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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) In general.—Chapter 140 of title 10, United States Code, as amended by section 851, is further amended by adding at the end the following new section:

Ҥ 2380A. Treatment of goods and services provided by nontraditional defense contractors as commercial items

“Notwithstanding section 2376(1) of this title, items and services provided by nontraditional defense contractors (as that term is defined in section 2302(9) of this title) may be treated by the head of an agency as commercial items for purposes of this chapter.”.

(b) Clerical amendment.—The table of sections at the beginning of chapter 140 of such title is amended by inserting after the item relating to section 2380, as added by section 851, the following new item:

“2380A. Treatment of goods and services provided by nontraditional defense contractors as commercial items.”.

The House bill contained no similar provision.

The House recedes.

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

Treatment of goods and services provided by a non-traditional contractors as commercial items (sec. 866)

The committee recommends a new provision in chapter 140 of title 10, United States Code that authorizes the Department of Defense (DOD) to treat goods and services provided by a non- traditional contractor as defined in section 2302(9) of title 10, United States Code, as a commercial item. The committee believes that it is critical for the Department of Defense to access non-traditional commercial contractors to address future technology challenges where commercial technology is rapidly advancing beyond military technology. There are significant barriers to the participation of these contractors in the DOD marketplace. To overcome those barriers Congress has put in place a patchwork of authorities to allow these firms to participate on a transaction by transaction basis either through the use of other transactions authority or through defining the product or service to be acquired as a commercial item under the commercial item definition in chapter 1 of title 41, United States Code.

This committee recognizes that the defense market is not large enough for some commercial firms to go to the trouble and expense of changing their business processes to comply with a Federal Acquisition Regulation (FAR) Part 15 type contract traditionally used for most defense purchases. This provision would allow the Department to access a greater share of the innovative potential of these commercial, non-traditional firms under FAR Part 12 terms and conditions by treating the entire business unit and what is produced and provided by these units as commercial. Government buyers if they wish to access non- traditional commercial entities will need to conduct extensive market research to first understand the Department of Defense's standing in the relevant commercial sector and market. The Department will also likely need to develop and use price and value based techniques to be used over the course of the relationship with these contractors that will be significantly different than the transactions based approach used to ensure price reasonableness on a contract by contract basis.