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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. 808. INDEPENDENT MANAGEMENT REVIEWS OF CONTRACTS FOR SERVICES.

(a) Guidance and Instructions- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall issue guidance, with detailed implementation instructions, for the Department of Defense to provide for periodic independent management reviews of contracts for services. The independent management review guidance and instructions issued pursuant to this subsection shall be designed to evaluate, at a minimum--

(1) contract performance in terms of cost, schedule, and requirements;

(2) the use of contracting mechanisms, including the use of competition, the contract structure and type, the definition of contract requirements, cost or pricing methods, the award and negotiation of task orders, and management and oversight mechanisms;

(3) the contractor's use, management, and oversight of subcontractors;

(4) the staffing of contract management and oversight functions; and

(5) the extent of any pass-throughs, and excessive pass-through charges (as defined in section 852 of the John Warner National Defense Authorization Act for Fiscal Year 2007), by the contractor.

(b) Additional Subject of Review- In addition to the matters required by subsection (a), the guidance and instructions issued pursuant to subsection (a) shall provide for procedures for the periodic review of contracts under which one contractor provides oversight for services performed by other contractors. In particular, the procedures shall be designed to evaluate, at a minimum--

(1) the extent of the agency's reliance on the contractor to perform acquisition functions closely associated with inherently governmental functions as defined in section 2383(b)(3) of title 10, United States Code; and

(2) the financial interest of any prime contractor performing acquisition functions described in paragraph (1) in any contract or subcontract with regard to which the contractor provided advice or recommendations to the agency.

(c) Elements- The guidance and instructions issued pursuant to subsection (a) shall address, at a minimum--

(1) the contracts subject to independent management reviews, including any applicable thresholds and exceptions;

(2) the frequency with which independent management reviews shall be conducted;

(3) the composition of teams designated to perform independent management reviews;

(4) any phase-in requirements needed to ensure that qualified staff are available to perform independent management reviews;

(5) procedures for tracking the implementation of recommendations made by independent management review teams; and

(6) procedures for developing and disseminating lessons learned from independent management reviews.

(c) Reports-

(1) REPORT ON GUIDANCE AND INSTRUCTION- Not later than 270 days after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees a report setting forth the guidance and instructions issued pursuant to subsection (a).

(2) GAO REPORT ON IMPLEMENTATION- Not later than two years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to the congressional defense committees a report on the implementation of the guidance and instructions issued pursuant to subsection (a).

The Senate amendment contained a provision (sec. 847) that would require the Secretary of Defense to issue guidance to provide for independent management reviews of contracts for services.

The House bill contained no similar provision.

The House recedes with an amendment that would extend the amount of time for the Secretary to issue the required guidance and add additional matters to be addressed in the guidance. In addition to the matters required in the Senate provision, the independent management reviews would be required to specifically address issues raised by contracts under which an agency uses one contractor to perform program management and other acquisition services with regard to services performed by other contractors.

The conferees note the military services and defense agencies are beginning to rely on a single contractor to oversee program management of large services contracts, in a manner similar to that of the `lead systems integrator' concept on hardware programs.

For example, the conferees understand that the program structure for the Defense Logistics `tire privatization' program places extensive control for the management, supply, and distribution of military tires into the hands of a single contractor. Similarly, the Army's Warfighter Field Operations Customer Support (Warfighter FOCUS) consolidates several existing contracts for training aids, simulators, and ranges used by the active, reserve, and Guard components of the Army into a single contract for life cycle support to be managed by a single large prime contractor over a 10 year period.

The conferees are concerned that the trend toward large single contracts for the procurement of services may undermine competition and result in unequal access to information about future government needs. The conferees expect the Department of Defense to review these issues and take appropriate action to ensure that, to the extent that the Department continues to rely upon such contracts, they do not result in the exclusion or unequal treatment of competing contractors.