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

Subtitle C—Provisions Relating to Other Transaction Authority

P. L. 117-81

Joint Explanatory Statement

(a) Review and Recommendations Required.--

(1) In general.--The Secretary of Defense shall review the current use, and the authorities, regulations, and policies related to the use, of other transaction authority under sections 2371 and 2371b of title 10, United States Code, and assess the merits of modifying or expanding such authorities with respect to--

(A) the inclusion in such transactions for the Government and contractors to include force majeure provisions to deal with unforeseen circumstances in execution of the transaction;

(B) the determination of the traditional or nontraditional status of an entity based on the parent company or majority owner of the entity;

(C) the determination of the traditional or nontraditional status of an entity based on the status of an entity as a qualified businesses wholly-owned through an Employee Stock Ownership Plan;

(D) the ability of the Department of Defense to award agreements for prototypes with all of the costs of the prototype project provided by private sector partners of the participant to the transaction for such prototype project, to allow for expedited transition into follow-on production agreements for appropriate technologies;

(E) the ability of the Department of Defense to award agreements for procurement, including without the need for prototyping;

(F) the ability of the Department of Defense to award agreements for sustainment of capabilities, including without the need for prototyping;

(G) the ability of the Department of Defense to award agreements to support the organic industrial base;

(H) the ability of the Department of Defense to award agreements for prototyping of services or acquisition of services;

(I) the need for alternative authorities or policies to more effectively and efficiently execute agreements with private sector consortia;

(J) the ability of the Department of Defense to monitor and report on individual awards made under consortium-based other transactions; and

(K) other issues as identified by the Secretary.

(2) Qualified businesses wholly-owned through an employee stock ownership plan defined.--The term ``qualified businesses wholly-owned through an Employee Stock Ownership Plan'' means an S corporation (as defined in section 1361(a)(1) of the Internal Revenue Code of 1986) for which 100 percent of the outstanding stock is held through an employee stock ownership plan (as defined in section 4975(e)(7) of the Internal Revenue Code).

(b) Issues Identified and Recommendations for Changes to Policies or Authorities.--In carrying out the review under paragraph (1) of subsection (a), with respect to each issue described in subparagraphs (A) through (K) of such paragraph, the Secretary of Defense shall--

(1) identify relevant issues and challenges with the use of the authority under section 2371 or 2371b of title 10, United States Code;

(2) discuss the advantages and disadvantages of modifying or expanding the authority under section 2371 or 2371b of title 10, United States Code, to address issues under paragraph (1);

(3) identify policy changes that will be made to address issues identified under paragraph (1);

(4) make recommendations to the congressional defense committees for new or modified statutory authorities to address issues identified under paragraph (1); and

(5) provide such other information as determined appropriate by the Secretary.

(c) Report.--Not later than December 31, 2022, the Secretary of Defense shall submit to the congressional defense committees a report describing activities undertaken pursuant to this section, as well as issues identified, policy changes proposed, justifications for such proposed policy changes, and recommendations for legislative changes.

The Senate amendment contained a provision (sec. 811) that would require the Secretary of Defense to review the current use of and authorities, regulations, and policies pertaining to other transaction authorities and make recommendations to the Congress on possible modifications to the authorities.

The House bill contained no similar provision.

The agreement includes the Senate provision.

S. 2792--Senate Report117-39

Recommendations on the use of other transaction authority (sec. 811)

The committee recommends a provision that would require the Secretary of Defense to review the current use, authorities, regulations, and policies relative to the use of other
transaction authorities and make recommendations to the Congress on possible modifications to the authorities. The committee notes that the use of the other transaction authority has increased significantly over the last few years and that industry and independent experts have proposed a number of new proposals for possible adjustments to the authorities. The committee also is concerned about the differing interpretations by Department of Defense counsels on the flexibilities currently authorized, resulting in inconsistent application of the authority and significant confusion among industry and Government personnel.