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

Subtitle B — Provisions Relating to Major Defense Acquisition Programs

NDAA Section

House Conference Report 110-477

SEC. 814. CLARIFICATION OF SUBMISSION OF COST OR PRICING DATA ON NONCOMMERCIAL MODIFICATIONS OF COMMERCIAL ITEMS.

(a) Measurement of Percentage at Contract Award- Section 2306a(b)(3)(A) of title 10, United States Code, is amended by inserting after `total price of the contract' the following: `(at the time of contract award)'.

(b) Harmonization of Thresholds for Cost or Pricing Data- Section 2306a(b)(3)(A) of title 10, United States Code, is amended by striking `$500,000' and inserting `the amount specified in subsection (a)(1)(A)(i), as adjusted from time to time under subsection (a)(7),'.

The House bill contained a provision (sec. 812) that would clarify certain thresholds in the Truth in Negotiations Act (10 U.S.C. 2306a).

The Senate amendment contained a similar provision (sec. 822(c)).

The Senate recedes with a technical amendment.

House Armed Services Committee Report 110-146

SECTION 812--CLARIFICATION OF SUBMISSION OF COST OR PRICING DATA ON NONCOMMERCIAL MODIFICATIONS OF COMMERCIAL ITEMS

This section would amend section 2306a of title 10, United States Code, to align two thresholds under the Truth in Negotiations Act (10 U.S.C. 2306a). The Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (Public Law 108-375) required that procurements involving a commercial item with noncommercial modifications totaling more than $0.5 million comply with the requirements for submission of cost or pricing data under the Truth in Negotiations Act (10 U.S.C. 2306a). In addition, it required that procurements involving a commercial item with noncommercial modifications totaling more than five percent of the total value of the item require the submission of cost or pricing data. The thresholds in the Truth in Negotiations Act (10 U.S.C. 2306a) are adjusted for inflation, but the requirement relating to noncommercial modifications of commercial items is not adjusted to the same level as other thresholds in the Act due to its later enactment. This section would align the threshold for noncommercial modifications of commercial items with the other thresholds, including adjustments for inflation. It would also clarify that the calculation of whether noncommercial modifications to a commercial item exceed five percent is made at contract award.

The committee recommends a provision that would address recent Inspector General reports regarding the use of questionable commercial item designations to deny the Department of Defense information that it needs to determine price reasonableness for sole-source purchases. The provision would: (1) clarify the circumstances in which a subsystem, component, or spare part for a major weapon system may be purchased as a commercial item; (2) clarify that the terms `general public' and `nongovernmental entity' do not include federal, state, local or foreign governments, or contractors acting on behalf of such governments for the purpose of determining whether an item qualifies as a commercial item; and (3) require the contractor offering a major weapon system, subsystem, component, or spare part as a commercial item to provide information other than certified cost or pricing data that is adequate for evaluating the reasonableness of the proposed price.