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

Subtitle A — Acquisition Policy and Management

NDAA Section

House Conference Report 110-477

SEC. 807. INVENTORIES AND REVIEWS OF CONTRACTS FOR SERVICES.

(a) Inventory Requirement- Section 2330a of title 10, United States Code, is amended--

(1) by redesignating subsection (d) as subsection (g);

(2) by striking subsection (c) and inserting the following:

`(c) Inventory- (1) Not later than the end of the third quarter of each fiscal year, the Secretary of Defense shall submit to Congress an annual inventory of the activities performed during the preceding fiscal year pursuant to contracts for services for or on behalf of the Department of Defense. The entry for an activity on an inventory under this subsection shall include, for the fiscal year covered by such entry, the following:

`(A) The functions and missions performed by the contractor.

`(B) The contracting organization, the component of the Department of Defense administering the contract, and the organization whose requirements are being met through contractor performance of the function.

`(C) The funding source for the contract under which the function is performed by appropriation and operating agency.

`(D) The fiscal year for which the activity first appeared on an inventory under this section.

`(E) The number of full-time contractor employees (or its equivalent) paid for the performance of the activity.

`(F) A determination whether the contract pursuant to which the activity is performed is a personal services contract.

`(G) A summary of the data required to be collected for the activity under subsection (a).

`(2) The inventory required under this subsection shall be submitted in unclassified form, but may include a classified annex.

`(d) Public Availability of Inventories- Not later than 30 days after the date on which an inventory under subsection (c) is required to be submitted to Congress, the Secretary shall--

`(1) make the inventory available to the public; and

`(2) publish in the Federal Register a notice that the inventory is available to the public.

`(e) Review and Planning Requirements- Within 90 days after the date on which an inventory is submitted under subsection (c), the Secretary of the military department or head of the Defense Agency responsible for activities in the inventory shall--

`(1) review the contracts and activities in the inventory for which such Secretary or agency head is responsible;

`(2) ensure that--

`(A) each contract on the list that is a personal services contract has been entered into, and is being performed, in accordance with applicable statutory and regulatory requirements;

`(B) the activities on the list do not include any inherently governmental functions; and

`(C) to the maximum extent practicable, the activities on the list do not include any functions closely associated with inherently governmental functions;

`(3) identify activities that should be considered for conversion--

`(A) to performance by civilian employees of the Department of Defense pursuant to section 2463 of this title; or

`(B) to an acquisition approach that would be more advantageous to the Department of Defense; and

`(4) develop a plan to provide for appropriate consideration of the conversion of activities identified under paragraph (3) within a reasonable period of time.

`(f) Rule of Construction- Nothing in this section shall be construed to authorize the performance of personal services by a contractor except where expressly authorized by a provision of law other than this section.'; and

(3) by adding at the end of subsection (g) (as so redesignated) the following new paragraphs:

`(3) FUNCTION CLOSELY ASSOCIATED WITH INHERENTLY GOVERNMENTAL FUNCTIONS- The term `function closely associated with inherently governmental functions' has the meaning given that term in section 2383(b)(3) of this title.

`(4) INHERENTLY GOVERNMENTAL FUNCTIONS- The term `inherently governmental functions' has the meaning given that term in section 2383(b)(2) of this title.

`(5) PERSONAL SERVICES CONTRACT- The term `personal services contract' means a contract under which, as a result of its terms or conditions or the manner of its administration during performance, contractor personnel are subject to the relatively continuous supervision and control of one or more Government officers or employees, except that the giving of an order for a specific article or service, with the right to reject the finished product or result, is not the type of supervision or control that makes a contract a personal services contract.'.

(b) Effective Date-

(1) The amendments made by subsection (a) shall be effective upon the date of the enactment of this Act.

(2) The first inventory required by section 2330a(c) of title 10, United States Code, as added by subsection (a), shall be submitted not later than the end of the third quarter of fiscal year 2008.

The House bill contained a provision (sec. 326(b)) that would require the Secretary of Defense to establish an inventory of work performed by contractors.

The Senate amendment contained a provision (sec. 845) that would require the secretary of each military department and the head of each defense agency to maintain an inventory of activities performed pursuant to contracts for services based on cost or time of performance.

The House recedes with an amendment that would codify a requirement for the Secretary of Defense to maintain an annual inventory of activities performed pursuant to contracts for services for or on behalf of the Department of Defense. The provision would require the secretaries of the military departments and the heads of defense agencies to conduct certain review and planning activities on the basis of the annual inventories.

House Armed Services Committee Report 110-146

SECTION 326--GUIDELINES ON INSOURCING NEW AND CONTRACTED OUT FUNCTIONS

This section would require the Under Secretary of Defense for Personnel and Readiness to develop and implement guidance to provide managers within the Department of Defense (DOD) and the military services with the flexibility to consider using federal civilian employees for work that is new or currently being performed by contractors in certain circumstances. The guidance must be developed within 60 days after enactment and no public-private competition studies could be conducted until such guidance is issued. The section also would require the Department to establish an inventory of the functions being performed by contractors. Within 90 days after date of enactment, the DOD Inspector General would be required to provide an assessment to the congressional defense committees of the implementation of the guidance and the establishment of the inventory.

Senate Armed Services Committee Report 110-77

The committee recommends a provision that would require the secretary of each military department and the head of each defense agency to maintain an inventory of activities performed pursuant to contracts for services (other than contracts that provide a fixed price for specific tasks to be performed). Within a reasonable time after an inventory is compiled, the military department or defense agency compiling the inventory would be required to review the inventory and develop a plan to ensure that the activities listed are performed in a manner consistent with the interests of the Department of Defense (DOD) and the taxpayers.

Section 802 of the National Defense Authorization Act for Fiscal Year 2002 (Public Law 107-107) required DOD to conduct spending analyses of its purchases of contract services. As explained in the committee's report on this provision: `[T]he Department has never conducted a comprehensive spending analysis of its services contracts and has made little effort to leverage its buying power, improve the performance of its services contractors, rationalize its supplier base, or otherwise ensure that its dollars are well spent.' Five years later, the Department's expenditures for contract services have nearly doubled, but DOD still has not conducted a comprehensive analysis of its spending on these services. The specific criteria and timelines established in this provision for the inventory and review of activities performed by contractors would ensure that such analyses are conducted.

The committee notes that DOD and other federal agencies are already required to maintain inventories of activities performed by federal employees and to review those inventories and develop plans to conduct public-private competitions for appropriate activities on those lists. The provision recommended by the committee would require the Department to develop a comparable inventory, and conduct a comparable review and planning effort, for activities performed for the Department by service contractors.