NOTICE TO PUBLIC- With respect to a contract opportunity determined to meet the criteria specified in paragraph (1), a contracting officer for the Department of Defense shall--

(A) consider awarding a contract under the pilot program before using full and open competition for such contract; and

(B) provide notice of the contract opportunity (including the eligibility requirements of the contract opportunity) in accordance with the Federal Acquisition Regulation and other applicable guidelines.

(4) RELATIONSHIP TO SMALL BUSINESS ACT PROGRAMS-

(A) An advanced small business concern shall not be eligible for any assistance provided to small businesses by the Small Business Act (15 U.S.C. 637 et seq.) or the Small Business Investment Act of 1958 22 (15 U.S.C. 661 et seq.), unless eligibility is expressly provided through the pilot program established by this Act, and contracts awarded pursuant to the pilot program shall not be counted toward the achievement of the small business prime or subcontracting goals established by the Small Business Act (15 U.S.C. 644).

(B) An advanced small business concern shall enter into a subcontracting plan in accordance with section 8(d) of the Small Business Act (15 U.S.C. 637(d)).

(C) Nothing in this section authorizes a Procurement Center Representative or an employee of the Office of Small Business Programs to provide assistance to advanced small business concerns or to advocate for the restriction of competition to advanced small business concerns.

(c) Implementation- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense, in consultation with the Administrator of the Small Business Administration, shall develop and issue guidance to implement the pilot program. The guidance shall--

(1) identify criteria under which the pilot program is evaluated, including a methodology to collect data during the course of the pilot program to facilitate an assessment at the conclusion of the pilot program;

(2) permit a self-certification for eligibility for participation in the pilot program;

(3) ensure that any self-certification requires the concern involved to meet the requirements of the Small Business Administration regarding ownership, control, and affiliation (as set forth in section 121.103 of title 13 of the Code of Federal Regulations);

(4) establish an appeals process to handle challenges to self-certifications of advanced small business concerns, with the certification of eligibility residing with the Small Business Administration's Office of Hearings and Appeals;

(5) identify a method to reimburse the Small Business Administration for additional costs to the Administration relating to such self-certifications;

(6) establish a methodology for identifying and tracking program participants, including reporting on contracts awarded to program participants using the Federal Procurement Data System; and

(7) ensure that the pilot program does not supersede goals or programs authorized by the Small Business Act (15 U.S.C. 637 et seq.) or the Small Business Investment Act of 1958 22 (15 U.S.C. 661 et seq.) or count toward the achievement of the small business prime or subcontracting goals established by the Small Business Act (15 U.S.C. 644).

(d) Report to Congress- Not later than one year after the date of the enactment of this Act, and annually thereafter for the duration of the pilot program, the Secretary of Defense shall submit to the appropriate congressional committees a report on the pilot program that includes each of the following:

(1) The number of contracts awarded in the prior year under the pilot program.

(2) The value of the contracts awarded under the pilot program and a description of the work carried out under such contracts.

(3) The number of program participants under the pilot program.

(4) An assessment of the success of the pilot program based on the criteria described in subsection (c)(1).

(5) Such recommendations as the Secretary considers appropriate, including a recommendation regarding whether to extend the pilot program or terminate it early.

(e) Termination- The pilot program shall terminate on the date that is three years after the date on which the guidance for the pilot program is issued pursuant to subsection (c).

(f) Definitions- In this section:

(1) ADVANCED SMALL BUSINESS CONCERN- The term `advanced small business concern' means an entity that meets the requirements specified in subsection (b)(2)(A).

(2) APPROPRIATE CONGRESSIONAL COMMITTEES- The term `appropriate congressional committees' means each of the following:

(A) The Committees on Armed Services and on Small Business and Entrepreneurship of the Senate.

(B) The Committees on Armed Services and on Small Business of the House of Representatives.

(3) OFFICE OF SMALL BUSINESS PROGRAMS- The term `Office of Small Business Programs' means the Office of Small Business Programs described in section 144(b) of title 10, United States Code.

(4) PILOT PROGRAM- The term `pilot program' means the program established by the Secretary of Defense under subsection (a).

(5) PROCUREMENT CENTER REPRESENTATIVE- The term `Procurement Center Representative' has the meaning provided in section 15 of the Small Business Act (15 U.S.C. 644).

(6) SMALL BUSINESS CONCERN- The term `small business concern' has the meaning provided under section 3(a) of the Small Business Act (15 U.S.C. 632(a)).

Program to provide federal contracts to early stage small business

The House bill contained a provision (sec. 1693a) that would establish a new procurement preference program for early stage small businesses.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 1693a. PROGRAM TO PROVIDE FEDERAL CONTRACTS TO EARLY STAGE SMALL BUSINESSES.

(a) In General- The Small Business Act (15 U.S.C. 631 et seq.) is amended by adding at the end the following:

`SEC. 46. PROGRAM TO PROVIDE FEDERAL CONTRACTS TO EARLY STAGE SMALL BUSINESSES.

`(a) Establishment- The Administrator shall establish and carry out a program in accordance with the requirements of this section to provide improved access to Federal contract opportunities for early stage small business concerns.

`(b) Procurement Contracts-

`(1) IN GENERAL- In carrying out subsection (a), the Administrator, in consultation with other Federal agencies, shall identify procurement contracts of Federal agencies for award under the program.

`(2) CONTRACT AWARDS- Under the program established pursuant to this section, the award of a procurement contract of a Federal agency identified by the Administrator pursuant to paragraph (1) shall be made by the agency to an eligible program participant selected, and determined to be responsible, by the agency.

`(3) COMPETITION-

`(A) SOLE SOURCE- A contracting officer may award a sole source contract under this program if such concern is determined to be a responsible contractor with respect to performance of such contract opportunity and the contracting officer does not have a reasonable expectation that 2 or more early stage small business concerns will submit offers for the contracting opportunity and in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price.

`(B) RESTRICTED COMPETITION- A contracting officer may award contracts on the basis of competition restricted to early stage small business concerns if the contracting officer has a reasonable expectation that not less than 2 early stage small business concerns will submit offers and that the award can be made at a fair market price.

`(4) CONTRACT VALUE- Contracts shall be awarded under this program if its value is greater than $3,000 and less than half the upper threshold of section 15(j)(1) of the Small Business Act.

`(c) Eligibility- Only an early stage small business concern shall be eligible to compete for a contract to be awarded under the program. The Administrator shall certify that a small business concern is an early stage small business concern, or the Administrator shall approve a Federal agency, a State government, or a national certifying entity to certify that the business meets the eligibility criteria of an early stage small business concern.

`(d) Technical Assistance- The Administrator shall provide early stage small business concerns with technical assistance and counseling with regard to--

`(1) applying for and competing for Federal contracts; and

`(2) fulfilling the administrative responsibilities associated with the performance of a Federal contract.

`(e) Attainment of Contract Goals- All contract awards made under the program shall be counted toward the attainment of the goals specified in section 15(g) of the Small Business Act.

`(f) Regulations- The Administrator shall--

`(1) issue proposed regulations to carry out this section not later than 180 days after the date of enactment of this Act; and

`(2) issue final regulations to carry out this section not later than 270 days after the date of enactment of this Act.

`(g) Report to Congress- Not later than April 30, 2015, the Administrator shall transmit to the Congress a report on the performance of the program.

`(h) Definitions- For purposes of this section, the following definitions shall apply:

`(1) PROGRAM- The term `program' means a program established pursuant to subsection (a).

`(2) EARLY STAGE SMALL BUSINESS CONCERN- The term `early stage small business concern' means a small business concern that--

`(A) has not more than 15 employees; and

`(B) has average annual receipts that total not more than $1,000,000, except if the concern is in an industry with an average annual revenue standard that is less than $1,000,000, as defined by the North American Industry Classification System.'.

(b) Repeal of Similar Program- Section 304 of the Small Business Administration Reauthorization and Amendments Act of 1994 (15 U.S.C. 644 note) is repealed.

Contractor governance, oversight, and accountability

The House bill contained a provision (sec. 3113) that would require the Administrator for Nuclear Security to establish a reformed system of governance, management, and oversight of the National Nuclear Security Administration (NNSA). The House bill also contained a provision (sec. 3115) that would require the Administrator to establish policies and procedures for the regulation and oversight of health, safety, and security of the nuclear security enterprise. Lastly, the House bill also contained a provision (sec. 3133) that would clarify the role of the Administrator and reinforce the semi-autonomous nature of the NNSA.

The Senate amendment contained a provision (sec. 3131) that would require the Secretary of Energy to submit a report to the congressional defense committees on the actions required to transition, to the maximum extent practicable, the regulation of non-nuclear operations of the NNSA to federal agencies other than the Department of Energy (DOE). The Senate amendment also contained a provision (sec. 3161) that would express a sense of Congress regarding any efforts to reform oversight of the nuclear security enterprise.

The conference agreement does not include these provisions.

The conferees emphasize that there is widespread recognition that the current system for governance, management, and oversight of the nuclear security enterprise is broken. For instance, in 2009 the bipartisan Congressional Commission on the Strategic Posture of the United States found that `the governance structure of the NNSA is not delivering the needed results. This governance structure should be changed.' The Commission elaborated, saying, `The NNSA was formed to improve management of the weapons program and to shelter that program from what was perceived as a welter of confusing and contradictory DOE directives, policies, and procedures. Despite some success, the NNSA has failed to meet the hopes of its founders. Indeed, it may have become part of the problem, adopting the same micromanagement and unnecessary and obtrusive oversight that it was created to eliminate.' The Commission concluded `it is time to consider fundamental changes.' Recent studies by the Henry L. Stimson Center (`Leveraging Science for Security'), the National Academies of Science (`Managing for High-Quality Science and Engineering at the NNSA National Security Laboratories' and `The Comprehensive Nuclear Test Ban Treaty--Technical Issues for the United States') and other objective, bipartisan groups have reached similar conclusions.

The conferees share the concerns expressed by these myriad groups, and believe the status quo is not working and must not be continued. The weaknesses of the current system, including an overly bureaucratic system, weak accountability, ineffective oversight, insufficient program and budget expertise, and poor contract management have been repeatedly demonstrated--including by recent high-profile failures such as the July 2012 security breach at the Y-12 National Security Complex. These incidents prove that a deeply bureaucratic system is no guarantee of health, safety, and security--and may in fact jeopardize health, safety, and security.

Furthermore, the conferees believe that the current system is not delivering the results required by the military and by the taxpayer. The cost of major stockpile and infrastructure modernization projects has risen to unprecedented levels due, in part, to the overwhelming bureaucracy within the system. Further slippage in project schedules is unacceptable, and could undermine the credibility of the nation's nuclear deterrent. Administrative costs within the NNSA and the nuclear security enterprise must be reduced and the enterprise must be refocused on accomplishing its mission effectively and efficiently, as well as safely and securely.

The conferees expect the advisory panel that would be created elsewhere in this Act to provide a bipartisan solution to fix this system. The conferees expect the advisory panel would provide actionable recommendations that directly address the host of systemic problems identified by previous studies and by the conferees. The conferees believe changes on the margins are not a solution.

SEC. 3113. CONTRACTOR GOVERNANCE, OVERSIGHT, AND ACCOUNTABILITY.

(a) Oversight of Contractors-

(1) IN GENERAL- The National Nuclear Security Administration Act (50 U.S.C. 2401 et seq.) is amended by adding after section 3264 the following new section:

`SEC. 3265. CONTRACTOR GOVERNANCE, OVERSIGHT, AND ACCOUNTABILITY.

`(a) Performance-based Contractor Governance, Management, and Oversight- (1) The Administrator shall establish a system of governance, management, and oversight of covered contractors.

`(2) The system established under paragraph (1) shall--

`(A) include clear, consistent, and auditable performance-based standards relating to the mission effectiveness and operations of a covered contractor;

`(B) ensure that the governance, management, and oversight of the mission effectiveness and operations of a covered contractor is conducted pursuant to national and international standards and best practices;

`(C) recognize the respective roles of--

`(i) the Federal Government in determining the performance-based standards with respect to high-level mission and operations performance objectives; and

`(ii) a covered contractor, particularly a contractor that is a federally funded research and development corporation, in determining how to accomplish such objectives;

`(D) conduct oversight based on outcomes and performance-based standards rather than detailed, transaction-based oversight; and

`(E) include appropriate measures to ensure that the Administrator has accurate and consistent data and information to manage and make decisions with respect to the nuclear security enterprise.

`(3)(A) The Administrator may exempt individual areas of governance, management, and oversight from the requirements of the system established under paragraph (1) and continue to conduct transaction-based oversight if the Administrator determines that such exemption is necessary to ensure the national security or the safety, security, or performance of the Administration.

`(B) If the Administrator makes an exemption under subparagraph (A), the Administrator shall annually submit to the congressional defense committees a certification for each such exemption, including a description of why such exemption is needed.

`(C) During the three-year period beginning on the date of the enactment of this section, the Administrator may temporarily exempt individual facilities or contractors from the system established under paragraph (1) and continue to conduct transaction-based oversight if the Administrator determines that such exemption is needed to ensure that robust contractor assurance, accountability, and performance-based oversight mechanisms are in place for such facility or contractor.

`(D) If the Administrator makes an exemption under subparagraph (C), the Administrator shall annually submit to the congressional defense committees a written justification for such exemption and a plan and schedule to transition the exempted facility or contractor to the system established under paragraph (1).

`(b) Contractor Accountability- The Administrator shall--

`(1) ensure that each management and operating contract includes robust mechanisms to ensure the accountability of a covered contractor; and

`(2) exercise such mechanisms as the Administrator determines appropriate to ensure the performance of the covered contractor.

`(c) Definitions- In this section:

`(1) The term `covered contractor' means a contractor who enters into a management and operating contract.

`(2) The term `management and operating contract' means a contract entered into by the Administrator and a contractor to manage and operate a Government-owned, contractor-operated facility.

`(3) The term `performance-based standards', with respect to a covered contract, means that the contract includes the use of performance work statements that set forth contract requirements in clear, specific, and objective terms with measurable outcomes.'.

(2) CLERICAL AMENDMENT- The table of contents at the beginning of the National Nuclear Security Administration Act is amended by inserting after the item relating to section 3264 the following new item:

`Sec. 3265. Contractor governance, oversight, and accountability.'.

(b) Reports- Not later than January 15, 2013, and each year thereafter through 2016, the Administrator shall submit to the congressional defense committees a report that includes--

(1) a description of each instance during the previous calendar year in which the Administrator, or any other head of an agency of the Federal Government, used a procedure, standard, or process for governance, management, and oversight of a covered contract (as defined in section 3265(d)(1) of the National Nuclear Security Administration Act, as added by subsection (a)(1)) that is not a procedure, standard, or process that conforms to national or international standards or industry best practices;

(2) an explanation of why such procedure, standard, or process was used during such year and any steps that will be taken by the Administrator or other head of an agency, as the case may be, in future years to instead use a procedure, standard, or process that conforms to national or international standards or industry best practices; and

(3) a description of any oversight activities by any agency of the Federal Government that occurred during the previous calendar year that the Administrator considers duplicative or unnecessary.

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