[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4409 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 4409
To prevent price gouging at the Department of Defense.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 30, 2023
Mr. Garamendi (for himself and Mr. Deluzio) introduced the following
bill; which was referred to the Committee on Armed Services, and in
addition to the Committee on Oversight and Accountability, for a period
to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To prevent price gouging at the Department of Defense.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Pentagon Price Gouging Act''.
SEC. 2. STRENGTHENING TRUTH IN NEGOTIATIONS ACT PROVISIONS.
(a) Required Cost or Pricing Data and Certification.--Section
3702(a)(1) of title 10, United States Code, is amended by striking
``only expected to receive one bid shall be required'' and replacing
with ``only expected to have one offeror, or for which award of a cost-
reimbursement contract is contemplated regardless of the number of
offers received, shall be required''.
(b) Exceptions.--Section 3703(a) of title 10, United States Code,
is amended--
(1) in paragraph (1)(A), by striking ``adequate
competition'' and all that follows through ``bids'' and
inserting ``adequate price competition for other than the award
of a cost-reimbursement contract that results in at least two
responsive and viable competing offerors''; and
(2) in paragraph (2), by inserting ``based on adequate
price competition that results in at least two responsive and
responsible offers'' after ``commercial service''.
(c) Conforming Amendment Related to Civilian Contracts.--Section
3503(a)(2) of title 41, United States Code, is by inserting after
``commercial service'' the following: ``based on adequate price
competition that results in at least two responsive and responsible
offers''.
SEC. 3. REVISION OF DEFINITION OF TERM ``COMMERCIAL ITEM'' FOR PURPOSES
OF FEDERAL PROCUREMENT STATUTES PROVIDING PROCEDURES FOR
PROCUREMENT OF COMMERCIAL ITEMS.
(a) Elimination of ``of a Type'' Criterion.--Section 103 of title
41, United States Code, is amended by striking ``of a type'' each place
it appears.
(b) Elimination of Items and Services Merely Offered for Sale,
Lease, or License.--
(1) Items.--Section 103(1)(B) of title 41, United States
Code, is amended by striking ``, or offered for sale, lease, or
license,''.
(2) Services.--Section 103a(2) of title 41, United States
Code, is amended by striking ``offered and''.
(c) Adjustment of Threshold Relating to Prior Sales.--
(1) Commercial products.--Section 103(6)(B) of title 41,
United States Code, is amended by striking ``substantial
quantities'' and inserting ``like quantities''.
(2) Commercial services.--Section 103a(2) of title 41,
United States Code, is amended by striking ``substantial
quantities'' and inserting ``like quantities''.
SEC. 4. PROGRESS PAYMENT INCENTIVE PILOT.
(a) Pilot Program.--The Secretary of Defense, acting through the
Under Secretary of Defense for Acquisition and Sustainment, shall
establish and implement a pilot program, to be known as the ``Progress
Payment Incentive Pilot Program'', to make accelerated progress
payments contingent upon responsiveness to Department of Defense
requests for cost or pricing information.
(b) Purpose.--The purpose of the pilot program is to reward
Department of Defense contractors who work with the Department in the
pre-award process to prevent excessive costs and establish guardrails
against excessive prices.
(c) Progress Payments.--
(1) Limitations for traditional contractors.--Under the
pilot program, the Department of Defense may not award to
traditional business contractors progress payments in excess of
50 percent.
(2) Exceptions.--The Department of Defense may increase the
rate of progress payments to 80 percent if the division of the
company provides certified cost or pricing information within
30 days of the Department's request for the information. The
progress payment rate may not exceed 95 percent.
(d) Definitions.--In this section:
(1) Traditional defense contractor.--The term ``traditional
defense contractor'' means a contractor (other than an
institute of higher education) that is currently performing or
has currently performed for at least the one-year period
preceding the solicitation of sources by the Department of
Defense for the procurement or transaction, any contract or
subcontract for the Department of Defense that is subject to
full coverage under the cost accounting standards prescribed
pursuant to section 1502 of title 41, United States Code, and
the regulations implementing such section.
(2) Progress payments.--The term ``progress payments''
means payments provided for under section 3804 of title 10,
United States Code.
SEC. 5. DISCLOSURE BY TRADITIONAL DEFENSE CONTRACTORS.
(a) Annual Reporting.--Not later than 60 days after the date of the
enactment of this Act, the Secretary of Defense shall amend the
Department of Defense Supplement to the Federal Acquisition Regulation
to provide that traditional contractors shall be required to annually
report to the Under Secretary of Defense for Acquisition and
Sustainment the following information with regard to the covered year,
as compared with the year preceding that covered year:
(1) The percentage change in the volume of goods or
services sold and the percentage change in the average sales
price of those goods or services, which shall be broken down by
material product categories, when relevant, and presented in a
tabular format.
(2) The gross margins of the traditional contractor, which
shall be broken down by material product categories, when
relevant, and presented in a tabular format.
(3) Presented in tabular format, the share of the increase
in revenue of the large defense contractor that is attributable
to--
(A) a change in the cost of goods or services sold
by the traditional defense contractor; and
(B) a change in the volume of goods or services
sold by the covered issuer.
(4) The percentage change in the costs of the traditional
contractor, which shall be broken down by category and
presented in tabular format.
(5) In dollars, the change in the costs of the traditional
defense contractor, which shall be presented in tabular format.
(6) A detailed narrative disclosure of the pricing strategy
of the traditional defense contractor, which shall include--
(A) an explanation for any increase in the gross
margins of material product categories, including--
(i) all material causes for such an
increase;
(ii) an explanation of how each such
material cause affected such an increase; and
(iii) a description of the relative
importance of each such material cause with
respect to such an increase.
(B) An explanation for the decisions made by the
traditional defense contractor with respect to the
prices of goods and services sold by the large defense
contractor.
(C) If the large defense contractor increased
prices at a rate that was greater than the rate at
which the costs incurred by the traditional defense
contractor increased, the rationale and objectives for
increasing prices in such a manner.
(D) A description of conditions under which the
large defense contractor plans to modify pricing after
the date on which the traditional defense contractor
submits the report.
(b) Publication.--The Under Secretary of Defense for Acquisition
and Sustainment shall annually publish on a publicly available internet
website the previous year's reports received under subsection (a).
(c) Traditional Contractor Defined.--In this section, the term
``traditional contractor'' means a contractor (other than an institute
of higher education) that is currently performing or has currently
performed for at least the one-year period preceding the solicitation
of sources by the Department of Defense for the procurement or
transaction of any contract or subcontract for the Department of
Defense that is subject to full coverage under the cost accounting
standards prescribed pursuant to section 1502 of title 41, United
States Code, and the regulations implementing such section.
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