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

Public Law 108-136

House Conference Report 108-354

SEC. 847. CERTAIN WEAPONS-RELATED PROTOTYPE PROJECTS.

(a) EXTENSION OF AUTHORITY- Subsection (g) of section 845 of the National Defense Authorization Act for Fiscal Year 1994 (10 U.S.C. 2371 note) is amended by striking `September 30, 2004' and inserting `September 30, 2008'.

(b) INCREASED SCOPE OF AUTHORITY- Subsection (a) of such section is amended by inserting before the period at the end the following: `, or to improvement of weapons or weapon systems in use by the Armed Forces'.

(c) PILOT PROGRAM FOR TRANSITION TO FOLLOW-ON CONTRACTS- Such section, as amended by subsection (a), is further amended--

(1) by redesignating subsections (e), (f), and (g) as subsections (f), (g), and (h), respectively; and

(2) by inserting after subsection (d) the following new subsection (e):

`(e) PILOT PROGRAM FOR TRANSITION TO FOLLOW-ON CONTRACTS- (1) The Secretary of Defense is authorized to carry out a pilot program for follow-on contracting for the production of items or processes under prototype projects carried out under this section.

`(2) Under the pilot program--

`(A) a qualifying contract for the procurement of such an item or process, or a qualifying subcontract under a contract for the procurement of such an item or process, may be treated as a contract or subcontract, respectively, for the procurement of commercial items, as defined in section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12)); and

`(B) the item or process may be treated as an item or process, respectively, that is developed in part with Federal funds and in part at private expense for the purposes of section 2320 of title 10, United States Code.

`(3) For the purposes of the pilot program, a qualifying contract or subcontract is a contract or subcontract, respectively, with a nontraditional defense contractor that--

`(A) does not exceed $50,000,000; and

`(B) is either--

`(i) a firm, fixed-price contract or subcontract; or

`(ii) a fixed-price contract or subcontract with economic price adjustment.

`(4) The authority to conduct a pilot program under this subsection shall terminate on September 30, 2008. The termination of the authority shall not affect the validity of contracts or subcontracts that are awarded or modified during the period of the pilot program, without regard to whether the contracts or subcontracts are performed during the period.'.

The House bill contained a provision (sec. 801) that would extend for four years the other transaction prototype authority under section 845 of the National Defense Authorization Act for Fiscal Year 1994 (Public Law 103-160).

The Senate amendment contained a provision (sec. 821) that would: (1) extend for three years the other transaction prototype authority under section 845 of the National Defense Authorization Act for Fiscal Year 1994; (2) include a clarification that other transaction prototype authority can be used for prototype projects related to fielded systems; and (3) establish a three-year pilot program to ease the transition of nontraditional defense contractors from prototype transactions to standard procurement contracts.

The House recedes with an amendment that would include the authorizations in the Senate provision and extend for four years the other transaction prototype authority under section 845 of the National Defense Authorization Act for Fiscal Year 1994.

House Rpt.108-106

SECTION 801--EXTENSION OF AUTHORITY TO CARRY OUT CERTAIN PROTOTYPE PROJECTS

This section would extend authority for the Director of the Defense Advanced Research Projects Agency, the Secretary of a military department, or any other official designated by the Secretary of Defense, to carry out prototype projects under section 845 of the National Defense Authorization Act for Fiscal Year 1994 (P.L. 103-160) until September 30, 1998.

Senate Report 108-046

The committee recommends a provision that would extend for three years the other transaction prototype authority under section 845 of the National Defense Authorization Act for Fiscal Year 1994. This provision would also include a clarification that other transaction prototype authority can be used for prototype projects related to fielded systems. This would allow non-traditional contractors greater opportunities to participate in modernizing fielded systems with new technologies that improve capability and reduce operating and support costs.

Finally, this provision would enable the Department of Defense to capitalize on successful prototype projects by bringing the prototypes into production under standard procurement contracts. The provision would establish a three-year pilot program to ease the transition of nontraditional defense contractors from prototype transactions to standard procurement contracts. Under the pilot program, the Department would be authorized to enter into contracts of $50.0 million or less that would treat items or processes developed by nontraditional defense contractors under prototype transactions: (1) as commercial items subject to the streamlined contracting procedures established in Part 12 of the Federal Acquisition Regulation; and (2) as items or processes that are developed with mixed funds for the purpose of negotiating rights in technical data under section 2320 of title 10, United States Code.