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(d) LIMITATION.—The quantity of items of a system procured using the procedures prescribed pursuant to this section may not exceed the number established for low-rate initial production for the system. Any such items shall be counted for purposes of the number of items of the system that may be procured through lowrate initial production. SEC. 807. (:10 U.S.C. 1702 note] QUICK-REACTION SPECIAL PROJECTS

ACQUISITION TEAM. (a) ESTABLISHMENT.—The Under Secretary of Defense for Acquisition, Technology, and Logistics shall establish a team of highly qualified acquisition professionals who shall be available to advise the Under Secretary on actions that can be taken to expedite the acquisition of urgently needed systems.

(b) DUTIES. --The issues on which the team may provide advice shall include the following:

(1) Industrial base issues, including the limited availability of suppliers.

(2) Technology development and technology transition issues.

(3) Issues of acquisition policy, including the length of the acquisition cycle.

(4) Issues of testing policy and ensuring that weapon systems perform properly in combat situations.

(5) Issues of procurement policy, including the impact of socio-economic requirements.

(6) Issues relating to compliance with environmental requirements.

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SEC. 817. [10 U.S.C. 2306a note] GRANTS OF EXCEPTIONS TO COST OR

PRICING DATA CERTIFICATION REQUIREMENTS AND

WAIVERS OF COST ACCOUNTING STANDARDS. (a) · GUIDANCE FOR EXCEPTIONS IN EXCEPTIONAL CIRCUMSTANCES.—Not later than 60 days after the date of the enactment of this Act, the Secretary of Defense shall issue guidance on the circumstances under which it is appropriate to grant an exceptional case exception or waiver with respect to certified cost and pricing data and cost accounting standards.

(b) DETERMINATION REQUIRED FOR EXCEPTIONAL CASE EXCEPTION OR WAIVER.—The guidance shall, at a minimum, include a limitation that a grant of an exceptional case exception or waiver is appropriate with respect to a contract, subcontract, or (in the case of submission of certified cost and pricing data) modification only upon a determination that

(1) the property or services cannot reasonably be obtained under the contract, subcontract, or modification, as the case may be, without the grant of the exception or waiver;

(2) the price can be determined to be fair and reasonable without the submission of certified cost and pricing data or the application of cost accounting standards, as the case may be; and

(3) there are demonstrated benefits to granting the exception or waiver.

(c) APPLICABILITY OF NEW GUIDANCE.—The guidance issued under subsection (a) shall apply to each exceptional case exception or waiver that is granted on or after the date on which the guidance is issued.

(d) ANNUAL REPORT ON BOTH COMMERCIAL ITEM AND EXCEPTIONAL CASE EXCEPTIONS AND WAIVERS WITH PRICE OR VALUE GREATER THAN $15,000,000.-(1) The Secretary of Defense shall transmit to the congressional defense committees promptly after the end of each fiscal year a report on commercial item exceptions, and exceptional case exceptions and waivers, described in paragraph (2) that were granted during that fiscal year. (2) The report for a fiscal year shall include

(A) with respect to any commercial item exception granted in the case of a contract, subcontract, or contract or subcontract modification that is expected to have a price of $15,000,000 or more, an explanation of the basis for the determination that the products or services to be purchased are commercial items, including an identification of the specific steps taken to ensure price reasonableness; and

(B) with respect to any exceptional case exception or waiver granted in the case of a contract or subcontract that is expected to have a value of $15,000,000 or more, an explanation of the basis for the determination described in subsection (b), including an identification of the specific steps taken to ensure that the price was fair and reasonable. (e) DEFINITIONS.—In this section:

(1) The term “exceptional case exception or waiver” means either of the following:

(A) An exception pursuant to section 2306a(b)(1)(C) of title 10, United States Code, relating to submission of certified cost and pricing data.

(B) A waiver pursuant to section 26(f)(5)(B) of the Office of Federal Procurement Policy Act (41 U.S.C. 422(f)(5)(B)), relating to the applicability of cost accounting standards to contracts and subcontracts.

(2) The term "commercial item exception" means an exception pursuant to section 2306a(b)(1)(B) of title 10, United States Code, relating to submission of certified cost and pricing data.

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Subtitle C—Acquisition-Related Reports

and Other Matters

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SEC. 828. [116 Stat. 2617] REPORT ON EFFECTS OF ARMY CONTRACTING

AGENCY. (a) IN GENERAL.—The Secretary of the Army shall submit a report on the effects of the establishment of an Army Contracting Agency on small business participation in Army procurements during the first year of operation of such an agency to

(1) the Committee on Armed Services of the House of Representatives;

(2) the Committee on Armed Services of the Senate;

(3) the Committee on Small Business of the House of Representatives; and

(4) the Committee on Small Business and Entrepreneurship of the Senate.

(b) CONTENT.—The report required under subsection (a) shall include, in detail

(1) the justification for the establishment of an Army Contracting Agency;

(2) the impact of the creation of an Army Contracting Agency on

(A) Army compliance with

(i) Department of Defense Directive 4205.1;

(ii) section 15(g) of the Small Business Act (15 U.S.C. 644(g)); and

(iii) section 15(k) of the Small Business Act (15 U.S.C. 644(k)); and

(B) small business participation in Army procurement of products and services for affected Army installations, including

(i) the impact on small businesses located near Army installations, including

(I) the increase or decrease in the total value of Army prime contracting with local small businesses; and

(II) the opportunities for small business owners to meet and interact with Army procurement personnel; and

(ii) any change or projected change in the use of consolidated contracts and bundled contracts; and (3) a description of the Army's plan to address any negative impact on small business participation in Army procurement, to the extent such impact is identified in the report.

(c) TIME FOR SUBMISSION.—The report under this section shall be submitted 15 months after the date of the establishment of the Army Contracting Agency, SEC. 829. [50 U.S.C. App. 2093 note] AUTHORIZATION TO TAKE ACTIONS

TO CORRECT THE INDUSTRIAL RESOURCE SHORTFALL

FOR RADIATION-HARDENED ELECTRONICS. Notwithstanding the limitation in section 303(a)(6)(C) of the Defense Production Act of 1950 (50 U.S.C. App. 2093(a)(6)(C)), action or actions may be taken under section 303 of that Act to correct the industrial resource shortfall for radiation-hardened electronics, if such actions do not cause the aggregate outstanding amount of all such actions to exceed $106,000,000.

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2002

(P.L. 107–107, approved December 28, 2001)

DIVISION A-DEPARTMENT OF
DEFENSE AUTHORIZATIONS

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TITLE VIII-ACQUISITION POLICY, AC

QUISITION MANAGEMENT, AND RELATED MATTERS

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SEC. 802. (10 U.S.C. 2330 note] PERFORMANCE GOALS FOR PROCURE

MENTS OF SERVICES. (a) GOALS.—(1) It shall be an objective of the Department of Defense to achieve efficiencies in procurements of services pursuant to multiple award contracts through the use of

(A) performance-based services contracting;

(B) appropriate competition for task orders under services contracts;

(C) program review, spending analyses, and improved management of services contracts.

(2) In furtherance of such objective, the Department of Defense shall have the following goals:

(A) To increase, as a percentage of all of the individual purchases of services made by or for the Department of Defense under multiple award contracts for a fiscal year (calculated on the basis of dollar value), the volume of the individual purchases of services that are made on a competitive basis and involve receipt of more than one offer from qualified contractors to a percentage as follows:

(i) For fiscal year 2003, a percentage not less than 40 percent.

(ii) For fiscal year 2004, a percentage not less than 50 percent.

(iii) For fiscal year 2011, a percentage not less than 75 percent.

(B) To increase, as a percentage of all of the individual purchases of services made by or for the Department of Defense under multiple award contracts for a fiscal year (calculated on the basis of dollar value), the use of performancebased purchasing specifying firm fixed prices for the specific tasks to be performed to a percentage as follows:

(i) For fiscal year 2003, a percentage not less than 25 percent.

(ii) For fiscal year 2004, a percentage not less than 35 percent.

(iii) For fiscal year 2005, a percentage not less than 50 percent.

(iv) For fiscal year 2011, a percentage not less than 70 percent. (3) The Secretary of Defense may adjust any percentage goal established in paragraph (2) if the Secretary determines in writing that such a goal is too high and cannot reasonably be achieved. In the event that the Secretary chooses to adjust such a goal, the Secretary shall

(A) establish a percentage goal that the Secretary determines would create an appropriate incentive for Department of Defense components to use competitive procedures or performance-based services contracting, as the case may be; and

(B) submit to the congressional defense committees a report containing an explanation of the reasons for the Secretary's determination and a statement of the new goal that the Secretary has established.

(b)-ANNUAL REPORT.-Not later than March 1, 2002, and annually thereafter through March 1, 2011, the Secretary of Defense shall submit to the congressional defense committees a report on the progress made toward meeting the objective and goals established in subsection (a). Each report shall include, at a minimum, the following information:

(1) A summary of the steps taken or planned to be taken in the fiscal year of the report to improve the management of procurements of services.

(2) A summary of the steps planned to be taken in the following fiscal year to improve the management of procurements of services.

(3) An estimate of the amount that will be expended by the Department of Defense for procurements of services in the fiscal year of the report.

(4) An estimate of the amount that will be expended by the Department of Defense for procurements of services in the following fiscal year.

(5) Regarding the individual purchases of services that were made by or for the Department of Defense under multiple award contracts in the fiscal year preceding the fiscal year in which the report is required to be submitted, information (determined using the data collection system established under section 2330a of title 10, United States Code) as follows:

(A) The percentage (calculated on the basis of dollar value) of such purchases that are purchases that were

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