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P. L. 108-375

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

LEGISLATIVE PROVISIONS NOT ADOPTED

House and Senate Bill Sections Not Enacted

House Conference Report 108-354

     (1) By the end of the pilot project, the Secretary of Defense shall have allowed civilian employees to compete through the standard competition process of Office of Management and Budget Circular A-76 for new requirements, as defined by such Circular, that are approximately one-tenth in value of the funds spent by the Department of Defense during the two fiscal years of the pilot project on all functions that are considered new requirements, as defined by such Circular.

     (2) The Department of Defense shall not receive credit towards compliance with the pilot program for subjecting to public-private competition --

(A) any contract to be awarded to small business concerns that meet the requirements under section 3(a) of the Small Business Act (15 U.S.C. 632(a)) and regulations under that section;

(B) any contract to be performed by contractor employees who are represented by a private sector labor union; or

(C) any contract related to special studies and analyses, construction services, architectural services, medical services, scientific and technical services related to (but not in support of) research and development, and depot-level maintenance and repair services.

(d) FUNCTIONS PERFORMED BY CONTRACTORS -

     (1) By the end of the pilot project, the Secretary of Defense shall have subjected a number of contractor employees to public-private competition through the standard competition process of Office of Management and Budget Circular A-76 that is approximately one-tenth of the number of civilian employees subject to public-private competition during the two fiscal years of the pilot project.

     (2) The Department of Defense shall, to the extent possible, subject to public-private competition those positions held by contractor employees that are associated with functions that are or have been performed at least in part by Federal employees at any time on or after October 1, 1980; and

     (3) Subsection (c)(2) shall also apply to this subsection.

(e) WAIVER - The implementation of the pilot project may be waived if --

(1) the written waiver is prepared by the Secretary of Defense;

(2) the written waiver is accompanied by a detailed determination that national security interests are so compelling as to preclude compliance with the competition requirement; and

(3) a copy of the waiver is published in the Federal Register within 10 working days after the date on which the waiver is invoked, although use of the waiver need not be delayed until its publication.

(f) REPORT- At the end of each fiscal year of the pilot program, the Inspector General of the Department of Defense shall submit to Congress a report on the results of the pilot program, including the extent to which the Department of Defense complied with the requirements of this section.

SEC. 852. PERFORMANCE OF CERTAIN WORK BY FEDERAL GOVERNMENT EMPLOYEES.

(a) GUIDELINES -

     (1) The Secretary of Defense shall prescribe guidelines and procedures for ensuring that consideration is given to using Federal Government employees on a regular basis for work that is performed under Department of Defense contracts and could be performed by Federal Government employees.

     (2) The guidelines and procedures prescribed under paragraph (1) shall provide for special consideration to be given to contracts that --

(A) have been performed by Federal Government employees at any time on or after October 1, 1980;

(B) are associated with the performance of inherently governmental functions;

(C) were not awarded on a competitive basis; or

(D) have been determined by a contracting officer to be poorly performed due to excessive costs or inferior quality.

(b) NEW REQUIREMENTS -

     (1) No public-private competition may be required under Office of Management and Budget Circular A-76 or any other provision of law or regulation before the performance of a new requirement by Federal Government employees commences, the performance by Federal Government employees of work pursuant to subsection (a) commences, or the scope of an existing activity performed by Federal Government employees is expanded. Office of Management and Budget Circular A-76 shall be revised to ensure that the heads of all Federal agencies give fair consideration to the performance of new requirements by Federal Government employees.

     (2) The Secretary of Defense shall, to the maximum extent practicable, ensure that Federal Government employees are fairly considered for the performance of new requirements, with special consideration given to new requirements that include functions that --

(A) are similar to functions that have been performed by Federal Government employees at any time on or after October 1, 1980; or

(B) are associated with the performance of inherently governmental functions.

(c) USE OF FLEXIBLE HIRING AUTHORITY - The Secretary shall include the use of the flexible hiring authority available through the National Security Personnel System in order to facilitate performance by Federal Government employees of new requirements and work that is performed under Department of Defense contracts.

(d) INSPECTOR GENERAL REPORT - Not later than 180 days after the enactment of this Act, the Inspector General of the Department of Defense shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the compliance of the Secretary of Defense with the requirements of this section.

(e) DEFINITIONS- In this section:

(1) The term `National Security Personnel System' means the human resources management system established under the authority of section 9902 of title 5, United States Code.

(2) The term `inherently governmental function' has the meaning given that term in section 5 of the Federal Activities Inventory Reform Act of 1998 (Public Law 105-270; 112 Stat. 2384; 31 U.S.C. 501 note).

This section would establish a joint program office to manage the Department of Defense's myriad of battlefield management command and control systems to provide a common operational picture of the battlefield for all users. The committee understands that the Department has struggled for many years to develop and field command, control, communications, computers, and intelligence, surveillance, and reconnaissance (C4ISR) systems that interoperate effectively across all of the military services. A primary reason for this struggle is that the military services and other defense agencies plan and acquire systems to meet their own operational requirements, and not necessarily joint warfighting concepts.

The committee notes that the Department recently drafted a Joint Battle Management Command and Control Roadmap that is intended to lead to a more integrated, interoperable set of command and control and battlespace awareness capabilities for joint force commanders to use in military operations. The committee understands that initially the United States Joint Forces Command (JFCOM) was given oversight and directive authority for the Family of Interoperable Operational Pictures (FIOP), which will eventually integrate air, ground, maritime, and possibly space into one common operational picture.

Unfortunately, JFCOM estimates that it will take up to two years to develop a joint architecture, by which time, several hundred million dollars will have been spent on the single integrated air picture program, while the other supporting systems that the FIOP is intended to integrate will also be in various stages of development under the funding and direction of the military services.

Furthermore, while JFCOM has authority to direct the FIOP development efforts, the actual program implementation will be done by the military services under separate program offices. The committee is deeply troubled by the lack of joint responsibility over program implementation that may jeopardize the possibility of achieving standardization and integration among these systems, and is concerned that funding for the various programs is the responsibility of the military services.

The House bill contained a provision (sec 333) that would establish a joint program office to improve interoperability of battlefield management command and control systems.

The Senate amendment contained no similar provision.

The House recedes.

The conferees note that the Department of Defense has struggled for many years to develop and field command, control, communications, computers, and intelligence, surveillance, and reconnaissance systems that interoperate effectively across all of the military services and with coalition forces. The conferees note that there are a number of current efforts throughout the Department to develop portions of a ``Family of Interoperable Operating Pictures'', including the Single Integrated Air Picture, the Single Integrated Ground Picture, the Single Integrated Maritime Picture, the Special Operations Forces Picture, and the Single Integrated Space Picture. The conferees are concerned that without proper management, oversight, and coordination, as well as a single over-arching architecture that controls all systems, these efforts could become redundant and wasteful, and lack the interoperability required to effectively support joint warfighting missions.

Therefore, the conferees direct the Secretary of Defense to provide to the congressional defense committees a report no later than March 15, 2005 that identifies all funds for research and procurement activities related to the development of joint battlefield management command and control systems in the Department.

This report shall also include baselines for the Family of Interoperable Pictures, including a baseline for the Single Integrated Air Picture, the Single Integrated Ground Picture, the Single Integrated Maritime Picture, the Special Operations Forces Picture, and the Single Integrated Space Picture. The baselines shall be consistent with those required for major defense acquisition programs under Department regulations, and shall include a description of the overall systems architecture, specific milestones and performance measures for each developmental block, the schedule for achieving those performance goals, the estimated total and annual costs to meet that schedule, and a description of the management approach being used to achieve program goals.

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

     `Sec. 2223a. Acquisition of information technology equipment integral to a weapon or a weapon system

`(a) RESPONSIBILITIES OF ACQUISITION EXECUTIVES- The acquisition executive of each military department shall be responsible for ensuring that, with regard to a weapon or weapon system acquired or to be acquired by or for that military department--

     `(1) the acquisition of information technology equipment that is integral to the 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 the weapon or weapon system; 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).

`(b) BOARD OF SENIOR ACQUISITION OFFICIALS -

     (1) The Secretary of Defense shall establish a board of senior acquisition officials to develop policy and provide oversight on the implementation of the requirements of this section and chapter 113 of title 40 in procurements of information technology equipment that is integral to a weapon or a weapon system.

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

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

`(B) The acquisition executives of the military departments.

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

     `(3) Any question regarding whether information technology equipment is integral to a weapon or weapon system shall be resolved by the board in accordance with policies established by the board.

`(c) INAPPLICABILITY OF OTHER LAWS- The following provisions of law do not apply to information technology equipment that is integral to 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).

`(d) 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 information technology equipment integral to a weapon or a weapon system.'.

(b) CONFORMING AMENDMENTS- Section 2223 of such title is amended--

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

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

`(c) EQUIPMENT INTEGRAL TO A WEAPON OR WEAPON SYSTEM -

     (1) In the case of information technology equipment that is integral to a weapon or weapon system acquired or to be acquired by or for a military department, the responsibilities under this section shall be performed by the acquisition executive of that military department pursuant to the guidance and oversight of the board of senior acquisition officials established under section 2223a(b) of this title.

     `(2) In this subsection, the term `acquisition executive' has the meaning given said term in section 2223a(d) of this title.'.

The Senate amendment contained a provision (sec. 801) that would require that the Clinger-Cohen Act requirements as applied to weapons and weapon systems be administered by senior acquisition executives of the three military services and overseen by a board of senior acquisition officials.

The House bill contained no similar provision.

The Senate recedes.

The Clinger-Cohen Act (40 U.S.C. 113) establishes requirements for capital planning, investment control, and performance and results-based management processes in the acquisition of information technology. While the Clinger-Cohen Act designates that the Chief Information Officer (CIO) is responsible for information technology in general, the Act does not specify who within the Department of Defense is responsible for administering these requirements for information technology embedded in major weapon systems. The Department's current practice is to administer the requirements of the Clinger-Cohen Act through the Department's CIO, even for information technology embedded in major weapon systems that are acquired by senior acquisition executives of the military departments. This approach raises the possibility of overlapping responsibilities and inefficient and/or duplicative procedures for the acquisition of information technology embedded in major weapon systems.

Therefore, the conferees direct the Secretary of Defense to review the Department's current approach to implementing the requirements of the Clinger-Cohen Act with respect to information technology embedded in major weapon systems; the conferees also direct the Secretary to identify any overlapping responsibilities and inefficient and/or duplicative procedures arising from possible dual responsibilities of the CIO and senior acquisition executives for the acquisition of such information systems. The conferees further direct the Secretary to report to the congressional defense committees and the Committee on Governmental Affairs of the Senate and the Committee on Governmental Reform of the House of Representatives no later than June 15, 2005, on the Department's strategy for addressing any such overlapping responsibilities and inefficient and/or duplicative procedures, including any legislative changes that the Secretary may choose to recommend.

`(d) ISSUES RELATING TO SMALL BUSINESSES- In developing recommendations under subsection (c)(2), the panel shall--

     `(1) consider the effects of its recommendations on small business concerns; and

     `(2) include any recommended modifications of laws, regulations, and policies that the panel considers necessary to enhance and ensure competition in contracting that affords small business concerns meaningful opportunity to participate in Federal Government contracts.'.

(b) REVISION AND EXTENSION OF REPORTING REQUIREMENT- Section 1423(d) of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136; 117 Stat. 1669; 41 U.S.C. 405 note) is amended--

     (1) by striking `one year after the establishment of the panel' and inserting `one year after the date of the enactment of the National Defense Authorization Act for Fiscal Year 2005';

     (2) by striking `Services and' both places it appears and inserting `Services,';

     (3) by inserting `, and Small Business' after `Government Reform'; and

     (4) by inserting `, and Small Business and Entrepreneurship' after `Governmental Affairs'.

The Senate amendment contained a provision (sec. 805) that would revise and extend the authority for the advisory panel on the review of government procurement laws and regulations established by section 1423 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136).

The House bill contained no similar provision.

The Senate recedes.

`(k) NOTIFICATION REQUIRED WHEN CERTAIN EXCEPTIONS APPLIED-

(1) Funds appropriated or otherwise available to the Department of Defense may not be used to enter into a contract to procure an item described in subsection (b) pursuant to an exception set forth in subsection (c) or (e) until --

     `(A) a notification of the intent to apply such exception is submitted to Congress and posted on the website maintained by the General Services Administration known as FedBizOpps.gov (or any successor site); and

     `(B) a period of 15 days has expired after the date on which such notification is so submitted and published.

`(2) In any case in which the Secretary of Defense or the Secretary of the military department concerned intends to apply or applies the exception set forth in subsection (d)(1), the Secretary concerned shall submit to Congress a notification of such intent or such application during the period beginning six months before the date of application of such exception and ending six months after the date of application of such exception.'.

(b) CLOTHING MATERIALS AND COMPONENTS COVERED- Subsection (b) of section 2533a of title 10, United States Code, is amended in paragraph (1)(B) by inserting before the semicolon the following: `and the materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with, clothing (and the materials and components thereof)'.

The House bill contained a provision (sec. 812) that would amend section 2533a of title 10, United States Code, also known as the Berry Amendment, to require the Secretary of Defense to notify Congress and the public when the Secretary exercises a waiver and describe certain covered items as clothing.

The Senate amendment contained no similar provision.

The House recedes.

(1) Cost-cutting measures.

(2) Retraining programs.

(3) Technology development.

(4) Plant upgrades.

(c) APPLICATION- A grant may not be awarded under this section unless an application is submitted to, and approved by, the Secretary. Such an application--

     (1) shall be submitted by a qualified defense contractor group in such form and manner as the Secretary may require; and

     (2) shall contain--

(A) a description of the strategy proposed for avoiding the outsourcing of at least 10 jobs in the performance of a defense contract by the defense contractor concerned; and

(B) such other information as the Secretary may require.

(d) DEFINITIONS- In this section:

     (1) The term `qualified defense contractor group', with respect to a defense contractor, is a group or person representing--

(A) management of the contractor;

(B) a labor organization that represents employees of the contractor; or

(C) employees of the contractor.

     (2) The term `outsourcing', with respect to a defense contract, includes the performance outside the United States of work under the contract.

(e) FEDERAL SHARE- The Federal share of the costs of the strategy carried out with a grant under this section may not exceed 50 percent.

(f) USE OF DEFENSE INDUSTRIAL CAPABILITIES FUND FOR GRANTS-

     (1) Notwithstanding section 814(c) of the National Defense Authorization Act for Fiscal Year 2004 (P.L. 108-136; 117 Stat. 1545), amounts in the Defense Industrial Base Capabilities Fund may be used for grants under this section.

     (2) For fiscal year 2005, up to $50,000,000 of amounts available in such Fund may be used to carry out this section.

(g) AUTHORIZATION OF FUNDS- There are authorized to be appropriated to the Defense Industrial Base Capabilities Fund $50,000,000 for purposes of providing grants under this section.

The House bill contained a provision (sec. 814) that would authorize the Secretary of Defense to award grants to qualified defense contractors in order to assist the contractor in avoiding the outsourcing of jobs.

The Senate amendment contained no similar provision.

The House recedes.

The conferees recognize that improving competitiveness in the defense industrial base is an effective method of retaining domestic defense jobs and reducing the pressure to outsource jobs.

The conferees recommend that the Secretary of Defense establish a program to encourage qualified defense contractors to implement cost reduction strategies that would improve competitiveness to avoid the outsourcing of jobs. Examples of such strategies could include retraining employees, plant upgrades, technology development, and other production cost-cutting measures

The House bill contained a provision (sec. 815) that would require the Secretary of Defense to grant preferences to freight forwarder companies owned and controlled by U.S. citizens that offer fair and reasonable rates in the award of transportation service contracts for transportation services to, from, or within Iraq or Afghanistan.

The Senate amendment contained no similar provision.

The House recedes.

(A) to monitor socioeconomic data concerning purchases made by means of purchase cards or credit cards issued for use in transactions on behalf of the Federal Government; and

(B) to encourage the placement of a fair portion of such purchases with small businesses consistent with governmentwide goals for small business prime contracting established under section 15(g) of the Small Business Act (15 U.S.C. 644(g)).

(b) SIMPLIFIED ACQUISITION THRESHOLD DEFINED- In this section, the term `simplified acquisition threshold' has the meaning given such term in section 4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11)).

The Senate amendment contained a provision (sec. 816) that would express the sense of the Senate that the thresholds for the requirement for the reservation of contracts for small businesses and the use of simplified acquisition procedures should be adjusted in the same amount when adjusting these thresholds for inflation.

The House bill contained no similar provision.

The Senate recedes.

The Senate amendment contained a provision (sec. 821) that would extend section 2323 of title 10, United States Code, for three years.

The House bill contained no similar provision.

The Senate recedes.

The conferees note that section 2323, which establishes a 5 percent goal for Department of Defense contracting with small disadvantaged businesses and certain institutions of higher education, would continue to be effective until September 2006, and that a decision on whether to extend this authority will be deferred to later legislation.

     (1) Effective October 1, 2005, the number of defense acquisition and support personnel in the Department of Defense may not exceed 95 percent of the baseline number.

     (2) For purposes of paragraph (1), the baseline number is the number of defense acquisition and support personnel as of October 1, 2004.

     (3) All determinations of personnel strengths for purposes of this section shall be on the basis of full-time equivalent positions.

(b) GAO STUDY AND REPORT ON DEFENSE ACQUISITION AND SUPPORT PERSONNEL-

     (1) The Comptroller General shall conduct a study of Department of Defense management of defense acquisition and support personnel. The study shall include --

(A) an analysis of the number and structure of defense acquisition and support personnel; and

(B) an assessment of the size, mission, composition, and projected workload requirements of defense acquisition and support personnel.

     (2) The Comptroller General shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the results of the study conducted under this subsection not later than March 1, 2005.

(c) DEFENSE ACQUISITION UNIVERSITY STUDY AND REPORT ON DEFENSE ACQUISITION AND SUPPORT PERSONNEL -

     (1) The Defense Acquisition University shall conduct a study of all the training programs offered to defense acquisition and support personnel.

     (2) The Defense Acquisition University shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the results of the study conducted under this subsection not later than March 1, 2005. The report shall include --

(A) the number of individuals currently certified within the field they are working in; and

(B) recommendations on how to improve education and productivity for defense acquisition and support personnel, including recommendations for additional training program requirements.

(d) DEFINITION - In this section, the term `defense acquisition and support personnel' means members of the Armed Forces and civilian personnel (other than civilian personnel who are employed at a maintenance depot) who are assigned to, or employed in, acquisition organizations of the Department of Defense (as specified in Department of Defense Instruction numbered 5000.58, dated January 14, 1992), and any other organization that, as determined by the Secretary, has acquisition as its predominant mission.

SEC. 841. LIMITATION AND REINVESTMENT AUTHORITY RELATING TO REDUCTION OF THE DEFENSE ACQUISITION AND SUPPORT WORKFORCE.

(a) LIMITATION- Notwithstanding any other provision of law, the defense acquisition and support workforce may not be reduced, during fiscal years 2005, 2006, and 2007, below the level of that workforce as of September 30, 2003, determined on the basis of full-time employee equivalence, except as may be necessary to strengthen the defense acquisition and support workforce in higher priority positions in accordance with this section.

(b) INCREASE AND REALIGNMENT OF WORKFORCE-

     (1)

(A) During fiscal years 2005, 2006, and 2007, the Secretary of Defense shall increase the number of persons employed in the defense acquisition and support workforce as follows:

(i) During fiscal year 2005, to 105 percent of the baseline number (as defined in subparagraph (B)).

(ii) During fiscal year 2006, to 110 percent of the baseline number.

(iii) During fiscal year 2007, to 115 percent of the baseline number.

(B) In this paragraph, the term `baseline number', with respect to persons employed in the defense acquisition and support workforce, means the number of persons employed in such workforce as of September 30, 2003 (determined on the basis of full-time employee equivalence).

(C) The Secretary of Defense may waive a requirement in subparagraph (A) and, subject to subsection (a), employ in the defense acquisition and support workforce a lesser number of employees if the Secretary determines and certifies to the congressional defense committees that the cost of increasing such workforce to the larger size as required under that subparagraph would exceed the savings to be derived from the additional oversight that would be achieved by having a defense acquisition and support workforce of such larger size.

     (2) During fiscal years 2005, 2006, and 2007, the Secretary of Defense may realign any part of the defense acquisition and support workforce to support reinvestment in other, higher priority positions in such workforce.

(c) HIGHER PRIORITY POSITIONS- For the purposes of this section, higher priority positions in the defense acquisition and support workforce include the following positions:

     (1) Positions the responsibilities of which include drafting performance-based work statements for services contracts and overseeing the performance of contracts awarded pursuant to such work statements.

     (2) Positions the responsibilities of which include conducting spending analyses, negotiating company-wide pricing agreements, and taking other measures to reduce contract costs.

     (3) Positions the responsibilities of which include reviewing contractor quality control systems, assessing and analyzing quality deficiency reports, and taking other measures to improve product quality.

     (4) Positions the responsibilities of which include effectively conducting public-private competitions in accordance with Office of Management and Budget Circular A-76.

     (5) Any other positions in the defense acquisition and support workforce that the Secretary of Defense identifies as being higher priority positions that are staffed at levels not likely to ensure efficient and effective performance of all of the responsibilities of those positions.

(d) STRATEGIC ASSESSMENT AND PLAN-

     (1) The Secretary of Defense shall--

(A) assess the extent to which the Department of Defense can recruit, retain, train, and provide professional development opportunities for acquisition professionals over the 10-fiscal year period beginning with fiscal year 2005; and

(B) develop a human resources strategic plan for the defense acquisition and support workforce that includes objectives and planned actions for improving the management of such workforce.

     (2) The Secretary shall submit to Congress, not later than April 1, 2005, a report on the progress made in--

(A) completing the assessment required under paragraph (1); and

(B) completing and implementing the strategic plan required under such paragraph.

(e) DEFENSE ACQUISITION AND SUPPORT WORKFORCE DEFINED- In this section, the term `defense acquisition and support workforce' means members of the Armed Forces and civilian personnel who are assigned to, or are employed in, an organization of the Department of Defense that has acquisition as its predominant mission, as determined by the Secretary of Defense.

The House bill contained a provision (sec. 823) that would require a 5 percent reduction in the number of defense acquisition and support personnel in the Department of Defense on or before October 1, 2005.

The Senate amendment contained a provision (sec. 841) that would require a 15 percent increase in the defense acquisition and support workforce during fiscal years 2005 through 2007.

The conference report does not include either provision.

The House bill contained a provision (sec. 824) that would require the Secretary of Defense to provide information on contracts and task or delivery orders to the chairmen or ranking members of the Committees on Armed Services of the Senate and the House of Representatives, within 14 days of the request.

The Senate amendment contained no similar provision.

The House recedes.

The House bill contained a provision (sec. 825) that would require that sureties be treated in the same manner as financing institutions in cases of contractor default.

The Senate amendment contained no similar provision.

The House recedes.

`(G) would create jobs in the United States.'.

(b) REQUIREMENT TO INCLUDE CREATION OF JOBS IN UNITED STATES AS EVALATION FACTOR -

     (1) Section 2305(a)(3)(A) of title 10, United States Code, is amended --

(A) by striking `and' at the end of clause (ii);

(B) by redesignating clause (iii) as clause (iv); and

(C) by inserting after clause (ii) the following new clause:

`(iii) shall include the creation of jobs in the United States as an evaluation factor that must be considered in the evaluation of proposals; and'.

     (2) Section 2305(a)(3)(B) of such title is amended by striking `clause (iii)' and inserting `clause (iv)'.

The House bill contained a provision (sec. 826) that would require that the creation of jobs in the United States be used as an evaluation factor in defense procurements.

The Senate amendment contained no similar provision.

The House recedes.

     (1) The Commission shall be composed of 12 members appointed by the President.

     (2) The members of the Commission shall include --

(A) persons with extensive experience and national reputations for expertise in the defense industry, commercial industries that support the defense industry, and the economics, finance, national security, international trade, or foreign policy areas; and

(B) persons who are representative of labor organizations associated with the defense industry, and persons who are representative of small business concerns or organizations of small business concerns that are involved in Department of Defense contracting and other Federal Government contracting.

     (3) The appointment of the members of the Commission under this subsection shall be made not later than March 1, 2005.

     (4) Members shall be appointed for the life of the Commission. A vacancy in the Commission shall not affect its powers, but shall be filled in the same manner in which the original appointment was made.

     (5) The President shall designate one member of the Commission to serve as the Chairman of the Commission.

(c) MEETINGS-

     (1) The Commission shall meet at the call of the Chairman.

     (2) A majority of the members of the Commission shall constitute a quorum, but a lesser number may hold hearings.

(d) DUTIES-

     (1) The Commission shall --

(A) study the issues associated with the future of the national technology and industrial base in the global economy, particularly with respect to its effect on United States national security; and

(B) assess the future ability of the national technology and industrial base to attain the national security objectives set forth in section 2501 of title 10, United States Code.

     (2) In carrying out the study and assessment under paragraph (1), the Commission shall consider the following matters:

(A) Existing and projected future capabilities of the national technology and industrial base.

(B) The impact on the national technology and industrial base of civil-military integration and the growing dependence of the Department of Defense on the commercial market for defense products and services.

(C) Any current or projected shortages of a critical technology (as defined in section 2500(6) of title 10, United States Code), or the raw materials necessary for the production of such technology, that could adversely affect the national security of the United States.

(D) The effects of domestic source restrictions on the strength of the national technology and industrial base.

(E) The effects of the policies and practices of United States allies and trading partners on the national technology and industrial base.

(F) The effects on the national technology and industrial base of laws and regulations related to international trade and the export of defense technologies and dual-use technologies.

(G) The adequacy of programs that support science and engineering education, including programs that support defense science and engineering efforts at institutions of higher learning, with respect to meeting the needs of the national technology and industrial base.

(H) The implementation of policies and planning required under subchapter II of chapter 148 of title 10, United States Code, and other provisions of law designed to support the national technology and industrial base.

(I) The role of the Manufacturing Technology program, other Department of Defense research and development programs, and the utilization of the authorities of the Defense Production Act of 1950 to provide transformational breakthroughs in advanced manufacturing technologies and processes that ensure the strength and productivity of the national technology and industrial base.

(J) The role of small business concerns in strengthening the national technology and industrial base.

(e) REPORT- Not later than March 1, 2007, the Commission shall submit a report on its activities to the President and Congress. The report shall include the following matters:

     (1) The findings and conclusions of the Commission.

     (2) The recommendations of the Commission for actions by Federal Government officials to support the maintenance of a robust national technology and industrial base in the 21st century.

     (3) The recommendations of the Commission for addressing shortages in critical technologies, and shortages of raw materials necessary for the production of critical technologies, that could adversely affect the national security of the United States.

     (4) Any recommendations for legislation or changes in regulations to support the implementation of the findings of the Commission.

     (5) A discussion of appropriate measures to implement the recommendations of the Commission.

(f) ADMINISTRATIVE REQUIREMENTS AND AUTHORITIES -

    (1) The Director of the Office of Management and Budget shall ensure that the Commission is provided such administrative services, facilities, staff, and other support services as may be necessary for the Commission to carry out its duties. Expenses of the Commission shall be paid out of funds available to the Director.

     (2) The Commission may hold such hearings, sit and act at such times and places, take such testimony, and receive such evidence as the Commission considers advisable to carry out the purposes of this section.

     (3) The Commission may secure directly from any Federal department or agency such information as the commission considers necessary to carry out the provisions of this section. Upon a request of the Chairman of the Commission, the head of such department or agency shall furnish such information to the Commission.

     (4) The Commission may use the United States mails in the same manner and under the same conditions as other departments and agencies of the Federal Government.

(g) PERSONNEL MATTERS-

     (1) Members of the Commission shall serve without compensation for their service on the Commission, except that each member of the Commission who is not an officer or employee of the United States shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the Commission.

     (2) Section 3161 of title 5, United States Code, shall apply to the Commission, except that--

(A) members of the Commission shall not be entitled to pay for services under subsection (d) of such section; and

(B) subsection (b)(2) of such section shall not apply to the employees of the Commission.

(h) APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT- The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Commission.

(i) TERMINATION- The Commission shall terminate 30 days after the date on which the Commission submits its report under subsection (e).

(j) DEFINITION OF NATIONAL TECHNOLOGY AND INDUSTRIAL BASE- In this section, the term `national technology and industrial base' has the meaning given such term in section 2500 of title 10, United States Code.

The Senate amendment contained a provision (sec. 831) that would require the President to establish a commission to assess the future of the national technology and industrial base as defined by section 2500 of title 10, United States Code.

The House bill contained no similar provision.

The Senate recedes

`(1) in a foreign country that has a Declaration of Principles with the United States;

`(2) in a foreign country that has a Declaration of Principles 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 Declaration of Principles 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 Declaration of Principles 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 Declaration of Principles with the United States; 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.

     `(i) DECLARATION OF PRINCIPLES -

(1) In this section, the term `Declaration of Principles' means a written understanding (including any Statement of Principles) between the Department of Defense and its counterpart in a foreign country signifying a cooperative relationship between the Department and its counterpart to standardize or make interoperable defense equipment used by the armed forces and the armed forces of the foreign country across a broad spectrum of defense activities, including --

     '(A) harmonization of military requirements and acquisition processes;

     `(B) security of supply;

     `(C) export procedures;

     `(D) security of information;

     `(E) ownership and corporate governance;

     `(F) research and development;

     `(G) flow of technical information; and

     `(H) defense trade.

`(2) A Declaration of Principles is underpinned by a memorandum of understanding or other agreement providing for the reciprocal procurement of defense items between the United States and the foreign country concerned without unfair discrimination in accordance with section 2531 of this title.'.

     (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.'.

The Senate amendment contained a provision (sec. 832) 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.

The Senate amendment contained a provision (sec. 833) that would require that no provision of this Act, or any amendment made by this Act, shall apply if the Secretary of Defense, in consultation with the Secretary of Commerce, the U.S. Trade Representative, and the Secretary of State determines that the application of the provision would be inconsistent with international trade agreements of the United States.

The House bill contained no similar provision.

The Senate recedes.

The Senate amendment contained a provision (sec. 834) that would repeal sections 812, 813, 814, and 821 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136).

The House bill contained no similar provision.

The Senate recedes.

(A) a determination of whether such function is an inherently governmental function, together with a discussion of the factual basis and rationale for that determination;

(B) an explanation of the basis for the decision to rely on a contractor to perform such function, including a discussion of the extent to which the Armed Forces lacked the expertise or manpower to perform that function using Armed Forces personnel;

(C) a description of the chain of command for the contractor performing such function, together with a discussion of the manner in which the United States Government or the Coalition Provisional Authority supervises and directs the contractor's performance of that function; and

(D) what sanctions are available to impose on any contractor employee who --

     (i) fails to comply with a requirement of law or regulation that applies to such employee in the performance of that function; or

     (ii) engages in other misconduct in the performance of that function.

     (3) An explanation of the legal status of contractor employees in the performance of such functions after the administration of the sovereign powers of Iraq is transferred from the Coalition Provisional Authority to a government of Iraq on June 30, 2004.

(c) COORDINATION- In the preparation of the report under this section, the Secretary of Defense shall coordinate, as appropriate, with the heads of any departments and agencies of the Federal Government that are involved in the procurement of services for the performance of functions described in subsection (a).

(d) ADDITIONAL CONGRESSIONAL RECIPIENTS- In addition to submitting the report under this section to the congressional defense committees, the Secretary of Defense shall also submit the report to the Select Committee on Intelligence of the Senate and the Permanent Select Committee on Intelligence of the House of Representatives.

The Senate amendment contained a provision (sec. 865) that would require the Secretary of Defense to report to the congressional defense committees on contractor performance of security, intelligence, law enforcement, and criminal justice functions in Iraq.

The House bill contained no similar provision.

The Senate recedes.

The conferees agree to include the intent of this provision in a related provision in this conference report.

The Senate amendment contained a provision (sec. 866) that would require the Secretary of Defense to carry out a study of commercial, off-the-shelf processes available to measure the quality of information technology, and to determine whether to accredit such a process for use in procurement of information technology and related services throughout the Department of Defense.

The House bill contained no similar provision.

The Senate recedes.

The Senate amendment contained a provision (sec. 869) that would require the Secretary of Defense to exercise existing authority to introduce life-cycle, cost-effective upgrades to federal assets through shared, energy savings contracting; demand management programs; and utility incentive programs.

The House bill contained no similar provision.

The Senate recedes.

(A) to preserve human capital and surge capability;

(B) to promote economic development and job creation;

(C) to generate cost savings; and

(D) to generate efficiencies that are comparable to or exceed the efficiencies that result from competitive sourcing carried out by the Department of Defense under the procedures applicable to competitive sourcing by the Department of Defense; and

     (2) identify areas within the Department of Defense in which transitional benefit corporations could be used to add value, reduce costs, and provide opportunities for beneficial use of employees and other resources that are displaced by competitive sourcing of the performance of activities and functions of the Department of Defense.

(d) TRANSITIONAL BENEFIT CORPORATION DEFINED - In this section, the term `transitional benefit corporation' means a corporation that facilitates the transfer of designated (usually underutilized) real estate, equipment, intellectual property, or other assets of the United States to the private sector in a process that enables employees of the United States in positions associated with the use of such assets to retain eligibility for Federal employee benefits and to continue to accrue those benefits.

The Senate amendment contained a provision (sec. 1029) that would require the Comptroller General to review the potential for use of transitional benefit corporations in connection with competitive sourcing of the performance of activities and functions of the Department of Defense.

The House amendment contained no similar provision.

The Senate recedes. The manner in which employee benefits are addressed in public-private competitions is addressed in a separate section of the conference report.

The House bill contained a provision (sec. 1042) that would require the Secretary of Defense to submit to the congressional defense committees, within 60 days of enactment of this Act, a report detailing the impact on military readiness and the defense industrial infrastructure of the elimination of the U.S. domestic firearms manufacturing base as a result of ongoing civil litigation.

The Senate amendment contained no similar provision.

The House recedes

The House bill contained a provision (sec. 1063) that would amend section 2710 of the Emergency Wartime Supplemental Appropriations Act, 2003 (Public Law 108-11), to clarify that the Secretary of Transportation is responsible for certifying whether an air carrier is effectively controlled by citizens of the United States.

The Senate amendment contained no similar provision.

The House recedes.

The Senate amendment contained a provision (sec. 1093) that would add additional reporting requirements to the report required under section 8138(b) of the Department of Defense Appropriations Act for Fiscal Year 2004 (Public Law 108-199).

The House bill contained no similar provision.

The Senate recedes.

     (1) The Secretary of Defense may not procure, by contract or otherwise, any goods or services from --

(A) any foreign person the Secretary of Defense determines has, with actual knowledge, on or after the date of the enactment of this Act, exported, transferred, or otherwise provided to governmental or nongovernmental entities of the People's Republic of China any item or class of items on the United States Munitions List (or any item or class of items that are identical, substantially identical, or directly competitive to an item or class of items on the United States Munitions List); and

(B) any foreign person the Secretary of Defense determines --

     (i) is a successor entity to a person referred to in paragraph (1);

     (ii) is a parent or subsidiary of a person referred to in paragraph (1); or

     (iii) is an affiliate of a person referred to in paragraph (1) if that affiliate is controlled in fact by such person.

     (2) The prohibition under paragraph (1) with respect to a foreign person shall last for a period of five years after a determination is made by the Secretary of Defense with respect to that person under paragraph (1)(A).

(c) PUBLIC AVAILABILITY OF LIST OF SANCTIONED PERSONS -

     (1) The Secretary of Defense shall annually publish in the Federal Register a current list of any foreign persons sanctioned under subsection (b). The removal of foreign persons from, and the addition of foreign persons to, the list shall also be so published.

     (2) The Secretary shall maintain the list published under paragraph (1) on the Internet website of the Department of Defense.

(d) REMOVAL FROM LIST OF SANCTIONED PERSONS - The Secretary of Defense may remove a person from the list of sanctioned persons referred to in subsection (c) only after the five-year prohibition period imposed under subsection (b) with respect to the person has expired.

(e) EXCEPTIONS-

     (1) Subsection (b) shall not apply --

(A) to contracts, or subcontracts under such contracts, in existence on the date of the enactment of this Act, including options under such contracts;

(B) if the Secretary of Defense determines in writing that the person to which the sanctions would otherwise be applied is a sole source supplier of the goods or services being procured, that the goods or services are essential, and that alternative sources are not readily or reasonably available;

(C) in the case of a contract for routine servicing and maintenance, if the Secretary of Defense determines in writing alternative sources for performing the contract are not readily or reasonably available; or

(D) if the Secretary of Defense determines in writing that goods or services proposed to be procured under the contract are essential to the national security of the United States.

     (2) Determinations under paragraph (1) shall be published in the Federal Register.

(f) DEFINITIONS- In this section:

     (1) The term `foreign person' has the meaning given the term in section 14 of the Iran and Libya Sanctions Act of 1996 (50 U.S.C. 1701).

     (2) The term `United States Munitions List' means the list referred to in section 38(a)(1) of the Arms Export Control Act (22 U.S.C. 2778(a)(1)).

The House bill contained a provision (sec. 1214) that would make it the policy of the United States to prevent destabilizing arms transfers to the People's Republic of China by denying Department of Defense procurement contracts to foreign companies that sell to China items similar to those found on the U.S. Munitions List. The provision would also require the Secretary of Defense to publish a list of such companies in the Federal Register.

The Senate amendment contained no similar provision.

The House recedes.