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

Subtitle F—Other Matters

P. L. 116-

House Conference Report   116-617

(a) Waiver of Progress Payments Requirements.--The Secretary of Defense may waive the requirements of section 2307(e)(2) of title 10, United States Code, with respect to progress payments for any undefinitized contractual action (as defined in section 2326 of title 10, United States Code; in this section referred to as ``UCA'') if the Secretary determines that the waiver is necessary due to the national emergency for the Coronavirus Disease 2019 (COVID-19) and--

(1) a contractor performing the contract for which a UCA is entered into has not already received increased progress payments from the Secretary of Defense on contractual actions other than UCAs; or

(2) a contractor performing the contract for which a UCA is entered into, and that has received increased progress payments from the Secretary of Defense on contractual actions other than UCAs, can demonstrate that the contractor has promptly provided the amount of the increase to any subcontractors (at any tier), small business concerns (as defined under section 3 of the Small Business Act (15 U.S.C. 632)), or suppliers of the contractor.

(b) Definitization.--With respect to a UCA that not been definitized for a period of 180 days beginning on the date on which such UCA was entered into, the Secretary of Defense may only use the waiver authority described in subsection (a) if the Secretary (or a designee at a level not below the head of a contracting activity) provides a certification to the congressional defense committees that such UCA will be definitized within 60 days after the date on which the waiver is issued.

(c) Submission.--For each use of the waiver authority under subsection (a), the Secretary of Defense shall submit to the congressional defense committees an estimate of the amounts to be provided to subcontractors (at any tier), small business concerns, and suppliers, including an identification of the specific entities receiving an amount from an increased progress payment described under such subsection (a).

The Senate amendment contained a provision (sec. 5841) that would allow the Secretary of Defense to temporarily increase the progress payment rate for undefinitized contract actions during the COVID-19 national emergency.

The House bill contained no similar provision.

The House recedes with an amendment that would add conditions to the waiver pertaining to companies' receipt of progress payments under other contracts, the companies' efforts to flow cash to subcontractors and suppliers, and other matters, as well as reporting on the use of the waivers and the flow of payments to subcontractors and suppliers.

The conferees support the Department of Defense's (DOD) actions to increase cash flow to the defense industry during the ongoing pandemic, which included increasing the rate of progress payments from 80 percent up to 95 percent for certain companies, and guidance on the use of advance payments in certain cases, among others. The conferees note that, according to DOD officials, these actions enabled DOD to provide billions of dollars to the defense industry in a period of severe economic downturn and instability.

The conferees remain concerned about whether and how the companies that received these funds to stabilize their operations in turn increased the rate of payments to their subcontractors and suppliers, who are in many cases small and medium sized firms that were potentially more at risk during this period.

Therefore, the conferees direct the Comptroller General of the United States to assess the Department's actions to provide and monitor the use of advance payments and the increased rate of progress payments. As part of this review, the conferees direct the Comptroller General to brief the defense committees by September 30, 2021 on: (1) The number and types of contracts and contractors that received advanced payments or increased rates of progress payments; (2) The amount of funding that was provided via these mechanisms; (3) The extent to which DOD established effective oversight procedures to ensure that the recipients of these funds provided, as appropriate, increased payments to their subcontractors and suppliers; (4) The risks, if any, that the use of these mechanisms posed to DOD and how DOD mitigated such risks; and (5) Any other matters the Comptroller General determines to be appropriate. The conferees further direct the Comptroller General to provide a final report to the congressional defense committees at a time to be mutually agreed to following the briefing.