National Defense Authorization Act for 2012

LEGISLATIVE PROVISIONS NOT ADOPTED

Sections of House and Senate Bills Not Enacted

Modification of reporting requirement for Department of Defense business system acquisition programs when initial operating capability is not achieved within 5 years of Milestone A approval

The House bill contained a provision (sec. 801) that would amend the reporting requirement imposed on defense business systems (DBS) acquisition programs by section 811 of the National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364) by clarifying the separate treatment of Major Automated Information Systems (MAIS) DBS and non-MAIS DBS. Specifically, this section would clarify that section 811 is inapplicable to MAIS DBS acquisition programs because such programs are independently subject to critical change reporting under section 2445c of title 10, United States Code. This section would also modify the requirement for non-MAIS DBS reporting a failure to achieve initial operational capacity (IOC) within 5 years of milestone A approval from a critical change report to a report to the Department of Defense pre-certification authority explaining the causes and circumstances surrounding the failure to achieve IOC within the required time.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

SECTION 801--MODIFICATION OF REPORTING REQUIREMENT FOR DEPARTMENT OF DEFENSE BUSINESS SYSTEM ACQUISITION PROGRAMS WHEN INITIAL OPERATING CAPABILITY IS NOT ACHIEVED WITHIN FIVE-YEARS OF MILESTONE A APPROVAL

This section would amend the reporting requirement imposed on defense business systems (DBS) acquisition programs by section 811 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364) by clarifying the separate treatment of Major Automated Information Systems (MAIS) DBS and non-MAIS DBS. Specifically, this section would clarify that section 811 is inapplicable to MAIS DBS acquisition programs because such programs are independently subject to critical change reporting under section 2445c of title 10, United States Code. This section would also modify the requirement for non-MAIS DBS reporting a failure to achieve initial operational capacity (IOC) within 5-years of milestone A approval from a critical change report to a report to the Department of Defense pre-certification authority explaining the causes and circumstances surrounding the failure to achieve IOC within the required time.

Restatement and revision of requirements applicable to multiyear defense acquisitions to be specifically authorized by law

The Senate committee-reported bill contained a provision (sec. 801) that would clarify and reorganize the reporting and certification requirements of the Department of Defense when requesting specific authorization for multiyear contract authority.

The House bill contained no similar provision.

The agreement does not contain the provision.

Restatement and revision of requirements applicable to multiyear defense acquisitions to be specifically authorized by law (sec. 801)

The committee recommends a provision that would clarify and reorganize the reporting and certification requirements of the Department of Defense when requesting specific authorization for multiyear contract authority.

Section 2306b of title 10, United States Code, requires the Secretary of Defense, in the case of a contract equal to or greater than $500.0 million, to certify that certain requirements will be met by the proposed contract no later than March 1st of the year in which the legislative authority to enter into such contract is requested. The Secretary must send a notification of the findings regarding the same requirements 30 days before award of the contract.

The committee finds value in both the certification and the notification, but, believes that the timing is reversed. The recommended provision would reorganize the timeline so the Secretary provides the initial findings of the enumerated requirements when requesting multiyear contract authority and then certifies the completed findings prior to contract award.

The committee believes this will provide more reasonable and complete information.

Report on program manager training and experience

The Senate committee-reported bill contained a provision (sec. 803) that would require the Secretary of Defense to submit an updated version of the 2009 Department of Defense report titled: ``OSD [Office of the Secretary of Defense] Study of Program Manager Training and Experience'' not later than 120 days from enactment of this Act.

The report found senior military officers, including general officers, and civilians in charge of acquisition programs did not believe their acquisition training was ``sufficiently practical and comprehensive'' regarding a number of fundamental areas of acquisition management. For example, the following is a partial list of responses showing the percent of program managers polled at that time who believed their acquisition training was sufficiently practical and comprehensive:

Overseeing Contractor Performance	31%
Cost Estimating Challenges	27%
Software Management Challenges	25%
Cost Control Challenges	25%
Unexpected Cost Growth	14%

The House bill contained no similar provision.

The agreement does not contain this provision.

We direct the Secretary of Defense to provide to the congressional defense committees a comprehensive update of the 2009 report not later than 120 days after the date of enactment of this Act.

The update should also identify, describe, and analyze trends in the training and experience of personnel acquisition program management since the issuance of the 2009 report, and should provide recommendations for improving the training and experience of personnel performing acquisition program management functions.

We further direct the Secretary to specifically examine the training, qualifications, and experience of personnel performing acquisition program management functions on programs designated as Acquisition Category I, IA, and II and provide recommendations on the ways to improve the practicality and comprehensiveness of the acquisition training provided to such personnel.

Report on program manager training and experience (sec. 803)

The committee recommends a provision that would require the Secretary of Defense to submit an updated version of the 2009 Department of Defense report titled: `OSD [Office of the Secretary of Defense] Study of Program Manager Training and Experience' not later than 120 days from enactment of this Act.

Additional contractor responsibilities in regulations relating to detection and avoidance of counterfeit electronic parts

The House bill contained a provision (sec. 811) that would amend section 818 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81) to provide that the costs associated with the use of counterfeit electronic parts, and the subsequent cost of rework or corrective action that may be required to remedy the use of inclusion of such parts, are allowable costs under Department of Defense contracts if the counterfeit electronic parts were procured from an original manufacturer or its authorized dealer, or from a trusted supplier.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain this provision.

SECTION 811--ADDITIONAL CONTRACTOR RESPONSIBILITIES IN REGULATIONS RELATING TO DETECTION AND AVOIDANCE OF COUNTERFEIT ELECTRONIC PARTS

This section would amend section 818 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81) to provide that the costs associated with the use of counterfeit electronic parts, and the subsequent cost of rework or corrective action that may be required to remedy the use or inclusion of such parts, are allowable costs under Department of Defense contracts if the counterfeit electronic parts were procured from an original manufacturer or its authorized dealer, or from a trusted supplier.

Requirement that cost or price to the Federal Government be given at least equal importance as technical or other criteria in evaluating competitive proposals for defense contracts

The House bill contained a provision (sec. 816) that would amend section 2305(a)(3) of title 10, United States Code, to require that the head of an agency of the Department of Defense, in prescribing the evaluation factors to be included in each solicitation for competitive proposals, assign importance to cost or price at least equal to all evaluation factors other than cost or price when combined. This section would allow the head of an agency to waive the requirement, and it would require the Secretary of Defense to submit to Congress, not later than 180 days after the end of each fiscal year, a report containing a list of each waiver issued during the preceding fiscal year.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

The Federal Acquisition Regulation Part 15 permits the use of several best value competitive source selection techniques. Within the best value continuum, the government should utilize the technique that is most advantageous to its interests.

The government may choose to use the lowest price technically acceptable source selection process for acquisitions in which best value can be expected to result from the selection of the technically acceptable proposal with the lowest evaluated price.

The government may also choose to use a trade-off source selection process for acquisitions in which it may be in the best interest of the government to grant an award to an offeror other than the lowest priced offeror or the highest technically rated offeror. In such cases, non-cost or price evaluation factors may be weighed against cost or price factors in competitive source selections.

We are concerned that best value competitive source selection processes are not always properly implemented. Therefore, we direct the Comptroller General of the United States to conduct a study on Department of Defense procurements that use best value competitive source selection techniques. The study shall include, at a minimum, an assessment of:

(1) The frequency with which evaluation factors other than cost or price, when combined, are given more weight than cost or price in solicitations for competitive proposals;

(2) The types of contracts for products or services for which such evaluation factors are most frequently used;

(3) The reasons why the Department of Defense chooses to use such evaluation factors;

(4) The extent to which the use of such factors is or is not in the interest of the Department of Defense;

(5) The efficacy with which the Department of Defense's acquisition workforce implements best value competitive source selection techniques;

(6) The Department of Defense's guidance and directives on the appropriate use of best value competitive source selection techniques; and

(7) The extent to which budgetary constraints affect the use of best value competitive source selection techniques.

We direct the Comptroller General to submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the results of this study not later than 180 days after the date of the enactment of this Act.

SECTION 816--REQUIREMENT THAT COST OR PRICE TO THE FEDERAL GOVERNMENT BE GIVEN AT LEAST EQUAL IMPORTANCE AS TECHNICAL OR OTHER CRITERIA IN EVALUATING COMPETITIVE PROPOSALS FOR DEFENSE CONTRACTS

This section would amend section 2305(a)(3) of title 10, United States Code, to require that the head of an agency of the Department of Defense, in prescribing the evaluation factors to be included in each solicitation for competitive proposals, assign importance to cost or price at least equal to all evaluation factors other than cost or price when combined. This section would allow the head of an agency to waive the requirement, and it would require the Secretary of Defense to submit to Congress, not later than 180 days after the end of each fiscal year, a report containing a list of each waiver issued during the preceding fiscal year.

Requirement to buy American flags from domestic sources

The House bill contained a provision (sec. 817) that would amend section 2533a(b) of title 10, United States Code, to include ``a flag of the United States of America'' to the list of items that the Department of Defense may not procure unless the item is grown, processed, reused, or produced in the United States.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

We note that flags of the United States procured by the Department of Defense are procured in accordance with section 2533a(b)(1)(D) of title 10, United States Code.

SECTION 817--REQUIREMENT TO BUY AMERICAN FLAGS FROM DOMESTIC SOURCES

This section would amend section 2533a(b) of title 10, United States Code, to include `a flag of the United States of America' to the list of items that the Department of Defense may not procure unless the item is grown, processed, reused, or produced in the United States.

Collection of data relating to contracts in Iraq and Afghanistan

The House bill contained a provision (sec. 822) that would amend section 861 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), as amended, to allow contracts in Afghanistan entered into after the enactment of this Act to include a clause requiring the imposition of a penalty on any contractor that does not comply with the policies, guidance, or regulations issued pursuant to that section. This section would also amend section 863 of Public Law 110-181 to require that the Annual Joint Report on Contracting in Iraq and Afghanistan include information on any penalties imposed on contractors for failing to comply with requirements under section 861(e) of Public Law 110-181.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

We are concerned about reports of contractor noncompliance with relevant policies, guidance, and regulations in Afghanistan, including contractor noncompliance with requirements to provide information for the common databases identified by section 861(b)(4) of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), as amended.

We direct the Secretary of Defense, in consultation with the Secretary of State and the Administrator for the United States Agency for International Development, to submit to the Committees on Armed Services of the Senate and the House of Representatives, the Committee on Foreign Relations of the Senate, and the Committee on Foreign Affairs of the House of Representatives, not later than 180 days after enactment of this Act, a report on contractor compliance in Iraq and Afghanistan.

At a minimum, the report shall include a detailed discussion of any outstanding contractor compliance issues or concerns, including any issues or concerns pertaining to the provision of information to common databases or the management thereof; a discussion of any lessons learned in Iraq or Afghanistan for improving contractor compliance in a contingency environment; and best practice recommendations for ensuring contractor compliance in future contingency contracting operations.

SECTION 822--COLLECTION OF DATA RELATING TO CONTRACTS IN IRAQ AND AFGHANISTAN

This section would amend section 861 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), as amended, to allow for imposition of a penalty on any contractor that does not comply with the policies, guidance or regulations issued pursuant to that section. This section would also amend section 863 of Public Law 110-181 to require that the Annual Joint Report on Contracting in Iraq and Afghanistan include information on any penalties imposed on contractors for failing to comply with requirements under section 861(e) of Public Law 110-181.

Report on procurement supply chain vulnerabilities

The House bill contained a provision (sec. 833) that would require the Secretary of Defense to submit a report regarding how sole source suppliers of components to the Department of Defense procurement supply chain creates vulnerabilities to military attack, terrorism, natural disaster, industrial shock, financial crisis, or geopolitical crisis, such as an embargo of key raw materials or industrial inputs.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

Could not find explanation.

Study on the impact of contracting with veteran-owned small businesses

The House bill contained a provision (sec. 834) that would require the Secretary of Defense to submit a report regarding impacts of the Department of Defense contracting with small businesses owned and controlled by veterans and service-disabled veterans on veteran entrepreneurship and unemployment; impact on veteran suicide and homelessness; and the feasibility and expected impacts of implementation of the small business goals and preferences detailed in section 8127, title 38, United States Code.

The Senate committee-reported bill contained no similar provision.

The provision does not contain the agreement.

Could not find explanation.

Revisions to requirements relating to justification and approval of sole-source defense contracts

The House bill contained a provision (sec. 835) that would modify the provisions of the Department of Defense Supplement to the Federal Acquisition Regulation that implement section 811 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84), clarifying the delegable authority of the head of an agency to make an award.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

Could not find explanation.

Revision of Defense Supplement to the Federal Acquisition Regulation to take into account sourcing laws

The House bill contained a provision (sec. 837) that would revise the Department of Defense Supplement to the Federal Acquisition Regulation to implement requirements imposed by sections 129, 129a, 2330a, 2461, and 2463 of title 10, United States Code.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

Prohibition on purchase of military coins not made in the United States

The House bill contained a provision (sec. 838) that would prohibit the purchase of any military coins not produced in the United States.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

We note military coins are generally purchased with unit-level morale funds or funds personally contributed by the members of the unit and not with appropriated funds.

Could not find explanation.

Compliance with domestic source requirements for footwear furnished to enlisted members of the Armed Forces upon their initial entry into the Armed Forces

The House bill contained a provision (sec. 839) that would amend section 418 of title 37, United States Code, by requiring the Department of Defense to issue athletic footwear compliant with the requirement detailed in section 2533a of title 10, United States Code, to members of the Armed Forces upon their initial entry in lieu of a cash allowance.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

We note that Congress passed the Berry Amendment in 1941 to ensure that American soldiers train and operate, to the greatest extent practicable, in American-made materials. The Berry Amendment specifically covers footwear listed in Federal Supply Class 8430 or 8435.

The Army, in 2001, and the Air Force, in 2008, have moved away from issuing athletic footwear to new recruits. Instead, new recruits are given an allowance to acquire athletic footwear from the service exchange.

During this period of time, no athletic footwear was available that could have met the requirements of the Berry Amendment without a waiver. It has been reported that at least one domestic contractor is now producing such footwear.

Therefore, we direct the Under Secretary of Defense for Acquisition, Technology and Logistics to issue a Sources Sought to determine whether there are any domestic manufacturers of Berry Amendment-compliant athletic footwear that meets the Department's requirements.

We further direct that any responses to the Sources Sought be evaluated by the Defense Logistics Agency and an independent entity to determine whether (1) such offered athletic footwear meets the requirements of the Berry Amendment and (2) whether Department requirements are actually met. Such review should consider the various sizes and fits of athletic shoes offered, cost, and capacity of suppliers to meet military requirements.

Could not find explanation.

Implementation by Department of Defense of certain recommendations of the Comptroller General of the United States on oversight of pensions offered by Department contractors

The Senate committee-reported bill contained a provision (sec. 842) that would require the Secretary of Defense to assign responsibility within the Department of Defense (DOD) for oversight of the reasonableness of the pension plans offered by Department contractors and issue certain guidance on pension benefits.

The House bill contained no similar provision.

The agreement does not contain the provision.

We note that, according to the Government Accountability Office (GAO), DOD contractors are among the largest sponsors of defined benefit pension plans in the United States and also factor pension costs into the price of DOD contracts. We also note that in its January 2013 report, GAO made the following recommendations tothe Secretary of Defense in order to improve oversight, management, and accountability of such pension plans:

(1) Assign responsibility within the DOD for oversight of the reasonableness of the pension plans offered by Department contractors, specifically the value of benefits earned by participants in such pension plans;

(2) Issue guidance on the measurement of the value of pension benefits that participants earn in a given year, in order to permit the Department to obtain a comprehensive understanding of the total compensation provided to employees by Department contractors;

(3) Issue guidance on the extent to which defined benefit pension plans will be included in assessments of the reasonableness of compensation for executives of Department contractors; and

(4) Issue guidance for the acquisition organizations of the Department, including the Defense Contract Management Activity and Defense Contract Audit Activity, in regards to the discount rate or rates that are acceptable for Department contractors to use in calculating person costs for forward pricing purposes.

We are pleased that the Director, Defense Procurement and Acquisition Policy, concurred with all such recommendations in his January 2, 2013 response letter and note that he also expressed clear intent to implement them. However, we are concerned that according to GAO, all four recommendations are yet to be closed. Therefore, we encourage the Secretary of Defense to move expeditiously to close out implementation of the recommendations, and to keep the Committees on Armed Services of the Senate and the House of Representatives informed of the progress.

Report on the elimination of improper payments

The Senate committee-reported bill contained a provision (sec. 863) that would require the Secretary of Defense to report on the Department's plan to implement the recommendations of the Comptroller General regarding the elimination of improper payments.

The House bill contained no similar provision.

The agreement does not contain the provision.

Report on the elimination of improper payments (sec. 863)

The committee recommends a provision that would require the Secretary of Defense to report on the Department's plan to implement the recommendations of the Comptroller General regarding the elimination of improper payments.

Federal Information Technology Acquisition Reform Act

The House bill contained a set of provisions (sec. 5001-5506) that would increase the authority of Chief Information Officers (CIO) regarding information technology (IT) investment practices for the 16 major civilian agencies, including the Department of Defense. The purpose of these provisions was to increase efficiencies government-wide by streamlining the acquisition process, increasing transparency, eliminating duplication and waste, and strengthening public-private partnerships by empowering the CIO with greater responsibility for IT systems within a government agency.

The Senate committee-reported bill contained no similar provision.

The agreement does not include this provision.

We note that the acquisition of information technology is a challenge across the Federal Government and that reform of the information technology acquisition process remains a priority in the defense committees and the Congress. We expect to continue working on improvements in this area and hope to bring a set of comprehensive reforms forward in the next fiscal year.

House Report 113-359 (pdf) to accompany H. R. 1232 the Federal Information Technology Acquisition Reform Act as it passed the House of Representatives.

Program to provide federal contracts to early stage small businesses

The House bill contained a provision (sec. 1608) that would amend section 631 of title 15, United States Code, which would provide improved access to federal contract opportunities for early stage small business concerns.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

Could not find explanation.

GAO study on subcontracting reporting systems

The House bill contained a provision (sec. 1610) that would require the Comptroller General to submit a report to the Committee on Small Business of the House of Representatives and to the Committee on Small Business and Entrepreneurship of the Senate regarding the feasibility of using federal subcontracting reporting systems.

The Senate committee-reported bill contained no similar provision.

The agreement does not contain the provision.

We direct the Comptroller General of the United States to submit not later than 365 days after enactment of this Act a report studying the feasibility of using federal subcontracting reporting systems, including the federal subcontracting reporting system required by section 2 of the Federal Funding Accountability and Transparency Act of 2006 and any electronic subcontracting reporting award system used by the Small Business Administration, to attribute subcontractors to any particular contracts in the case of contractors that have subcontracting plans under section 8(d) of the Small Business Act that pertain to multiple contracts with executive agencies.

Could not find explanation.

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