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

Subtitle D—Provisions Relating to Acquisition Workforce

P. L. 114-

House Conference Report. 114-270

(a) Limitation.—

(1) IN GENERAL.—Except as provided in paragraph (2), prior to converting the procurement of commercial items or services valued at more than $1,000,000 from commercial acquisition procedures under part 12 of the Federal Acquisition Regulation to noncommercial acquisition procedures under part 15 of the Federal Acquisition Regulation, the contracting officer for the procurement shall determine in writing that—

(A) the earlier use of commercial acquisition procedures under part 12 of the Federal Acquisition Regulation was in error or based on inadequate information; and

(B) the Department of Defense will realize a cost savings compared to the cost of procuring a similar quantity or level of such item or service using commercial acquisition procedures.

(2) REQUIREMENT FOR APPROVAL OF DETERMINATION BY HEAD OF CONTRACTING ACTIVITY.—In the case of a procurement valued at more than $100,000,000, a contract may not be awarded pursuant to a conversion of the procurement described in paragraph (1) until—

(A) the head of the contracting activity approves the determination made under paragraph (1); and

(B) a copy of the determination so approved is provided to the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics.

(b) Factors to be considered.—In making a determination under paragraph (1), the determining official shall, at a minimum, consider the following factors:

(1) The estimated cost of research and development to be performed by the existing contractor to improve future products or services.

(2) The transaction costs for the Department of Defense and the contractor in assessing and responding to data requests to support a conversion to noncommercial acquisition procedures.

(3) Changes in purchase quantities.

(4) Costs associated with potential procurement delays resulting from the conversion.

(c) Procedures.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall develop procedures to track conversions of future contracts and subcontracts for improved analysis and reporting and shall revise the Defense Federal Acquisition Regulation Supplement to reflect the requirement in subsection (a).

(d) Reporting requirement.—Not later than one year after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees a report on the implementation of subsection (a), including any procurements converted as described in that subsection.

(e) Sunset.—The requirements of this section shall terminate 5 years after the date of the enactment of this Act.

The House bill contained no similar provision.

The House recedes with an amendment that would require a written determination to be made prior to any conversion of the procurement of commercial items to a non-commercial acquisition procedure. The conferees also require the Secretary of Defense to establish procedures to track conversions of future contracts and subcontracts for improved analysis and reporting.

Senate Report 114-49 to accompany S. 1376 as it was reported out of the Senate Armed Services Committee.

Limitation on conversion of procurements from commercial acquisition procedures (sec. 865)

The committee recommends a provision that would limit the conversion of the procurement of a commercial item or commercial service to a non-commercial acquisition procedure unless the Secretary of Defense certifies to the congressional defense committees that the Department of Defense will realize a significant cost savings as compared to the cost of procuring a similar quantity of such item or level of service using commercial acquisition procedures. The committee is concerned that a number of parts, components, services and systems have been converted from Federal Acquisition Regulation (FAR) Part 12 procurements to FAR Part 15 with no assessment of the costs of these conversions. The Air Force is currently in negotiations to change the contract for the Joint Direct Attack Munition (JDAM) from one governed by FAR Part 12 to one governed by FAR Part 15. The JDAM was one of the most successful acquisition reform pilots authorized under the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355). Under this authority, the price of JDAMs has consistently dropped over the years while contractors have been incentivized to use their own research and development dollars to continue to increase quality and performance of the munition. The committee is concerned that the cost of this program may increase and that the Department will be forced to fund directly any new quality or performance enhancement.

This provision would ensure that under any such future conversion the Secretary shall, in addition to price changes, factor in forgone commercial research and development costs, transaction costs and increased regulatory costs in converting existing FAR Part 12 contracts. This provision would also require the Department to conduct an inventory (which the Comptroller General will review for accuracy) of all contracts and subcontracts that have been converted from FAR Part 12 to FAR Part 15 over the last 5 years and determine the prices paid before and after the conversion.