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

P. L. 108-375

House Conference Report 108-767

SEC. 814. FUNDING FOR CONTRACT CEILINGS FOR CERTAIN MULTIYEAR PROCUREMENT CONTRACTS.

(a) MULTIYEAR CONTRACTS RELATING TO PROPERTY. —Section 2306b(g) of title 10, United States Code, is amended —

(1) by inserting ‘‘(1)’’ before ‘‘Before any’’;

(2) by striking ‘‘Committee’’ through ‘‘House of Representatives’’ and inserting ‘‘congressional defense committees’’; and

(3) by adding at the end the following new paragraph:

     ‘‘(2) In the case of a contract described in subsection (a) with a cancellation ceiling described in paragraph (1), if the budget for the contract does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract, the head of the agency concerned shall, as part of the certification required by subsection (i)(1)(A), give written notification to the congressional defense committees of —

‘‘(A) the cancellation ceiling amounts planned for each program year in the proposed multiyear procurement contract, together with the reasons for the amounts planned;

‘‘(B) the extent to which costs of contract cancellation are not included in the budget for the contract; and

‘‘(C) a financial risk assessment of not including budgeting for costs of contract cancellation.’’.

(b) MULTIYEAR CONTRACTS RELATING TO SERVICES. —Section 2306c(d) of title 10, United States Code, is amended —

(1) in paragraphs (1), (3), and (4), by striking ‘‘committees of Congress named in paragraph (5)’’ and inserting ‘‘congressional defense committees’’ each place it appears; and

(2) by amending paragraph (5) to read as fol- lows:

‘‘(5) In the case of a contract described in subsection (a) with a cancellation ceiling described in paragraph (4), if the budget for the contract does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract, the head of the agency concerned shall give written notification to the congressional defense committees of —

‘‘(A) the cancellation ceiling amounts planned for each program year in the proposed multiyear procurement contract, together with the reasons for the amounts planned;

‘‘(B) the extent to which costs of contract cancellation are not included in the budget for the contract; and

‘‘(C) a financial risk assessment of not including budgeting for costs of contract cancellation.’’.

The House bill contained a provision (sec. 804) that would amend section 2306(g) and section 2306(d) of title 10, United States Code, to require the head of the agency concerned to provide written notification to the congressional defense committees in those instances when cancellation costs that are above $100.0 million are not fully funded.  The written notification would include a financial risk assessment for not fully funding the cancellation ceiling.

The Senate amendment contained no similar provision. 

The Senate recedes with an amendment that would not require the head of the agency to identify up-front sources for potential contract cancellation.

House Report 108-491