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

Subtitle B—Amendments to General Contracting Authorities, Procedures, and Limitations

P. L. 117-81

Joint Explanatory Statement

Section 829 of the National Defense Authorization Act for Fiscal Year 2017 (10 U.S.C. 2306 note) is repealed.
 

The House bill contained a provision (sec. 818) that would repeal the preference for fixed-price contracts, previously established by section 829 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114-328), and make a conforming amendment to United States Code.

The Senate amendment contained a similar provision (sec. 801).

The agreement includes the House provision.

H. R. 4350--House Report 117-118

Section 818--Repeal of Preference for Fixed-Price Contracts

This section would repeal section 829 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114-328), which established a statutory preference for fixed-price
type contracts and a requirement for senior acquisition executives to approve the award of cost-type contracts over $25.0 million.

S. 2792--Senate Report117-39

Repeal of preference for fixed-price contracts (sec. 801)

The committee recommends a provision that would repeal the preference for fixed-price contracts, previously established by section 829 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114-328).

The committee notes that the preference for fixed-price contracts was originally established as an effort to control cost growth on large acquisition programs and to incentivize contractors to actively manage costs. While the committee remains concerned about acquisition cost growth, it recognizes that the fixed-price contract type may not be suitable for all acquisitions. With the repeal of the preference for fixed-price contracts, the committee expects the Department of Defense to select contract types and negotiate contract terms that are appropriate for the product or service being acquired and that effectively account for an acquisition program's risks, requirements, and cost and schedule goals.

The committee also notes that the Department has used fixed-price type contracts for the majority of major defense acquisition program obligations fairly consistently over the last several years.

The committee further notes that fixed-price type contracts can be used to encourage better cost and schedule performance. Fixed-price type contracts also are appropriate when requirements are stable and technical and technology risks are minimal and understood. Fixed-price contracts also remain appropriate when the Department is purchasing commercial items.