mercial or industrial type function of the Department of Defense that

(1) is included on the procurement list established pursuant to section 2 of the Javits-Wagner-O'Day Act (41 U.S.C. 47);

or

(2) is planned to be changed to performance by a qualified nonprofit agency for the blind or by a qualified nonprofit agency for other severely handicapped persons in accordance with that Act.

(f) ADDITIONAL LIMITATIONS. (1) A commercial or industrial type function of the Department of Defense that on October 1, 1980, was being performed by Department of Defense civilian employees may not be changed to performance by a private contractor to circumvent a civilian personnel ceiling.

(2) In no case may a commercial or industrial type function being performed by Department of Defense personnel be modified, reorganized, divided, or in any way changed for the purpose of exempting from the requirements of subsection (a) the change of all or any part of such function to performance by a private contractor. 1

(g) ANNUAL REPORTS.-Not later than June 30 of each fiscal year, the Secretary of Defense shall submit to Congress a written report describing the extent to which commercial and industrial type functions were performed by Department of Defense contractors during the preceding fiscal year. The Secretary shall include in each such report an estimate of the percentage of commercial and industrial type functions of the Department of Defense that will be performed by Department of Defense civilian employees, and the percentage of such functions that will be performed by private contractors, during the fiscal year during which the report is submitted.

(h) INAPPLICABILITY DURING WAR OR EMERGENCY.-The provisions of this section shall not apply during war or during a period of national emergency declared by the President or Congress. (Added P.L. 100–370, § 2(a)(1), July 19, 1988, 102 Stat. 851; amended P.L. 101-189, § 1132, Nov. 29, 1989, 103 Stat. 1561; P.L. 104-106, § 4321(b)(19), Feb. 10, 1996, 110 Stat. 673; P.L. 105– 85, §384(a), Nov. 18, 1997, 111 Stat. 1711; P.L. 105–261, §342(a)–(c), Oct. 17, 1998, 112 Stat. 1974-1976; P.L. 106-65, § 341, Oct. 5, 1999, 113 Stat. 568; P.L. 106–398, § 1[351, 352], Oct. 30, 2000, 114 Stat. 1654, 1654A-71, 1654A-72; P.L. 107-107, §344, Dec. 28, 2001, 115 Stat. 1061; P.L. 107-314, § 331, Dec. 2, 2002, 116 Stat. 2512.)

1 Section 8014 of the Department of Defense Appropriations Act, 2003 (P.L. 107-248; 116 Stat. 1539), provides:

SEC. 8014. None of the funds appropriated by this Act shall be available to convert to contractor performance an activity or function of the Department of Defense that, on or after the date of the enactment of this Act, is performed by more than 10 Department of Defense civilian employees until a most efficient and cost-effective organization analysis is completed on such activity or function and certification of the analysis is made to the Committees on Appropriations of the House of Representatives and the Senate: Provided, That this section and subsections (a), (b), and (c) of 10 U.S.C. 2461 shall not apply to a commercial or industrial type function of the Department of Defense that: (1) is included on the procurement list established pursuant to section 2 of the Act of June 25, 1938 (41 U.S.C. 47), popularly referred to as the Javits-Wagner-O'Day Act; (2) is planned to be converted to performance by a qualified nonprofit agency for the blind or by a qualified nonprofit agency for other severely handicapped individuals in accordance with that Act; or (3) is planned to be converted to performance by a qualified firm under 51 percent ownership by an Indian tribe, as defined in section 450b(e) of title 25, United States Code, or a Native Hawaiian organization, as defined in section 637(a)(15) of title 15, United States Code.

§ 2461a. Development of system for monitoring cost savings resulting from workforce reductions

(a) WORKFORCE REVIEW DEFINED.-In this section, the term "workforce review", with respect to a function of the Department of Defense performed by Department of Defense civilian employees, means a review conducted under Office of Management and Budget Circular A-76 (or any successor administrative regulation or policy), the Strategic Sourcing Program Plan of Action (or any successor Department of Defense guidance or directive), or any other authority to determine whether the function

(1) should be performed by a workforce composed of Department of Defense civilian employees or by a private sector workforce; or

(2) should be reorganized or otherwise reengineered to improve the efficiency or effectiveness of the performance of the function, with a resulting decrease in the number of Department of Defense civilian employees performing the function.

(b) SYSTEM FOR MONITORING PERFORMANCE. (1) The Secretary of Defense shall establish a system for monitoring the performance, including the cost of performance, of each function of the Department of Defense that, after October 30, 2000, is the subject of a workforce review.

(2) The monitoring system shall be designed to compare the following:

(A) The costs to perform a function before the workforce review to the costs actually incurred to perform the function after implementing the conversion, reorganization, or reengineering actions recommended by the workforce review.

(B) The anticipated savings to the actual savings, if any, resulting from conversion, reorganization, or reengineering actions undertaken in response to the workforce review.

(3) The monitoring of a function shall continue under this section for at least five years after the conversion, reorganization, or reengineering of the function.

(c) WAIVER FOR CERTAIN WORKFORCE REVIEWS.-Subsection (b) shall not apply to a workforce review that would result in a manpower reduction affecting fewer than 50 Department of Defense civilian employees.

(d) ANNUAL REPORT.-Not later than February 1 of each fiscal year, the Secretary of Defense shall submit to Congress a report on the results of the monitoring performed under the system established under subsection (b). For each function subject to monitoring during the previous fiscal year, the report shall indicate the following:

(1) The cost of the workforce review.

(2) The cost of performing the function before the workforce review compared to the costs incurred after implementing the conversion, reorganization, or reengineering actions recommended by the workforce review.

(3) The actual savings derived from the implementation of the recommendations of the workforce review, if any, compared to the anticipated savings that were to result from the conversion, reorganization, or reengineering actions.

(e) CONSIDERATION IN PREPARATION OF FUTURE-YEARS DEFENSE PROGRAM.-In preparing the future-years defense program under section 221 of this title, the Secretary of Defense shall, for the fiscal years covered by the program, estimate and take into account the costs to be incurred and the savings to be derived from the performance of functions by workforces selected in workforce reviews. The Secretary shall consider the results of the monitoring under this section in making the estimates.

(Added P.L. 106-398, § 1[354(a)], Oct. 30, 2000, 114 Stat. 1654, 1654A-73; amended P.L. 107107, § 1048(a)(21), (c)(11), Dec. 28, 2001, 115 Stat. 1224, 1226.)

§ 2462. Contracting for certain supplies and services required when cost is lower

(a) IN GENERAL.-Except as otherwise provided by law, the Secretary of Defense shall procure each supply or service necessary for or beneficial to the accomplishment of the authorized functions of the Department of Defense (other than functions which the Secretary of Defense determines must be performed by military or Government personnel) from a source in the private sector if such a source can provide such supply or service to the Department at a cost that is lower (after including any cost differential required by law, Executive order, or regulation) than the cost at which the Department can provide the same supply or service.

(b) REALISTIC AND FAIR COST COMPARISONS.-For the purpose of determining whether to contract with a source in the private sector for the performance of a Department of Defense function on the basis of a comparison of the costs of procuring supplies or services from such a source with the costs of providing the same supplies or services by the Department of Defense, the Secretary of Defense shall ensure that all costs considered (including the costs of quality assurance, technical monitoring of the performance of such function, liability insurance, employee retirement and disability benefits, and all other overhead costs) are realistic and fair.

(Added P.L. 100-370, § 2(a)(1), July 19, 1988, 102 Stat. 853.)

$2463. Collection and retention of cost information data on converted services and functions

(a) REQUIREMENTS IN CONNECTION WITH CONVERSION TO CONTRACTOR PERFORMANCE.-With respect to each contract converting the performance of a service or function of the Department of Defense to contractor performance (and any extension of such a contract), the Secretary of Defense shall collect, during the term of the contract or extension, but not to exceed five years, cost information data regarding performance of the service or function by private contractor employees.

(b) REQUIREMENTS IN CONNECTION WITH RETURN TO EMPLOYEE PERFORMANCE.-Whenever the performance of a commercial or industrial type activity of the Department of Defense that is being performed by 50 or more employees of a private_contractor is changed to performance by civilian employees of the Department of Defense, the Secretary of Defense shall collect, for a five-year period, cost information data comparing

(1) the estimated costs of continued performance of such activity by private contractor employees; and

(2) the costs of performance of such activity by civilian employees of the Department of Defense.

(c) RETENTION OF INFORMATION.-With regard to the conversion to or from contractor performance of a particular service or function of the Department of Defense, the Secretary of Defense shall provide for the retention of information collected under this section for at least a 10-year period beginning at the end of the final year in which the information is collected.

(Added P.L. 100-370, § 2(a)(1), July 19, 1988, 102 Stat. 853; amended P.L. 101-189, § 1622(c)(7), Nov. 29, 1989, 103 Stat. 1604; P.L. 101-510, § 1301(14), Nov. 5, 1990, 104 Stat. 1668; P.L. 105– 85, § 385(a), Nov. 18, 1997, 111 Stat. 1712.)

§ 2464. Core logistics capabilities

(a) NECESSITY FOR CORE LOGISTICS CAPABILITIES.—(1) It is essential for the national defense that the Department of Defense maintain a core logistics capability that is Government-owned and Government-operated (including Government personnel and Government-owned and Government-operated equipment and facilities) to ensure a ready and controlled source of technical competence and resources necessary to ensure effective and timely response to a mobilization, national defense contingency situations, and other emergency requirements.

(2) The Secretary of Defense shall identify the core logistics capabilities described in paragraph (1) and the workload required to maintain those capabilities.

(3) The core logistics capabilities identified under paragraphs (1) and (2) shall include those capabilities that are necessary to maintain and repair the weapon systems and other military equipment (including mission-essential weapon systems or materiel not later than four years after achieving initial operational capability, but excluding systems and equipment under special access programs, nuclear aircraft carriers, and commercial items described in paragraph (5)) that are identified by the Secretary, in consultation with the Chairman of the Joint Chiefs of Staff, as necessary to enable the armed forces to fulfill the strategic and contingency plans prepared by the Chairman of the Joint Chiefs of Staff under section 153(a) of this title.

(4) The Secretary of Defense shall require the performance of core logistics workloads necessary to maintain the core logistics capabilities identified under paragraphs (1), (2), and (3) at Government-owned, Government-operated facilities of the Department of Defense (including Government-owned, Government-operated facilities of a military department) and shall assign such facilities sufficient workload to ensure cost efficiency and technical competence in peacetime while preserving the surge capacity and reconstitution capabilities necessary to support fully the strategic and contingency plans referred to in paragraph (3).

(5) The commercial items covered by paragraph (3) are commercial items that have been sold or leased in substantial quantities to the general public and are purchased without modification in the same form that they are sold in the commercial marketplace, or with minor modifications to meet Federal Government requirements.

(b) LIMITATION ON CONTRACTING.-(1) Except as provided in paragraph (2), performance of workload needed to maintain a logistics capability identified by the Secretary under subsection (a)(2) may not be contracted for performance by non-Government personnel under the procedures and requirements of Office of Management and Budget Circular A-76 or any successor administrative regulation or policy (hereinafter in this section referred to as OMB Circular A-76).

(2) The Secretary of Defense may waive paragraph (1) in the case of any such logistics capability and provide that performance of the workload needed to maintain that capability shall be considered for conversion to contractor performance in accordance with OMB Circular A-76. Any such waiver shall be made under regulations prescribed by the Secretary and shall be based on a determination by the Secretary that Government performance of the workload is no longer required for national defense reasons. Such regulations shall include criteria for determining whether Government performance of any such workload is no longer required for national defense reasons.

(3)(A) A waiver under paragraph (2) may not take effect until the expiration of the first period of 30 days of continuous session of Congress that begins on or after the date on which the Secretary submits a report on the waiver to the Committee on Armed Services and the Committee on Appropriations of the Senate and the Committee on Armed Services and the Committee on Appropriations of the House of Representatives.

(B) For the purposes of subparagraph (A)—

(i) continuity of session is broken only by an adjournment of Congress sine die; and

(ii) the days on which either House is not in session because of an adjournment of more than three days to a day certain are excluded in the computation of any period of time in which Congress is in continuous session.

(c) NOTIFICATION OF DETERMINATIONS REGARDING CERTAIN COMMERCIAL ITEMS.-The first time that a weapon system or other item of military equipment described in subsection (a)(3) is determined to be a commercial item for the purposes of the exception contained in that subsection, the Secretary of Defense shall submit to Congress a notification of the determination, together with the justification for the determination. The justification for the determination shall include, at a minimum, the following:

(1) The estimated percentage of commonality of parts of the version of the item that is sold or leased in the commercial marketplace and the Government's version of the item.

(2) The value of any unique support and test equipment and tools that are necessary to support the military requirements if the item were maintained by the Government.

(3) A comparison of the estimated life cycle logistics support costs that would be incurred by the Government if the item were maintained by the private sector with the estimated life cycle logistics support costs that would be incurred by the Government if the item were maintained by the Government. (Added P.L. 100-370, § 2(a)(i), July 19, 1988, 102 Stat. 853; amended P.L. 101-189, § 1622(c)(7), Nov. 29, 1989, 103 Stat. 1604; P.L. 104-106, §314, Feb. 10, 1996, 110 Stat. 251; P.L. 105-85,