National Defense Authorization Act for 2004 Analysis

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

LEGISLATIVE PROVISIONS NOT ADOPTED

Bill Sections Not Enacted

House Conference Report 108-354

SEC. 813. PROCUREMENT OF CERTAIN CRITICAL ITEMS FROM AMERICAN SOURCES.

(a) REQUIREMENT FOR PROCUREMENT OF CERTAIN CRITICAL ITEMS PRODUCED IN UNITED STATES- With respect to items that meet the criteria set forth in subsection (b), the Secretary of Defense may procure such items only if the items are entirely produced in the United States.

(b) CRITERIA- For purposes of subsection (a), an item meets the criteria of this subsection if--

(1) it is a critical item; and

(2) there are limited sources of production capability of the item in the United States.

(c) EXCEPTION- Subsection (a) does not apply to a procurement of an item when the Secretary of Defense determines in writing that the Department of Defense's need for the item is of such an unusual and compelling urgency that the United States would be seriously injured unless the Department is permitted to procure the item from sources outside the United States.

(d) APPLICABILITY- Subsection (a) shall apply to contracts for the procurement of covered military systems and subcontracts under such contracts.

Procurement of certain critical items from American sources

The House bill contained a provision (sec. 813) that would require the Secretary of Defense to purchase certain critical items only if they are entirely produced in the United States. The Senate amendment contained no similar provision.

The House recedes.

SEC. 821. DOMESTIC SOURCE LIMITATION AMENDMENTS.

(a) ADDITIONAL ITEMS- Section 2534(a) of title 10, United States Code, is amended by adding at the end of the following new paragraphs:

`(6) Fuzes used for ordnance.

`(7) Microwave power tubes or traveling wave tubes.

`(8) PAN carbon fiber.

`(9) Aircraft tires.

`(10) Ground vehicle tires.

`(11) Tank track assemblies.

`(12) Tank track components.

`(13) Pre-formed retort packaging in direct contact with main entree meals within meals ready-to-eat listed in Federal Supply Class 8970.'.

(b) AMENDMENT OF NATIONAL TECHNOLOGY AND INDUSTRIAL BASE- Paragraph (1) of section 2500 of title 10, United States Code, is amended--

(1) by striking all that follows after `States' to the end of the paragraph and inserting a period; and

(2) by striking `production, or maintenance' and inserting `production, and maintenance'.

(1) in the text before paragraph (1), by inserting `in writing' after `determines';

(2) by striking paragraphs (1), (2), (3), (6), (7), and (8);

(3) by redesignating paragraphs (4) and (5) as paragraphs (2) and (3), respectively, and in such paragraph (3), as so redesignated, by adding at the end the following: `This exception shall not apply to items determined to be critical by the Secretary of Defense under section 812 of the National Defense Authorization Act for Fiscal Year 2004.'; and

(4) by inserting before paragraph (2), as so redesignated, the following new paragraph (1):

`(1) The Department of Defense's need for the item is of such an unusual and compelling urgency that the United States would be seriously injured unless the Department is permitted to procure the item from sources outside the United States.'.

Domestic source limitation for certain additional items

The House bill contained a provision (sec. 821) that would expand the list of items in 10 U.S.C. 2534 that are required to be procured from a source within the National Technology and Industrial Base (NTIB). The provision would exclude Canada from the definition of the NTIB and limit the conditions under which the Secretary of Defense could waive the domestic source requirements in 10 U.S.C. 2534.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 822. REQUIREMENTS RELATING TO BUYING COMMERCIAL ITEMS CONTAINING SPECIALTY METALS FROM AMERICAN SOURCES.

(a) SPECIALTY METALS AND OTHER INDUSTRIAL BASE PROTECTION MEASURES- (1) Subsection (b) of section 2533a of title 10, United States Code, is amended--

(A) in paragraph (1)(B), by inserting before the semicolon the following: `and the materials and components thereof'; and

(B) in paragraph (2), by inserting before the period the following: ` and any specialty metal that may be part of another item'.

(2) Subsection (c) of such section is amended--

(A) by striking `or the Secretary of the military department concerned'; and

(B) by adding at the end the following: `For each such determination, the Secretary of Defense shall notify Congress in writing of the factors supporting the determination.'.

(3) Section 2533a of such title is amended by adding at the end the following new subsection:

`(l) AUTHORITY NOT DELEGABLE- The Secretary may not delegate any authority under this section to anyone other than the Under Secretary of Defense for Acquisition, Technology, and Logistics.'.

(b) EXCEPTION TO BERRY AMENDMENT FOR COMMERCIAL ITEMS CONTAINING SPECIALTY METALS- Section 2533a of title 10, United States Code, is amended--

(1) by redesignating subsections (i) and (j) as subsections (j) and (k), respectively; and

(2) by inserting after subsection (h) the following new subsection:

`(i) EXCEPTION FOR COMMERCIAL ITEMS CONTAINING SPECIALTY METALS-

`(1) IN GENERAL- Subsection (a) does not apply to the procurement of a commercial item containing specialty metals if--

`(A) the contractor agrees to comply with the requirement set forth in paragraph (2); or

`(B) the Secretary of Defense determines in writing that the Department of Defense's need for the commercial item containing specialty metal is of such an unusual and compelling urgency that the United States would be seriously injured unless the Department is permitted to procure the item containing specialty metal from outside the United States.

`(2) REQUIREMENT TO PURCHASE EQUIVALENT AMOUNT OF DOMESTIC METAL- For purposes of paragraph (1)(A), the requirement set forth in this paragraph is that the contractor for each contract entered into by the Secretary for the procurement of a commercial item containing specialty metal agrees to purchase, over the 18-month period beginning on the date of award of the contract, an amount of specialty metal that is--

`(A) produced, including such functions as melting and smelting, in the United States; and

`(B) equivalent to--

`(i) the amount of specialty metal (measured by factors including volume, type, and grade) purchased to carry out the work under the contract (including the work under each subcontract at any tier under the contract); plus

`(ii) 10 percent of the amount referred to in clause (i).

`(3) RELATIONSHIP TO OTHER EXCEPTIONS- The exceptions under subsections (c), (d), and (h) of this section shall not apply to the procurement of a commercial item containing specialty metals.

`(4) NOTICE TO CONGRESS- The Secretary of Defense shall not enter into a contract to procure a commercial item containing specialty metal pursuant to the exception in subsection (a) until Congress is notified that the Secretary has applied the exception and a period of 15 days has expired after such notification is made.

`(5) NOTICE TO INDUSTRY- The Secretary of Defense shall publish a notice in the Federal Register on the method that the Department of Defense will use to measure an equivalent amount of specialty metal for purposes of this subsection. Such a method shall consider factors such as volume, type, and grade of specialty metal that otherwise would be produced from United States sources.'.

(1) in the heading, by striking `SPECIALTY METALS AND'; and

(2) by striking `specialty metals or'.

(d) CONFORMING AMENDMENT- Subsection (a) of section 2533a of such title is amended by striking `through (h)' and inserting `through (i)'.

(e) EFFECTIVE DATE- Section 2533a(i) of title 10, United States Code, as added by subsection (a), shall apply to each contract for the procurement of a commercial item containing specialty metal entered into before, on, or after the date of the enactment of this Act.

Requirements relating to buying commercial items containing specialty metals from American sources

The House bill contained a provision (sec. 822) that would define the requirements by which the Secretary of Defense could procure commercial items containing specialty metals produced outside of the United States upon agreement by contractors to purchase an equivalent amount, plus 10 percent, of those specialty metals from sources within the United States. The provision required specific contractor reporting of annual usage for such specialty metals. The provision also required that domestic sourcing of clothing also include the materials and components thereof.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 824. CONGRESSIONAL NOTIFICATION REQUIRED BEFORE EXERCISING EXCEPTION TO REQUIREMENT TO BUY SPECIALTY METALS FROM AMERICAN SOURCES.

Section 2533a(c) of title 10, United States Code, is amended by adding at the end the following new sentence: `The Secretary of Defense or the Secretary of the military department concerned may not procure specialty metals pursuant to the exception authorized by this subsection until the Secretary submits to Congress and publishes in the Federal Register notice of the determination made under this subsection and a period of 15 days expires after the date such notification is submitted.'.

Congressional notification required before exercising exception to requirement to buy specialty metals from American sources

The House bill contained a provision (sec. 824) that would not allow the Secretary of Defense or Secretary of the military department to procure specialty metals under the exception in sec. 822 until the Secretary submits to Congress and publish in the Federal Register notice of the determination made under that section.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 825. REPEAL OF AUTHORITY FOR FOREIGN PROCUREMENT OF PARA-ARAMID FIBERS AND YARNS.

Section 807 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261; 112 Stat. 2084) is repealed.

Repeal of authority for foreign procurement of para-aramid fibers and yarns

The House bill contained a provision (sec. 825) that would repeal section 807 of the National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261), which authorized competition for para-aramid fibers and yarns between foreign and domestic sources in order to avoid a domestic sole source procurement.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 828. BUY AMERICAN ENHANCEMENT.

Section 2533 of title 10, United States Code, is amended--

(1) by redesignating subsection (b) as subsection (c); and

(2) by inserting after subsection (a) the following new subsection (b):

`(b) In determining under section 2 of the Buy American Act (41 U.S.C. 10a et seq.) whether application of such Act is inconsistent with the public interest, the Secretary of Defense shall not consider the provisions of any trade agreement between the United States and a foreign country that is in effect at the time of the determination.'.

Buy American enhancement

The House bill contained a provision (sec. 828) that would amend the criteria available to the Secretary of Defense under 10 U.S.C. 2533 in determining whether the application of the Buy American Act (41 U.S.C. 10A) is consistent with the public interest.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 829. REQUIREMENT RELATING TO PURCHASES BY DEPARTMENT OF DEFENSE SUBJECT TO BUY AMERICAN ACT.

In applying section 2 of the Buy American Act (41 U.S.C. 10a) to acquisitions by the Department of Defense, the term `substantially all' shall mean at least 65 percent.

Requirement relating to purchases by Department of Defense subject to Buy American Act

The House bill contained a provision (sec. 829) that would require that, in any application of the Buy American Act to the Department of Defense, the term `substantially' in section 2 of the Act would mean 65 percent rather than the 50 percent for Federal agencies as provided in current regulations implementing the Act.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 831. DEFINITIONS.

In this subtitle:

(1) COVERED MILITARY SYSTEM- The term `covered military system' means a military system that includes one or more critical items.

(2) MILITARY SYSTEM- The term `military system' means a military system necessary to support national security requirements, as determined by the Secretary of Defense, and which costs more than $25,000. At a minimum, the term includes the following:

(A) Weapons listed in Federal Supply Group 10.

(B) Nuclear ordnance listed in Federal Supply Group 11.

(D) Ammunition and explosives listed in Federal Supply Group 13.

(E) Guided missiles listed in Federal Supply Group 14.

(F) Aircraft and related components, accessories, and equipment listed in Federal Supply Groups 15, 16, and 17.

(G) Space vehicles listed in Federal Supply Group 18.

(H) Ships, small craft, pontoons, and floating docks listed in Federal Supply Group 19.

(I) Ship and marine equipment listed in Federal Supply Group 20.

(J) Tracked combat vehicles listed in Federal Supply Class 2350.

(K) Engines, turbines, and components listed in Federal Supply Group 28.

(3) CRITICAL ITEM- The term `critical item' means an item or component determined to be critical by the Secretary of Defense under section 812.

(4) ITEM- The term `item' means an end item.

(5) COMPONENT- The term `component' means an article, material, or supply incorporated into an end item. The term includes software and subassemblies.

(6) FOREIGN CONTRACTOR- The term `foreign contractor' means a contractor or subcontractor organized or existing under the laws of a country other than the United States.

(7) UNITED STATES CONTRACTOR- The term `United States contractor' means a contractor or subcontractor organized or existing under the laws of the United States.

(8) UNITED STATES PRODUCTION CAPABILITIES- The term `United States production capabilities' means, with respect to an item or component, facilities located in the United States to design, develop, or manufacture the item or component.

Definitions

The House bill contained a provision (sec. 831) that would provide a number of definitions related to subtitle B of title VIII of the House bill.

The Senate amendment contained no similar provision.

The House recedes.

SEC. 822. APPLICABILITY OF CLINGER-COHEN ACT POLICIES AND REQUIREMENTS TO EQUIPMENT INTEGRAL TO A WEAPON OR WEAPON SYSTEM.

(a) IN GENERAL- (1) Chapter 131 of title 10, United States Code, is amended by inserting after section 2223 the following:

`Sec. 2223a. Acquisition of equipment integral to a weapon or a weapon system: applicability of certain acquisition reform authorities and information technology-related requirements

`(a) BOARD OF SENIOR ACQUISITION OFFICIALS- (1) The Secretary of Defense shall establish a board of senior acquisition officials to administer the implementation of the policies and requirements of chapter 113 of title 40 in procurements of information technology equipment determined by the Secretary as being an integral part of a weapon or a weapon system.

`(2) The Board shall be composed of the following officials:

`(A) Under Secretary of Defense for Acquisition, Technology, and Logistics, who shall be the Chairman.

`(B) The acquisition executive of each of the military departments.

`(C) The Chief Information Officer of the Department of Defense.

`(c) RESPONSIBILITIES OF BOARD- The Board shall be responsible for ensuring that--

`(1) the acquisition of information technology equipment determined by the Secretary of Defense as being an integral part of a weapon or a weapon system is conducted in a manner that is consistent with the capital planning, investment control, and performance and results-based management processes and requirements provided under sections 11302, 11303, 11312, and 11313 of title 40, to the extent that such processes requirements are applicable to the acquisition of such equipment;

`(2) issues of spectrum availability, interoperability, and information security are appropriately addressed in the development of weapons and weapon systems; and

`(3) in the case of information technology equipment that is to be incorporated into a weapon or a weapon system under a major defense acquisition program, the information technology equipment is incorporated in a manner that is consistent with--

`(A) the planned approach to applying certain provisions of law to major defense acquisition programs following the evolutionary acquisition process that the Secretary of Defense reported to Congress under section 802 of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 (Public Law 107-314; 116 Stat. 2602);

`(B) the acquisition policies that apply to spiral development programs under section 803 of such Act (116 Stat. 2603; 10 U.S.C. 2430 note); and

`(C) the software acquisition processes of the military department or Defense Agency concerned under section 804 of such Act (116 Stat. 2604; 10 U.S.C. 2430 note).

`(d) INAPPLICABILITY OF OTHER LAWS- The following provisions of law do not apply to information technology equipment that is determined by the Secretary of Defense as being an integral part of a weapon or a weapon system:

`(1) Section 11315 of title 40.

`(2) The policies and procedures established under section 11316 of title 40.

`(3) Subsections (d) and (e) of section 811 of the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (as enacted into law by Public Law 106-398; 114 Stat. 1654A-211), and the requirements and prohibitions that are imposed by Department of Defense Directive 5000.1 pursuant to subsections (b) and (c) of such section.

`(4) Section 351 of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 (Public Law 107-314; 116 Stat. 2516; 10 U.S.C. 221 note).

`(e) DEFINITIONS- In this section:

`(1) The term `acquisition executive', with respect to a military department, means the official who is designated as the senior procurement executive of the military department under section 16(3) of the Office of Federal Procurement Policy Act (41 U.S.C. 414(3)).

`(2) The term `information technology' has the meaning given such term in section 11101 of title 40.

`(3) The term `major defense acquisition program' has the meaning given such term in section 2430 of this title.'.

(2) The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 2223 the following new item:

`2223a. Acquisition of equipment integral to a weapon or a weapon system: applicability of certain acquisition reform authorities and information technology-related requirements.'.

(b) CONFORMING AMENDMENT- Section 2223 of such title is amended by adding at the end the following new subsection:

`(c) EQUIPMENT INTEGRAL TO A WEAPON OR WEAPON SYSTEM- (1) In the case of information technology equipment determined by the Secretary of Defense as being an integral part of a weapon or a weapon system, the responsibilities under this section shall be performed by the board of senior acquisition officials established pursuant to section 2223a of this title.

`(2) In this subsection, the term `information technology' has the meaning given such term in section 11101 of title 40.'.

Applicability of Clinger-Cohen Act policies and requirements to equipment integral to a weapon or weapon system

The Senate amendment contained a provision (sec. 822) that would clarify responsibility within the Department of Defense ( for applying the requirements of the Clinger-Cohen Act, Division D of the National Defense Authorization Act for fiscal year 1996 (Public Law 104-106) to equipment determined by the Secretary of Defense to be an integral part of a weapon or weapon system.

The House bill contained no similar provision.

The Senate recedes.

The conferees believe that section 5141 of the Clinger-Cohen Act provides the Department flexibility to determine which organizations and the degree to which the Department will apply the Act's capital planning and investment control, and performance and results based management provisions to embedded information technology on weapon systems. The conferees direct the Department to review the procedures implementing the Clinger-Cohen Act with respect to embedded systems in order to streamline and eliminate duplicate or unnecessary procedures. If the Department determines that greater statutory flexibility is necessary in the application of the Clinger-Cohen Act to embedded systems, the Secretary of Defense should provide additional justification to Congress prior to submission of the budget for fiscal year 2005.

SEC. 833. WAIVER AUTHORITY FOR DOMESTIC SOURCE OR CONTENT REQUIREMENTS.

(a) AUTHORITY- Subchapter V of chapter 148 of title 10, United States Code, is amended by adding at the end the following new section:

`Sec. 2539c. Waiver of domestic source or content requirements

`(a) AUTHORITY- Except as provided in subsection (f), the Secretary of Defense may waive the application of any domestic source requirement or domestic content requirement referred to in subsection (b) and thereby authorize the procurement of items that are grown, reprocessed, reused, produced, or manufactured--

`(1) in a foreign country that has a reciprocal defense procurement memorandum of understanding or agreement with the United States;

`(2) in a foreign country that has a reciprocal defense procurement memorandum of understanding or agreement with the United States substantially from components and materials grown, reprocessed, reused, produced, or manufactured in the United States or any foreign country that has a reciprocal defense procurement memorandum of understanding or agreement with the United States; or

`(3) in the United States substantially from components and materials grown, reprocessed, reused, produced, or manufactured in the United States or any foreign country that has a reciprocal defense procurement memorandum of understanding or agreement with the United States.

`(b) COVERED REQUIREMENTS- For purposes of this section:

`(1) A domestic source requirement is any requirement under law that the Department of Defense satisfy its requirements for an item by procuring an item that is grown, reprocessed, reused, produced, or manufactured in the United States or by a manufacturer that is a part of the national technology and industrial base (as defined in section 2500(1) of this title).

`(2) A domestic content requirement is any requirement under law that the Department of Defense satisfy its requirements for an item by procuring an item produced or manufactured partly or wholly from components and materials grown, reprocessed, reused, produced, or manufactured in the United States.

`(c) APPLICABILITY- The authority of the Secretary to waive the application of a domestic source or content requirements under subsection (a) applies to the procurement of items for which the Secretary of Defense determines that--

`(1) application of the requirement would impede the reciprocal procurement of defense items under a memorandum of understanding providing for reciprocal procurement of defense items between a foreign country and the United States in accordance with section 2531 of this title; and

`(2) such country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.

`(d) LIMITATION ON DELEGATION- The authority of the Secretary to waive the application of domestic source or content requirements under subsection (a) may not be delegated to any officer or employee other than the Under Secretary of Defense for Acquisition, Technology and Logistics.

`(e) CONSULTATIONS- The Secretary may grant a waiver of the application of a domestic source or content requirement under subsection (a) only after consultation with the United States Trade Representative, the Secretary of Commerce, and the Secretary of State.

`(f) LAWS NOT WAIVABLE- The Secretary of Defense may not exercise the authority under subsection (a) to waive any domestic source or content requirement contained in any of the following laws:

`(1) The Small Business Act (15 U.S.C. 631 et seq.).

`(2) The Javits-Wagner-O'Day Act (41 U.S.C. 46 et seq.).

`(3) Sections 7309 and 7310 of this title.

`(4) Section 2533a of this title.

`(g) RELATIONSHIP TO OTHER WAIVER AUTHORITY- The authority under subsection (a) to waive a domestic source requirement or domestic content requirement is in addition to any other authority to waive such requirement.

`(h) CONSTRUCTION WITH RESPECT TO LATER ENACTED LAWS- This section may not be construed as being inapplicable to a domestic source requirement or domestic content requirement that is set forth in a law enacted after the enactment of this section solely on the basis of the later enactment.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of such subchapter is amended by inserting after the item relating to section 2539b the following new item:

`2539c. Waiver of domestic source or content requirements.'.

Waiver authority for domestic source or content requirements

The Senate amendment contained a provision (sec. 833) that would provide the Secretary of Defense the authority to waive the application of statutory domestic source requirements and domestic content requirements for those countries who have signed a Declaration of Principles on defense trade with the United States.

The House bill contained no similar provision.

The Senate recedes.

SEC. 851. APPLICATION OF INDEMNIFICATION AUTHORITY TO STATE AND LOCAL GOVERNMENT CONTRACTORS.

(a) AUTHORITY- Subject to the limitations of subsection (b), the President may exercise the discretionary authority under Public Law 85-804 (50 U.S.C. 1431 et seq.) so as to provide under such law for indemnification of contractors and subcontractors in procurements by States or units of local government of an anti-terrorism technology or an anti-terrorism service for the purpose of preventing, detecting, identifying, otherwise deterring, or recovering from acts of terrorism.

(b) LIMITATIONS- Any authority that is delegated by the President under subsection (a) to the head of a Federal agency to provide for the indemnification of contractors and subcontractors under Public Law 85-804 (50 U.S.C. 1431 et seq.) for procurements by States or units of local government may be exercised only--

(1) in the case of a procurement by a State or unit of local government that--

(A) is made under a contract awarded pursuant to section 852; and

(B) is approved, in writing, for the provision of indemnification by the President or the official designated by the President under section 852(a); and

(2) with respect to--

(A) amounts of losses or damages not fully covered by private liability insurance and State or local government-provided indemnification; and

(B) liabilities of a contractor or subcontractor not arising out of willful misconduct or lack of good faith on the part of the contractor or subcontractor, respectively.

Application of indemnification authority to state and local government contractors

The Senate amendment contained a provision (sec. 851) that would authorize the executive branch to apply discretionary indemnification authority (50 U.S.C. 1431 et seq.; Public Law 85-804) to authorized Federal Government contracts where state and local governments could buy anti-terrorism technology solutions.

The House bill contained no similar provision.

The Senate recedes.

SEC. 853. DEFINITIONS.

In this subtitle:

(1) ANTI-TERRORISM TECHNOLOGY AND SERVICE- The terms `anti-terrorism technology' and `anti-terrorism service' mean any product, equipment, or device, including information technology, and any service, system integration, or other kind of service (including a support service), respectively, that is related to technology and is designed, developed, modified, or procured for the purpose of preventing, detecting, identifying, otherwise deterring, or recovering from acts of terrorism.

(2) INFORMATION TECHNOLOGY- The term `information technology' has the meaning given such term in section 11101(6) of title 40, United States Code.

(3) STATE- The term `State' includes the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and any territory or possession of the United States.

(4) UNIT OF LOCAL GOVERNMENT- The term `unit of local government' means any city, county, township, town, borough, parish, village, or other general purpose political subdivision of a State; an Indian tribe which performs law enforcement functions as determined by the Secretary of the Interior; or any agency of the District of Columbia Government or the United States Government performing law enforcement functions in and for the District of Columbia or the Trust Territory of the Pacific Islands.

Definitions

The Senate amendment contained a provision (sec. 853) that would provide a number of definitions related to subtitle F of title VIII of the Senate bill.

The House bill contained no similar provision.

The Senate recedes.