Back to RWRNDAA Contents

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

P. L. 108-375

House Conference Report 108-767

SEC. 854. DEFENSE PROCUREMENTS MADE THROUGH CONTRACTS OF OTHER AGENCIES.

(a) LIMITATION. — The head of an agency may not procure goods or services (under section 1535 of title 31, United States Code, pursuant to a designation under section 11302(e) of title 40, United States Code, or otherwise) through a contract entered into by an agency outside the Department of Defense for an amount greater than the simplified acquisition threshold referred to in section 2304(g) of title 10, United States Code, unless the procurement is done in accordance with procedures prescribed by that head of an agency for reviewing and approving the use of such contracts.

(b) EFFECTIVE DATE. — The limitation in subsection (a) shall apply only with respect to orders for goods or services that are issued by the head of an agency to an agency outside the Department of Defense on or after the date that is 180 days after the date of the enactment of this Act.

(c) INAPPLICABILITY TO CONTRACTS FOR CERTAIN SERVICES. — This section does not apply to procurements of the following services:

(1) Printing, binding, or blank-book work to which section 502 of title 44, United States Code, applies.

(2) Services available under programs pursuant to section 103 of the Library of Congress Fiscal Operations Improvement Act of 2000 (Public Law 106–481; 114 Stat. 2187; 2 U.S.C. 182c).

(d) ANNUAL REPORT. —

     (1) For each of fiscal years 2005 and 2006, each head of an agency shall submit to the Secretary of Defense a report on the service charges imposed on purchases made for an amount greater than the simplified acquisition threshold during such fiscal year through a contract entered into by an agency outside the Department of Defense.

     (2) In the case of procurements made on orders issued by the head of a Defense Agency, Department of Defense Field Activity, or any other organization within the Department of Defense (other than a military department) under the authority of the Secretary of Defense as the head of an agency, the report under paragraph (1) shall be submitted by the head of that Defense Agency, Department of Defense Field Activity, or other organization, respectively.

     (3) The report for a fiscal year under this subsection shall be submitted not later than December 31 of the calendar year in which such fiscal year ends.

(e) DEFINITIONS. — In this section:

     (1) The term ‘‘head of an agency’’ means the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, the Secretary of the Air Force.

     (2) The term ‘‘Defense Agency’’ has the meaning given such term in section 101(a)(11) of title 10, United States Code. (3) The term ‘‘Department of Defense Field Activity’’ has the meaning given such term in section 101(a)(12) of such title.

The senate amendment contained a provision (sec. 815) that would prohibit the Department of Defense from paying more than a 1 percent service charge for using other agency contracts to purchase goods and services.

The House bill contained no similar provision. 

The House recedes with an amendment that would delete the prohibition on paying fees in excess of 1 percent of the amount charged by the contractor and substitute:  (1) a requirement that the procurement is done in accordance with military department or defense agency procedures for reviewing and approving the use of non-Department contracts; and (2) a reporting requirement for all service charges imposed on purchases in amounts greater that the simplified acquisition threshold in fiscal years 2005 and 2006.  Approvals of inter-agency transactions under this provision should be in writing, with supporting rationale, and retained in an official file.

The conferees expect the Department's review and approval procedures to ensure that any fees are reasonable in relation to the work actually performed by the contracting agency.  The conferees do not believe that the Department should pay fees in excess of 1 percent to an outside agency that merely acts as a conduit for Department requirements.  The conferees are particularly concerned that in some instances, the Department's orders appear to have been awarded to contractors who charge their own fees for directing the work to preferred subcontractors without providing any value added.

The conferees also expect the Department's review and approval procedures to ensure that the goods or services to be procured are within the scope of the non-Department contract vehicle, and that the suppliers or services to be acquired are consistent with the appropriated funding to be utilized.  In addition, the Department's review and approval procedures should ensure that orders placed against non-Department contracts are in compliance with all applicable Department-unique statutes, regulations, directives, and other requirements prior to approval.  The use of multiple award contracts must be consistent with the requirements of section 803 of the national Defense Authorization Act for Fiscal Year 2002 (Public law 107-107 Competition Requirements for Purchase of Services Pursuant to Multiple Award Contracts)); part 8.002 of the Federal Acquisition Regulation (Priorities for Use of Government Supply Sources); Part 17.5 of the Federal Acquisition Regulation (Interagency Acquisitions under the Economy Act); and the Department of Defense Instruction 4000.19 (Interservice and Intergovernmental Support).  Purchases of information technology should also be consistent with Department information security requirements and the requirements of the Department business system enterprise architecture and transition plan.  Officials should be familiar with the requirements of the basic contract and should provide to the assisting agency any Department-unique requirements associated with the acquisition.