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

Subtitle G - Industrial Base Matters

P. L. 114-

House Conference Report. 114-840

(1) IN GENERAL.—Any storage and distribution services to be provided under the pilot program under this section to a contractor in support of the performance of a contract described in subsection (a) shall be provided under a separate contract that is entered into by the Director of the Defense Logistics Agency with that contractor. The requirements of section 2208(h) of title 10, United States Code, and the regulations prescribed pursuant to such section shall apply to any such separate support contract between the Director of the Defense Logistics Agency and the contractor.

(2) LIMITATION.—Not more than five support contracts between the Director and the contractor may be awarded under the pilot program.

(c) Scope Of Support And Services.—The storage and distribution support services that may be provided under this section in support of the performance of a contract described in subsection (a) are storage and distribution of materiel and repair parts necessary for the performance of that contract.

(d) Regulations.—Before exercising the authority under the pilot program under this section, the Secretary of Defense shall prescribe in regulations such requirements, conditions, and restrictions as the Secretary determines appropriate to ensure that storage and distribution services are provided under the pilot program only when it is in the best interests of the United States to do so. The regulations shall include, at a minimum, the following:

(1) A requirement for the solicitation of offers for a contract described in subsection (a), for which storage and distribution services are to be made available under the pilot program, including—

(A) a statement that the storage and distribution services are to be made available under the authority of the pilot program under this section to any contractor awarded the contract, but only on a basis that does not require acceptance of the support and services; and

(B) a description of the range of the storage and distribution services that are to be made available to the contractor.

(2) A requirement for the rates charged a contractor for storage and distribution services provided to a contractor under the pilot program to reflect the full cost to the United States of the resources used in providing the support and services, including the costs of resources used, but not paid for, by the Department of Defense.

(3) With respect to a contract described in subsection (a) that is being performed for a department or agency outside the Department of Defense, a prohibition, in accordance with applicable contracting procedures, on the imposition of any charge on that department or agency for any effort of Department of Defense personnel or the contractor to correct deficiencies in the performance of such contract.

(4) A prohibition on the imposition of any charge on a contractor for any effort of the contractor to correct a deficiency in the performance of storage and distribution services provided to the contractor under this section.

(5) A requirement that storage and distribution services provided under the pilot program may not interfere with the mission of the Defense Logistics Agency or of any military department involved with the pilot program.

(6) A requirement that any support contract for storage and distribution services entered into under the pilot program shall include a clause to indemnify the Government against any failure by the contractor to perform the support contract, and to remain responsible for performance of the primary contract.

(e) Relationship To Treaty Obligations.—The Secretary shall ensure that the exercise of authority under the pilot program under this section does not conflict with any obligation of the United States under any treaty or other international agreement.

(f) Reports.—

(1) SECRETARY OF DEFENSE.—Not later than the end of the fourth year of operation of the pilot program, the Secretary of Defense shall submit to the Committees on Armed Services of the Senate and House of Representatives a report describing—

(A) the cost effectiveness for both the Government and industry of the pilot program; and

(B) how support contracts under the pilot program affected meeting the requirements of primary contracts.

(2) COMPTROLLER GENERAL.—Not later than the end of the fifth year of operation of the pilot program, the Comptroller General of the United States shall review the report of the Secretary under paragraph (1) for sufficiency and provide such recommendations in a report to the Committees on Armed Services of the Senate and House of Representatives as the Comptroller General considers appropriate.

(g) Sunset.—The authority to enter into contracts under the pilot program shall expire six years after the date of the enactment of this Act. Any contracts entered into before such date shall continue in effect according to their terms.

The Senate bill contained a provision (sec. 873) that would grant permissive authority to the Secretary of Defense to make available storage and distribution services support to a contractor in support of the performance by the contractor of a contract for the production, modification, maintenance, or repair of a weapon system that is entered into by an official of the Department of Defense.

The House amendment contained no similar provision.

The House recedes with a clarifying amendment that would remove the permanent authority and grant permissive authority to the Secretary of Defense to establish a six-year pilot program with a report to be delivered in the fourth year of the pilot program outlining the cost effectiveness for both government and industry as well as any performance enhancements, and recommendations on whether to make the authority permanent, and a review to be conducted by the Comptroller General of the United States during the fifth year to inform the potential extension or permanent authorization of the program.