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NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2000

(P.L. 106–65, approved October 5, 1999)

DIVISION A-DEPARTMENT OF
DEFENSE AUTHORIZATIONS

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

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SEC. 802. [41 U.S.C. 422 note] STREAMLINED APPLICABILITY OF COST ACCOUNTING STANDARDS.

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(c) REGULATION ON TYPES OF CAS COVERAGE.-(1) The Administrator for Federal Procurement Policy shall revise the rules and procedures prescribed pursuant to section 26(f) of the Office of Federal Procurement Policy Act (41 U.S.C. 422(f)) to the extent necessary to increase the thresholds established in section 9903.2012 of title 48 of the Code of Federal Regulations from $25,000,000 to $50,000,000.

(2) Paragraph (1) requires only a change of the statement of a threshold condition in the regulation referred to by section number in that paragraph, and shall not be construed as

(A) a ratification or expression of approval of

(i) any aspect of the regulation; or

(ii) the manner in which section 26 of the Office of Federal Procurement Policy Act is administered through the regulation; or

(B) a requirement to apply the regulation.

(d) IMPLEMENTATION.-The Administrator for Federal Procurement Policy shall ensure that this section and the amendments made by this section are implemented in a manner that ensures that the Federal Government can recover costs, as appropriate, in a case in which noncompliance with cost accounting standards, or a change in the cost accounting system of a contractor segment or subcontractor segment that is not determined to be desirable by the Federal Government, results in a shift of costs from contracts that are not covered by the cost accounting standards to contracts that are covered by the cost accounting standards.

(e) IMPLEMENTATION OF REQUIREMENTS FOR REVISION OF REGULATIONS. (1) Final regulations required by subsection (c) shall be

issued not later than 180 days after the date of the enactment of this Act.

(2) Subsection (c) shall cease to be effective one year after the date on which final regulations issued in accordance with that subsection take effect.

(f) STUDY OF TYPES OF CAS COVERAGE.-The Administrator for Federal Procurement Policy shall review the various categories of coverage of contracts for applying cost accounting standards and, not later than the date on which the President submits to Congress the budget for fiscal year 2001 under section 1105(a) of title 31, United States Code, submit to Congress a report on the results of the review. The report shall include an analysis of the matters reviewed and any recommendations that the Administrator considers appropriate regarding such matters.

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SEC. 814. [10 U.S.C. 2461 note] PILOT PROGRAM FOR COMMERCIAL SERVICES.

(a) PROGRAM AUTHORIZED.-The Secretary of Defense may carry out a pilot program to treat procurements of commercial services as procurements of commercial items.

(b) DESIGNATION OF PILOT PROGRAM CATEGORIES.-The Secretary of Defense may designate the following categories of services as commercial services covered by the pilot program:

(1) Utilities and housekeeping services.

(2) Education and training services.

(3) Medical services.

(c) TREATMENT AS COMMERCIAL ITEMS.-A Department of Defense contract for the procurement of commercial services designated by the Secretary for the pilot program shall be treated as a contract for the procurement of commercial items, as defined in section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12)), if the source of the services provides similar services contemporaneously to the general public under terms and conditions similar to those offered to the Federal Government.

(d) GUIDANCE.-Not later than 90 days after the date of the enactment of this Act, the Secretary shall issue guidance to procurement officials on contracting for commercial services under the pilot program. The guidance shall place particular emphasis on ensuring that negotiated prices for designated services, including prices negotiated without competition, are fair and reasonable.

(e) UNIFIED MANAGEMENT OF PROCUREMENTS:-The Secretary of Defense shall develop and implement procedures to ensure that, whenever appropriate, a single item manager or contracting officer is responsible for entering into all contracts from a single contractor for commercial services under the pilot program.

(f) DURATION OF PILOT PROGRAM. (1) The pilot program shall begin on the date that the Secretary issues the guidance required by subsection (d) and may continue for a period, not in excess of five years, that the Secretary shall establish.

(2) The pilot program shall cover Department of Defense contracts for the procurement of commercial services designated by the Secretary under subsection (b) that are awarded or modified during

the period of the pilot program, regardless of whether the contracts are performed during the period.

(g) REPORT TO CONGRESS. (1) The Secretary shall submit to Congress a report on the impact of the pilot program on

(A) prices paid by the Federal Government under contracts

for commercial services covered by the pilot program;

(B) the quality and timeliness of the services provided under such contracts; and

(C) the extent of competition for such contracts. (2) The Secretary shall submit the report

(A) not later than 90 days after the end of the third full fiscal year for which the pilot program is in effect; or

(B) if the period established for the pilot program under subsection (f)(1) does not cover three full fiscal years, not later than 90 days after the end of the designated period.

(h) PRICE TREND ANALYSIS.-The Secretary of Defense shall apply the procedures developed pursuant to section 803(c) of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261; 112 Stat. 2081; 10 U.S.C. 2306a note) to collect and analyze information on price trends for all services covered by the pilot program and for the services in such categories of services not covered by the pilot program to which the Secretary considers it appropriate to apply those procedures.

STROM THURMOND NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1999

(P.L. 105–261, approved Oct. 17, 1998)

DIVISION A-DEPARTMENT OF
DEFENSE AUTHORIZATIONS

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

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SEC. 803. [10 U.S.C. 2306a note] DEFENSE COMMERCIAL PRICING MANAGEMENT IMPROVEMENT.

(a) MODIFICATION OF PRICING REGULATIONS FOR CERTAIN COMMERCIAL ITEMS EXEMPT FROM COST OR PRICING DATA CERTIFICATION REQUIREMENTS. (1) The Federal Acquisition Regulation issued in accordance with sections 6 and 25 of the Office of Federal Procurement Policy Act (41 U.S.C. 405, 421) shall be revised to clarify the procedures and methods to be used for determining the reasonableness of prices of exempt commercial items (as defined in subsection (d)).

(2) The regulations shall, at a minimum, provide specific guid

ance on

(A) the appropriate application and precedence of such price analysis tools as catalog-based pricing, market-based pricing, historical pricing, parametric pricing, and value analysis;

(B) the circumstances under which contracting officers should require offerors of exempt commercial items to provide

(i) information on prices at which the offeror has previously sold the same or similar items; or

(ii) other information other than certified cost or pricing data;

(C) the role and responsibility of Department of Defense support organizations in procedures for determining price reasonableness; and

(D) the meaning and appropriate application of the term "purposes other than governmental purposes" in section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12)).

(3) This subsection shall cease to be effective 1 year after the date on which final regulations prescribed pursuant to paragraph (1) take effect.

(b) UNIFIED MANAGEMENT OF PROCUREMENT OF EXEMPT COMMERCIAL ITEMS.-The Secretary of Defense shall develop and implement procedures to ensure that, whenever appropriate, a single item manager or contracting officer is responsible for negotiating and entering into all contracts from a single contractor for the procurement of exempt commercial items or for the procurement of items in a category of exempt commercial items.

(c) COMMERCIAL PRICE TREND ANALYSIS.-(1) The Secretary of Defense shall develop and implement procedures that, to the maximum extent that is practicable and consistent with the efficient operation of the Department of Defense, provide for the collection and analysis of information on price trends for categories of exempt commercial items described in paragraph (2).

(2) A category of exempt commercial items referred to in paragraph (1) consists of exempt commercial items

(A) that are in a single Federal Supply Group or Federal Supply Class, are provided by a single contractor, or are otherwise logically grouped for the purpose of analyzing information on price trends; and

(B) for which there is a potential for the price paid to be significantly higher (on a percentage basis) than the prices previously paid in procurements of the same or similar items for the Department of Defense, as determined by the head of the procuring Department of Defense agency or the Secretary of the procuring military department on the basis of criteria prescribed by the Secretary of Defense.

(3) The head of a Department of Defense agency or the Secretary of a military department shall take appropriate action to address any unreasonable escalation in prices being paid for items procured by that agency or military department as identified in an analysis conducted pursuant to paragraph (1).

(4) Not later than April 1 of each of fiscal years 2000 through 2006, the Secretary of Defense shall submit to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives a report on the analyses of price trends that were conducted by the Secretary of each military department and the Director of the Defense Logistics Agency for categories of exempt commercial items during the preceding fiscal year under the procedures prescribed pursuant to paragraph (1). The report shall include a description of the actions taken by each Secretary and the Director to identify and address any unreasonable price escalation for the categories of items.

(d) EXEMPT COMMERCIAL ITEMS DEFINED.-For the purposes of this section, the term "exempt commercial item" means a commercial item that is exempt under subsection (b)(1)(B) of section 2306a of title 10, United States Code, or subsection (b)(1)(B) of section 304A of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254b), from the requirements for submission of certified cost or pricing data under that section.

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