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108th Congress                                            Rept. 108-117
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
                SERVICES ACQUISITION REFORM ACT OF 2003

                                _______
                                

                  May 19, 2003.--Ordered to be printed

                                _______
                                

  Mr. Tom Davis of Virginia, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1837]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Government Reform, to whom was referred the 
bill (H.R. 1837) to improve the Federal acquisition workforce 
and the process for the acquisition of services by the Federal 
Government, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................    22
Section-by-Section...............................................    31
Explanation of Amendments........................................    40
Committee Consideration..........................................    40
Rollcall Votes...................................................    40
Application of Law to the Legislative Branch.....................    48
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................    48
Statement of General Performance Goals and Objectives............    48
Constitutional Authority Statement...............................    48
Unfunded Mandate Statement.......................................    48
Committee Estimate...............................................    48
Budget Authority and Congressional Budget Office Cost Estimate...    48
Changes in Exisiting Law Made by the Bill as Reported............    51
Minority Views...................................................   101

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Services Acquisition 
Reform Act of 2003''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Executive agency defined.

              TITLE I--ACQUISITION WORKFORCE AND TRAINING

Sec. 101. Definition of acquisition.
Sec. 102. Acquisition workforce training fund.
Sec. 103. Government-industry exchange program.
Sec. 104. Acquisition workforce recruitment program.
Sec. 105. Architectural and engineering acquisition workforce.

         TITLE II--ADAPTATION OF BUSINESS ACQUISITION PRACTICES

        Subtitle A--Adaptation of Business Management Practices

Sec. 201. Chief Acquisition Officers.
Sec. 202. Chief Acquisition Officers Council.
Sec. 203. Statutory and regulatory review.

               Subtitle B--Other Acquisition Improvements

Sec. 211. Extension of authority to carry out franchise fund programs.
Sec. 212. Agency acquisition protests.
Sec. 213. Improvements in contracting for architectural and engineering 
services.
Sec. 214. Authorization of telecommuting for Federal contractors.
Sec. 215. Procedural requirements for civilian agencies relating to 
products of Federal Prison Industries.

                     TITLE III--CONTRACT INCENTIVES

Sec. 301. Share-in-savings initiatives.
Sec. 302. Incentives for contract efficiency.

               TITLE IV--ACQUISITIONS OF COMMERCIAL ITEMS

Sec. 401. Preference for performance-based contracting.
Sec. 402. Authorization of additional commercial contract types.
Sec. 403. Clarification of commercial services definition.
Sec. 404. Designation of commercial business entities.

                         TITLE V--OTHER MATTERS

Sec. 501. Authority to enter into certain procurement-related 
transactions and to carry out certain prototype projects.
Sec. 502. Amendments relating to Federal emergency procurement 
flexibility.
Sec. 503. Authority to make inflation adjustments to simplified 
acquisition threshold.
Sec. 504. Technical corrections related to duplicative amendments.
Sec. 505. Exemption from limitations on procurement of foreign 
information technology that is a commercial item.
Sec. 506. Prohibition on use of quotas.
Sec. 507. Public disclosure of noncompetitive contracting for the 
reconstruction of infrastructure in Iraq.
Sec. 508. Applicability of certain provisions to sole source contracts 
for goods and services treated as commercial items.

SEC. 2. EXECUTIVE AGENCY DEFINED.

  In this Act, the term ``executive agency'' has the meaning given that 
term in section 4(1) of the Office of Federal Procurement Policy Act 
(41 U.S.C. 403(1)), unless specifically stated otherwise.

              TITLE I--ACQUISITION WORKFORCE AND TRAINING

SEC. 101. DEFINITION OF ACQUISITION.

  Section 4 of the Office of Federal Procurement Policy Act (41 U.S.C. 
403) is amended by adding at the end the following:
          ``(16) The term `acquisition'--
                  ``(A) means the process of acquiring, with 
                appropriated funds, by contract for purchase or lease, 
                property or services (including construction) that 
                support the missions and goals of an executive agency, 
                from the point at which the requirements of the 
                executive agency are established in consultation with 
                the chief acquisition officer of the executive agency; 
                and
                  ``(B) includes--
                          ``(i) the process of acquiring property or 
                        services that are already in existence, or that 
                        must be created, developed, demonstrated, and 
                        evaluated;
                          ``(ii) the description of requirements to 
                        satisfy agency needs;
                          ``(iii) solicitation and selection of 
                        sources;
                          ``(iv) award of contracts;
                          ``(v) contract performance;
                          ``(vi) contract financing:
                          ``(vii) management and measurement of 
                        contract performance through final delivery and 
                        payment; and
                          ``(viii) technical and management functions 
                        directly related to the process of fulfilling 
                        agency requirements by contract.''.

SEC. 102. ACQUISITION WORKFORCE TRAINING FUND.

  (a) Purposes.--The purposes of this section are to ensure that the 
Federal acquisition workforce--
          (1) adapts to fundamental changes in the nature of Federal 
        Government acquisition of property and services associated with 
        the changing roles of the Federal Government; and
          (2) acquires new skills and a new perspective to enable it to 
        contribute effectively in the changing environment of the 21st 
        century.
  (b) Establishment of Fund.--Section 37 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 433) is amended by adding at the end 
of subsection (h) the following new paragraph:
          ``(3) Acquisition workforce training fund.--(A) The 
        Administrator of General Services shall establish an 
        acquisition workforce training fund. The Administrator shall 
        manage the fund through the Federal Acquisition Institute to 
        support the training of the acquisition workforce of the 
        executive agencies other than the Department of Defense. The 
        Administrator shall consult with the Administrator for Federal 
        Procurement Policy in managing the fund.
          ``(B) There shall be credited to the acquisition workforce 
        training fund 5 percent of the fees collected by executive 
        agencies under the following contracts:
                  ``(i) Governmentwide task and delivery-order 
                contracts entered into under sections 2304a and 2304b 
                of title 10, United States Code, or sections 303H and 
                303I of the Federal Property and Administrative 
                Services Act of 1949 (41 U.S.C. 253h and 253i).
                  ``(ii) Governmentwide contracts for the acquisition 
                of information technology as defined in section 11101 
                of title 40, United States Code, and multiagency 
                acquisition contracts for such technology authorized by 
                section 11314 of such title.
                  ``(iii) Multiple-award schedule contracts entered 
                into by the Administrator of General Services.
          ``(C) The head of an executive agency that administers a 
        contract described in subparagraph (B) shall remit to the 
        General Services Administration the amount required to be 
        credited to the fund with respect to such contract at the end 
        of each quarter of the fiscal year.
          ``(D) The Administrator of General Services, through the 
        Office of Federal Acquisition Policy, shall ensure that funds 
        collected for training under this section are not used for any 
        purpose other than the purpose specified in subparagraph (A).
          ``(E) Amounts credited to the fund shall be in addition to 
        funds requested and appropriated for education and training 
        referred to in paragraph (1).
          ``(F) Amounts credited to the fund shall remain available 
        until expended.''.

SEC. 103. GOVERNMENT-INDUSTRY EXCHANGE PROGRAM.

  (a) In General.--Subpart B of part III of title 5, United States 
Code, is amended by adding at the end the following:

        ``CHAPTER 38--ACQUISITION PROFESSIONAL EXCHANGE PROGRAM

``Sec.
``3801. Definitions.
``3802. General provisions.
``3803. Assignment of employees to private sector organizations.
``3804. Assignment of employees from private sector organizations.
``3805. Reporting requirement.
``3806. Regulations.

``Sec. 3801. Definitions

  ``For purposes of this chapter--
          ``(1) the term `agency'--
                  ``(A) subject to subparagraph (B), means an executive 
                agency; and
                  ``(B) does not include--
                          ``(i) the General Accounting Office;
                          ``(ii) an Office of Inspector General of an 
                        establishment or a designated Federal entity 
                        established under the Inspector General Act of 
                        1978; and
                          ``(iii) the Defense Contract Audit Agency 
                        referred to in section 2313(b) of title 10; and
          ``(2) the term `detail' means--
                  ``(A) the assignment or loan of an employee of an 
                agency to a private sector organization without a 
                change of position from the agency that employs the 
                individual, or
                  ``(B) the assignment or loan of an employee of a 
                private sector organization to an agency without a 
                change of position from the private sector organization 
                that employs the individual,
        whichever is appropriate in the context in which such term is 
        used.

``Sec. 3802. General provisions

  ``(a) Assignment Authority.--On request from or with the agreement of 
a private sector organization, and with the consent of the employee 
concerned, the head of an agency may arrange for the assignment of an 
employee of the agency to a private sector organization or an employee 
of a private sector organization to the agency. An eligible employee is 
an individual who--
          ``(1) works in the field of Federal acquisition or 
        acquisition management;
          ``(2) is considered an exceptional performer by the 
        individual's current employer; and
          ``(3) is expected to assume increased acquisition management 
        responsibilities in the future.
An employee of an agency shall be eligible to participate in this 
program only if the employee is employed at the GS-11 level or above 
(or equivalent) and is serving under a career or career-conditional 
appointment or an appointment of equivalent tenure in the excepted 
service.
  ``(b) Agreements.--Each agency that exercises its authority under 
this chapter shall provide for a written agreement between the agency 
and the employee concerned regarding the terms and conditions of the 
employee's assignment. In the case of an employee of the agency, the 
agreement shall--
          ``(1) require the employee to serve in the civil service, 
        upon completion of the assignment, for a period equal to the 
        length of the assignment; and
          ``(2) provide that, in the event the employee fails to carry 
        out the agreement (except for good and sufficient reason, as 
        determined by the head of the agency from which assigned) the 
        employee shall be liable to the United States for payment of 
        all expenses of the assignment.
An amount under paragraph (2) shall be treated as a debt due the United 
States.
  ``(c) Termination.--Assignments may be terminated by the agency or 
private sector organization concerned for any reason at any time.
  ``(d) Duration.--Assignments under this chapter shall be for a period 
of between 6 months and 1 year, and may be extended in 3-month 
increments for a total of not more than 1 additional year, except that 
no assignment under this chapter may commence after the end of the 5-
year period beginning on the date of the enactment of this chapter.
  ``(e) Assistance.--The Administrator for Federal Procurement Policy, 
by agreement with the Office of Personnel Management, may assist in the 
administration of this chapter, including by maintaining lists of 
potential candidates for assignment under this chapter, establishing 
mentoring relationships for the benefit of individuals who are given 
assignments under this chapter, and publicizing the program.
  ``(f) Considerations.--In exercising any authority under this 
chapter, an agency shall take into consideration--
          ``(1) the need to ensure that small business concerns are 
        appropriately represented with respect to the assignments 
        described in sections 3803 and 3804, respectively; and
          ``(2) how assignments described in section 3803 might best be 
        used to help meet the needs of the agency for the training of 
        employees in acquisition management.

``Sec. 3803. Assignment of employees to private sector organizations

  ``(a) In General.--An employee of an agency assigned to a private 
sector organization under this chapter is deemed, during the period of 
the assignment, to be on detail to a regular work assignment in his 
agency.
  ``(b) Coordination With Chapter 81.--Notwithstanding any other 
provision of law, an employee of an agency assigned to a private sector 
organization under this chapter is entitled to retain coverage, rights, 
and benefits under subchapter I of chapter 81, and employment during 
the assignment is deemed employment by the United States, except that, 
if the employee or the employee's dependents receive from the private 
sector organization any payment under an insurance policy for which the 
premium is wholly paid by the private sector organization, or other 
benefit of any kind on account of the same injury or death, then, the 
amount of such payment or benefit shall be credited against any 
compensation otherwise payable under subchapter I of chapter 81.
  ``(c) Reimbursements.--The assignment of an employee to a private 
sector organization under this chapter may be made with or without 
reimbursement by the private sector organization for the travel and 
transportation expenses to or from the place of assignment, subject to 
the same terms and conditions as apply with respect to an employee of a 
Federal agency or a State or local government under section 3375, and 
for the pay, or a part thereof, of the employee during assignment. Any 
reimbursements shall be credited to the appropriation of the agency 
used for paying the travel and transportation expenses or pay.
  ``(d) Tort Liability; Supervision.--The Federal Tort Claims Act and 
any other Federal tort liability statute apply to an employee of an 
agency assigned to a private sector organization under this chapter. 
The supervision of the duties of an employee of an agency so assigned 
to a private sector organization may be governed by an agreement 
between the agency and the organization.
  ``(e) Small Business Concerns.--
          ``(1) In general.--The head of each agency shall take such 
        actions as may be necessary to ensure that, of the assignments 
        made under this chapter from such agency to private sector 
        organizations in each year, at least 20 percent are to small 
        business concerns.
          ``(2) Definitions.--For purposes of this subsection--
                  ``(A) the term `small business concern' means a 
                business concern that satisfies the definitions and 
                standards specified by the Administrator of the Small 
                Business Administration under section 3(a)(2) of the 
                Small Business Act (as from time to time amended by the 
                Administrator);
                  ``(B) the term `year' refers to the 12-month period 
                beginning on the date of the enactment of this chapter, 
                and each succeeding 12-month period in which any 
                assignments under this chapter may be made; and
                  ``(C) the assignments `made' in a year are those 
                commencing in such year.
          ``(3) Reporting requirement.--An agency which fails to comply 
        with paragraph (1) in a year shall, within 90 days after the 
        end of such year, submit a report to the Committees on 
        Government Reform and Small Business of the House of 
        Representatives and the Committees on Governmental Affairs and 
        Small Business of the Senate. The report shall include--
                  ``(A) the total number of assignments made under this 
                chapter from such agency to private sector 
                organizations in the year;
                  ``(B) of that total number, the number (and 
                percentage) made to small business concerns; and
                  ``(C) the reasons for the agency's noncompliance with 
                paragraph (1).
          ``(4) Exclusion.--This subsection shall not apply to an 
        agency in any year in which it makes fewer than 5 assignments 
        under this chapter to private sector organizations.

``Sec. 3804. Assignment of employees from private sector organizations

  ``(a) In General.--An employee of a private sector organization 
assigned to an agency under this chapter is deemed, during the period 
of the assignment, to be on detail to such agency.
  ``(b) Terms and Conditions.--An employee of a private sector 
organization assigned to an agency under this chapter--
          ``(1) may continue to receive pay and benefits from the 
        private sector organization from which he is assigned;
          ``(2) is deemed, notwithstanding subsection (a), to be an 
        employee of the agency for the purposes of--
                  ``(A) chapter 73;
                  ``(B) sections 201, 203, 205, 207, 208, 209, 603, 
                606, 607, 643, 654, 1905, and 1913 of title 18;
                  ``(C) sections 1343, 1344, and 1349(b) of title 31;
                  ``(D) the Federal Tort Claims Act and any other 
                Federal tort liability statute;
                  ``(E) the Ethics in Government Act of 1978;
                  ``(F) section 1043 of the Internal Revenue Code of 
                1986; and
                  ``(G) section 27 of the Office of Federal Procurement 
                Policy Act;
          ``(3) may not have access to any trade secrets or to any 
        other nonpublic information which is of commercial value to the 
        private sector organization from which he is assigned; and
          ``(4) is subject to such regulations as the President may 
        prescribe.
The supervision of an employee of a private sector organization 
assigned to an agency under this chapter may be governed by agreement 
between the agency and the private sector organization concerned. Such 
an assignment may be made with or without reimbursement by the agency 
for the pay, or a part thereof, of the employee during the period of 
assignment, or for any contribution of the private sector organization 
to employee benefit systems.
  ``(c) Coordination With Chapter 81.--An employee of a private sector 
organization assigned to an agency under this chapter who suffers 
disability or dies as a result of personal injury sustained while 
performing duties during the assignment shall be treated, for the 
purpose of subchapter I of chapter 81, as an employee as defined by 
section 8101 who had sustained the injury in the performance of duty, 
except that, if the employee or the employee's dependents receive from 
the private sector organization any payment under an insurance policy 
for which the premium is wholly paid by the private sector 
organization, or other benefit of any kind on account of the same 
injury or death, then, the amount of such payment or benefit shall be 
credited against any compensation otherwise payable under subchapter I 
of chapter 81.
  ``(d) Prohibition Against Charging Certain Costs to the Federal 
Government.--A private sector organization may not charge the Federal 
Government, as direct or indirect costs under a Federal contract, the 
costs of pay or benefits paid by the organization to an employee 
assigned to an agency under this chapter for the period of the 
assignment.

``Sec. 3805. Reporting requirement

  ``(a) In General.--The Office of Personnel Management shall, not 
later than April 30 and October 31 of each year, prepare and submit to 
the Committee on Government Reform of the House of Representatives and 
the Committee on Governmental Affairs of the Senate a semiannual report 
summarizing the operation of this chapter during the immediately 
preceding 6-month period ending on March 31 and September 30, 
respectively.
  ``(b) Content.--Each report shall include, with respect to the 6-
month period to which such report relates--
          ``(1) the total number of individuals assigned to, and the 
        total number of individuals assigned from, each agency during 
        such period;
          ``(2) a brief description of each assignment included under 
        paragraph (1), including--
                  ``(A) the name of the assigned individual, as well as 
                the private sector organization and the agency 
                (including the specific bureau or other agency 
                component) to or from which such individual was 
                assigned;
                  ``(B) the respective positions to and from which the 
                individual was assigned, including the duties and 
                responsibilities and the pay grade or level associated 
                with each; and
                  ``(C) the duration and objectives of the individual's 
                assignment; and
          ``(3) such other information as the Office considers 
        appropriate.
  ``(c) Publication.--A copy of each report submitted under subsection 
(a)--
          ``(1) shall be published in the Federal Register; and
          ``(2) shall be made publicly available on the Internet.
  ``(d) Agency Cooperation.--On request of the Office, agencies shall 
furnish such information and reports as the Office may require in order 
to carry out this section.

``Sec. 3806. Regulations

  ``The Director of the Office of Personnel Management shall prescribe 
regulations for the administration of this chapter.''.
  (b) Report.--Not later than 4 years after the date of the enactment 
of this Act, the General Accounting Office shall prepare and submit to 
the Committee on Government Reform of the House of Representatives and 
the Committee on Governmental Affairs of the Senate a report on the 
operation of chapter 38 of title 5, United States Code (as added by 
this section). Such report shall include--
          (1) an evaluation of the effectiveness of the program 
        established by such chapter; and
          (2) a recommendation as to whether such program should be 
        continued (with or without modification) or allowed to lapse.
  (c) Clerical Amendment.--The table of chapters at the beginning of 
part III of title 5, United States Code, is amended by inserting after 
the item relating to chapter 37 the following:

``38. Acquisition Professional Exchange Program.............    3801''.
  (d) Coordination with Acquisition Workforce Provisions of Office of 
Federal Procurement Policy Act.--Section 37 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 433) is amended by adding at the end 
the following new subsection:
  ``(i) Authority to Detail Employees to Non-Federal Employers.--(1) In 
carrying out the provisions of this section, the Administrator, by 
agreement with the Director of the Office of Personnel Management, may 
provide for a program under which a Federal employee may be detailed to 
a non-Federal employer. The Administrator, by agreement with the 
Director of the Office of Personnel Management, shall prescribe 
regulations for such program, including the conditions for service and 
duties as the Administrator considers necessary.
  ``(2) An assignment described in section 3803 of title 5, United 
States Code, may not be made unless a program under paragraph (1) is 
established, and the assignment is made in accordance with the 
requirements of such program.''.
  (e) Ethics Provisions.--
          (1) One-year restriction on certain communications.--Section 
        207(c)(2)(A)(v) of title 18, United States Code, is amended by 
        inserting ``or 38'' after ``chapter 37''.
          (2) Disclosure of confidential information.--Section 1905 of 
        title 18, United States Code, is amended by inserting ``or 38'' 
        after ``chapter 37''.
          (3) Contract advice.--Section 207(l) of title 18, United 
        States Code, is amended--
                  (A) in the subsection heading, by striking 
                ``Details.--'' and inserting ``Detailees.--''; and
                  (B) by inserting ``or 38'' after ``chapter 37''.
          (4) Restriction on disclosure of procurement information.--
        Section 27 of the Office of Federal Procurement Policy Act (41 
        U.S.C. 423) is amended in the last sentence of subsection 
        (a)(1) by inserting ``or 38'' after ``chapter 37''.
  (f) Technical and Conforming Amendments.--
          (1) Amendments to Title 5, United States Code.--Title 5, 
        United States Code, is amended--
                  (A) in section 3111(d), by inserting ``or 38'' after 
                ``chapter 37'';
                  (B) in section 7353(b)(4), by inserting ``or 38'' 
                after ``chapter 37''.
          (2) Amendment to title 18, united states code.--Section 
        209(g) of title 18, United States Code, is amended--
                  (A) in paragraph (1), by inserting ``or 38'' after 
                ``chapter 37''; and
                  (B) by amending paragraph (2) to read as follows:
  ``(2) For purposes of this subsection, the term `agency'--
          ``(A) with respect to assignments under chapter 37 of title 
        5, means an agency (as defined in section 3701 of title 5) and 
        the Office of the Chief Technology Officer of the District of 
        Columbia; and
          ``(B) with respect to assignments under chapter 38 of title 
        5, means an agency (as defined by section 3801 of title 5).''.
          (3) Eligibility for thrift savings plan.--Section 
        125(c)(1)(D) of Public Law 100-238 (101 Stat. 1757; 5 U.S.C. 
        8432 note) is amended by inserting ``or 38'' after ``chapter 
        37''.

SEC. 104. ACQUISITION WORKFORCE RECRUITMENT PROGRAM.

  (a) Authority To Carry Out Program.--For purposes of sections 3304, 
5333, and 5753 of title 5, United States Code, the head of a department 
or agency of the United States (including the Secretary of Defense) may 
determine that certain Federal acquisition positions are ``shortage 
category'' positions in order to recruit and appoint directly to 
positions of employment in the department or agency highly qualified 
persons, such as any person who--
          (1) holds a bachelor's degree from an accredited institution 
        of higher education;
          (2) holds, from an accredited law school or an accredited 
        institution of higher education--
                  (A) a law degree; or
                  (B) a masters or equivalent degree in business 
                administration, public administration, or systems 
                engineering; or
          (3) has significant experience with commercial acquisition 
        practices, terms, and conditions.
  (b) Requirements.--The exercise of authority to take a personnel 
action under this section shall be subject to policies prescribed by 
the Office of Personnel Management that govern direct recruitment, 
including policies requiring appointment of a preference eligible who 
satisfies the qualification requirements.
  (c) Termination of Authority.--The head of a department or agency may 
not appoint a person to a position of employment under this section 
after September 30, 2007.
  (d) Report.--Not later than March 31, 2007, the Administrator for 
Federal Procurement Policy shall submit to Congress a report on the 
implementation of this section. The report shall include--
          (1) the Administrator's assessment of the efficacy of the 
        exercise of the authority provided in this section in 
        attracting employees with unusually high qualifications to the 
        acquisition workforce; and
          (2) any recommendations considered appropriate by the 
        Administrator on whether the authority to carry out the program 
        should be extended.

SEC. 105. ARCHITECTURAL AND ENGINEERING ACQUISITION WORKFORCE.

  The Administrator for Federal Procurement Policy, in consultation 
with the Secretary of Defense, the Administrator of General Services, 
and the Director of the Office of Personnel Management, shall develop 
and implement a plan to ensure that the Federal Government maintains 
the necessary capability with respect to the acquisition of 
architectural and engineering services to--
          (1) ensure that Federal Government employees have the 
        expertise to determine agency requirements for such services;
          (2) establish priorities and programs (including acquisition 
        plans);
          (3) establish professional standards;
          (4) develop scopes of work; and
          (5) award and administer contracts for such services.

         TITLE II--ADAPTATION OF BUSINESS ACQUISITION PRACTICES

        Subtitle A--Adaptation of Business Management Practices

SEC. 201. CHIEF ACQUISITION OFFICERS.

  (a) Appointment of Chief Acquisition Officers.--(1) Section 16 of the 
Office of Federal Procurement Policy Act (41 U.S.C. 414) is amended to 
read as follows:

``SEC. 16. CHIEF ACQUISITION OFFICERS.

  ``(a) Establishment of Agency Chief Acquisition Officers.--The head 
of each executive agency (other than the Department of Defense) shall 
appoint or designate a non-career employee as Chief Acquisition Officer 
for the agency, who shall--
          ``(1) have acquisition management as that official's primary 
        duty; and
          ``(2) advise and assist the head of the executive agency and 
        other agency officials to ensure that the mission of the 
        executive agency is achieved through the management of the 
        agency's acquisition activities.
  ``(b) Authority and Functions of Agency Chief Acquisition Officers.--
The functions of each Chief Acquisition Officer shall include--
          ``(1) monitoring the performance of acquisition activities 
        and acquisition programs of the executive agency, evaluating 
        the performance of those programs on the basis of applicable 
        performance measurements, and advising the head of the 
        executive agency regarding the appropriate business strategy to 
        achieve the mission of the executive agency;
          ``(2) increasing the use of full and open competition in the 
        acquisition of property and services by the executive agency by 
        establishing policies, procedures, and practices that ensure 
        that the executive agency receives a sufficient number of 
        sealed bids or competitive proposals from responsible sources 
        to fulfill the Government's requirements (including performance 
        and delivery schedules) at the best value considering the 
        nature of the property or service procured;
          ``(3) making acquisition decisions consistent with all 
        applicable laws and establishing clear lines of authority, 
        accountability, and responsibility for acquisition 
        decisionmaking within the executive agency;
          ``(4) managing the direction of acquisition policy for the 
        executive agency, including implementation of the unique 
        acquisition policies, regulations, and standards of the 
        executive agency;
          ``(5) developing and maintaining an acquisition career 
        management program in the executive agency to ensure that there 
        is an adequate professional workforce; and
          ``(6) as part of the strategic planning and performance 
        evaluation process required under section 306 of title 5, 
        United States Code, and sections 1105(a)(28), 1115, 1116, and 
        9703 of title 31, United States Code--
                  ``(A) assessing the requirements established for 
                agency personnel regarding knowledge and skill in 
                acquisition resources management and the adequacy of 
                such requirements for facilitating the achievement of 
                the performance goals established for acquisition 
                management;
                  ``(B) in order to rectify any deficiency in meeting 
                such requirements, developing strategies and specific 
                plans for hiring, training, and professional 
                development; and
                  ``(C) reporting to the head of the executive agency 
                on the progress made in improving acquisition 
                management capability.''.
  (2) The item relating to section 16 in the table of contents in 
section 1(b) of such Act is amended to read as follows:

``Sec. 16. Chief Acquisition Officers.''.

  (b) References to Senior Procurement Executive.--
          (1) Amendment to the office of federal policy act.--
                  (A) Subsections (a)(2)(A) and (b) of section 20 of 
                the Office of Federal Procurement Policy Act (41 U.S.C. 
                418(a)(2)(A), (b)) are amended by striking ``senior 
                procurement executive'' each place it appears and 
                inserting ``Chief Acquisition Officer''.
                  (B) Subsection (c)(2)(A)(ii) of section 29 of the 
                Office of Federal Procurement Policy Act (41 U.S.C. 
                425(c)(2)(A)(ii)) is amended by striking ``senior 
                procurement executive'' and inserting ``Chief 
                Acquisition Officer''.
                  (C) Subsection (c) of section 37 of the Office of 
                Federal Procurement Policy Act (41 U.S.C. 433(c)) is 
                amended--
                          (i) by striking ``Senior Procurement 
                        Executive'' in the heading and inserting 
                        ``Chief Acquisition Officer''; and
                          (ii) by striking ``senior procurement 
                        executive'' each place it appears and inserting 
                        ``Chief Acquisition Officer''.
          (2) Amendment to title iii of the federal property and 
        administrative services act of 1949.--Sections 302C(b) and 
        303(f)(1)(B)(iii) of the Federal Property and Administrative 
        Services Act of 1949 (41 U.S.C. 252c, 253) are amended by 
        striking ``senior procurement executive'' each place it appears 
        and inserting ``Chief Acquisition Officer''.
          (3) Amendment to title 10, united states code.--The following 
        sections of title 10, United States Code are amended by 
        striking ``senior procurement executive'' each place it appears 
        and inserting ``Chief Acquisition Officer'':
                  (A) Section 133(c)(1).
                  (B) Subsections (d)(2)(B) and (f)(1) of section 2225.
                  (C) Section 2302c(b).
                  (D) Section 2304(f)(1)(B)(iii).
                  (E) Section 2359a(i).
          (4) References.--Any reference to a senior procurement 
        executive of a department or agency of the United States in any 
        other provision of law or regulation, document, or record of 
        the United States shall be deemed to be a reference to the 
        Chief Acquisition Officer of the department or agency.
  (c) Technical Correction.--Section 1115(a) of title 31, United States 
Code, is amended by striking ``section 1105(a)(29)'' and inserting 
``section 1105(a)(28)''.

SEC. 202. CHIEF ACQUISITION OFFICERS COUNCIL.

  (a) Establishment of Council.--The Office of Federal Procurement 
Policy Act (41 U.S.C. 403 et seq.) is amended by inserting after 
section 16 the following new section:

``SEC. 16A. CHIEF ACQUISITION OFFICERS COUNCIL.

  ``(a) Establishment.--There is established in the executive branch a 
Chief Acquisition Officers Council.
  ``(b) Membership.--The members of the Council shall be as follows:
          ``(1) The Deputy Director for Management of the Office of 
        Management and Budget, who shall act as Chairman of the 
        Council.
          ``(2) The Administrator for Federal Procurement Policy.
          ``(3) The chief acquisition officer of each executive agency.
          ``(4) The Under Secretary of Defense for Acquisition, 
        Technology, and Logistics.
          ``(5) Any other officer or employee of the United States 
        designated by the Chairman.
  ``(c) Leadership; Support.--(1) The Administrator for Federal 
Procurement Policy shall lead the activities of the Council on behalf 
of the Deputy Director for Management.
  ``(2)(A) The Vice Chairman of the Council shall be selected by the 
Council from among its members.
  ``(B) The Vice Chairman shall serve a 1-year term, and may serve 
multiple terms.
  ``(3) The Administrator of General Services shall provide 
administrative and other support for the Council.
  ``(d) Principal Forum.--The Council is designated the principal 
interagency forum for monitoring and improving the Federal acquisition 
system.
  ``(e) Functions.--The Council shall perform functions that include 
the following:
          ``(1) Develop recommendations for the Director of the Office 
        of Management and Budget on Federal acquisition policies and 
        requirements.
          ``(2) Share experiences, ideas, best practices, and 
        innovative approaches related to Federal acquisition.
          ``(3) Assist the Administrator in the identification, 
        development, and coordination of multiagency projects and other 
        innovative initiatives to improve Federal acquisition.
          ``(4) Promote effective business practices that ensure the 
        timely delivery of best value products to the Federal 
        Government and achieve appropriate public policy objectives.
          ``(5) Further integrity, fairness, competition, openness, and 
        efficiency in the Federal acquisition system.
          ``(6) Work with the Office of Personnel Management to assess 
        and address the hiring, training, and professional development 
        needs of the Federal Government related to acquisition.
          ``(7) Work with the Administrator and the Federal Acquisition 
        Regulatory Council to promote the business practices referred 
        to in paragraph (4) and other results of the functions carried 
        out under this subsection.''.
  (b) Clerical Amendment.--The table of contents in section 1(b) of 
such Act is amended by inserting after the item relating to section 16 
the following new item:

``Sec. 16A. Chief Acquisition Officers Council.''.

SEC. 203. STATUTORY AND REGULATORY REVIEW.

  (a) Establishment.--Not later than 90 days after the date of the 
enactment of this Act, the Administrator for Federal Procurement Policy 
shall establish an advisory panel to review laws and regulations 
regarding the use of commercial practices, performance-based 
contracting, the performance of acquisition functions across agency 
lines of responsibility, and the use of Governmentwide contracts.
  (b) Membership.--The panel shall be composed of at least nine 
individuals who are recognized experts in acquisition law and 
Government acquisition policy. In making appointments to the panel, the 
Administrator shall--
          (1) consult with the Secretary of Defense, the Administrator 
        of General Services, the Committees on Armed Services and 
        Government Reform of the House of Representatives, and the 
        Committees on Armed Services and Governmental Affairs of the 
        Senate, and
          (2) ensure that the members of the panel reflect the diverse 
        experiences in the public and private sectors.
  (c) Duties.--The panel shall--
          (1) review all Federal acquisition laws and regulations with 
        a view toward ensuring effective and appropriate use of 
        commercial practices and performance-based contracting; and
          (2) make any recommendations for the repeal or amendment of 
        such laws or regulations that are considered necessary as a 
        result of such review--
                  (A) to eliminate any provisions in such laws or 
                regulations that are unnecessary for the effective, 
                efficient, and fair award and administration of 
                contracts for the acquisition by the Federal Government 
                of goods and services;
                  (B) to ensure the continuing financial and ethical 
                integrity of acquisitions by the Federal Government; 
                and
                  (C) to protect the best interests of the Federal 
                Government.
  (d) Report.--Not later than one year after the establishment of the 
panel, the panel shall submit to the Administrator and to the 
Committees on Armed Services and Government Reform of the House of 
Representatives and the Committees on Armed Services and Governmental 
Affairs of the Senate a report containing a detailed statement of the 
findings, conclusions, and recommendations of the panel.

               Subtitle B--Other Acquisition Improvements

SEC. 211. EXTENSION OF AUTHORITY TO CARRY OUT FRANCHISE FUND PROGRAMS.

  Section 403(f) of the Federal Financial Management Act of 1994 
(Public Law 103-356; 31 U.S.C. 501 note) is amended by striking 
``October 1, 2003'' and inserting ``October 1, 2006''.

SEC. 212. AGENCY ACQUISITION PROTESTS.

  (a) Defense Contracts.--(1) Chapter 137 of title 10, United States 
Code, is amended by inserting after section 2305a the following new 
section:

``Sec. 2305b. Protests

  ``(a) In General.--An interested party may protest an acquisition of 
supplies or services by an agency based on an alleged violation of an 
acquisition law or regulation, and a decision regarding such alleged 
violation shall be made by the agency in accordance with this section.
  ``(b) Restriction on Contract Award Pending Decision.--(1) Except as 
provided in paragraph (2), a contract may not be awarded by an agency 
after a protest concerning the acquisition has been submitted under 
this section and while the protest is pending.
  ``(2) The head of the acquisition activity responsible for the award 
of the contract may authorize the award of a contract, notwithstanding 
pending protest under this section, upon making a written finding that 
urgent and compelling circumstances do not allow for waiting for a 
decision on the protest.
  ``(c) Restriction on Contract Performance Pending Decision.--(1) 
Except as provided in paragraph (2), performance of a contract may not 
be authorized (and performance of the contract shall cease if 
performance has already begun) in any case in which a protest of the 
contract award is submitted under this section before the later of--
          ``(A) the date that is 10 days after the date of contract 
        award; or
          ``(B) the date that is five days after an agency debriefing 
        date offered to an unsuccessful offeror for any debriefing that 
        is requested and, when requested, is required, under section 
        2305(b)(5) of this title.
  ``(2) The head of the acquisition activity responsible for the award 
of a contract may authorize performance of the contract notwithstanding 
a pending protest under this section upon making a written finding that 
urgent and compelling circumstances do not allow for waiting for a 
decision on the protest.
  ``(d) Deadline for Decision.--The head of an agency shall issue a 
decision on a protest under this section not later than the date that 
is 20 working days after the date on which the protest is submitted to 
such head of an agency.
  ``(e) Construction.--Nothing in this section shall affect the right 
of an interested party to file a protest with the Comptroller General 
under subchapter V of chapter 35 of title 31 or in the United States 
Court of Federal Claims.
  ``(f) Definitions.--In this section, the terms `protest' and 
`interested party' have the meanings given such terms in section 3551 
of title 31.''.
  (2) The table of sections at the beginning of such chapter is amended 
by inserting after the item relating to section 2305a the following new 
item:

``2305b. Protests.''.
  (b) Other Agencies.--Title III of the Federal Property and 
Administrative Services Act of 1949 is amended by inserting after 
section 303M (41 U.S.C. 253m) the following new section:

``SEC. 303N. PROTESTS.

  ``(a) In General.--An interested party may protest an acquisition of 
supplies or services by an executive agency based on an alleged 
violation of an acquisition law or regulation, and a decision regarding 
such alleged violation shall be made by the agency in accordance with 
this section.
  ``(b) Restriction on Contract Award Pending Decision.--(1) Except as 
provided in paragraph (2), a contract may not be awarded by an agency 
after a protest concerning the acquisition has been submitted under 
this section and while the protest is pending.
  ``(2) The head of the acquisition activity responsible for the award 
of a contract may authorize the award of the contract, notwithstanding 
a pending protest under this section, upon making a written finding 
that urgent and compelling circumstances do not allow for waiting for a 
decision on the protest.
  ``(c) Restriction on Contract Performance Pending Decision.--(1) 
Except as provided in paragraph (2), performance of a contract may not 
be authorized (and performance of the contract shall cease if 
performance has already begun) in any case in which a protest of the 
contract award is submitted under this section before the later of--
          ``(A) the date that is 10 days after the date of contract 
        award; or
          ``(B) the date that is five days after an agency debriefing 
        date offered to an unsuccessful offeror for any debriefing that 
        is requested and, when requested, is required, under section 
        303B(e) of this title.
  ``(2) The head of the acquisition activity responsible for the award 
of a contract may authorize performance of the contract notwithstanding 
a pending protest under this section upon making a written finding that 
urgent and compelling circumstances do not allow for waiting for a 
decision on the protest.
  ``(d) Deadline for Decision.--The head of an executive agency shall 
issue a decision on a protest under this section not later than the 
date that is 20 working days after the date on which the protest is 
submitted to the executive agency.
  ``(e) Construction.--Nothing in this section shall affect the right 
of an interested party to file a protest with the Comptroller General 
under subchapter V of chapter 35 of title 31, United States Code, or in 
the United States Court of Federal Claims.
  ``(f) Definitions.--In this section, the terms `protest' and 
`interested party' have the meanings given such terms in section 3551 
of title 31, United States Code.''.
  (c) Conforming Amendment.--Section 3553(d)(4) of title 31, United 
States Code, is amended--
          (1) in subparagraph (A), by striking ``or'' at the end;
          (2) by striking the period at the end of subparagraph (B) and 
        inserting ``; or''; and
          (3) by adding at the end the following new subparagraph:
          ``(C) in the case of a protest of the same matter regarding 
        such contract that is submitted under section 2305b of title 10 
        or section 303N of the Federal Property and Administrative 
        Services Act of 1949, the date that is 5 days after the date on 
        which a decision on that protest is issued.''.

SEC. 213. IMPROVEMENTS IN CONTRACTING FOR ARCHITECTURAL AND ENGINEERING 
                    SERVICES.

  (a) Clarification of Definition of Surveying and Mapping.--(1) 
Section 1102 of title 40, United States Code, is amended by adding at 
the end the following new paragraph:
          ``(4) Surveying and mapping.--The term `surveying and 
        mapping' means services performed by professionals such as 
        surveyors, photogrammetrists, hydrographers, geodesists, or 
        cartographers in the collection, storage, retrieval, or 
        dissemination of graphical or digital data to depict natural or 
        manmade physical features, phenomena, or boundaries of the 
        earth and any information related to such data, including any 
        such data that comprises a survey, map, chart, geographic 
        information system, remotely sensed image or data, or an aerial 
        photograph.''.
  (2) The Federal Acquisition Regulation shall be revised to include 
the definition added by subsection (a) of this section.
  (b) Title 10.--Section 2855(b) of title 10, United States Code, is 
amended--
          (1) in paragraph (2), by striking ``$85,000'' and inserting 
        ``$300,000''; and
          (2) by adding at the end the following new paragraph:
  ``(4) The selection and competition requirements described in 
subsection (a) shall apply to any contract for architectural and 
engineering services (including surveying and mapping services) that is 
entered into by the head of an agency (as such term is defined in 
section 2302 of this title).''.
  (c) Architectural and Engineering Services.--Architectural and 
engineering services (as defined in section 1102 of title 40, United 
States Code) shall not be offered under multiple-award schedule 
contracts entered into by the Administrator of General Services or 
under Governmentwide task and delivery-order contracts entered into 
under sections 2304a and 2304b of title 10, United States Code, or 
sections 303H and 303I of the Federal Property and Administrative 
Services Act of 1949 (41 U.S.C. 253h and 253i) unless such services--
          (1) are performed under the direct supervision of a 
        professional engineer licensed in a State; and
          (2) are awarded in accordance with the selection procedures 
        set forth in chapter 11 of title 40, United States Code.

SEC. 214. AUTHORIZATION OF TELECOMMUTING FOR FEDERAL CONTRACTORS.

  (a) Amendment to the Federal Acquisition Regulation.--Not later than 
180 days after the date of the enactment of this Act, the Federal 
Acquisition Regulatory Council shall amend 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 and 421) to permit 
telecommuting by employees of Federal Government contractors in the 
performance of contracts entered into with executive agencies.
  (b) Content of Amendment.--The regulation issued pursuant to 
subsection (a) shall, at a minimum, provide that solicitations for the 
acquisition of property or services may not set forth any requirement 
or evaluation criteria that would--
          (1) render an offeror ineligible to enter into a contract on 
        the basis of the inclusion of a plan of the offeror to permit 
        the offeror's employees to telecommute; or
          (2) reduce the scoring of an offer on the basis of the 
        inclusion in the offer of a plan of the offeror to permit the 
        offeror's employees to telecommute, unless the contracting 
        officer concerned first--
                  (A) determines that the requirements of the agency, 
                including the security requirements of the agency, 
                cannot be met if the telecommuting is permitted; and
                  (B) documents in writing the basis for that 
                determination.
  (c) GAO Report.--Not later than one year after the date on which the 
regulation required by subsection (a) is published in the Federal 
Register, the Comptroller General shall submit to Congress--
          (1) an evaluation of--
                  (A) the conformance of the regulations with law; and
                  (B) the compliance by executive agencies with the 
                regulations; and
          (2) any recommendations that the Comptroller General 
        considers appropriate.
  (d) Definition.--In this section, the term ``executive agency'' has 
the meaning given that term in section 4 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 403).

SEC. 215. PROCEDURAL REQUIREMENTS FOR CIVILIAN AGENCIES RELATING TO 
                    PRODUCTS OF FEDERAL PRISON INDUSTRIES.

  Title III of the Federal Property and Administrative Services Act of 
1949 (41 U.S.C. 251 et seq.) is amended by adding at the end the 
following new section:

``SEC. 318. PRODUCTS OF FEDERAL PRISON INDUSTRIES: PROCEDURAL 
                    REQUIREMENTS.

  ``(a) Market Research.--Before purchasing a product listed in the 
latest edition of the Federal Prison Industries catalog under section 
4124(d) of title 18, United States Code, the head of an executive 
agency shall conduct market research to determine whether the Federal 
Prison Industries product is comparable to products available from the 
private sector that best meet the executive agency's needs in terms of 
price, quality, and time of delivery.
  ``(b) Competition Requirement.--If the head of the executive agency 
determines that a Federal Prison Industries product is not comparable 
in price, quality, or time of delivery to products available from the 
private sector that best meet the executive agency's needs in terms of 
price, quality, and time of delivery, the agency head shall use 
competitive procedures for the procurement of the product or shall make 
an individual purchase under a multiple award contract. In conducting 
such a competition or making such a purchase, the agency head shall 
consider a timely offer from Federal Prison Industries.
  ``(c) Implementation by Head of Executive Agency.--The head of an 
executive agency shall ensure that--
          ``(1) the executive agency does not purchase a Federal Prison 
        Industries product or service unless a contracting officer of 
        the agency determines that the product or service is comparable 
        to products or services available from the private sector that 
        best meet the agency's needs in terms of price, quality, and 
        time of delivery; and
          ``(2) Federal Prison Industries performs its contractual 
        obligations to the same extent as any other contractor for the 
        executive agency.
  ``(d) Market Research Determination Not Subject to Review.--A 
determination by a contracting officer regarding whether a product or 
service offered by Federal Prison Industries is comparable to products 
or services available from the private sector that best meet an 
executive agency's needs in terms of price, quality, and time of 
delivery shall not be subject to review pursuant to section 4124(b) of 
title 18.
  ``(e) Performance as a Subcontractor.--(1) A contractor or potential 
contractor of an executive agency may not be required to use Federal 
Prison Industries as a subcontractor or supplier of products or 
provider of services for the performance of a contract of the executive 
agency by any means, including means such as--
          ``(A) a contract solicitation provision requiring a 
        contractor to offer to make use of products or services of 
        Federal Prison Industries in the performance of the contract;
          ``(B) a contract specification requiring the contractor to 
        use specific products or services (or classes of products or 
        services) offered by Federal Prison Industries in the 
        performance of the contract; or
          ``(C) any contract modification directing the use of products 
        or services of Federal Prison Industries in the performance of 
        the contract.
  ``(2) In this subsection, the term `contractor', with respect to a 
contract, includes a subcontractor at any tier under the contract.
  ``(f) Protection of Classified and Sensitive Information.--The head 
of an executive agency may not enter into any contract with Federal 
Prison Industries under which an inmate worker would have access to--
          ``(1) any data that is classified;
          ``(2) any geographic data regarding the location of--
                  ``(A) surface and subsurface infrastructure providing 
                communications or water or electrical power 
                distribution;
                  ``(B) pipelines for the distribution of natural gas, 
                bulk petroleum products, or other commodities; or
                  ``(C) other utilities; or
          ``(3) any personal or financial information about any 
        individual private citizen, including information relating to 
        such person's real property however described, without the 
        prior consent of the individual.
  ``(g) Definitions.--In this section:
          ``(1) The term `competitive procedures' has the meaning given 
        such term in section 4(5) of the Office of Federal Procurement 
        Policy Act (41 U.S.C. 403(5)).
          ``(2) The term `market research' means obtaining specific 
        information about the price, quality, and time of delivery of 
        products available in the private sector through a variety of 
        means, which may include--
                  ``(A) contacting knowledgeable individuals in 
                government and industry;
                  ``(B) interactive communication among industry, 
                acquisition personnel, and customers; and
                  ``(C) interchange meetings or pre-solicitation 
                conferences with potential offerors.''.

                     TITLE III--CONTRACT INCENTIVES

SEC. 301. SHARE-IN-SAVINGS INITIATIVES.

  (a) Defense Contracts.--Section 2332 of title 10, United States Code, 
is amended to read as follows:

``Sec. 2332. Share-in-savings contracts

  ``(a) Authority To Enter Into Share-in-Savings Contracts.--(1) The 
head of an agency may enter into a share-in-savings contract in which 
the Government awards a contract to improve mission-related or 
administrative processes or to accelerate the achievement of its 
mission and share with the contractor in savings achieved through 
contract performance.
  ``(2)(A) Except as provided in subparagraph (B), a share-in-savings 
contract shall be awarded for a period of not more than five years.
  ``(B) A share-in-savings contract may be awarded for a period greater 
than five years, but not more than 10 years, if the head of the agency 
determines in writing prior to award of the contract that--
          ``(i) the level of risk to be assumed and the investment to 
        be undertaken by the contractor is likely to inhibit the 
        government from obtaining the needed performance competitively 
        at a fair and reasonable price if the contract is limited in 
        duration to a period of five years or less; and
          ``(ii) the performance to be acquired is likely to continue 
        for a period of time sufficient to generate reasonable benefit 
        for the government.
  ``(3) Contracts awarded pursuant to the authority of this section 
shall, to the maximum extent practicable, be performance-based 
contracts that identify objective outcomes and contain performance 
standards that will be used to measure achievement and milestones that 
must be met before payment is made.
  ``(4) Contracts awarded pursuant to the authority of this section 
shall include a provision containing a quantifiable baseline that is to 
be the basis upon which a savings share ratio is established that 
governs the amount of payment a contractor is to receive under the 
contract. Before commencement of performance of such a contract, the 
chief acquisition officer of the agency shall determine in writing that 
the terms of the provision are quantifiable and will likely yield value 
to the Government.
  ``(5)(A) The head of the agency may retain savings realized through 
the use of a share-in-savings contract under this section that are in 
excess of the total amount of savings paid to the contractor under the 
contract. Except as provided in subparagraph (B), savings shall be 
credited to the appropriation or fund against which charges were made 
to carry out the contract.
  ``(B) Amounts retained by the agency under this subsection shall--
          ``(i) without further appropriation, remain available until 
        expended; and
          ``(ii) be applied first to fund any contingent liabilities 
        associated with share-in-savings procurements that are not 
        fully funded.
  ``(b) Cancellation and Termination.--(1) If funds are not made 
available for the continuation of a share-in-savings contract entered 
into under this section in a subsequent fiscal year, the contract shall 
be canceled or terminated. The costs of cancellation or termination may 
be paid out of--
          ``(A) appropriations available for the performance of the 
        contract;
          ``(B) appropriations available for acquisition of the type of 
        property or services procured under the contract, and not 
        otherwise obligated; or
          ``(C) funds subsequently appropriated for payments of costs 
        of cancellation or termination, subject to the limitations in 
        paragraph (3).
  ``(2) The amount payable in the event of cancellation or termination 
of a share-in-savings contract shall be negotiated with the contractor 
at the time the contract is entered into.
  ``(3) The head of an agency may enter into share-in-savings contracts 
under this section in any given fiscal year even if funds are not made 
specifically available for the full costs of cancellation or 
termination of the contract if funds are available and sufficient to 
make payments with respect to the first fiscal year of the contract and 
the following conditions are met regarding the funding of cancellation 
and termination liability:
          ``(A) The amount of unfunded contingent liability for the 
        contract does not exceed the lesser of--
                  ``(i) 50 percent of the estimated costs of a 
                cancellation or termination; or
                  ``(ii) $10,000,000.
          ``(B) Unfunded contingent liability in excess of $5,000,000 
        has been approved by the Director of the Office of Management 
        and Budget or the Director's designee.
  ``(c) Definitions.--In this section:
          ``(1) The term `contractor' means a private entity that 
        enters into a contract with an agency.
          ``(2) The term `savings' means--
                  ``(A) monetary savings to an agency; or
                  ``(B) savings in time or other benefits realized by 
                the agency, including enhanced revenues.
          ``(3) The term `share-in-savings contract' means a contract 
        under which--
                  ``(A) a contractor provides solutions for--
                          ``(i) improving the agency's mission-related 
                        or administrative processes; or
                          ``(ii) accelerating the achievement of agency 
                        missions; and
                  ``(B) the head of the agency pays the contractor an 
                amount equal to a portion of the savings derived by the 
                agency from--
                          ``(i) any improvements in mission-related or 
                        administrative processes that result from 
                        implementation of the solution; or
                          ``(ii) acceleration of achievement of agency 
                        missions.''.
  (b) Other Contracts.--Section 317 of the Federal Property and 
Administrative Services Act of 1949 is amended to read as follows:

``SEC. 317. SHARE-IN-SAVINGS CONTRACTS.

  ``(a) Authority To Enter Into Share-in-Savings Contracts.--(1) The 
head of an executive agency may enter into a share-in-savings contract 
in which the Government awards a contract to improve mission-related or 
administrative processes or to accelerate the achievement of its 
mission and share with the contractor in savings achieved through 
contract performance.
  ``(2)(A) Except as provided in subparagraph (B), a share-in-savings 
contract shall be awarded for a period of not more than five years.
  ``(B) A share-in-savings contract may be awarded for a period greater 
than five years, but not more than 10 years, if the head of the agency 
determines in writing prior to award of the contract that--
          ``(i) the level of risk to be assumed and the investment to 
        be undertaken by the contractor is likely to inhibit the 
        government from obtaining the needed performance competitively 
        at a fair and reasonable price if the contract is limited in 
        duration to a period of five years or less; and
          ``(ii) the performance to be acquired is likely to continue 
        for a period of time sufficient to generate reasonable benefit 
        for the government.
  ``(3) Contracts awarded pursuant to the authority of this section 
shall, to the maximum extent practicable, be performance-based 
contracts that identify objective outcomes and contain performance 
standards that will be used to measure achievement and milestones that 
must be met before payment is made.
  ``(4) Contracts awarded pursuant to the authority of this section 
shall include a provision containing a quantifiable baseline that is to 
be the basis upon which a savings share ratio is established that 
governs the amount of payment a contractor is to receive under the 
contract. Before commencement of performance of such a contract, the 
chief acquisition officer of the agency shall determine in writing that 
the terms of the provision are quantifiable and will likely yield value 
to the Government.
  ``(5)(A) The head of the agency may retain savings realized through 
the use of a share-in-savings contract under this section that are in 
excess of the total amount of savings paid to the contractor under the 
contract. Except as provided in subparagraph (B), savings shall be 
credited to the appropriation or fund against which charges were made 
to carry out the contract.
  ``(B) Amounts retained by the agency under this subsection shall--
          ``(i) without further appropriation, remain available until 
        expended; and
          ``(ii) be applied first to fund any contingent liabilities 
        associated with share-in-savings procurements that are not 
        fully funded.
  ``(b) Cancellation and Termination.--(1) If funds are not made 
available for the continuation of a share-in-savings contract entered 
into under this section in a subsequent fiscal year, the contract shall 
be canceled or terminated. The costs of cancellation or termination may 
be paid out of--
          ``(A) appropriations available for the performance of the 
        contract;
          ``(B) appropriations available for acquisition of the type of 
        property or services procured under the contract, and not 
        otherwise obligated; or
          ``(C) funds subsequently appropriated for payments of costs 
        of cancellation or termination, subject to the limitations in 
        paragraph (3).
  ``(2) The amount payable in the event of cancellation or termination 
of a share-in-savings contract shall be negotiated with the contractor 
at the time the contract is entered into.
  ``(3) The head of an executive agency may enter into share-in-savings 
contracts under this section in any given fiscal year even if funds are 
not made specifically available for the full costs of cancellation or 
termination of the contract if funds are available and sufficient to 
make payments with respect to the first fiscal year of the contract and 
the following conditions are met regarding the funding of cancellation 
and termination liability:
          ``(A) The amount of unfunded contingent liability for the 
        contract does not exceed the lesser of--
                  ``(i) 50 percent of the estimated costs of a 
                cancellation or termination; or
                  ``(ii) $10,000,000.
          ``(B) Unfunded contingent liability in excess of $5,000,000 
        has been approved by the Director of the Office of Management 
        and Budget or the Director's designee.
  ``(c) Definitions--In this section:
          ``(1) The term `contractor' means a private entity that 
        enters into a contract with an agency.
          ``(2) The term `savings' means--
                  ``(A) monetary savings to an agency; or
                  ``(B) savings in time or other benefits realized by 
                the agency, including enhanced revenues.
          ``(3) The term `share-in-savings contract' means a contract 
        under which--
                  ``(A) a contractor provides solutions for--
                          ``(i) improving the agency's mission-related 
                        or administrative processes; or
                          ``(ii) accelerating the achievement of agency 
                        missions; and
                  ``(B) the head of the agency pays the contractor an 
                amount equal to a portion of the savings derived by the 
                agency from--
                          ``(i) any improvements in mission-related or 
                        administrative processes that result from 
                        implementation of the solution; or
                          ``(ii) acceleration of achievement of agency 
                        missions.''.
  (c) Development of Incentives.--The Director of the Office of 
Management and Budget shall--
          (1) identify potential opportunities for the use of share-in-
        savings contracts;
          (2) provide guidance to executive agencies for determining 
        mutually beneficial savings share ratios and baselines from 
        which savings may be measured; and
          (3) in consultation with the Committee on Governmental 
        Affairs of the Senate, the Committee on Government Reform of 
        the House of Representatives, and executive agencies, develop 
        techniques to permit an executive agency to retain a portion of 
        the savings (after payment of the contractor's share of the 
        savings) derived from share-in-savings contracts as funds are 
        appropriated to the agency in future fiscal years.
  (d) Regulations.--Not later than 180 days after the date of the 
enactment of this Act, the Federal Acquisition Regulation shall be 
revised to implement the provisions enacted by this section. Such 
revisions shall--
          (1) provide for the use of competitive procedures in the 
        selection and award of share-in-savings contracts to--
                  (A) ensure the contractor's share of savings reflects 
                the risk involved and market conditions; and
                  (B) otherwise yield best value to the government; and
          (2) allow appropriate regulatory flexibility to facilitate 
        the use of share-in-savings contracts by executive agencies, 
        including the use of innovative provisions for technology 
        refreshment and nonstandard Federal Acquisition Regulation 
        contract clauses.
  (e) OMB Report to Congress.--In consultation with executive agencies, 
the Director of the Office of Management and Budget shall, not later 
than 2 years after the completion of the revisions to the Federal 
Acquisition Regulation under subsection (d), submit to Congress a 
report containing--
          (1) a description of the number of share-in-savings contracts 
        entered into by each executive agency under by this section and 
        the amendments made by this section, and, for each contract 
        identified--
                  (A) the performance acquired;
                  (B) the total amount of payments made to the 
                contractor; and
                  (C) the total amount of savings or other measurable 
                benefits realized;
          (2) a description of the ability of agencies to determine the 
        baseline costs of a project against which savings can be 
        measured; and
          (3) any recommendations, as the Director deems appropriate, 
        regarding additional changes in law that may be necessary to 
        ensure effective use of share-in-savings contracts by executive 
        agencies.
  (f) Definitions.--In this section, the terms ``contractor'', 
``savings'', and ``share-in-savings contract'' have the meanings given 
those terms in section 2332 of title 10, United States Code, and 
section 317 of the Federal Property and Administrative Services Act of 
1949 (as amended by subsections (a) and (b)).
  (g) Repeal of Superseded Provisions.--Subsections (c), (d), (e), (f), 
(g), and (i) of section 210 of the E-Government Act of 2002 (Public Law 
107-317; 116 Stat. 2936) are repealed.

SEC. 302. INCENTIVES FOR CONTRACT EFFICIENCY.

  (a) Incentives for Contract Efficiency.--The Office of Federal 
Procurement Policy Act (41 U.S.C. 403 et seq.) is amended by adding at 
the end the following new section:

``SEC. 41. INCENTIVES FOR EFFICIENT PERFORMANCE OF SERVICES CONTRACTS.

  ``(a) Options for Services Contracts.--An option included in a 
contract for services to extend the contract by one or more periods may 
provide that it be exercised on the basis of exceptional performance by 
the contractor. A contract that contains such an option provision shall 
include performance standards for measuring performance under the 
contract, and to the maximum extent practicable be performance-based. 
Such option provision shall only be exercised in accordance with 
applicable provisions of law or regulation that set forth restrictions 
on the duration of the contract containing the option.
  ``(b) Definition of Performance-Based.--In this section, the term 
`performance-based', with respect to a contract, task order, or 
contracting, means that the contract, task order, or contracting, 
respectively, includes the use of performance work statements that set 
forth contract requirements in clear, specific, and objective terms 
with measurable outcomes.''.
  (b) Clerical and Technical Amendments.--(1) The table of contents in 
section 1(b) of such Act is amended by striking the last item and 
inserting the following:

``Sec. 40. Protection of constitutional rights of contractors.
``Sec. 41. Incentives for efficient performance of services 
contracts.''.
  (2) The section before section 41 of such Act (as added by subsection 
(a)) is redesignated as section 40.

               TITLE IV--ACQUISITIONS OF COMMERCIAL ITEMS

SEC. 401. ADDITIONAL INCENTIVE FOR USE OF PERFORMANCE-BASED CONTRACTING 
                    FOR SERVICES.

  (a) Other Contracts.--Section 41 of the Office of Federal Procurement 
Policy Act, as added by section 302, is amended--
          (1) by redesignating subsection (b) as subsection (c); and
          (2) by inserting after subsection (a) the following new 
        subsection:
  ``(b) Incentive for Use of Performance-Based Services Contracts.--(1) 
A performance-based contract for the procurement of services entered 
into by an executive agency or a performance-based task order for 
services issued by an executive agency may be treated as a contract for 
the procurement of commercial items if--
          ``(A) the contract or task order sets forth specifically each 
        task to be performed and, for each task--
                  ``(i) defines the task in measurable, mission-related 
                terms; and
                  ``(ii) identifies the specific end products or output 
                to be achieved; and
          ``(B) the source of the services provides similar services to 
        the general public under terms and conditions similar to those 
        offered to the Federal Government.
  ``(2) The regulations implementing this subsection shall require 
agencies to collect and maintain reliable data sufficient to identify 
the contracts or task orders treated as contracts for commercial items 
using the authority of this subsection. The data may be collected using 
the Federal Procurement Data System or other reporting mechanism.
  ``(3) Not later than two years after the date of the enactment of 
this subsection, the Director of the Office of Management and Budget 
shall prepare and submit to the Committees on Governmental Affairs and 
on Armed Services of the Senate and the Committees on Government Reform 
and on Armed Services of the House of Representatives a report on the 
contracts or task orders treated as contracts for commercial items 
using the authority of this subsection. The report shall include data 
on the use of such authority both government-wide and for each 
department and agency.
  ``(4) The authority under this subsection shall expire 10 years after 
the date of the enactment of this subsection.''.
  (b) Center of Excellence in Service Contracting.--Not later than 180 
days after the date of the enactment of this Act, the Administrator for 
Federal Procurement Policy shall establish a center of excellence in 
contracting for services. The center of excellence shall assist the 
acquisition community by identifying, and serving as a clearinghouse 
for, best practices in contracting for services in the public and 
private sectors.
  (c) Repeal of Superseded Provision.--Subsection (b) of section 821 of 
the Floyd D. Spence National Defense Authorization Act for Fiscal Year 
2001 (as enacted into law by Public Law 106-398; 114 Stat. 1654A-218) 
is repealed.

SEC. 402. AUTHORIZATION OF ADDITIONAL COMMERCIAL CONTRACT TYPES.

  Section 8002(d) of the Federal Acquisition Streamlining Act of 1994 
(Public Law 103-355; 108 Stat. 3387; 41 U.S.C. 264 note) is amended--
          (1) in paragraph (1), by striking ``and'';
          (2) by striking the period at the end of paragraph (2) and 
        inserting ``; and''; and
          (3) by adding at the end the following new paragraph:
          ``(3) authority for use of a time and materials contract or a 
        labor-hour contract for the procurement of commercial services 
        that are commonly sold to the general public through such 
        contracts.''

SEC. 403. CLARIFICATION OF COMMERCIAL SERVICES DEFINITION.

  Subparagraph (F) of section 4(12) of the Office of Federal 
Procurement Policy Act (41 U.S.C. 403(12)(F)) is amended--
          (1) by striking ``catalog or''; and
          (2) by inserting ``or specific outcomes to be achieved'' 
        after ``performed''.

SEC. 404. DESIGNATION OF COMMERCIAL BUSINESS ENTITIES.

  (a) In General.--Section 4 of the Office of Federal Procurement 
Policy Act (41 U.S.C. 403), as amended by section 101, is further 
amended--
          (1) by adding at the end of paragraph (12) the following new 
        subparagraph:
                  ``(I) Items or services produced or provided by a 
                commercial entity.''; and
          (2) by adding at the end the following new paragraph:
          ``(17) The term `commercial entity' means any enterprise 
        whose primary customers are other than the Federal Government. 
        In order to qualify as a commercial entity, at least 90 percent 
        (in dollars) of the sales of the enterprise over the past three 
        business years must have been made to private sector 
        entities.''.
  (b) Collection of Data.--Regulations implementing the amendments made 
by subsection (a) shall require agencies to collect and maintain 
reliable data sufficient to identify the contracts entered into or task 
orders awarded for items or services produced or provided by a 
commercial entity. The data may be collected using the Federal 
Procurement Data System or other reporting mechanism.
  (c) OMB Report.--Not later than two years after the date of the 
enactment of this subsection, the Director of the Office of Management 
and Budget shall prepare and submit to the Committees on Governmental 
Affairs and on Armed Services of the Senate and the Committees on 
Government Reform and on Armed Services of the House of Representatives 
a report on the contracts entered into or task orders awarded for items 
or services produced or provided by a commercial entity. The report 
shall include data on the use of such authority both government-wide 
and for each department and agency.
  (d) Comptroller General Review.--The Comptroller General shall review 
the implementation of the amendments made by subsection (a) to evaluate 
the effectiveness of such implementation in increasing the availability 
of items and services to the Federal Government at fair and reasonable 
prices.

                         TITLE V--OTHER MATTERS

SEC. 501. AUTHORITY TO ENTER INTO CERTAIN PROCUREMENT-RELATED 
                    TRANSACTIONS AND TO CARRY OUT CERTAIN PROTOTYPE 
                    PROJECTS.

  Title III of the Federal Property and Administrative Services Act of 
1949 (41 U.S.C. 251 et seq.) as amended by section 215, is further 
amended by adding at the end the following new section:

``SEC. 319. AUTHORITY TO ENTER INTO CERTAIN TRANSACTIONS FOR DEFENSE 
                    AGAINST OR RECOVERY FROM TERRORISM OR NUCLEAR, 
                    BIOLOGICAL, CHEMICAL, OR RADIOLOGICAL ATTACK.

  ``(a) Authority.--
          ``(1) In general.--The head of an executive agency who 
        engages in basic research, applied research, advanced research, 
        and development projects that--
                  ``(A) are necessary to the responsibilities of such 
                official's executive agency in the field of research 
                and development, and
                  ``(B) have the potential to facilitate defense 
                against or recovery from terrorism or nuclear, 
                biological, chemical, or radiological attack,
        may exercise the same authority (subject to the same 
        restrictions and conditions) with respect to such research and 
        projects as the Secretary of Defense may exercise under section 
        2371 of title 10, United States Code, except for subsections 
        (b) and (f) of such section 2371.
          ``(2) Prototype projects.--The head of an executive agency 
        may, under the authority of paragraph (1), carry out prototype 
        projects that meet the requirements of subparagraphs (A) and 
        (B) of paragraph (1) in accordance with the requirements and 
        conditions provided for carrying out prototype projects under 
        section 845 of the National Defense Authorization Act for 
        Fiscal Year 1994 (Public Law 103-160; 10 U.S.C. 2371 note). In 
        applying the requirements and conditions of that section 845--
                  ``(A) subsection (c) of that section shall apply with 
                respect to prototype projects carried out under this 
                paragraph; and
                  ``(B) the Director of the Office of Management and 
                Budget shall perform the functions of the Secretary of 
                Defense under subsection (d) of that section.
          ``(3) Applicability to selected executive agencies.--
                  ``(A) OMB authorization required.--The head of an 
                executive agency may exercise authority under this 
                subsection only if authorized by the Director of the 
                Office of Management and Budget to do so.
                  ``(B) Relationship to authority of department of 
                homeland security.--The authority under this subsection 
                shall not apply to the Secretary of Homeland Security 
                while section 831 of the Homeland Security Act of 2002 
                (Public Law 107-296; 116 Stat. 2224) is in effect.
  ``(b) Annual Report.--The annual report of the head of an executive 
agency that is required under subsection (h) of section 2371 of title 
10, United States Code, as applied to the head of the executive agency 
by subsection (a), shall be submitted to the Committee on Governmental 
Affairs of the Senate and the Committee on Government Reform of the 
House of Representatives.
  ``(c) Regulations.--The Director of the Office of Management and 
Budget shall prescribe regulations to carry out this section.''.

SEC. 502. AMENDMENTS RELATING TO FEDERAL EMERGENCY PROCUREMENT 
                    FLEXIBILITY.

  (a) Repeal of Sunset for Authorities Applicable to Procurements for 
Defense Against or Recovery From Terrorism or Nuclear, Biological, 
Chemical, or Radiological Attack.--Section 852 of the Homeland Security 
Act of 2002 (Public Law 107-296; 116 Stat. 2235) is amended by striking 
``, but only if a solicitation of offers for the procurement is issued 
during the 1-year period beginning on the date of the enactment of this 
Act''.
  (b) Applicability of Increased Simplified Acquisition Threshold.--(1) 
The matter preceding paragraph (1) of section 853(a) of the Homeland 
Security Act of 2002 (Public Law 107-296; 116 Stat. 2235) is amended to 
read as follows:
  ``(a) Threshold Amounts.--For a procurement referred to in section 
852, the simplified acquisition threshold referred to in section 4(11) 
of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11)) is 
deemed to be--''.
  (2) Subsections (b) and (c) of section 853 of such Act are repealed.
  (3) The heading of section 853 of such Act is amended to read as 
follows:

``SEC. 853. INCREASED SIMPLIFIED ACQUISITION THRESHOLD FOR CERTAIN 
                    PROCUREMENTS.''.

  (4) The table of contents in section 1(b) of such Act is amended by 
striking the item relating to section 853 and inserting the following:

``Sec. 853. Increased simplified acquisition threshold for certain 
procurements.''.
  (5) Section 18(c)(1) of the Office of Federal Procurement Policy Act 
(41 U.S.C. 416(c)(1)) is amended--
          (A) by striking ``or'' at the end of subparagraph (G);
          (B) by striking the period at the end of subparagraph (H) and 
        inserting ``; or''; and
          (C) by adding at the end the following:
          ``(I) the procurement is by the head of an executive agency 
        pursuant to the special procedures provided in section 853 of 
        the Homeland Security Act of 2002 (Public Law 107-296).''.
  (c) Applicability of Certain Commercial Items Authorities.--(1) 
Subsection (a) of section 855 of the Homeland Security Act of 2002 
(Public Law 107-296; 116 Stat. 2236) is amended to read as follows:
  ``(a) Authority.--With respect to a procurement referred to in 
section 852, the head of an executive agency may deem any item or 
service to be a commercial item for the purpose of Federal procurement 
laws.''.
  (2) Subsection (b)(1) of section 855 of such Act is amended by 
striking ``to which any of the provisions of law referred to in 
subsection (a) are applied''.
  (d) Extension of Deadline for Review and Report.--Section 857(a) of 
the Homeland Security Act of 2002 (Public Law 107-296; 116 Stat. 2237) 
is amended by striking ``2004'' and inserting ``2006''.

SEC. 503. AUTHORITY TO MAKE INFLATION ADJUSTMENTS TO SIMPLIFIED 
                    ACQUISITION THRESHOLD.

  Section 4(11) of the Office of Federal Procurement Policy Act (41 
U.S.C. 403(11)) is amended by inserting before the period at the end 
the following: ``, except that such amount may be adjusted by the 
Administrator every five years to the amount equal to $100,000 in 
constant fiscal year 2003 dollars (rounded to the nearest $10,000)''.

SEC. 504. TECHNICAL CORRECTIONS RELATED TO DUPLICATIVE AMENDMENTS.

  (a) Repeal of Superseded Subchapter and Related Conforming 
Amendments.--(1) Subchapter II of chapter 35 of title 44, United States 
Code, is repealed.
  (2) Subchapter III of such chapter is redesignated as subchapter II.
  (3) Section 3549 of title 44, United States Code, is amended by 
striking the sentence beginning with ``While this subchapter''.
  (4) The table of sections at the beginning of chapter 35 of title 44, 
United States Code, is amended--
          (A) by striking the items relating to sections 3531 through 
        3538; and
          (B) by striking the heading ``SUBCHAPTER III--INFORMATION 
        SECURITY''.
  (5) Section 2224a of title 10, United States Code, is repealed, and 
the table of sections at the beginning of chapter 131 of such title is 
amended by striking the item relating to such section.
  (b) Conforming Amendments Related to Repeals of Share-in-Savings and 
Solutions-Based Contracting Pilot Programs.--(1) Chapter 115 of title 
40, United States Code, is repealed.
  (2) The table of chapters at the beginning of subtitle III of such 
title is amended by striking the item relating to chapter 115.
  (c) Amendments Made by E-Government Act Made Applicable.--The 
following provisions of law shall read as if the amendments made by 
title X of the Homeland Security Act of 2002 (Public Law 107-296) to 
such provisions did not take effect:
          (1) Section 2224 of title 10, United States Code.
          (2) Sections 20 and 21 of the National Institute of Standards 
        and Technology Act (15 U.S.C. 278g-3 and 278g-4).
          (3) Sections 11331 and 11332 of title 40, United States Code.
          (4) Subtitle G of title X of the Floyd D. Spence National 
        Defense Authorization Act for Fiscal Year 2001 (Public Law 106-
        398; 44 U.S.C. 3531 note).
          (5) Sections 3504(g), 3505, and 3506(g) of title 44, United 
        States Code.
  (d) Correction of Cross Reference.--Section 2224(c) of title 10, 
United States Code, as amended by section 301(c)(1)(B)(iii) of the E-
Government Act of 2002 (Public Law 107-347; 116 Stat. 2955), is amended 
by striking ``subchapter III'' and inserting ``subchapter II''.

SEC. 505. EXEMPTION FROM LIMITATIONS ON PROCUREMENT OF FOREIGN 
                    INFORMATION TECHNOLOGY THAT IS A COMMERCIAL ITEM.

  (a) Exemption.--Notwithstanding any other provision of law, in order 
to promote Government access to commercial information technology, the 
restriction on purchasing nondomestic articles, materials, and supplies 
set forth in the Buy American Act (41 U.S.C. 10a et seq.), and the 
prohibition on acquiring foreign products under section 302(a)(1) of 
the Trade Agreements Act of 1979 (Public Law 96-39; 19 U.S.C. 
2512(a)(1)), shall not apply to the acquisition by the Federal 
Government of information technology (as defined in section 11101 of 
title 40, United States Code, that is a commercial item (as defined in 
section 4(12) of the Office of Federal Procurement Policy Act (41 
U.S.C. 403(12)).
  (b) Definition.--Section 11101(6) of title 40, United States Code, is 
amended--
          (1) in subparagraph (A), by inserting after ``storage,'' the 
        following: ``analysis, evaluation,''; and
          (2) in subparagraph (B), by striking ``ancillary equipment,'' 
        and inserting ``ancillary equipment (including imaging 
        peripherals, input, output, and storage devices necessary for 
        security and surveillance), peripheral equipment designed to be 
        controlled by the central processing unit of a computer,''.

SEC. 506. PROHIBITION ON USE OF QUOTAS.

  (a) In General.--After the date of enactment of this Act, the Office 
of Management and Budget may not establish, apply, or enforce any 
numerical goal, target, or quota for subjecting the employees of a 
department or agency of the Government to public-private competitions 
or converting such employees or the work performed by such employees to 
contractor performance under Office of Management and Budget Circular 
A-76 or any other administrative regulation, directive, or policy 
unless the goal, target, or quota is based on considered research and 
sound analysis of past activities and is consistent with the stated 
mission of the department or agency.
  (b) Limitations.--Subsection (a) shall not--
          (1) otherwise affect the implementation or enforcement of the 
        Government Performance and Results Act of 1993 (107 Stat. 285); 
        or
          (2) prevent any agency of the Executive branch from 
        subjecting work performed by Federal employees or private 
        contractors to public-private competition or conversions.

SEC. 507. PUBLIC DISCLOSURE OF NONCOMPETITIVE CONTRACTING FOR THE 
                    RECONSTRUCTION OF INFRASTRUCTURE IN IRAQ.

  (a) Disclosure Required.--
          (1) Publication and public availability.--The head of an 
        executive agency of the United States that enters into a 
        contract for the repair, maintenance, or construction of 
        infrastructure in Iraq without full and open competition shall 
        publish in the Federal Register or Commerce Business Daily and 
        otherwise make available to the public, not later than 30 days 
        after the date on which the contract is entered into, the 
        following information:
                  (A) The amount of the contract.
                  (B) A brief description of the scope of the contract.
                  (C) A discussion of how the executive agency 
                identified, and solicited offers from, potential 
                contractors to perform the contract, together with a 
                list of the potential contractors that were issued 
                solicitations for the offers.
                  (D) The justification and approval documents on which 
                was based the determination to use procedures other 
                than procedures that provide for full and open 
                competition.
          (2) Inapplicability to contracts after fiscal year 2013.--
        Paragraph (1) does not apply to a contract entered into after 
        September 30, 2013.
  (b) Classified Information.--
          (1) Authority to withhold.--The head of an executive agency 
        may--
                  (A) withhold from publication and disclosure under 
                subsection (a) any document that is classified for 
                restricted access in accordance with an Executive order 
                in the interest of national defense or foreign policy; 
                and
                  (B) redact any part so classified that is in a 
                document not so classified before publication and 
                disclosure of the document under subsection (a).
          (2) Availability to congress.--In any case in which the head 
        of an executive agency withholds information under paragraph 
        (1), the head of such executive agency shall make available an 
        unredacted version of the document containing that information 
        to the chairman and ranking member of each of the following 
        committees of Congress:
                  (A) The Committee on Governmental Affairs of the 
                Senate and the Committee on Government Reform of the 
                House of Representatives.
                  (B) The Committees on Appropriations of the Senate 
                and House of Representatives.
                  (C) Each committee that the head of the executive 
                agency determines has legislative jurisdiction for the 
                operations of such department or agency to which the 
                information relates.
  (c) Fiscal Year 2003 Contracts.--This section shall apply to 
contracts entered into on or after October 1, 2002, except that, in the 
case of a contract entered into before the date of the enactment of 
this Act, subsection (a) shall be applied as if the contract had been 
entered into on the date of the enactment of this Act.
  (d) Relationship to Other Disclosure Laws.--Nothing in this section 
shall be construed as affecting obligations to disclose United States 
Government information under any other provision of law.
  (e) Definitions.--In this section, the terms ``executive agency'' and 
``full and open competition'' have the meanings given such terms in 
section 4 of the Office of Federal Procurement Policy Act (41 U.S.C. 
403).

SEC. 508. APPLICABILITY OF CERTAIN PROVISIONS TO SOLE SOURCE CONTRACTS 
                    FOR ITEMS AND SERVICES TREATED AS COMMERCIAL ITEMS.

  (a) In General.--No contract awarded on a sole source basis for the 
procurement of items or services that are treated as or deemed to be 
commercial items pursuant to the amendments made by section 401, 404, 
or 502 of this Act shall be exempt from--
          (1) cost accounting standards promulgated pursuant to section 
        26 of the Office of Federal Procurement Policy Act (41 U.S.C. 
        422); and
          (2) cost or pricing data requirements (commonly referred to 
        as truth in negotiating) under section 2306a of title 10, 
        United States Code, and section 304A of title III of the 
        Federal Property and Administrative Services Act of 1949 (41 
        U.S.C. 254b).
  (b) Limitation.--This section shall not apply to any contract in an 
amount less than $15,000,000.

                     Committee Statement and Views


                          PURPOSE AND SUMMARY

    The current acquisition system, improved though it may be 
through the reforms of the 80s and 90s is simply inadequate to 
leverage the best and most innovative services and products our 
vigorous private-sector economy has to offer. It has not kept 
up with the dynamics of an economy that has, over the last few 
years, become increasingly service and technology oriented.
    H.R 1837 is targeted overall at the root causes of our 
current dilemma. The legislation will allow us to put the tools 
needed to access the commercial service and technology market 
in the hands of a trained workforce. The legislation also 
grants that workforce the discretion necessary to choose the 
best value for the government and holds them accountable for 
their choices.
    Specifically, the legislation consists of a carefully 
crafted set of balanced and interrelated proposals that will 
address the multiple deficiencies plaguing government 
acquisition today; (1) the lack of up-to-date comprehensive 
training for our acquisition professionals, (2) the inability 
of the current government structure to reflect business-like 
practices by integrating the acquisition function into the 
overall agency mission and facilitating cross-agency 
acquisitions and information sharing, and (3) the lack of 
effective tools and incentives to encourage the participation 
of the best commercial firms in the government market.

                                TITLE I

    H.R 1837 at title I amends federal procurement law to 
remedy one of the most glaring difficulties facing today's 
acquisition system; our inability to have the right people with 
the right skills to manage the acquisition of the services and 
technology the government needs. It will establish a sorely 
needed workforce training fund within the General Services 
Administration (GSA), financed by depositing 5 percent of the 
fees collected by various agencies under their government-wide 
contracts, including the GSA
    Schedules. This will stabilize training funding and allow 
our hard-working acquisition professionals to get the training 
they need to transition to the new service oriented and 
technology driven federal market.
    It will also create an acquisition professional exchange 
program to permit the exchange of high-performing acquisition 
professionals between the federal government and participating 
private-sector concerns. The program will provide both public 
and private sector employees with invaluable first-hand 
experience and insight to bring back to their respective 
organizations. The program will contain extensive ethics 
protections. It is modeled after the Digital Tech Corps Act for 
technology professionals that is included in the recently 
enacted E-Government Act of 2002 Pub L. 107-347.
    Title I makes a number of other changes to help the 
government recruit a skilled acquisition workforce and to 
ensure that the government maintains an adequate workforce to 
acquire the architectural and engineering services it needs.

                                TITLE II

    Title II of the legislation includes a number of provisions 
aimed at reforming the government's antiquated acquisition 
management structure and provides other improvements to the 
process. The legislation provides for the appointment of a 
Chief Acquisition Officer (CAO) (the provision is modeled on 
the Chief Human Capitol Officer position created in the 
Homeland Security Act of 2002, Pub. L. 107-296) for each agency 
to eliminate stovepipes and serve as a focal point for 
acquisition in day-to-day operations, as well as in agency-wide 
strategic planning and performance evaluation processes. It 
also establishes a CAO Council modeled after the Chief 
Information Officers Council established in the E-Government 
Act of 2002, Pub. L. 107-347 to monitor and improve the federal 
acquisition system. In a further effort to unlock the current 
stove-piped structure, the legislation will provide for the 
creation of an advisory panel of acquisition experts with 
diverse experience to review current government-wide 
acquisition laws and regulations. The panel will make 
recommendations for change with a view towards ensuring the 
effective and appropriate use of commercial practices and 
encouraging the most innovative firms to compete in the 
government market while retaining the integrity of the 
acquisition process and ensuring that the government's best 
interests are protected.
    The legislation also contains a provision that will 
prohibit government agencies from disqualifying from the award 
of a government contract a business that permits its workers to 
telecommute in the performance of the contract. The provision 
is based upon the Freedom to Telecommute Act that passed the 
House last Congress by a vote of 412-0. H.R 1837 also contains 
provisions that (1) provide statutory authority for agency 
level bid protests and clarify the relationship between agency-
level and the General Accounting Office protest process, (2) 
extend the current authority to carry out the government's 
franchise fund programs, (3) provide for a number of needed 
improvements in the government's contracting for architectural 
and engineering services and (4) add procedural requirements 
for civilian agencies relating to the acquisition of products 
of Federal Prison Industries.

                               TITLE III

    H.R 1837 at title III adds tools to enable our acquisition 
workforce to tap into our dynamic commercial marketplace. The 
legislation provides for the increased authorization of the use 
of innovative share-in-savings contracts beyond information 
technology. A limited number of share-in--savings contracts are 
authorized for information technology in the recently passed E-
Government Act. Share-in-savingscontracts represent an 
innovative approach to encourage industry to share creative technology 
and management solutions so that agencies can lower costs and improve 
service delivery without large up-front investments. The legislation 
also authorizes agencies to exercise options for additional performance 
periods in service contracts based upon exceptional performance.

                                TITLE IV

    H.R 1837 updates the improvements in the acquisition of 
commercial items made during the reforms of the 90s. It 
establishes a government-wide preference for the use of 
performance-based service contracts by treating them in most 
respects as contracts for commercial items. This will authorize 
the use of simplified procedures for the award of performance-
based service contracts and apply to those contracts, within 
certain limits, the current waivers of requirements and 
certifications. The legislation authorizes the use of time and 
material and labor-hour type contracts for commercial services 
that are commonly sold to the public through such contracts. 
The legislation provides a clarification of the existing 
statutory definition of commercial items to better reflect the 
commercial market for services and to include goods and 
services provided by a firm's commercial entity.

                                TITLE V

    This title of H.R 1837 provides for various improvements to 
the acquisition system. It contains a provision allowing all 
federal agencies to use approaches other than contracts to buy 
research and development and prototypes for new technologies to 
fight terror. The Department of Defense has long had such 
authority. The new Department of Homeland Security has recently 
been granted the authority. The legislation also makes 
permanent the Federal Emergency Procurement Flexibility Act 
that was included as part of the Homeland Security Act of 2002. 
The Flexibility Act provides agencies with greater authority to 
buy the most high-tech and sophisticated products and services 
to support anti-terror efforts and to defend against 
biological, chemical, or radiological attacks. All government 
agencies need this authority to respond to possible terror 
threats. The title also provides authority to make inflation 
adjustments to the existing acquisition threshold for 
simplified acquisition procedures and makes technical 
corrections to the information security provisions of the 
Homeland Security Act. The title further removes domestic 
source restrictions for commercial information technology 
products, prohibits the use of numerical goals, targets, or 
quotas for competitive sourcing unless they are based on sound 
research and analysis, provides for publication of information 
on certain contract awards for Iraq reconstruction efforts and 
places a $15,000,000 ceiling on the applicability of the waiver 
of certification and accounting requirements for services or 
goods deemed commercial pursuant to the title IV provisions of 
H.R. 1837 encouraging the use of performance-based contracts 
and clarifying the definition of commercial item to include 
services and products of a commercial entity.

                BACKGROUND AND NEED FOR THE LEGISLATION

    Each year our government spends well over $200 billion 
buying services and goods ranging from sophisticated 
information technology and management services, to grass 
cutting and window washing, from paper clips to advanced weapon 
systems. More than half that $200 billion, over $135 billion is 
now spent on services--an increase of about 24 percent since 
1990--establishing services as the Nation's largest single 
spending category.
    The acquisition process that is tasked with this daunting 
job is grounded on two basic, and largely mirror-image 
statutes. The Armed Services Procurement Act of 1947 for the 
Department of Defense, the National Aeronautics and Space 
Administration, and the Coast Guard and the Federal Property 
and Administrative Services Act of 1949 for most civilian 
agencies. Additionally, the Office of Federal Procurement 
Policy Act provides a tie between the defense and civilian 
sectors through the establishment of government-wide 
acquisition policies and procedures; particularly the 
government-wide Federal Acquisition Regulation. Finally, an 
array of other statutes such as the Small Business Act, Buy 
American Act and other government-wide and agency-specific laws 
impact the acquisition process. These governing provisions are 
the culmination of a haphazard succession of reforms, reactions 
to perceived abuses, socio-economic programs and management 
initiatives stretching back to the 1700s.
    The good news is that despite the lack of a long-term 
coherent vision for the acquisition system, recent reforms 
throughout the 90s have revolutionized the way the government 
does business with the private sector.
    The bad news is the reforms were not nearly sufficient to 
match the best practices of industry particularly regarding the 
acquisition of cutting edge information technology and 
management services. The reforms were rooted in the late 80s 
and early 90s context products and major systems. The current 
system, improved though it may be, is simply inadequate to 
leverage the best and most innovative services and products our 
vigorous private-sector economy has to offer. It has not kept 
up with the dynamics of an economy that has over the last few 
years become increasingly service and technology oriented. We 
do not have the right people with the right skills to manage 
acquisition of the services and technology the government so 
desperately needs.
    The General Accounting Office, along with several civilian 
oversight agencies, have found prevailing weaknesses in service 
contacting; acquisitions are not competed sufficiently, are 
poorly planned, or not well managed. These enduring failures 
cause GAO to, year after year, place management of large 
procurement operations on its High Risk list. This diminishes 
the government's ability to be effective and efficient in 
managing federal programs and spending, communicating with and 
providing services to citizens, and protecting our homeland. 
Without change, the current system cannot support the 
President's vision, expressed in his Management Agenda, of a 
government that is well run, results oriented, citizen 
centered, and market based.
    The proposals in H.R 1837 are grounded on the Services 
Acquisition Reform Act of 2002 (SARA), H.R. 3832 from the last 
Congress and the acquisition hearings held last year by the 
Technology and Procurement Policy Subcommittee of the Committee 
on Government Reform. We have made progress since then. The 
Congress has passed the Homeland Security Act, Pub. L 107-296 
and the E-Government Act, Pub. L. 107-347. The Homeland 
Security Act contains some important procurement flexibilities, 
while the E-Government Act contains limited share-in-savings 
authority and cooperative purchasing authority to expand the 
General Services Administration schedule contracts to state and 
local governments. H.R. 1837 has benefited from the comments 
received from a variety of sources on the original version of 
SARA during last Congress's acquisition hearings and from the 
debates surrounding the passage of the Homeland Security and E-
Government Acts.
    SARA will provide our acquisition workforce with the 
necessary tools to succeed through a carefully crafted set of 
provisions along with training and insightful management based 
on results and accountability. SARA is targeted towards the 
goal of a modern, responsive, flexible, market-based 
acquisition system that will result in the government 
leveraging the best the private sector has to offer at fair and 
reasonable prices. SARA will address training of our 
acquisition workforce to meet the challenges of the new 
service-oriented economy, it will provide for the adoption of 
business-like acquisition practices within the government, 
facilitate the acquisition of commercial services by building 
on the prior reforms in the acquisition of commercial items and 
enable our government to access cutting-edge technology within 
today's commercial environment.
    The federal government faces historic challenges. At the 
same time, it sits at the brink of unprecedented opportunity. 
We can and must develop new methods to harness the magic of our 
dynamic private market to meet the critical needs of the 
American people.

                          LEGISLATIVE HISTORY

    The Services Acquisition Reform Act of 2003 (SARA), H.R. 
1837 is targeted at the root causes of the dilemma facing the 
government's acquisition system today: (1) The lack of up-to-
date comprehensive training for our acquisition professionals; 
(2) the inability of the current government structure to 
reflect business-like practices by integrating the acquisition 
function into the overall agency mission and facilitating 
cross-agency acquisitions and information sharing; and (3) the 
lack of good tools and incentives to encourage the 
participation of the best commercial firms in the government 
market.
    The legislation is the product of a rich hearing and 
comment process that has stretched over two Congresses. The 
provisions in the current legislation are grounded on the 
Services Acquisition Reform Act of 2002, H.R. 3832, introduced 
last Congress and the multiple hearings and debates that 
surrounded its consideration, as well as the debates held in 
connection with the passage of the Homeland Security Act and 
the E-Government Act. The Homeland Security Act contains some 
important procurement flexibilities, while the E-Government Act 
contains limited share-in-savings authority and cooperative 
purchasing authority. Consequently, the Committee has had the 
benefit of wealth of comments and suggestions from a variety of 
sources on the best reforms for the acquisition process.
    On April 29, 2003, Chairman Tom Davis of the Committee on 
Government Reform and Representative Duncan Hunter introduced 
H.R. 1837 to give the government's acquisition workforce the 
tools needed to access the commercial service and technology 
markets and the discretion necessary to choose the best value 
for the government and be held accountable for those choices.
    The bill was referred to the House Committee on Government 
Reform that met pursuant to notice on April 30, 2003 to hear 
testimony on reforms that will promote best practices in 
services acquisitions.
    At the hearing, the Committee received testimony from 
William Woods, Director, Acquisition and Sourcing Management, 
United States General Accounting Office (GAO); Stephen Perry, 
Administrator of General Services; Angela Styles, Administrator 
of Federal Procurement Policy, Office of Management and Budget. 
Also testifying were Charles Tiefer, professor of law, 
University of Baltimore; Bruce Leinster, of IBM on behalf of 
the Information Technology Association of America; Edward 
Legasey, Executive Vice President and Chief Operating Officer 
of SRA International on behalf of the Professional Services 
Counsel and Mark Wagner, Vice President of Government Affairs, 
Johnson Controls Corp. on behalf of the Contract Services 
Association.
    The government witnesses testified about the current status 
of government contracting for services. All praised the 
training provisions of the bill and spoke about the need to 
address the explosive growth in the federal government's 
services acquisitions. Administrator Styles stated that the 
provisions dealing with time materials and labor hour 
contracting were an improvement over the earlier version of the 
bill but added that there was need for appropriate oversight 
and safeguards in time material labor hour contracts. Mr. Woods 
of the GAO noted that SARA addressed a number of longstanding 
issues in service contracting and should enable agencies to 
improve their performance. He did however raise concern about a 
provision for more timely payment under service contracts, 
since removed in the Chairman's amendment in the nature of a 
substitute.
    Professor Tiefer raised some concerns about the bill. He 
viewed the bill as removing useful regulation and creating 
opportunities for possible abuse. The witnesses representing 
various industry groups praised the bill by pointing out that 
it will increase competition by making it easier for commercial 
firms to participate in the federal market.
    This most recent hearing was the culmination of a fact 
gathering and comment process that began last Congress. The 
process featured two hearings targeted at services acquisition 
reform. The first hearing was held on May 22, 2001, by the 
Subcommittee on Technology and Procurement Policy. The 
Subcommittee met on that day pursuant to notice to hear 
testimony on services acquisition and future reforms to the 
federal acquisition system.
    The hearing addressed and examined the progress of the 
acquisition reform initiatives of the early to mid-nineties. 
This hearing focused on the next steps in services acquisition 
reform. The recent reforms had to some extent streamlined the 
process that resulted in some cost savings, increased access to 
technological advancements, and reduced procurement cycles. The 
reforms have also improved the quality of products and services 
purchased by the federal government. The subcommittee reviewed 
the implementation of the reform efforts government-wide and 
examined future legislative proposals to further streamline the 
procurement system and to better use commercial best practices.
    Testimony was received from David E. Cooper, Director, 
Acquisition and Sourcing Management, General Accounting Office 
(GAO); David R. Oliver, Jr., principal Deputy Under Secretary 
of Defense, Acquisition, Technology and Logistics; David A. 
Drabkin, Deputy Associate Administrator, Office of Acquisition 
Policy, Office of Government-wide Policy, General Services 
Administration; Dr. Steven Kelman, Albert Weatherhead professor 
of public management, John F. Kennedy School of Government, 
Harvard University; Michael W. Mutek, Senior Vice President, 
General Counsel, and Secretary, Raytheon Technical Services 
Co., representing the Professional Services Counsel; and Mark 
Wagner, Director of Federal Government Affairs, Johnson 
Controls, representing the Contact Services Association.
    Generally, the comments of the witnesses were as follows: 
the government witnesses informed the subcommittee of their 
services acquisition reform efforts and theirattempts to equip 
federal employees to take advantage of the opportunities afforded by 
these reforms; the testimony offered by the GAO and non-federal 
witnesses expressed the need to consider new reforms. GAO pointed out 
that, as a percentage of federal spending, services acquisition is 
growing and that increasing needs in information technology services 
and professional, administrative and management services drives this 
growth. Private-sector witnesses stated that the system still contained 
too many non-value-added requirements and processes.
    There was a consensus that additional reforms were needed. 
Some witnesses suggested aggressive implementation of 
performance based contracting. Others advocated share-in-
savings contracting. Almost all witnesses cited training of the 
acquisition workforce as critical to enhancing the effect of 
any reforms.
    Subsequently, on November 1, 2001 the Subcommittee on 
Technology and Procurement Policy pursuant to notice met to 
review proposed legislative initiatives designed to provide the 
federal government greater access to the commercial marketplace 
and lower the barriers agencies faced in acquiring goods and 
services necessary to meet their mission objectives.
    The hearing reviewed proposed legislative initiatives 
designed to provide the federal government greater access to 
the commercial marketplace. The subcommittee found that such 
initiatives were critical as the government was not utilizing 
best commercial practices and many of the best commercial firms 
were reluctant to participate in the government market.
    At the hearing, testimony was received from Stan Z. 
Soloway, President, Professional Services Council; Mark Wagner, 
Vice President, Federal Government affairs, Johnson Controls, 
Inc.; Renato DiPentima, President, SRA Consulting and Systems 
Integration, SRA International, Inc.; Charles Mather, Chief 
Executive Officer, Acquisition Solutions, Inc.; and Charles 
Tiefer, professor of law, University of Baltimore Law School. 
Also testifying were William T. Woods, Acting Director, 
Acquisition and Sourcing Management; Stephen A. Perry, 
Administrator of General Services; Angela B. Styles, 
Administrator for Federal Procurement Policy, Office of 
Management and Budget; Deidre A. Lee, Director, Defense 
Procurement, Office of the Under Secretary of Defense for 
Acquisition, Technology and Logistics, Department of Defense.
    The witnesses testifying on behalf of the government 
generally stated that there was interest in particular 
initiatives contained within the draft legislation. Some 
witnesses cautioned that there was also a need to maintain 
other governmental interests such as the benefits of 
competition and transparency. They also reported on successes 
and challenges in implementing earlier acquisition reforms.
    The private-sector witnesses were enthusiastic in their 
support for the draft legislation. They lauded, in particular, 
the importance of an aggressive training program for the 
acquisition workforce contained in the draft. Several witnesses 
stated that a lack of adequate training led to the hampered 
implementation of earlier reforms. They also encouraged the 
increased emphasis on share-in-savings and performance based 
contracting and the revision of standard payment terms.
    The final witness, Professor Tiefer, cautioned the 
subcommittee on three issues. He warned that any perceived 
partial repeal of the Davis-Bacon Act or the Service 
Contracting Act might be viewed as polarizing. He stated that 
allowing government contractors to create more flexible 
commercial business segments might lead to new instances of 
defective pricing. Finally, he advised that share-in-savings 
programs harbor some potential risks.
    The information and knowledge developed in these two 
hearings led to the development of the Services Acquisition 
Reform Act (SARA) which was introduced as H.R. 3832 on March 4, 
2002 by Chairman Davis. Following the introduction of H.R. 
3832, the Subcommittee on Technology and Procurement Policy 
held a third hearing on March 7, 2002 to gather views and data 
on H.R. 3832 as introduced.
    In his opening statement, Chairman Davis stated that over 
the last year he continued to find that federal agencies were 
failing to achieve contract management goals and efficiency in 
service contracting. In addition, the GAO, along with several 
civilian oversight agencies, had found that prevailing 
weaknesses exist in service contracting. These weaknesses 
include acquisitions that were not competed sufficiently, were 
poorly planned, or were not well managed. According to the 
Chairman, one of SARA's goals is to streamline procurement 
cycles and integrate agency mission goals with acquisition 
goals in order to help agencies meet the challenges presented 
by the war on terrorism.
    At the hearing, testimony was received from Dr. Steven 
Kelman, professor of public management, Harvard University; 
Steven Schooner, associate professor of law, the George 
Washington University Law School; Scott Dever, Vice President 
of Global Procurement, Hasbro, Inc.; Richard Roberts, Senior 
Vice President and Managing Director, Federal Services, KPMG 
Consulting, Inc.; Roberta StandsBlack-Carver, President and 
CEO, Four Winds Services, Inc.; Jerry S. Howe, Senior Vice 
President and General Counsel, Veridian. Also testifying were 
William T. Woods, Director, Acquisition and Sourcing 
Management, U.S. General Accounting Office (GAO); Angela B. 
Styles, Administrator of Federal Procurement Policy, Office of 
Management and Budget; Stephen Perry, Administrator of General 
Services; and Deidre Lee, Director of Procurement, U.S. 
Department of Defense.
    The GAO witness expanded on its recent report on industry 
best practices in services acquisition. He noted that various 
provisions of the bill addressed aspects of the approaches 
followed by leading companies, particularly the provisions 
regarding performance-based contracting and the establishment 
of an agency Chief Acquisition Officer. Commissioner Perry of 
the General Services Administration spoke highly of SARA's 
commitment to training acquisition professionals as well as the 
concept of each agency having a Chief Acquisition Officer.
    The witnesses from academia were generally supportive of 
the reforms laid out in H.R. 3832. Dr. Kelman stated that SARA 
``continues the effort to create a modern, businesslike 
procurement system that began a decade ago, in an exercise in 
bipartisanship and good government that is all-too-rare these 
days.'' Professor Schooner did comment that he would like to 
see even more emphasis on Congressional oversight in the 
procurement process.
    Witnesses testifying on behalf of the private sector 
supported the provisions of H.R. 3832. Mr. Roberts of KPMG 
stated that as the nation refocused its efforts toward new 
challenges the federal government needed to have fast, 
efficient access to the best information technology solutions. 
He added that these solutions reside primarily in the private 
sector but that SARA could help the federal government benefit 
from them. Ms. StandsBlack Carver, CEO of a Native American-
owned small business was enthusiastic in her support of the 
legislation. She noted that SARA would allow the 
federalgovernment to take advantage of innovations offered in the 
services area to the benefit of the U.S. taxpayer.
    The Committee relied on the testimony, reports and 
statements collected in the development and drafting of H.R. 
3832 of the 107th Congress while crafting and reintroducing H.R 
1837 in this the 108th Congress.

                           Section-by-Section


Section 1--Short title; table of contents

Section 2--Executive agency defined

    The section would define the term ``executive agency'' as 
that term is defined in section 4(1) of the Office of Federal 
Procurement Policy Act (41 U.S.C. 403(1)), unless stated 
otherwise.

              TITLE I--ACQUISITION WORKFORCE AND TRAINING


Section 101--Definition of acquisition

    The section would amend section 4 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 403) to provide a 
comprehensive government-wide definition of the term 
``acquisition.'' The new definition would encompass the entire 
spectrum of acquisition starting with the development of an 
agency's requirements through management and measurement of 
contract performance.

Section 102--Acquisition workforce training fund

    The section would amend section 37 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 433) to establish within the 
General Services Administration an acquisition workforce-
training fund to be managed by the Federal Acquisition 
Institute (FAI). The fund is to be financed by depositing 5% of 
the fees collected by various executive agencies under their 
government-wide contracts. This will provide the stabilized 
funding needed by FAI to develop training resources needed to 
enable our acquisition professionals to transition to the new 
service oriented and technology driven federal market. The fund 
can only be used for sorely needed acquisition workforce 
training across the civilian government agencies.

Section 103--Government-Industry Exchange Program

    The section would amend Subpart B of part III of title 5, 
United States Code by adding a new Chapter 38 establishing an 
acquisition professional exchange program to permit the 
temporary exchange of high-performing acquisition professionals 
between the federal government and participating private-sector 
concerns. Under the program, which is modeled after the 
Information Technology Exchange Program included in section 209 
of the recently passed E-Government Act, Pub. L. 107-347, a 
participating federal employee would retain his/her federal 
benefits and would be deemed during the period of the 
assignment (for a period of between 6 months and a year, with 
possible extensions of up an additional year for both public 
and private-sector employees) to be detailed to regular work 
within the agency. Under the section an agency head would take 
necessary actions to ensure that 20 percent of those federal 
employees assigned to private sector firms are assigned to 
small businesses. Private-sector employees could be assigned to 
a federal agency. An assigned employee could still be paid by 
the private-sector employer and would be deemed a federal 
employee for most purposes. The section would amend a number of 
current government employee ethics provisions to apply to 
private sector employees assigned to federal agencies under the 
program. The Office of Personnel Management (OPM) would submit 
semi-annual reports to the Committees on Government Reform and 
Governmental Affairs summarizing the operation of the program 
including the number of individuals assigned, the positions 
involved and the durations of the assignments. Assignments of 
federal employees to non-federal employers would only be made 
pursuant to a program developed by the Office of Federal 
Procurement Policy and OPM. No assignments under the section 
could be made after the end of a 5-year period beginning on the 
date of enactment. The General Accounting Office would, 4 years 
after enactment, report on the effectiveness of the program and 
whether it should be continued. Finally, the section would 
provide conforming amendments to title 5 and title 18, United 
States Code and other law in connection with the new 
professional exchange program.

Section 104--Acquisition Workforce Recruitment Program

    The section would permit the head of an agency to 
determine, for purposes of sections 3304, 5333, and 5753 of 
title 5, United States Code, that certain Federal acquisition 
positions are ``shortage category'' positions in order to 
recruit and directly hire such employees with high 
qualifications. The actions under this section would be subject 
to Office of Personnel Management policies. The Administrator 
for Federal Procurement Policy would be required to submit a 
report to Congress prior to the authority's September 2007 
expiration date concerning the efficacy of the program and 
recommending whether the authority should be extended.

Section 105--Architectural and engineering acquisition workforce

    The section would provide that the Administrator for 
Federal Procurement Policy in consultation with the Secretary 
of Defense, the Administrator of General Services and the 
Director of the Office of Personnel Management develop and 
implement a plan to assure that the federal government 
maintains a core in-house architectural and engineering 
capability to ensure that it has the capability to effectively 
contract for the performance of architectural and engineering 
services.

         TITLE II--ADAPTATION OF BUSINESS ACQUISITION PRACTICES


        Subtitle A--Adaptation of Business Management Practices


Section 201--Chief Acquisition Officers

    The section would amend section 16 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 414) to provide for the 
appointment of a non-career employee as the Chief Acquisition 
Officer for each executive agency other than the Department of 
Defense. The Department of Defense currently has a comparable 
position established pursuant to section 133 of title 10, 
United States Code. The Chief Acquisition Officer would have 
acquisition as the official's primary duty and advise and 
assist the agency head and other senior officials to ensure 
that the agency mission is achieved through the management of 
the agency's acquisition activities. The functions of the Chief 
Acquisition Officer would include monitoring the agency's 
acquisition activities, evaluating them based on applicable 
performance measurements, increasing the use of full and open 
competition in agency acquisitions, making acquisition 
decisions consistent with applicable laws, and establishing 
clear lines of authority, accountability, and responsibility 
for acquisition decision-making and developing and maintaining 
a acquisition career management program. The Chief Acquisition 
Officer would, as a part of the statutorily required annual 
strategic planning and performance evaluation process, assess 
agency requirements foragency personnel knowledge and skills in 
acquisition resources management and, if necessary, develop strategies 
and plan for hiring, training and professional development.

Section 202--Chief Acquisition Officers Council

    The section would add a new section 16A to the Office of 
Federal Procurement Policy (OFPP) Act (41 U.S.C. 403 et seq.) 
to authorize the establishment of a Chief Acquisition Officers 
Council to monitor and improve the federal acquisition system. 
The Council is to be chaired by the Deputy Director for 
Management (DDM) of the Office of Management and Budget (OMB) 
and comprised of the Administrator for Federal Procurement 
Policy (Administrator), the Chief Acquisition Officers created 
under section 16 of the OFPP Act, and any other federal officer 
or employee designated by the chair. The Administrator is to 
lead the activities of the Council on behalf of the DDM. The 
General Services Administration is to provide administrative 
and other support to the Council. The Council will, among other 
things, develop recommendations for OMB on acquisition policies 
and requirements, assist the Administrator in the 
identification, development, and coordination of multi-agency 
and other innovative acquisition initiatives, promote effective 
business practices to ensure timely delivery of best value 
products and services to the government. The Council will also 
work with the Office of Personnel Management to assess and 
address hiring, training, and professional development needs 
related to acquisition.

Section 203--Statutory and regulatory review

    The section would provide that the Administrator for 
Federal Procurement Policy establish an advisory panel of at 
least nine experts in acquisition law and policy who represent 
diverse public and private sector experiences. The panel would 
review acquisition laws and regulations with a view toward 
ensuring effective and appropriate use of commercial practices 
and performance-based contracting and enhancing the performance 
of acquisition functions across agency lines, and the use of 
government-wide contracts. The panel would make recommendations 
for the repeal or amendment of laws or regulations that are 
unnecessary for the effective, efficient and fair award and 
administration of government contracts while retaining the 
financial and ethical integrity of the acquisition programs and 
ensuring that the government's best interest is protected. The 
report is to be completed within one year after the 
establishment of the panel and contain the findings and 
conclusions of the panel.

               Subtitle B--Other Acquisition Improvements


Section 211--Extension of authority to carry out franchise fund 
        programs

    The section would amend section 403(f) of the Federal 
Financial Management Act of 1994 (31 U.S.C. 501 note) to 
reauthorize the government's franchise funds until October 1, 
2006. These six franchise fund programs were authorized in the 
Departments of the Interior, Commerce, Health and Human 
Services, Treasury, and Veterans Affairs and in the 
Environmental Protection Agency to provide common 
administrative support services.

Section 212--Agency acquisition protests

    The section would amend Chapter 137 of title 10, United 
States Code and the Federal Property and Administrative 
Services Act of 1949 to provide statutory authority for an 
agency-level acquisition protest process. It would provide for 
a ``stay'' of the award or of contract performance during the 
20 working day period an agency is given to decide the protest. 
The ``stay'' could be lifted by the head of the agency 
procuring activity upon a written finding that urgent and 
compelling circumstances do not permit waiting for the 
decision. The section would provide that filing an agency-level 
protest under this section would not affect the right of an 
interested party to file a protest with the Comptroller General 
or in the United States Court of Federal Claims. The section 
would also amend section 3553(d)(4) of title 31, United States 
Code to provide that an interested party filing a protest on 
the same matter with the Comptroller General within 5 days of 
the issuance of the agency protest decision would qualify for a 
stay of performance in connection with such protest.

Section 213--Improvements in contracting for architectural and 
        engineering services

    The section would amend section 1102 of title 40 of the 
United States Code to clarify the terms ``surveying and 
mapping'' as used in the definition of architectural and 
engineering services to ensure that the quality-based selection 
process in chapter 11 of title 40 of the United States Code is 
used for the full spectrum of surveying and mapping services. 
The Federal Acquisition Regulation would also be amended to 
include the new clarified definition. Further, the section 
would amend section 2855(b) of title 10, United States Code to 
raise from $85,000 to $300,000 the threshold for a 
participation incentive for small business concerns in 
acquisitions for architectural and engineering services and to 
conform section 2855 to the title 40 amendments. Finally, the 
section would require that architectural and engineering 
services offered under multiple-award schedule contracts 
awarded by the General Services Administration or under 
government-wide task and delivery order contracts be performed 
under the supervision of a licensed professional engineer and 
be awarded pursuant to the quality-based selection procedures 
in chapter 11 of title 40 of the United States Code.

Section 214--Authorization of telecommuting for Federal contractors

    The section would amend the Federal Acquisition Regulation 
(FAR) to provide that solicitations for federal contracts 
should not contain any requirement or evaluation criteria that 
would render an offeror ineligible for award or would reduce 
the scoring of the offeror's proposal based upon the offeror's 
inclusion of a plan to allow its employees to telecommute 
unless the contracting officer first determines in writing that 
the needs of the agency, including security needs, could not be 
meet without the requirement. The General Accounting Office 
would report to Congress on the implementation one year after 
the FAR amendment is published.

Section 215--Procedural requirements for civilian agencies relating to 
        products of Federal Prison Industries

    The section would amend the Federal Property and 
Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) to 
add a new section 318 to provide that before purchasing a 
product from the Federal Prison Industries (FPI) an agency head 
must conduct market research to determine whether the FPI 
product is comparable in terms of price, quality and time of 
delivery to products available from the private sector. If the 
agency determines that the FPI product is not comparable, the 
agency shall use competitive procedures or a multiple award 
contract to acquire the product. The agency is to consider a 
timely offer from FPI under such an acquisition. The section 
also provides that a firm contracting with an agency may not be 
required by that agency to use FPI as a subcontractor or 
supplier. Finally, the section prohibits an agency from 
entering into a contract with FPI under which an inmate worker 
would have access to classified or other sensitive data.

                     TITLE III--CONTRACT INCENTIVES


Section 301--Share-in-Savings Initiatives

    The section would amend section 2332 title 10, United 
States Code and section 317 of the Federal Property and 
Administrative Services Act (Property Act) to authorize 
government-wide the use of share-in-savings contracts. These 
contracts represent an innovative approach to encourage 
industry to share creative solutions with the government. 
Through these contracts, agencies can lower their costs and 
improve service delivery without large ``up front'' investments 
as the contractor provides the technology and is compensated by 
receiving a portion of savings achieved. The section would 
amend and clarify the provisions in title 10 and the Property 
Act that were added to the United States Code by section 210 of 
the E-Government Act of 2002, Pub. L. 107-347. The new section 
would expand the authorization beyond information technology 
and provide for the use of such contracts whenever the proper 
approvals are granted.
    The section would authorize agencies to enter into share-
in-savings contracts for a term of 5 years, and with the 
appropriate approval, for up to 10 years, to pay contractors 
from the savings realized, and to retain those savings that 
exceed the amount paid to the contractor. The section would 
permit agencies to use various options for funding cancellation 
or termination costs and would permit the cancellation or 
termination amount to be negotiated by the parties. The section 
would require that share-in-savings contracts include a 
provision containing a quantifiable baseline for savings that 
is approved by the agency's chief acquisition officer. The 
section would not permit the award of such contracts where 
funding for the full cost of cancellation or termination is not 
available unless the amount of unfunded contingent liability 
does not exceed the lesser of 50% of the estimated cancellation 
or termination costs or $10,000,000. Any unfunded contingent 
liability in excess of $5,000,000 would require approval by the 
Director of the Office of Management and Budget (OMB). Further, 
the section would require that the Federal Acquisition 
Regulation (FAR) be revised to implement this section and to 
provide for such matters as the use of competitive procedures 
and innovative provisions for technology refreshment, 
appropriate regulatory flexibility to facilitate the use of 
such contracts and assurance that the contractor's share of the 
savings reflects the risk involved and the market conditions. 
The Director of OMB is to provide incentives to agencies in 
identifying additional opportunities for the use of these 
contracts and guidance for determining baselines and savings 
share ratios. Finally, the section would require the Director 
of OMB to report to Congress two years after the FAR revisions 
are issued describing the number of share-in savings contracts 
entered into, the total payments made and savings achieved, 
agency efforts to determine baseline costs and making 
recommendations for changes in law needed to encourage the 
effective use of share-in-savings contracts.

Section 302--Incentives for contract efficiency

    The section would amend the Office of Federal Procurement 
Policy Act (41 U.S.C. 403 et seq.) to add a new section 41 
authorizing an agency to exercise an option to extend a 
contract for services by one or more performance periods based 
on exceptional performance as measured by standards set forth 
in the contract. The option is only to be exercised within the 
applicable provisions of law or regulation that set forth 
limitations on the duration of the contract containing the 
option. The contract is, to the maximum extent practicable, to 
be performance based.

               TITLE IV--ACQUISITIONS OF COMMERCIAL ITEMS


Section 401--Additional incentive for use of performance-based 
        contracting for services

    The section would amend section 41 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 41), as added by section 302 
above, to add a new subsection that would provide that a 
performance-based service contract or task order may be treated 
as a contract for a commercial item if it defines tasks to be 
performed in measurable, mission related terms, identifies 
specific products or outputs and the source provides similar 
services to the public under similar terms to those offered the 
government. This would authorize the use of special simplified 
procedures provided in the Federal Acquisition Regulation for 
commercial items if the performance-based contract or task 
order is valued at $5,000,000 or less and apply to those 
contracts the current waivers of requirements and 
certifications applicable to contracts for commercial items. 
Section 508 below provides that the application of the 
exemptions from cost accounting standards and cost or pricing 
data for a contract for a service treated as a commercial item 
under this section applies to contracts valued at up to 
$15,000,000. The section further provides for agencies to 
collect and maintain data to identify the contracts and orders 
for services considered commercial items under this section and 
for a report to congressional committees by the Office of 
Management and Budget on the use of these authorities 
government-wide and by agency. The provision would sunset after 
10 years. Finally, the section would require the Administrator 
for Federal Procurement Policy to establish a Center of 
Excellence for Service Contracting to assist the acquisition 
community in identifying best practices in service contracting.

Section 402--Authorization of additional commercial contract types

    The section would provide that section 8002(d) of the 
Federal Acquisition Streamlining Act of 1994 (Public Law 103-
355; 41 U.S.C. 264 note) be amended to provide that the Federal 
Acquisition Regulation (FAR) include a provision that would 
provide that time and material and labor-hour contracts could 
be used for commercial services that are commonly sold to the 
general public through such contracts. Time and material and 
labor-hour contracts are treated in the current Part 16 of the 
FAR as a separate contract type, as are fixed-price contracts 
and cost-reimbursement contracts. While section 8002(d) 
provides that the FAR is to prohibit the use of cost-type 
contracts for commercial items, there is no comparable 
prohibition applicable to time and material and labor-hour 
contracts. Section 402 would make clear that, under the 
appropriate circumstances, time and material and labor-hour 
contracts should be specifically authorized by the FAR for 
commercial services.

Section 403--Clarification of commercial services definition

    The section would amend section 4 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 403 (12)) (OFPP Act) to 
clarify the definition of commercial item to recognize the 
changing dynamics of the commercial marketplace for services. 
The new definition would eliminate the antiquated notion of an 
established catalogue price, but retain the requirement that 
commercial services have an established market price. Further 
and most important, the definition now recognizes that services 
that are sold on the basis of specific outcomes in addition to 
those for specific tasks fit with the OFPP Act definition of 
commercial services. Thus, benefits that attach to commercial 
items will now be available not just for services sold in the 
marketplace for specific tasks such asgrass cutting but for 
more sophisticated services such as management consulting services use 
to improve agency processes.

Section 404--Designation of commercial business entities

    The section would amend section 4 of the Office of Federal 
Procurement Policy Act, 41 U.S.C. 403 to add to the definition 
of commercial item services or goods provided or produced by a 
commercial entity that over the past 3 business years made 90% 
of its sales to private-sector entities. Section 508 below 
provides that the application of the exemptions from cost 
accounting standards and cost or pricing data for a contract 
for goods or services treated as a commercial item under this 
section apply to contracts valued at up to $15,000,000. The 
section would further provide for a report by the Office of 
Management and Budget on the use of the authority in this 
section, by agency and government-wide, and for a Comptroller 
General review of the implementation of the new section to 
determine its effectiveness in increasing the availability of 
goods and services to the federal government at fair and 
reasonable prices.

                         TITLE V--OTHER MATTERS


Section 501--Authority to enter into certain procurement-related 
        transactions and to carry out certain prototype projects

    The section would amend title III of the Federal Property 
and Administrative Services Act of 1949 (Property Act) (41 
U.S.C. 251 et seq.) to authorize the head of a civilian 
executive agency, if authorized by the Director of the Office 
of Management and Budget (OMB), to enter into transactions 
(other than contracts, cooperative agreements, and grants) to 
carry out basic, applied and advanced research, and development 
projects that are otherwise authorized and necessary to the 
responsibilities of the agency that may facilitate defense 
against, or recovery from, terrorism or nuclear, biological, 
chemical, or radiological, attack. This authority would be 
similar to that exercised by the Secretary of Defense under 
section 2317 of title 10, United States Code with certain 
exceptions.
    The section would further amend the Property Act to provide 
that the head of an executive agency, designated by the 
Director of OMB to enter into transactions (other than 
contracts, cooperative agreements, and grants) may, with the 
approval of the Director of OMB, carryout prototype projects in 
accordance with the same requirements and conditions for 
prototype projects as are provided under section 845 of the 
National Defense Authorization Act for Fiscal Year 1994 (Public 
Law 103-160; 10 U.S.C. 2371 note).

Section 502--Amendments relating to federal emergency procurement 
        flexibility

    The section would amend section 852, and various other 
sections of subtitle F of The Homeland Security Act of 2002, 
Pub. L. 107-296 to make permanent and clarify the authorities 
applicable to agencies other than the Department of Homeland 
Security for procurements for defense against terror. The 
procurement flexibilities in subtitle F of the Homeland 
Security Act, sections 851-858, provide for special streamlined 
procedures for the procurement of property or services when the 
head of the agency determines the property or services are to 
facilitate defense against or recovery from terrorism or 
nuclear, biological, chemical, or radiological attack.
    The section would maintain the current expanded thresholds 
in subtitle F, but would more closely align the accompanying 
provisions with those in section 833 of the Homeland Security 
Act that provide special streamlined acquisition authorities 
for the Department of Homeland Security. Specifically, section 
502 would provide for the application of the expanded 
simplified acquisition threshold to acquisitions other than 
those in support of humanitarian or peacekeeping or contingency 
operations and eliminate notice and reservation restrictions. 
The section would also provide for the application of the 
attributes of a commercial item to an impacted acquisition, as 
is the case in section 833 of the Homeland Security Act. This 
provision would be applied in conjunction with section 508 
below which provides that the application of the exemptions 
from cost accounting standards and cost or pricing data for a 
contract for a good or service treated as a commercial item 
under this section applies to contracts valued at up to 
$15,000,000.

Section 503--Authority to make inflation adjustments to simplified 
        acquisition threshold

    The section would provide that the Administrator for 
Federal Procurement Policy may adjust the simplified 
acquisition threshold as defined in section 4(11) of the Office 
of Federal Procurement Policy Act (41 U.S.C. 403 (11)) every 
five years to an amount equal to $100,000 in constant fiscal 
year 2003 dollars.

Section 504--Technical corrections related to duplicative amendments

    The section would repeal subchapter II of chapter 35 of 
title 44 of the United States Code and chapter 115 of title 40 
of the United States Code. The section would also conform 
various amendments made by the Homeland Security Act of 2002, 
Pub.L. 107-296, with those made by the E-Government Act of 
2002, Pub.L. 107-347.

Section 505--Exemption from limitations on procurement of foreign 
        information technology that is a commercial item

    The section would provide that, in order to promote 
government access to commercial information technology, the Buy 
American Act (41 U.S.C.10a) restriction on the acquisition of 
nondomestic products and the Trade Agreements Act of 1979 
(Public Law 96-39; 19 U.S.C. 2512 (a)(1)) prohibition on 
noneligible foreign products would not apply to the acquisition 
of commercial information technology as defined in section 
11101(6) of title 40 of the United States Code. The section 
would also amend section 11101(6) by including in the 
definition of information technology, equipment, interconnected 
system, or subsystem of equipment used in the analysis and 
evaluation of data or information and adding imaging 
peripherals and certain devices necessary for security and 
surveillance.

Section 506--Prohibition on the use of quotas

    The section would provide that the Office of Management and 
Budget (OMB) may not use a numerical goal, target, or quota for 
the use of public-private competitions under OMB Circular A-76 
or any other related policy unless the goal, target or quota is 
based on considered research and sound analysis of past 
activities and is consistent with the agency's mission. The 
section further provides that it shall not affect the 
implementation or enforcement of the Government Performance and 
Results Act of 1993 (107 Stat.285) or prevent any agency from 
subjecting work performed by federal employees or contractors 
to public-private competitions or conversions.

Section 507--Public disclosure of noncompetitive contracting for the 
        reconstruction of infrastructure in Iraq

    The section would require an agency to publish, within 30 
days of award, information regarding a contract for repair, 
maintenance, or construction of infrastructure in Iraq that was 
awarded by the agency without full and open competition.

Section 508--Applicability of certain provisions to sole source 
        contracts for goods and services treated as commercial items

    The section provides a ceiling of $15,000,000 per contract 
for the applicability of an exemption from cost accounting 
standards and cost or pricing data requirements (1) to a 
contract for a service that is treated as a commercial item 
under section 401 above because it is the subject of a 
performance-based contact, (2) to a service or good that is 
treated as a commercial item because it is provided or produced 
by a commercial entity in accordance with section 404 above, or 
(3) considered to be a commercial item under the emergency 
procurement flexibilities in section 502 above.

                       Explanation of Amendments

    The provisions of the substitute are explained in this 
report.

                        Committee Consideration

    On May 8, 2003, the Committee met in open session and 
ordered favorably reported the bill, H.R. 1837, as amended, by 
rollcall vote, a quorum being present.

                             Rollcall Votes



              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. The bill does not prevent legislative branch employees 
from receiving the benefits of this legislation.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(2) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    Clause 3(c)(4) of rule XIII of the Rules of the House of 
Representatives requires a statement of the Committee's general 
performance goals and objectives for reported measures that 
authorize funding. This bill does not authorize funding.

                   Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the Rules of the House 
of Representatives, the Committee must include a statement 
citing the specific powers granted to Congress to enact the law 
proposed by H.R. 1837. The constitutional authority to regulate 
the civil service of the Federal government lies within the 
Necessary and Proper clause of Article I, Section Eight of the 
United States Constitution.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement whether 
the provisions of the reported include unfunded mandates. In 
compliance with this requirement the Committee has received a 
letter from the Congressional Budget Office included herein.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 1837. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 1837 from the Director of 
Congressional Budget Office:

H.R. 1837--Services Acquisition Reform Act of 2003

    Summary: H.R. 1837 would amend the laws governing how the 
federal government procures goods and services. The provisions 
of the bill with the largest budgetary effects would expand the 
authorized uses of share-in-savings (SIS) contracts by 
government agencies to procure products and services and 
establish a fund to train federal personnel in acquisition and 
contracting positions.
    CBO estimates that expanding the use of SIS contracts would 
increase direct spending outlays by about $80 million over the 
2004-2008 period and by a total of about $450 million over the 
2004-2013 period. In addition, CBO estimates that implementing 
H.R. 1837 would cost about $28 million in appropriated funds 
over the 2004-2008 period, assuming appropriation of the 
necessary amounts.
    H.R. 1837 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1837 is shown in the following table. 
The costs of this legislation fall within budget function 800 
(general government).

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal year, in millions of dollars--
                                           ---------------------------------------------------------------------
                                             2004   2005   2006   2007   2008   2009   2010   2011   2012   2013
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Share-in-savings contracts:
    Estimated budget authority............      5     10     25     30     45     60     75     90    100    100
    Estimated outlays.....................      2      6     14     24     34    48     62     77     91     98

                                 CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Acquisition workforce training program:
    Estimated authorization level.........      5      5      5      5      5      6      6      6      6      6
    Estimated outlays.....................      3      5      5      5      5      5      6      6      6      6
Other costs:
    Estimated authorization level.........      1      1      1      1      1      *      *      *      *      *
    Estimated outlays.....................      1      1      1      1      1      *      *      *      *      *
Total discretionary costs:
    Estimated authorization level.........      6      6      6      6      6      6      6      6      6      6
    Estimated outlays.....................      4      6      6      6      6      5      6      6      6      6
----------------------------------------------------------------------------------------------------------------
Note.--*=less than $500,000.

Basis of estimate

    For this estimate, CBO assumes H.R. 1837 will be enacted by 
the end of fiscal year 2003. We assume that the necessary 
amounts will be appropriated for each year and that outlays 
will occur at historical rates for similar programs.
            Share-in-savings contracts
    Section 301 would expand the authorization for the 
government's use of SIS contracts to acquire goods and 
services. Currently, the use of these contracts is limited to 
purchasing information technology. The bill would allow 
contracts to be awarded for up to 10 years.
    A SIS contract is a special contracting and funding 
strategy whereby a service or product required by an agency is 
provided by a private firm without full up-front funding. 
Instead, payment for this service or product is made by 
spending some of the estimated annual savings generated by the 
goods or services provided. Under H.R. 1837, agencies would be 
authorized to enter into SIS contracts without funds available 
for the termination cost of thecontract provided that 
appropriated funds are available for the first year's payment under the 
contract. The bill would limit the amount of such unfunded termination 
liability to $10 million per contract (or 50 percent of the termination 
costs, whichever is less).
    Under current law agencies are authorized to use a limited 
pilot program to enter into SIS contracts to obtain data and 
information-processing equipment and services. To date, use of 
the pilot program has been very limited. Because H.R. 1837 
would broaden the potential use of this contracting mechanism, 
CBO expects that its use would become more widespread as 
agencies became familiar with it. In the mid-1980's, a similar 
contracting mechanism, energy savings performance contracts 
(ESPCs), was authorized by the Congress. Use of ESPCs has 
accelerated overtime, and today federal agencies enter into 
around $100 million worth of such contracts a year. Based on 
the experience with ESPCs, CBO expects that agencies would need 
a few years to become familiar with SIS contracts before use of 
that type of contract would become common. We estimate that 
agencies would agree to acquire about $115 million in goods and 
services through SIS contracts over the next five years and 
that obligations for such acquisitions would grow to $425 
million over the following five years.
    Because both ESPC and SIS contracts authorized agencies to 
commit federal funds in advance of appropriations, CBO 
considers the execution of such contracts to be a form of 
direct spending that should be reflected in the budget when 
such contracts are entered into and a new government obligation 
is made. CBO's estimate assumes that outlays would be recorded 
when the services or equipment are provided (similar to the 
treatment of lease-purchases).
            Spending subject to appropriation
    Funding for Acquisition Workforce Training Fund. The bill 
would authorize the establishment of an Acquisition Workforce 
Training Fund. Under the bill, 5 percent of the fees collected 
by the General Services Administration (GSA) from other, 
nondefense agencies that procure goods and services through 
GSA's governmentwide contracts would be deposited in the new 
fund. GSA generates most of those fees by charging other 
federal agencies approximately 1 percent of the cost of 
purchases made through GSA's supply schedule services and data 
processing contracts. That fee is designed to recover 
administrative costs incurred by GSA. In 2002, GSA collected 
$88 million in fees from agencies other than the Department of 
Defense. Thus, CBO estimates that the bill would authorize GSA 
to charge agencies a fee sufficient to establish a $5 million 
Acquisition Workforce Training Fund each year, as well as 
continuing to cover the administrative costs of GSA's 
governmentwide contracting programs.
    Government-Industry Exchange Program. H.R. 1837 would 
establish an exchange program for certain types of employees 
between the federal government and private-sector employers to 
promote acquisition management skills. The bill would allow the 
exchange of employees for between six months and two years. 
Private-sector employers could be reimbursed for all or part of 
their employees' assignment with the federal government. 
Alternatively, H.R. 1837 would allow federal agencies to accept 
voluntary employment services from private-sector employees.
    Based on information from GSA and the experience of similar 
exchange programs, CBO expects that few private-sector 
employers would be willing to part with such employees for 
extended periods of time. Thus, we estimate that this provision 
would not result in significant additional costs to the 
government. Any costs for reimbursing private-sector employers 
would be subject to the availability of appropriated funds.
    Other Costs. H.R. 1837 also would establish a new advisory 
panel to review procurement policies, a Chief Acquisition 
Officers Council, and a center of excellence in the Office of 
Federal Procurement Policy. The bill would require implementing 
regulations to be issued by GSA, the Office of Personnel 
Management, and the Office of Management and Budget. In 
addition, the bill would require the General Accounting Office 
to prepare certain studies on procurement issues. In total, CBO 
estimates that implementing these provisions would cost $1 
million annually over the 2004-2008 period.
    Intergovernmental and Private-sector impact: H.R. 1837 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal costs: Matthew Pickford, Lisa 
Driskell, and Matthew Schmit; impact on state, local, and 
tribal governments: Victoria Heid Hall; and impact on the 
private sector: Paige Piper/Bach.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                OFFICE OF FEDERAL PROCUREMENT POLICY ACT


SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Office of 
Federal Procurement Policy Act''.
  (b) Table of Contents.--The table of contents for this Act is 
as follows:
Sec. 1. Short title; table of contents.
     * * * * * * *
[Sec. 16. Executive agency responsibilities.]
Sec. 16. Chief Acquisition Officers.
Sec. 16A. Chief Acquisition Officers Council.
     * * * * * * *
[Sec. 39. Protection of constitutional rights of contractors.]
Sec. 40. Protection of constitutional rights of contractors.
Sec. 41. Incentives for efficient performance of services contracts.

           *       *       *       *       *       *       *


SEC. 4. DEFINITIONS.

  As used in this Act:
          (1) * * *

           *       *       *       *       *       *       *

          (11) The term ``simplified acquisition threshold'' 
        means $100,000, except that such amount may be adjusted 
        by the Administrator every five years to the amount 
        equal to $100,000 in constant fiscal year 2003 dollars 
        (rounded to the nearest $10,000).
          (12) The term ``commercial item'' means any of the 
        following:
                  (A) * * *

           *       *       *       *       *       *       *

                  (F) Services offered and sold competitively, 
                in substantial quantities, in the commercial 
                marketplace based on established [catalog or] 
                market prices for specific tasks performed or 
                specific outcomes to be achieved and under 
                standard commercial terms and conditions.

           *       *       *       *       *       *       *

                  (I) Items or services produced or provided by 
                a commercial entity.

           *       *       *       *       *       *       *

          (16) The term ``acquisition''--
                  (A) means the process of acquiring, with 
                appropriated funds, by contract for purchase or 
                lease, property or services (including 
                construction) that support the missions and 
                goals of an executive agency, from the point at 
                which the requirements of the executive agency 
                are established in consultation with the chief 
                acquisition officer of the executive agency; 
                and
                  (B) includes--
                          (i) the process of acquiring property 
                        or services that are already in 
                        existence, or that must be created, 
                        developed, demonstrated, and evaluated;
                          (ii) the description of requirements 
                        to satisfy agency needs;
                          (iii) solicitation and selection of 
                        sources;
                          (iv) award of contracts;
                          (v) contract performance;
                          (vi) contract financing:
                          (vii) management and measurement of 
                        contract performance through final 
                        delivery and payment; and
                          (viii) technical and management 
                        functions directly related to the 
                        process of fulfilling agency 
                        requirements by contract.
          (17) The term ``commercial entity'' means any 
        enterprise whose primary customers are other than the 
        Federal Government. In order to qualify as a commercial 
        entity, at least 90 percent (in dollars) of the sales 
        of the enterprise over the past three business years 
        must have been made to private sector entities.

           *       *       *       *       *       *       *


[SEC. 16. EXECUTIVE AGENCY RESPONSIBILITIES.

  [To further achieve effective, efficient, and economic 
administration of the Federal procurement system, the head of 
each executive agency shall, in accordance with applicable 
laws, Government-wide policies and regulations, and good 
business practices--
          [(1) increase the use of full and open competition in 
        the procurement of property or services by the 
        executive agency by establishing policies, procedures, 
        and practices that assure that the executive agency 
        receives a sufficient number of sealed bids or 
        competitive proposals from responsible sources to 
        fulfill the Government's requirements (including 
        performance and delivery schedules) at the lowest 
        reasonable cost considering the nature of the property 
        or service procured;
          [(2) establish clear lines of authority, 
        accountability, and responsibility for procurement 
        decisionmaking within the executive agency, including 
        placing the procurement function at a sufficiently high 
        level in the executive agency to provide--
                  [(A) direct access to the head of the major 
                organizational element of the executive agency 
                served; and
                  [(B) comparative equality with organizational 
                counterparts;
          [(3) designate a senior procurement executive who 
        shall be responsible for management direction of the 
        procurement system of the executive agency, including 
        implementation of the unique procurement policies, 
        regulations, and standards of the executive agency; and
          [(4) develop and maintain a procurement career 
        management program in the executive agency to assure an 
        adequate professional work force.]

SEC. 16. CHIEF ACQUISITION OFFICERS.

  (a) Establishment of Agency Chief Acquisition Officers.--The 
head of each executive agency (other than the Department of 
Defense) shall appoint or designate a non-career employee as 
Chief Acquisition Officer for the agency, who shall--
          (1) have acquisition management as that official's 
        primary duty; and
          (2) advise and assist the head of the executive 
        agency and other agency officials to ensure that the 
        mission of the executive agency is achieved through the 
        management of the agency's acquisition activities.
  (b) Authority and Functions of Agency Chief Acquisition 
Officers.--The functions of each Chief Acquisition Officer 
shall include--
          (1) monitoring the performance of acquisition 
        activities and acquisition programs of the executive 
        agency, evaluating the performance of those programs on 
        the basis of applicable performance measurements, and 
        advising the head of the executive agency regarding the 
        appropriate business strategy to achieve the mission of 
        the executive agency;
          (2) increasing the use of full and open competition 
        in the acquisition of property and services by the 
        executive agency by establishing policies, procedures, 
        and practices that ensure that the executive agency 
        receives a sufficient number of sealed bids or 
        competitive proposals from responsible sources to 
        fulfill the Government's requirements (including 
        performance and delivery schedules) at the best value 
        considering the nature of the property or service 
        procured;
          (3) making acquisition decisions consistent with all 
        applicable laws and establishing clear lines of 
        authority, accountability, and responsibility for 
        acquisition decisionmaking within the executive agency;
          (4) managing the direction of acquisition policy for 
        the executive agency, including implementation of the 
        unique acquisition policies, regulations, and standards 
        of the executive agency;
          (5) developing and maintaining an acquisition career 
        management program in the executive agency to ensure 
        that there is an adequate professional workforce; and
          (6) as part of the strategic planning and performance 
        evaluation process required under section 306 of title 
        5, United States Code, and sections 1105(a)(28), 1115, 
        1116, and 9703 of title 31, United States Code--
                  (A) assessing the requirements established 
                for agency personnel regarding knowledge and 
                skill in acquisition resources management and 
                the adequacy of such requirements for 
                facilitating the achievement of the performance 
                goals established for acquisition management;
                  (B) in order to rectify any deficiency in 
                meeting such requirements, developing 
                strategies and specific plans for hiring, 
                training, and professional development; and
                  (C) reporting to the head of the executive 
                agency on the progress made in improving 
                acquisition management capability.

SEC. 16A. CHIEF ACQUISITION OFFICERS COUNCIL.

  (a) Establishment.--There is established in the executive 
branch a Chief Acquisition Officers Council.
  (b) Membership.--The members of the Council shall be as 
follows:
          (1) The Deputy Director for Management of the Office 
        of Management and Budget, who shall act as Chairman of 
        the Council.
          (2) The Administrator for Federal Procurement Policy.
          (3) The chief acquisition officer of each executive 
        agency.
          (4) The Under Secretary of Defense for Acquisition, 
        Technology, and Logistics.
          (5) Any other officer or employee of the United 
        States designated by the Chairman.
  (c) Leadership; Support.--(1) The Administrator for Federal 
Procurement Policy shall lead the activities of the Council on 
behalf of the Deputy Director for Management.
  (2)(A) The Vice Chairman of the Council shall be selected by 
the Council from among its members.
  (B) The Vice Chairman shall serve a 1-year term, and may 
serve multiple terms.
  (3) The Administrator of General Services shall provide 
administrative and other support for the Council.
  (d) Principal Forum.--The Council is designated the principal 
interagency forum for monitoring and improving the Federal 
acquisition system.
  (e) Functions.--The Council shall perform functions that 
include the following:
          (1) Develop recommendations for the Director of the 
        Office of Management and Budget on Federal acquisition 
        policies and requirements.
          (2) Share experiences, ideas, best practices, and 
        innovative approaches related to Federal acquisition.
          (3) Assist the Administrator in the identification, 
        development, and coordination of multiagency projects 
        and other innovative initiatives to improve Federal 
        acquisition.
          (4) Promote effective business practices that ensure 
        the timely delivery of best value products to the 
        Federal Government and achieve appropriate public 
        policy objectives.
          (5) Further integrity, fairness, competition, 
        openness, and efficiency in the Federal acquisition 
        system.
          (6) Work with the Office of Personnel Management to 
        assess and address the hiring, training, and 
        professional development needs of the Federal 
        Government related to acquisition.
          (7) Work with the Administrator and the Federal 
        Acquisition Regulatory Council to promote the business 
        practices referred to in paragraph (4) and other 
        results of the functions carried out under this 
        subsection.

SEC. 18. PROCUREMENT NOTICE.

  (a) * * *

           *       *       *       *       *       *       *

  (c)(1) A notice is not required under subsection (a)(1) if--
          (A) * * *

           *       *       *       *       *       *       *

          (G) the procurement is for the services of an expert 
        for use in any litigation or dispute (including any 
        reasonably foreseeable litigation or dispute) involving 
        the Federal Government in any trial, hearing, or 
        proceeding before any court, administrative tribunal, 
        or agency, or in any part of an alternative dispute 
        resolution process, whether or not the expert is 
        expected to testify; [or]
          (H) the procurement is by the Secretary of Homeland 
        Security pursuant to the special procedures provided in 
        section 833(c) of the Homeland Security Act of 2002[.]; 
        or
          (I) the procurement is by the head of an executive 
        agency pursuant to the special procedures provided in 
        section 853 of the Homeland Security Act of 2002 
        (Public Law 107-296).

           *       *       *       *       *       *       *


SEC. 20. ADVOCATES FOR COMPETITION.

  (a)(1) There is established in each executive agency an 
advocate for competition.
  (2) The head of each executive agency shall--
          (A) designate for the executive agency and for each 
        procuring activity of the executive agency one officer 
        or employee serving in a position authorized for such 
        executive agency on the date of enactment of the 
        Competition in Contracting Act of 1984 (other than the 
        [senior procurement executive] Chief Acquisition 
        Officer designated pursuant to section 16(3)) to serve 
        as the advocate for competition;

           *       *       *       *       *       *       *

  (b) The advocate for competition of an executive agency 
shall--
          (1) be responsible for challenging barriers to and 
        promoting full and open competition in the procurement 
        of property and services by the executive agency;
          (2) review the procurement activities of the 
        executive agency;
          (3) identify and report to the [senior procurement 
        executive] Chief Acquisition Officer of the executive 
        agency designated pursuant to section 16(3)--
                  (A) * * *

           *       *       *       *       *       *       *

          (4) prepare and transmit to such [senior procurement 
        executive] Chief Acquisition Officer an annual report 
        describing--
                  (A)
          (5) recommend to the [senior procurement executive] 
        Chief Acquisition Officer of the executive agency goals 
        and the plans for increasing competition on a fiscal 
        year basis;
          (6) recommend to the [senior procurement executive] 
        Chief Acquisition Officer of the executive agency a 
        system of personal and organizational accountability 
        for competition, which may include the use of 
        recognition and awards to motivate program managers, 
        contracting officers, and others in authority to 
        promote competition in procurement programs; and

           *       *       *       *       *       *       *


SEC. 27. RESTRICTIONS ON DISCLOSING AND OBTAINING CONTRACTOR BID OR 
                    PROPOSAL INFORMATION OR SOURCE SELECTION 
                    INFORMATION.

  (a) Prohibition on Disclosing Procurement Information.--(1) A 
person described in paragraph (2) shall not, other than as 
provided by law, knowingly disclose contractor bid or proposal 
information or source selection information before the award of 
a Federal agency procurement contract to which the information 
relates. In the case of an employee of a private sector 
organization assigned to an agency under chapter 37 or 38 of 
title 5, United States Code, in addition to the restriction in 
the preceding sentence, such employee shall not, other than as 
provided by law, knowingly disclose contractor bid or proposal 
information or source selection information during the three-
year period after the end of the assignment of such employee.

           *       *       *       *       *       *       *


SEC. 29. CONTRACT CLAUSES AND CERTIFICATIONS.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Prohibition on Certification Requirements.--(1) * * *
  (2)(A) A requirement for a certification by a contractor or 
offeror may not be included in a procurement regulation of an 
executive agency unless--
          (i) * * *
          (ii) written justification for such certification 
        requirement is provided to the head of the executive 
        agency by the [senior procurement executive] Chief 
        Acquisition Officer of the agency, and the head of the 
        executive agency approves in writing the inclusion of 
        such certification requirement.

           *       *       *       *       *       *       *


SEC. 37. ACQUISITION WORKFORCE.

  (a) * * *

           *       *       *       *       *       *       *

  (c) [Senior Procurement Executive] Chief Acquisition Officer 
Authorities and Responsibilities.--Subject to the authority, 
direction, and control of the head of an executive agency, the 
[senior procurement executive] Chief Acquisition Officer of the 
agency shall carry out all powers, functions, and duties of the 
head of the agency with respect to implementation of this 
section. The [senior procurement executive] Chief Acquisition 
Officer shall ensure that the policies of the head of the 
executive agency established in accordance with this section 
are implemented throughout the agency.

           *       *       *       *       *       *       *

  (h) Education and Training.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Acquisition workforce training fund.--(A) The 
        Administrator of General Services shall establish an 
        acquisition workforce training fund. The Administrator 
        shall manage the fund through the Federal Acquisition 
        Institute to support the training of the acquisition 
        workforce of the executive agencies other than the 
        Department of Defense. The Administrator shall consult 
        with the Administrator for Federal Procurement Policy 
        in managing the fund.
          (B) There shall be credited to the acquisition 
        workforce training fund 5 percent of the fees collected 
        by executive agencies under the following contracts:
                  (i) Governmentwide task and delivery-order 
                contracts entered into under sections 2304a and 
                2304b of title 10, United States Code, or 
                sections 303H and 303I of the Federal Property 
                and Administrative Services Act of 1949 (41 
                U.S.C. 253h and 253i).
                  (ii) Governmentwide contracts for the 
                acquisition of information technology as 
                defined in section 11101 of title 40, United 
                States Code, and multiagency acquisition 
                contracts for such technology authorized by 
                section 11314 of such title.
                  (iii) Multiple-award schedule contracts 
                entered into by the Administrator of General 
                Services.
          (C) The head of an executive agency that administers 
        a contract described in subparagraph (B) shall remit to 
        the General Services Administration the amount required 
        to be credited to the fund with respect to such 
        contract at the end of each quarter of the fiscal year.
          (D) The Administrator of General Services, through 
        the Office of Federal Acquisition Policy, shall ensure 
        that funds collected for training under this section 
        are not used for any purpose other than the purpose 
        specified in subparagraph (A).
          (E) Amounts credited to the fund shall be in addition 
        to funds requested and appropriated for education and 
        training referred to in paragraph (1).
          (F) Amounts credited to the fund shall remain 
        available until expended.
  (i) Authority to Detail Employees to Non-Federal Employers.--
(1) In carrying out the provisions of this section, the 
Administrator, by agreement with the Director of the Office of 
Personnel Management, may provide for a program under which a 
Federal employee may be detailed to a non-Federal employer. The 
Administrator, by agreement with the Director of the Office of 
Personnel Management, shall prescribe regulations for such 
program, including the conditions for service and duties as the 
Administrator considers necessary.
  (2) An assignment described in section 3803 of title 5, 
United States Code, may not be made unless a program under 
paragraph (1) is established, and the assignment is made in 
accordance with the requirements of such program.

           *       *       *       *       *       *       *


SEC. [39.] 40. PROTECTION OF CONSTITUTIONAL RIGHTS OF CONTRACTORS.

      (a) * * *

           *       *       *       *       *       *       *


SEC. 41. INCENTIVES FOR EFFICIENT PERFORMANCE OF SERVICES CONTRACTS.

  (a) Options for Services Contracts.--An option included in a 
contract for services to extend the contract by one or more 
periods may provide that it be exercised on the basis of 
exceptional performance by the contractor. A contract that 
contains such an option provision shall include performance 
standards for measuring performance under the contract, and to 
the maximum extent practicable be performance-based. Such 
option provision shall only be exercised in accordance with 
applicable provisions of law or regulation that set forth 
restrictions on the duration of the contract containing the 
option.
  (b) Incentive for Use of Performance-Based Services 
Contracts.--(1) A performance-based contract for the 
procurement of services entered into by an executive agency or 
a performance-based task order for services issued by an 
executive agency may be treated as a contract for the 
procurement of commercial items if--
          (A) the contract or task order sets forth 
        specifically each task to be performed and, for each 
        task--
                  (i) defines the task in measurable, mission-
                related terms; and
                  (ii) identifies the specific end products or 
                output to be achieved; and
          (B) the source of the services provides similar 
        services to the general public under terms and 
        conditions similar to those offered to the Federal 
        Government.
  (2) The regulations implementing this subsection shall 
require agencies to collect and maintain reliable data 
sufficient to identify the contracts or task orders treated as 
contracts for commercial items using the authority of this 
subsection. The data may be collected using the Federal 
Procurement Data System or other reporting mechanism.
  (3) Not later than two years after the date of the enactment 
of this subsection, the Director of the Office of Management 
and Budget shall prepare and submit to the Committees on 
Governmental Affairs and on Armed Services of the Senate and 
the Committees on Government Reform and on Armed Services of 
the House of Representatives a report on the contracts or task 
orders treated as contracts for commercial items using the 
authority of this subsection. The report shall include data on 
the use of such authority both government-wide and for each 
department and agency.
  (4) The authority under this subsection shall expire 10 years 
after the date of the enactment of this subsection.
  (c) Definition of Performance-Based.--In this section, the 
term ``performance-based'', with respect to a contract, task 
order, or contracting, means that the contract, task order, or 
contracting, respectively, includes the use of performance work 
statements that set forth contract requirements in clear, 
specific, and objective terms with measurable outcomes.
                              ----------                              


TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *


                          PART III--EMPLOYEES

                     Subpart A--General Provisions

Chap.                                                               Sec.
      Definitions...................................................2101
     * * * * * * *

                   Subpart B--Employment and Retention

     * * * * * * *
      Acquisition Professional Exchange Program.....................3801
     * * * * * * *

                  Subpart B--Employment and Retention

CHAPTER 31--AUTHORITY FOR EMPLOYMENT

           *       *       *       *       *       *       *


SUBCHAPTER I--EMPLOYMENT AUTHORITIES

           *       *       *       *       *       *       *


Sec. 3111. Acceptance of volunteer service

  (a) * * *

           *       *       *       *       *       *       *

  (d) Notwithstanding section 1342 of title 31, the head of an 
agency may accept voluntary service for the United States under 
chapter 37 or 38 of this title and regulations of the Office of 
Personnel Management.

           *       *       *       *       *       *       *


         CHAPTER 38--ACQUISITION PROFESSIONAL EXCHANGE PROGRAM

Sec.
3801. Definitions.
3802. General provisions.
3803. Assignment of employees to private sector organizations.
3804. Assignment of employees from private sector organizations.
3805. Reporting requirement.
3806. Regulations.

Sec. 3801. Definitions

  For purposes of this chapter--
          (1) the term ``agency''--
                  (A) subject to subparagraph (B), means an 
                executive agency; and
                  (B) does not include--
                          (i) the General Accounting Office;
                          (ii) an Office of Inspector General 
                        of an establishment or a designated 
                        Federal entity established under the 
                        Inspector General Act of 1978; and
                          (iii) the Defense Contract Audit 
                        Agency referred to in section 2313(b) 
                        of title 10; and
          (2) the term ``detail'' means--
                  (A) the assignment or loan of an employee of 
                an agency to a private sector organization 
                without a change of position from the agency 
                that employs the individual, or
                  (B) the assignment or loan of an employee of 
                a private sector organization to an agency 
                without a change of position from the private 
                sector organization that employs the 
                individual,
        whichever is appropriate in the context in which such 
        term is used.

Sec. 3802. General provisions

  (a) Assignment Authority.--On request from or with the 
agreement of a private sector organization, and with the 
consent of the employee concerned, the head of an agency may 
arrange for the assignment of an employee of the agency to a 
private sector organization or an employee of a private sector 
organization to the agency. An eligible employee is an 
individual who--
          (1) works in the field of Federal acquisition or 
        acquisition management;
          (2) is considered an exceptional performer by the 
        individual's current employer; and
          (3) is expected to assume increased acquisition 
        management responsibilities in the future.
An employee of an agency shall be eligible to participate in 
this program only if the employee is employed at the GS-11 
level or above (or equivalent) and is serving under a career or 
career-conditional appointment or an appointment of equivalent 
tenure in the excepted service.
  (b) Agreements.--Each agency that exercises its authority 
under this chapter shall provide for a written agreement 
between the agency and the employee concerned regarding the 
terms and conditions of the employee's assignment. In the case 
of an employee of the agency, the agreement shall--
          (1) require the employee to serve in the civil 
        service, upon completion of the assignment, for a 
        period equal to the length of the assignment; and
          (2) provide that, in the event the employee fails to 
        carry out the agreement (except for good and sufficient 
        reason, as determined by the head of the agency from 
        which assigned) the employee shall be liable to the 
        United States for payment of all expenses of the 
        assignment.
An amount under paragraph (2) shall be treated as a debt due 
the United States.
  (c) Termination.--Assignments may be terminated by the agency 
or private sector organization concerned for any reason at any 
time.
  (d) Duration.--Assignments under this chapter shall be for a 
period of between 6 months and 1 year, and may be extended in 
3-month increments for a total of not more than 1 additional 
year, except that no assignment under this chapter may commence 
after the end of the 5-year period beginning on the date of the 
enactment of this chapter.
  (e) Assistance.--The Administrator for Federal Procurement 
Policy, by agreement with the Office of Personnel Management, 
may assist in the administration of this chapter, including by 
maintaining lists of potential candidates for assignment under 
this chapter, establishing mentoring relationships for the 
benefit of individuals who are given assignments under this 
chapter, and publicizing the program.
  (f) Considerations.--In exercising any authority under this 
chapter, an agency shall take into consideration--
          (1) the need to ensure that small business concerns 
        are appropriately represented with respect to the 
        assignments described in sections 3803 and 3804, 
        respectively; and
          (2) how assignments described in section 3803 might 
        best be used to help meet the needs of the agency for 
        the training of employees in acquisition management.

Sec. 3803. Assignment of employees to private sector organizations

  (a) In General.--An employee of an agency assigned to a 
private sector organization under this chapter is deemed, 
during the period of the assignment, to be on detail to a 
regular work assignment in his agency.
  (b) Coordination With Chapter 81.--Notwithstanding any other 
provision of law, an employee of an agency assigned to a 
private sector organization under this chapter is entitled to 
retain coverage, rights, and benefits under subchapter I of 
chapter 81, and employment during the assignment is deemed 
employment by the United States, except that, if the employee 
or the employee's dependents receive from the private sector 
organization any payment under an insurance policy for which 
the premium is wholly paid by the private sector organization, 
or other benefit of any kind on account of the same injury or 
death, then, the amount of such payment or benefit shall be 
credited against any compensation otherwise payable under 
subchapter I of chapter 81.
  (c) Reimbursements.--The assignment of an employee to a 
private sector organization under this chapter may be made with 
or without reimbursement by the private sector organization for 
the travel and transportation expenses to or from the place of 
assignment, subject to the same terms and conditions as apply 
with respect to an employee of a Federal agency or a State or 
local government under section 3375, and for the pay, or a part 
thereof, of the employee during assignment. Any reimbursements 
shall be credited to the appropriation of the agency used for 
paying the travel and transportation expenses or pay.
  (d) Tort Liability; Supervision.--The Federal Tort Claims Act 
and any other Federal tort liability statute apply to an 
employee of an agency assigned to a private sector organization 
under this chapter. The supervision of the duties of an 
employee of an agency so assigned to a private sector 
organization may be governed by an agreement between the agency 
and the organization.
  (e) Small Business Concerns.--
          (1) In general.--The head of each agency shall take 
        such actions as may be necessary to ensure that, of the 
        assignments made under this chapter from such agency to 
        private sector organizations in each year, at least 20 
        percent are to small business concerns.
          (2) Definitions.--For purposes of this subsection--
                  (A) the term ``small business concern'' means 
                a business concern that satisfies the 
                definitions and standards specified by the 
                Administrator of the Small Business 
                Administration under section 3(a)(2) of the 
                Small Business Act (as from time to time 
                amended by the Administrator);
                  (B) the term ``year'' refers to the 12-month 
                period beginning on the date of the enactment 
                of this chapter, and each succeeding 12-month 
                period in which any assignments under this 
                chapter may be made; and
                  (C) the assignments ``made'' in a year are 
                those commencing in such year.
          (3) Reporting requirement.--An agency which fails to 
        comply with paragraph (1) in a year shall, within 90 
        days after the end of such year, submit a report to the 
        Committees on Government Reform and Small Business of 
        the House of Representatives and the Committees on 
        Governmental Affairs and Small Business of the Senate. 
        The report shall include--
                  (A) the total number of assignments made 
                under this chapter from such agency to private 
                sector organizations in the year;
                  (B) of that total number, the number (and 
                percentage) made to small business concerns; 
                and
                  (C) the reasons for the agency's 
                noncompliance with paragraph (1).
          (4) Exclusion.--This subsection shall not apply to an 
        agency in any year in which it makes fewer than 5 
        assignments under this chapter to private sector 
        organizations.

Sec. 3804. Assignment of employees from private sector organizations

  (a) In General.--An employee of a private sector organization 
assigned to an agency under this chapter is deemed, during the 
period of the assignment, to be on detail to such agency.
  (b) Terms and Conditions.--An employee of a private sector 
organization assigned to an agency under this chapter--
          (1) may continue to receive pay and benefits from the 
        private sector organization from which he is assigned;
          (2) is deemed, notwithstanding subsection (a), to be 
        an employee of the agency for the purposes of--
                  (A) chapter 73;
                  (B) sections 201, 203, 205, 207, 208, 209, 
                603, 606, 607, 643, 654, 1905, and 1913 of 
                title 18;
                  (C) sections 1343, 1344, and 1349(b) of title 
                31;
                  (D) the Federal Tort Claims Act and any other 
                Federal tort liability statute;
                  (E) the Ethics in Government Act of 1978;
                  (F) section 1043 of the Internal Revenue Code 
                of 1986; and
                  (G) section 27 of the Office of Federal 
                Procurement Policy Act;
          (3) may not have access to any trade secrets or to 
        any other nonpublic information which is of commercial 
        value to the private sector organization from which he 
        is assigned; and
          (4) is subject to such regulations as the President 
        may prescribe.
The supervision of an employee of a private sector organization 
assigned to an agency under this chapter may be governed by 
agreement between the agency and the private sector 
organization concerned. Such an assignment may be made with or 
without reimbursement by the agency for the pay, or a part 
thereof, of the employee during the period of assignment, or 
for any contribution of the private sector organization to 
employee benefit systems.
  (c) Coordination With Chapter 81.--An employee of a private 
sector organization assigned to an agency under this chapter 
who suffers disability or dies as a result of personal injury 
sustained while performing duties during the assignment shall 
be treated, for the purpose of subchapter I of chapter 81, as 
an employee as defined by section 8101 who had sustained the 
injury in the performance of duty, except that, if the employee 
or the employee's dependents receive from the private sector 
organization any payment under an insurance policy for which 
the premium is wholly paid by the private sector organization, 
or other benefit of any kind on account of the same injury or 
death, then, the amount of such payment or benefit shall be 
credited against any compensation otherwise payable under 
subchapter I of chapter 81.
  (d) Prohibition Against Charging Certain Costs to the Federal 
Government.--A private sector organization may not charge the 
Federal Government, as direct or indirect costs under a Federal 
contract, the costs of pay or benefits paid by the organization 
to an employee assigned to an agency under this chapter for the 
period of the assignment.

Sec. 3805. Reporting requirement

  (a) In General.--The Office of Personnel Management shall, 
not later than April 30 and October 31 of each year, prepare 
and submit to the Committee on Government Reform of the House 
of Representatives and the Committee on Governmental Affairs of 
the Senate a semiannual report summarizing the operation of 
this chapter during the immediately preceding 6-month period 
ending on March 31 and September 30, respectively.
  (b) Content.--Each report shall include, with respect to the 
6-month period to which such report relates--
          (1) the total number of individuals assigned to, and 
        the total number of individuals assigned from, each 
        agency during such period;
          (2) a brief description of each assignment included 
        under paragraph (1), including--
                  (A) the name of the assigned individual, as 
                well as the private sector organization and the 
                agency (including the specific bureau or other 
                agency component) to or from which such 
                individual was assigned;
                  (B) the respective positions to and from 
                which the individual was assigned, including 
                the duties and responsibilities and the pay 
                grade or level associated with each; and
                  (C) the duration and objectives of the 
                individual's assignment; and
          (3) such other information as the Office considers 
        appropriate.
  (c) Publication.--A copy of each report submitted under 
subsection (a)--
          (1) shall be published in the Federal Register; and
          (2) shall be made publicly available on the Internet.
  (d) Agency Cooperation.--On request of the Office, agencies 
shall furnish such information and reports as the Office may 
require in order to carry out this section.

Sec. 3806. Regulations

  The Director of the Office of Personnel Management shall 
prescribe regulations for the administration of this chapter.

           *       *       *       *       *       *       *


Subpart F--Labor-Management and Employee Relations

           *       *       *       *       *       *       *


CHAPTER 73--SUITABILITY, SECURITY, AND CONDUCT

           *       *       *       *       *       *       *


SUBCHAPTER V--MISCONDUCT

           *       *       *       *       *       *       *


Sec. 7353. Gifts to Federal employees

  (a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  (4) Nothing in this section precludes an employee of a 
private sector organization, while assigned to an agency under 
chapter 37 or 38, from continuing to receive pay and benefits 
from such organization in accordance with such chapter.

           *       *       *       *       *       *       *

                              ----------                              


TITLE 18, UNITED STATES CODE

           *       *       *       *       *       *       *


PART I--CRIMES

           *       *       *       *       *       *       *


CHAPTER 11--BRIBERY, GRAFT, AND CONFLICTS OF INTEREST

           *       *       *       *       *       *       *


Sec. 207. Restrictions on former officers, employees, and elected 
                    officials of the executive and legislative branches

  (a) * * *

           *       *       *       *       *       *       *

  (c) One-Year Restrictions on Certain Senior Personnel of the 
Executive Branch and Independent Agencies.--
          (1) * * *
          (2) Persons to whom restrictions apply.--(A) 
        Paragraph (1) shall apply to a person (other than a 
        person subject to the restrictions of subsection (d))--
                  (i) * * *

           *       *       *       *       *       *       *

                  (v) assigned from a private sector 
                organization to an agency under chapter 37 or 
                38 of title 5.

           *       *       *       *       *       *       *

  (l) Contract Advice by Former [Details] Detailees.--Whoever, 
being an employee of a private sector organization assigned to 
an agency under chapter 37 or 38 of title 5, within one year 
after the end of that assignment, knowingly represents or aids, 
counsels, or assists in representing any other person (except 
the United States) in connection with any contract with that 
agency shall be punished as provided in section 216 of this 
title.

           *       *       *       *       *       *       *


Sec. 209. Salary of Government officials and employees payable only by 
                    United States

  (a) * * *

           *       *       *       *       *       *       *

  (g)(1) This section does not prohibit an employee of a 
private sector organization, while assigned to an agency under 
chapter 37 or 38 of title 5, from continuing to receive pay and 
benefits from such organization in accordance with such 
chapter.
  [(2) For purposes of this subsection, the term ``agency'' 
means an agency (as defined by section 3701 of title 5) and the 
Office of the Chief Technology Officer of the District of 
Columbia.]
  (2) For purposes of this subsection, the term ``agency''--
          (A) with respect to assignments under chapter 37 of 
        title 5, means an agency (as defined in section 3701 of 
        title 5) and the Office of the Chief Technology Officer 
        of the District of Columbia; and
          (B) with respect to assignments under chapter 38 of 
        title 5, means an agency (as defined by section 3801 of 
        title 5).

           *       *       *       *       *       *       *


CHAPTER 93--PUBLIC OFFICERS AND EMPLOYEES

           *       *       *       *       *       *       *


Sec. 1905. Disclosure of confidential information generally

  Whoever, being an officer or employee of the United States or 
of any department or agency thereof, any person acting on 
behalf of the Office of Federal Housing Enterprise Oversight, 
or agent of the Department of Justice as defined in the 
Antitrust Civil Process Act (15 U.S.C. 1311-1314), or being an 
employee of a private sector organization who is or was 
assigned to an agency under chapter 37 or 38 of title 5, 
publishes, divulges, discloses, or makes known in any manner or 
to any extent not authorized by law any information coming to 
him in the course of his employment or official duties or by 
reason of any examination or investigation made by, or return, 
report or record made to or filed with, such department or 
agency or officer or employee thereof, which information 
concerns or relates to the trade secrets, processes, 
operations, style of work, or apparatus, or to the identity, 
confidential statistical data, amount or source of any income, 
profits, losses, or expenditures of any person, firm, 
partnership, corporation, or association; or permits any income 
return or copy thereof or any book containing any abstract or 
particulars thereof to be seen or examined by any person except 
as provided by law; shall be fined under this title, or 
imprisoned not more than one year, or both; and shall be 
removed from office or employment.

           *       *       *       *       *       *       *

                              ----------                              


               SECTION 125 OF THE ACT OF JANUARY 8, 1988

                          (Public Law 100-238)

A bill making technical corrections relating to the Federal Employees' 
               Retirement System, and for other purposes.

SEC. 125. ELIGIBILITY OF CERTAIN INDIVIDUALS TO PARTICIPATE IN THE 
                    THRIFT SAVINGS PLAN.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Applicability.--This section applies with respect to--
          (1) any individual participating in the Civil Service 
        Retirement System or the Federal Employees' Retirement 
        System as--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) an individual assigned from a Federal 
                agency to a private sector organization under 
                chapter 37 or 38 of title 5, United States 
                Code; and

           *       *       *       *       *       *       *

                              ----------                              


        FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949

TITLE III--PROCUREMENT PROCEDURE

           *       *       *       *       *       *       *


SEC. 302C. IMPLEMENTATION OF FACNET CAPABILITY.

  (a) * * *
  (b) Designation of Agency Official.--The head of each 
executive agency shall designate a program manager to have 
responsibility for implementation of FACNET capability for that 
agency and otherwise to implement this section. Such program 
manager shall report directly to the [senior procurement 
executive] Chief Acquisition Officer designated for the 
executive agency under section 16(3) of the Office of Federal 
Procurement Policy Act (41 U.S.C. 414(3)).

           *       *       *       *       *       *       *


SEC. 303. COMPETITION REQUIREMENTS.

  (a) * * *

           *       *       *       *       *       *       *

  (f)(1) Except as provided in paragraph (2), an executive 
agency may not award a contract using procedures other than 
competitive procedures unless--
          (A) * * *
          (B) the justification is approved--
                  (i) * * *

           *       *       *       *       *       *       *

                  (iii) in the case of a contract for an amount 
                exceeding $50,000,000, by the [senior 
                procurement executive] Chief Acquisition 
                Officer of the agency designated pursuant to 
                section 16(3) of the Office of Federal 
                Procurement Policy Act (41 U.S.C. 414(3)) 
                (without further delegation); and

           *       *       *       *       *       *       *


SEC. 303N. PROTESTS.

  (a) In General.--An interested party may protest an 
acquisition of supplies or services by an executive agency 
based on an alleged violation of an acquisition law or 
regulation, and a decision regarding such alleged violation 
shall be made by the agency in accordance with this section.
  (b) Restriction on Contract Award Pending Decision.--(1) 
Except as provided in paragraph (2), a contract may not be 
awarded by an agency after a protest concerning the acquisition 
has been submitted under this section and while the protest is 
pending.
  (2) The head of the acquisition activity responsible for the 
award of a contract may authorize the award of the contract, 
notwithstanding a pending protest under this section, upon 
making a written finding that urgent and compelling 
circumstances do not allow for waiting for a decision on the 
protest.
  (c) Restriction on Contract Performance Pending Decision.--
(1) Except as provided in paragraph (2), performance of a 
contract may not be authorized (and performance of the contract 
shall cease if performance has already begun) in any case in 
which a protest of the contract award is submitted under this 
section before the later of--
          (A) the date that is 10 days after the date of 
        contract award; or
          (B) the date that is five days after an agency 
        debriefing date offered to an unsuccessful offeror for 
        any debriefing that is requested and, when requested, 
        is required, under section 303B(e) of this title.
  (2) The head of the acquisition activity responsible for the 
award of a contract may authorize performance of the contract 
notwithstanding a pending protest under this section upon 
making a written finding that urgent and compelling 
circumstances do not allow for waiting for a decision on the 
protest.
  (d) Deadline for Decision.--The head of an executive agency 
shall issue a decision on a protest under this section not 
later than the date that is 20 working days after the date on 
which the protest is submitted to the executive agency.
  (e) Construction.--Nothing in this section shall affect the 
right of an interested party to file a protest with the 
Comptroller General under subchapter V of chapter 35 of title 
31, United States Code, or in the United States Court of 
Federal Claims.
  (f) Definitions.--In this section, the terms ``protest'' and 
``interested party'' have the meanings given such terms in 
section 3551 of title 31, United States Code.

           *       *       *       *       *       *       *


[SEC. 317. SHARE-IN-SAVINGS CONTRACTS.

  [(a) Authority To Enter Into Share-in-Savings Contracts.--(1) 
The head of an executive agency may enter into a share-in-
savings contract for information technology (as defined in 
section 11101(6) of title 40, United States Code) in which the 
Government awards a contract to improve mission-related or 
administrative processes or to accelerate the achievement of 
its mission and share with the contractor in savings achieved 
through contract performance.
  [(2)(A) Except as provided in subparagraph (B), a share-in-
savings contract shall be awarded for a period of not more than 
five years.
  [(B) A share-in-savings contract may be awarded for a period 
greater than five years, but not more than 10 years, if the 
head of the agency determines in writing prior to award of the 
contract that--
          [(i) the level of risk to be assumed and the 
        investment to be undertaken by the contractor is likely 
        to inhibit the government from obtaining the needed 
        information technology competitively at a fair and 
        reasonable price if the contract is limited in duration 
        to a period of five years or less; and
          [(ii) usage of the information technology to be 
        acquired is likely to continue for a period of time 
        sufficient to generate reasonable benefit for the 
        government.
  [(3) Contracts awarded pursuant to the authority of this 
section shall, to the maximum extent practicable, be 
performance-based contracts that identify objective outcomes 
and contain performance standards that will be used to measure 
achievement and milestones that must be met before payment is 
made.
  [(4) Contracts awarded pursuant to the authority of this 
section shall include a provision containing a quantifiable 
baseline that is to be the basis upon which a savings share 
ratio is established that governs the amount of payment a 
contractor is to receive under the contract. Before 
commencement of performance of such a contract, the senior 
procurement executive of the agency shall determine in writing 
that the terms of the provision are quantifiable and will 
likely yield value to the Government.
  [(5)(A) The head of the agency may retain savings realized 
through the use of a share-in-savings contract under this 
section that are in excess of the total amount of savings paid 
to the contractor under the contract, but may not retain any 
portion of such savings that is attributable to a decrease in 
the number of civilian employees of the Federal Government 
performing the function. Except as provided in subparagraph 
(B), savings shall be credited to the appropriation or fund 
against which charges were made to carry out the contract and 
shall be used for information technology.
  [(B) Amounts retained by the agency under this subsection 
shall--
          [(i) without further appropriation, remain available 
        until expended; and
          [(ii) be applied first to fund any contingent 
        liabilities associated with share-in-savings 
        procurements that are not fully funded.
  [(b) Cancellation and Termination.--(1) If funds are not made 
available for the continuation of a share-in-savings contract 
entered into under this section in a subsequent fiscal year, 
the contract shall be canceled or terminated. The costs of 
cancellation or termination may be paid out of--
          [(A) appropriations available for the performance of 
        the contract;
          [(B) appropriations available for acquisition of the 
        information technology procured under the contract, and 
        not otherwise obligated; or
          [(C) funds subsequently appropriated for payments of 
        costs of cancellation or termination, subject to the 
        limitations in paragraph (3).
  [(2) The amount payable in the event of cancellation or 
termination of a share-in-savings contract shall be negotiated 
with the contractor at the time the contract is entered into.
  [(3)(A) Subject to subparagraph (B), the head of an executive 
agency may enter into share-in-savings contracts under this 
section in any given fiscal year even if funds are not made 
specifically available for the full costs of cancellation or 
termination of the contract if funds are available and 
sufficient to make payments with respect to the first fiscal 
year of the contract and the following conditions are met 
regarding the funding of cancellation and termination 
liability:
          [(i) The amount of unfunded contingent liability for 
        the contract does not exceed the lesser of--
                  [(I) 25 percent of the estimated costs of a 
                cancellation or termination; or
                  [(II) $5,000,000.
          [(ii) Unfunded contingent liability in excess of 
        $1,000,000 has been approved by the Director of the 
        Office of Management and Budget or the Director's 
        designee.
  [(B) The aggregate number of share-in-savings contracts that 
may be entered into under subparagraph (A) by all executive 
agencies to which this chapter applies in a fiscal year may not 
exceed 5 in each of fiscal years 2003, 2004, and 2005.
  [(c) Definitions.--In this section:
          [(1) The term ``contractor'' means a private entity 
        that enters into a contract with an agency.
          [(2) The term ``savings'' means--
                  [(A) monetary savings to an agency; or
                  [(B) savings in time or other benefits 
                realized by the agency, including enhanced 
                revenues (other than enhanced revenues from the 
                collection of fees, taxes, debts, claims, or 
                other amounts owed the Federal Government).
          [(3) The term ``share-in-savings contract'' means a 
        contract under which--
                  [(A) a contractor provides solutions for--
                          [(i) improving the agency's mission-
                        related or administrative processes; or
                          [(ii) accelerating the achievement of 
                        agency missions; and
                  [(B) the head of the agency pays the 
                contractor an amount equal to a portion of the 
                savings derived by the agency from--
                          [(i) any improvements in mission-
                        related or administrative processes 
                        that result from implementation of the 
                        solution; or
                          [(ii) acceleration of achievement of 
                        agency missions.
  [(d) Termination.--No share-in-savings contracts may be 
entered into under this section after September 30, 2005.]

SEC. 317. SHARE-IN-SAVINGS CONTRACTS.

  (a) Authority To Enter Into Share-in-Savings Contracts.--(1) 
The head of an executive agency may enter into a share-in-
savings contract in which the Government awards a contract to 
improve mission-related or administrative processes or to 
accelerate the achievement of its mission and share with the 
contractor in savings achieved through contract performance.
  (2)(A) Except as provided in subparagraph (B), a share-in-
savings contract shall be awarded for a period of not more than 
five years.
  (B) A share-in-savings contract may be awarded for a period 
greater than five years, but not more than 10 years, if the 
head of the agency determines in writing prior to award of the 
contract that--
          (i) the level of risk to be assumed and the 
        investment to be undertaken by the contractor is likely 
        to inhibit the government from obtaining the needed 
        performance competitively at a fair and reasonable 
        price if the contract is limited in duration to a 
        period of five years or less; and
          (ii) the performance to be acquired is likely to 
        continue for a period of time sufficient to generate 
        reasonable benefit for the government.
  (3) Contracts awarded pursuant to the authority of this 
section shall, to the maximum extent practicable, be 
performance-based contracts that identify objective outcomes 
and contain performance standards that will be used to measure 
achievement and milestones that must be met before payment is 
made.
  (4) Contracts awarded pursuant to the authority of this 
section shall include a provision containing a quantifiable 
baseline that is to be the basis upon which a savings share 
ratio is established that governs the amount of payment a 
contractor is to receive under the contract. Before 
commencement of performance of such a contract, the chief 
acquisition officer of the agency shall determine in writing 
that the terms of the provision are quantifiable and will 
likely yield value to the Government.
  (5)(A) The head of the agency may retain savings realized 
through the use of a share-in-savings contract under this 
section that are in excess of the total amount of savings paid 
to the contractor under the contract. Except as provided in 
subparagraph (B), savings shall be credited to the 
appropriation or fund against which charges were made to carry 
out the contract.
  (B) Amounts retained by the agency under this subsection 
shall--
          (i) without further appropriation, remain available 
        until expended; and
          (ii) be applied first to fund any contingent 
        liabilities associated with share-in-savings 
        procurements that are not fully funded.
  (b) Cancellation and Termination.--(1) If funds are not made 
available for the continuation of a share-in-savings contract 
entered into under this section in a subsequent fiscal year, 
the contract shall be canceled or terminated. The costs of 
cancellation or termination may be paid out of--
          (A) appropriations available for the performance of 
        the contract;
          (B) appropriations available for acquisition of the 
        type of property or services procured under the 
        contract, and not otherwise obligated; or
          (C) funds subsequently appropriated for payments of 
        costs of cancellation or termination, subject to the 
        limitations in paragraph (3).
  (2) The amount payable in the event of cancellation or 
termination of a share-in-savings contract shall be negotiated 
with the contractor at the time the contract is entered into.
  (3) The head of an executive agency may enter into share-in-
savings contracts under this section in any given fiscal year 
even if funds are not made specifically available for the full 
costs of cancellation or termination of the contract if funds 
are available and sufficient to make payments with respect to 
the first fiscal year of the contract and the following 
conditions are met regarding the funding of cancellation and 
termination liability:
          (A) The amount of unfunded contingent liability for 
        the contract does not exceed the lesser of--
                  (i) 50 percent of the estimated costs of a 
                cancellation or termination; or
                  (ii) $10,000,000.
          (B) Unfunded contingent liability in excess of 
        $5,000,000 has been approved by the Director of the 
        Office of Management and Budget or the Director's 
        designee.
  (c) Definitions--In this section:
          (1) The term ``contractor'' means a private entity 
        that enters into a contract with an agency.
          (2) The term ``savings'' means--
                  (A) monetary savings to an agency; or
                  (B) savings in time or other benefits 
                realized by the agency, including enhanced 
                revenues.
          (3) The term ``share-in-savings contract'' means a 
        contract under which--
                  (A) a contractor provides solutions for--
                          (i) improving the agency's mission-
                        related or administrative processes; or
                          (ii) accelerating the achievement of 
                        agency missions; and
                  (B) the head of the agency pays the 
                contractor an amount equal to a portion of the 
                savings derived by the agency from--
                          (i) any improvements in mission-
                        related or administrative processes 
                        that result from implementation of the 
                        solution; or
                          (ii) acceleration of achievement of 
                        agency missions.

SEC. 318. PRODUCTS OF FEDERAL PRISON INDUSTRIES: PROCEDURAL 
                    REQUIREMENTS.

  (a) Market Research.--Before purchasing a product listed in 
the latest edition of the Federal Prison Industries catalog 
under section 4124(d) of title 18, United States Code, the head 
of an executive agency shall conduct market research to 
determine whether the Federal Prison Industries product is 
comparable to products available from the private sector that 
best meet the executive agency's needs in terms of price, 
quality, and time of delivery.
  (b) Competition Requirement.--If the head of the executive 
agency determines that a Federal Prison Industries product is 
not comparable in price, quality, or time of delivery to 
products available from the private sector that best meet the 
executive agency's needs in terms of price, quality, and time 
of delivery, the agency head shall use competitive procedures 
for the procurement of the product or shall make an individual 
purchase under a multiple award contract. In conducting such a 
competition or making such a purchase, the agency head shall 
consider a timely offer from Federal Prison Industries.
  (c) Implementation by Head of Executive Agency.--The head of 
an executive agency shall ensure that--
          (1) the executive agency does not purchase a Federal 
        Prison Industries product or service unless a 
        contracting officer of the agency determines that the 
        product or service is comparable to products or 
        services available from the private sector that best 
        meet the agency's needs in terms of price, quality, and 
        time of delivery; and
          (2) Federal Prison Industries performs its 
        contractual obligations to the same extent as any other 
        contractor for the executive agency.
  (d) Market Research Determination Not Subject to Review.--A 
determination by a contracting officer regarding whether a 
product or service offered by Federal Prison Industries is 
comparable to products or services available from the private 
sector that best meet an executive agency's needs in terms of 
price, quality, and time of delivery shall not be subject to 
review pursuant to section 4124(b) of title 18.
  (e) Performance as a Subcontractor.--(1) A contractor or 
potential contractor of an executive agency may not be required 
to use Federal Prison Industries as a subcontractor or supplier 
of products or provider of services for the performance of a 
contract of the executive agency by any means, including means 
such as--
          (A) a contract solicitation provision requiring a 
        contractor to offer to make use of products or services 
        of Federal Prison Industries in the performance of the 
        contract;
          (B) a contract specification requiring the contractor 
        to use specific products or services (or classes of 
        products or services) offered by Federal Prison 
        Industries in the performance of the contract; or
          (C) any contract modification directing the use of 
        products or services of Federal Prison Industries in 
        the performance of the contract.
  (2) In this subsection, the term ``contractor'', with respect 
to a contract, includes a subcontractor at any tier under the 
contract.
  (f) Protection of Classified and Sensitive Information.--The 
head of an executive agency may not enter into any contract 
with Federal Prison Industries under which an inmate worker 
would have access to--
          (1) any data that is classified;
          (2) any geographic data regarding the location of--
                  (A) surface and subsurface infrastructure 
                providing communications or water or electrical 
                power distribution;
                  (B) pipelines for the distribution of natural 
                gas, bulk petroleum products, or other 
                commodities; or
                  (C) other utilities; or
          (3) any personal or financial information about any 
        individual private citizen, including information 
        relating to such person's real property however 
        described, without the prior consent of the individual.
  (g) Definitions.--In this section:
          (1) The term ``competitive procedures'' has the 
        meaning given such term in section 4(5) of the Office 
        of Federal Procurement Policy Act (41 U.S.C. 403(5)).
          (2) The term ``market research'' means obtaining 
        specific information about the price, quality, and time 
        of delivery of products available in the private sector 
        through a variety of means, which may include--
                  (A) contacting knowledgeable individuals in 
                government and industry;
                  (B) interactive communication among industry, 
                acquisition personnel, and customers; and
                  (C) interchange meetings or pre-solicitation 
                conferences with potential offerors.

SEC. 319. AUTHORITY TO ENTER INTO CERTAIN TRANSACTIONS FOR DEFENSE 
                    AGAINST OR RECOVERY FROM TERRORISM OR NUCLEAR, 
                    BIOLOGICAL, CHEMICAL, OR RADIOLOGICAL ATTACK.

  (a) Authority.--
          (1) In general.--The head of an executive agency who 
        engages in basic research, applied research, advanced 
        research, and development projects that--
                  (A) are necessary to the responsibilities of 
                such official's executive agency in the field 
                of research and development, and
                  (B) have the potential to facilitate defense 
                against or recovery from terrorism or nuclear, 
                biological, chemical, or radiological attack,
        may exercise the same authority (subject to the same 
        restrictions and conditions) with respect to such 
        research and projects as the Secretary of Defense may 
        exercise under section 2371 of title 10, United States 
        Code, except for subsections (b) and (f) of such 
        section 2371.
          (2) Prototype projects.--The head of an executive 
        agency may, under the authority of paragraph (1), carry 
        out prototype projects that meet the requirements of 
        subparagraphs (A) and (B) of paragraph (1) in 
        accordance with the requirements and conditions 
        provided for carrying out prototype projects under 
        section 845 of the National Defense Authorization Act 
        for Fiscal Year 1994 (Public Law 103-160; 10 U.S.C. 
        2371 note). In applying the requirements and conditions 
        of that section 845--
                  (A) subsection (c) of that section shall 
                apply with respect to prototype projects 
                carried out under this paragraph; and
                  (B) the Director of the Office of Management 
                and Budget shall perform the functions of the 
                Secretary of Defense under subsection (d) of 
                that section.
          (3) Applicability to selected executive agencies.--
                  (A) OMB authorization required.--The head of 
                an executive agency may exercise authority 
                under this subsection only if authorized by the 
                Director of the Office of Management and Budget 
                to do so.
                  (B) Relationship to authority of department 
                of homeland security.--The authority under this 
                subsection shall not apply to the Secretary of 
                Homeland Security while section 831 of the 
                Homeland Security Act of 2002 (Public Law 107-
                296; 116 Stat. 2224) is in effect.
  (b) Annual Report.--The annual report of the head of an 
executive agency that is required under subsection (h) of 
section 2371 of title 10, United States Code, as applied to the 
head of the executive agency by subsection (a), shall be 
submitted to the Committee on Governmental Affairs of the 
Senate and the Committee on Government Reform of the House of 
Representatives.
  (c) Regulations.--The Director of the Office of Management 
and Budget shall prescribe regulations to carry out this 
section.

           *       *       *       *       *       *       *

                              ----------                              


TITLE 10, UNITED STATES CODE

           *       *       *       *       *       *       *


PART I--ORGANIZATION AND GENERAL MILITARY POWERS

           *       *       *       *       *       *       *


CHAPTER 1--DEFINITIONS

           *       *       *       *       *       *       *


Sec. 133. Under Secretary of Defense for Acquisition, Technology, and 
                    Logistics

  (a) * * *

           *       *       *       *       *       *       *

  (c) The Under Secretary--
          (1) is the [senior procurement executive] Chief 
        Acquisition Officer for the Department of Defense for 
        the purposes of section 16(3) of the Office of Federal 
        Procurement Policy Act (41 U.S.C. 414(3));

           *       *       *       *       *       *       *


PART IV--SERVICE, SUPPLY, AND PROCUREMENT

           *       *       *       *       *       *       *


                 CHAPTER 131--PLANNING AND COORDINATION

Sec.
2201.  Apportionment of funds: authority for exemption; excepted 
          expenses.
     * * * * * * *
[2224a.   Information security: continued applicability of expiring 
          Governmentwide requirements to the Department of Defense.]

           *       *       *       *       *       *       *


Sec. 2224. Defense Information Assurance Program

  (a) * * *

           *       *       *       *       *       *       *

  (c) Program Strategy.--In carrying out the program, the 
Secretary shall develop a program strategy that encompasses 
those actions necessary to assure the readiness, reliability, 
continuity, and integrity of Defense information systems, 
networks, and infrastructure, including through compliance with 
subtitle II of chapter 35 of title 44, including through 
compliance with subchapter [III] II of chapter 35 of title 44. 
The program strategy shall include the following:
          (1) * * *

           *       *       *       *       *       *       *


[Sec. 2224a. Information security: continued applicability of expiring 
                    Governmentwide requirements to the Department of 
                    Defense

  [(a) In General.--The provisions of subchapter II of chapter 
35 of title 44 shall continue to apply through September 30, 
2004, with respect to the Department of Defense, 
notwithstanding the expiration of authority under section 3536 
of such title.
  [(b) Responsibilities.--In administering the provisions of 
subchapter II of chapter 35 of title 44 with respect to the 
Department of Defense after the expiration of authority under 
section 3536 of such title, the Secretary of Defense shall 
perform the duties set forth in that subchapter for the 
Director of the Office of Management and Budget.]

           *       *       *       *       *       *       *


Sec. 2225. Information technology purchases: tracking and management

  (a) * * *

           *       *       *       *       *       *       *

  (d) Limitation on Certain Purchases.--No purchase of 
information technology products or services in excess of the 
simplified acquisition threshold shall be made for the 
Department of Defense from a Federal agency outside the 
Department of Defense unless--
          (1) * * *
          (2)(A) * * *
          (B) in the case of a purchase by a military 
        department, the purchase is approved by the [senior 
        procurement executive] Chief Acquisition Officer of the 
        military department.

           *       *       *       *       *       *       *

  (f ) Definitions.--In this section:
          (1) The term ``[senior procurement executive] Chief 
        Acquisition Officer'', with respect to a military 
        department, means the official designated as the 
        [senior procurement executive] Chief Acquisition 
        Officer for the military department for the purposes of 
        section 16(3) of the Office of Federal Procurement 
        Policy Act (41 U.S.C. 414(3)).

           *       *       *       *       *       *       *


                   CHAPTER 137--PROCUREMENT GENERALLY

Sec.
2302.  Definitions.
     * * * * * * *
2305b.   Protests.
     * * * * * * *

Sec. 2302c. Implementation of electronic commerce capability

  (a) * * *
  (b) Designation of Agency Official.--The head of each agency 
named in paragraph (5) or (6) of section 2303(a) this title 
shall designate a program manager to implement the electronic 
commerce capability for that agency. The program manager shall 
report directly to an official at a level not lower than the 
[senior procurement executive] Chief Acquisition Officer 
designated for the agency under section 16(3) of the Office of 
Federal Procurement Policy Act (41 U.S.C. 414(3)).

           *       *       *       *       *       *       *


Sec. 2304. Contracts: competition requirements

  (a) * * *

           *       *       *       *       *       *       *

  (f)(1) Except as provided in paragraph (2), the head of an 
agency may not award a contract using procedures other than 
competitive procedures unless--
          (A) * * *
          (B) the justification is approved--
                  (i) * * *

           *       *       *       *       *       *       *

                  (iii) in the case of a contract for an amount 
                exceeding $50,000,000, by the [senior 
                procurement executive] Chief Acquisition 
                Officer of the agency designated pursuant to 
                section 16(3) of the Office of Federal 
                Procurement Policy Act (41 U.S.C. 414(3)) 
                (without further delegation) or in the case of 
                the Under Secretary of Defense for Acquisition, 
                Technology, and Logistics, acting in his 
                capacity as the [senior procurement executive] 
                Chief Acquisition Officer for the Department of 
                Defense, the Under Secretary's delegate 
                designated pursuant to paragraph (6)(B); and

           *       *       *       *       *       *       *


Sec. 2305b. Protests

  (a) In General.--An interested party may protest an 
acquisition of supplies or services by an agency based on an 
alleged violation of an acquisition law or regulation, and a 
decision regarding such alleged violation shall be made by the 
agency in accordance with this section.
  (b) Restriction on Contract Award Pending Decision.--(1) 
Except as provided in paragraph (2), a contract may not be 
awarded by an agency after a protest concerning the acquisition 
has been submitted under this section and while the protest is 
pending.
  (2) The head of the acquisition activity responsible for the 
award of the contract may authorize the award of a contract, 
notwithstanding pending protest under this section, upon making 
a written finding that urgent and compelling circumstances do 
not allow for waiting for a decision on the protest.
  (c) Restriction on Contract Performance Pending Decision.--
(1) Except as provided in paragraph (2), performance of a 
contract may not be authorized (and performance of the contract 
shall cease if performance has already begun) in any case in 
which a protest of the contract award is submitted under this 
section before the later of--
          (A) the date that is 10 days after the date of 
        contract award; or
          (B) the date that is five days after an agency 
        debriefing date offered to an unsuccessful offeror for 
        any debriefing that is requested and, when requested, 
        is required, under section 2305(b)(5) of this title.
  (2) The head of the acquisition activity responsible for the 
award of a contract may authorize performance of the contract 
notwithstanding a pending protest under this section upon 
making a written finding that urgent and compelling 
circumstances do not allow for waiting for a decision on the 
protest.
  (d) Deadline for Decision.--The head of an agency shall issue 
a decision on a protest under this section not later than the 
date that is 20 working days after the date on which the 
protest is submitted to such head of an agency.
  (e) Construction.--Nothing in this section shall affect the 
right of an interested party to file a protest with the 
Comptroller General under subchapter V of chapter 35 of title 
31 or in the United States Court of Federal Claims.
  (f) Definitions.--In this section, the terms ``protest'' and 
``interested party'' have the meanings given such terms in 
section 3551 of title 31.

           *       *       *       *       *       *       *


[Sec. 2332. Share-in-savings contracts

  [(a) Authority To Enter Into Share-in-Savings Contracts.--(1) 
The head of an agency may enter into a share-in-savings 
contract for information technology (as defined in section 
11101(6) of title 40) in which the Government awards a contract 
to improve mission-related or administrative processes or to 
accelerate the achievement of its mission and share with the 
contractor in savings achieved through contract performance.
  [(2)(A) Except as provided in subparagraph (B), a share-in-
savings contract shall be awarded for a period of not more than 
five years.
  [(B) A share-in-savings contract may be awarded for a period 
greater than five years, but not more than 10 years, if the 
head of the agency determines in writing prior to award of the 
contract that--
          [(i) the level of risk to be assumed and the 
        investment to be undertaken by the contractor is likely 
        to inhibit the government from obtaining the needed 
        information technology competitively at a fair and 
        reasonable price if the contract is limited in duration 
        to a period of five years or less; and
          [(ii) usage of the information technology to be 
        acquired is likely to continue for a period of time 
        sufficient to generate reasonable benefit for the 
        government.
  [(3) Contracts awarded pursuant to the authority of this 
section shall, to the maximum extent practicable, be 
performance-based contracts that identify objective outcomes 
and contain performance standards that will be used to measure 
achievement and milestones that must be met before payment is 
made.
  [(4) Contracts awarded pursuant to the authority of this 
section shall include a provision containing a quantifiable 
baseline that is to be the basis upon which a savings share 
ratio is established that governs the amount of payment a 
contractor is to receive under the contract. Before 
commencement of performance of such a contract, the senior 
procurement executive of the agency shall determine in writing 
that the terms of the provision are quantifiable and will 
likely yield value to the Government.
  [(5)(A) The head of the agency may retain savings realized 
through the use of a share-in-savings contract under this 
section that are in excess of the total amount of savings paid 
to the contractor under the contract, but may not retain any 
portion of such savings that is attributable to a decrease in 
the number of civilian employees of the Federal Government 
performing the function. Except as provided in subparagraph 
(B), savings shall be credited to the appropriation or fund 
against which charges were made to carry out the contract and 
shall be used for information technology.
  [(B) Amounts retained by the agency under this subsection 
shall--
          [(i) without further appropriation, remain available 
        until expended; and
          [(ii) be applied first to fund any contingent 
        liabilities associated with share-in-savings 
        procurements that are not fully funded.
  [(b) Cancellation and Termination.--(1) If funds are not made 
available for the continuation of a share-in-savings contract 
entered into under this section in a subsequent fiscal year, 
the contract shall be canceled or terminated. The costs of 
cancellation or termination may be paid out of--
          [(A) appropriations available for the performance of 
        the contract;
          [(B) appropriations available for acquisition of the 
        information technology procured under the contract, and 
        not otherwise obligated; or
          [(C) funds subsequently appropriated for payments of 
        costs of cancellation or termination, subject to the 
        limitations in paragraph (3).
  [(2) The amount payable in the event of cancellation or 
termination of a share-in-savings contract shall be negotiated 
with the contractor at the time the contract is entered into.
  [(3)(A) Subject to subparagraph (B), the head of an agency 
may enter into share-in-savings contracts under this section in 
any given fiscal year even if funds are not made specifically 
available for the full costs of cancellation or termination of 
the contract if funds are available and sufficient to make 
payments with respect to the first fiscal year of the contract 
and the following conditions are met regarding the funding of 
cancellation and termination liability:
          [(i) The amount of unfunded contingent liability for 
        the contract does not exceed the lesser of--
                  [(I) 25 percent of the estimated costs of a 
                cancellation or termination; or
                  [(II) $5,000,000.
          [(ii) Unfunded contingent liability in excess of 
        $1,000,000 has been approved by the Director of the 
        Office of Management and Budget or the Director's 
        designee.
  [(B) The aggregate number of share-in-savings contracts that 
may be entered into under subparagraph (A) by all agencies to 
which this chapter applies in a fiscal year may not exceed 5 in 
each of fiscal years 2003, 2004, and 2005.
  [(c) Definitions.--In this section:
          [(1) The term ``contractor'' means a private entity 
        that enters into a contract with an agency.
          [(2) The term ``savings'' means--
                  [(A) monetary savings to an agency; or
                  [(B) savings in time or other benefits 
                realized by the agency, including enhanced 
                revenues (other than enhanced revenues from the 
                collection of fees, taxes, debts, claims, or 
                other amounts owed the Federal Government).
          [(3) The term ``share-in-savings contract'' means a 
        contract under which--
                  [(A) a contractor provides solutions for--
                          [(i) improving the agency's mission-
                        related or administrative processes; or
                          [(ii) accelerating the achievement of 
                        agency missions; and
                  [(B) the head of the agency pays the 
                contractor an amount equal to a portion of the 
                savings derived by the agency from--
                          [(i) any improvements in mission-
                        related or administrative processes 
                        that result from implementation of the 
                        solution; or
                          [(ii) acceleration of achievement of 
                        agency missions.
  [(d) Termination.--No share-in-savings contracts may be 
entered into under this section after September 30, 2005.]

Sec. 2332. Share-in-savings contracts

  (a) Authority To Enter Into Share-in-Savings Contracts.--(1) 
The head of an agency may enter into a share-in-savings 
contract in which the Government awards a contract to improve 
mission-related or administrative processes or to accelerate 
the achievement of its mission and share with the contractor in 
savings achieved through contract performance.
  (2)(A) Except as provided in subparagraph (B), a share-in-
savings contract shall be awarded for a period of not more than 
five years.
  (B) A share-in-savings contract may be awarded for a period 
greater than five years, but not more than 10 years, if the 
head of the agency determines in writing prior to award of the 
contract that--
          (i) the level of risk to be assumed and the 
        investment to be undertaken by the contractor is likely 
        to inhibit the government from obtaining the needed 
        performance competitively at a fair and reasonable 
        price if the contract is limited in duration to a 
        period of five years or less; and
          (ii) the performance to be acquired is likely to 
        continue for a period of time sufficient to generate 
        reasonable benefit for the government.
  (3) Contracts awarded pursuant to the authority of this 
section shall, to the maximum extent practicable, be 
performance-based contracts that identify objective outcomes 
and contain performance standards that will be used to measure 
achievement and milestones that must be met before payment is 
made.
  (4) Contracts awarded pursuant to the authority of this 
section shall include a provision containing a quantifiable 
baseline that is to be the basis upon which a savings share 
ratio is established that governs the amount of payment a 
contractor is to receive under the contract. Before 
commencement of performance of such a contract, the chief 
acquisition officer of the agency shall determine in writing 
that the terms of the provision are quantifiable and will 
likely yield value to the Government.
  (5)(A) The head of the agency may retain savings realized 
through the use of a share-in-savings contract under this 
section that are in excess of the total amount of savings paid 
to the contractor under the contract. Except as provided in 
subparagraph (B), savings shall be credited to the 
appropriation or fund against which charges were made to carry 
out the contract.
  (B) Amounts retained by the agency under this subsection 
shall--
          (i) without further appropriation, remain available 
        until expended; and
          (ii) be applied first to fund any contingent 
        liabilities associated with share-in-savings 
        procurements that are not fully funded.
  (b) Cancellation and Termination.--(1) If funds are not made 
available for the continuation of a share-in-savings contract 
entered into under this section in a subsequent fiscal year, 
the contract shall be canceled or terminated. The costs of 
cancellation or termination may be paid out of--
          (A) appropriations available for the performance of 
        the contract;
          (B) appropriations available for acquisition of the 
        type of property or services procured under the 
        contract, and not otherwise obligated; or
          (C) funds subsequently appropriated for payments of 
        costs of cancellation or termination, subject to the 
        limitations in paragraph (3).
  (2) The amount payable in the event of cancellation or 
termination of a share-in-savings contract shall be negotiated 
with the contractor at the time the contract is entered into.
  (3) The head of an agency may enter into share-in-savings 
contracts under this section in any given fiscal year even if 
funds are not made specifically available for the full costs of 
cancellation or termination of the contract if funds are 
available and sufficient to make payments with respect to the 
first fiscal year of the contract and the following conditions 
are met regarding the funding of cancellation and termination 
liability:
          (A) The amount of unfunded contingent liability for 
        the contract does not exceed the lesser of--
                  (i) 50 percent of the estimated costs of a 
                cancellation or termination; or
                  (ii) $10,000,000.
          (B) Unfunded contingent liability in excess of 
        $5,000,000 has been approved by the Director of the 
        Office of Management and Budget or the Director's 
        designee.
  (c) Definitions.--In this section:
          (1) The term ``contractor'' means a private entity 
        that enters into a contract with an agency.
          (2) The term ``savings'' means--
                  (A) monetary savings to an agency; or
                  (B) savings in time or other benefits 
                realized by the agency, including enhanced 
                revenues.
          (3) The term ``share-in-savings contract'' means a 
        contract under which--
                  (A) a contractor provides solutions for--
                          (i) improving the agency's mission-
                        related or administrative processes; or
                          (ii) accelerating the achievement of 
                        agency missions; and
                  (B) the head of the agency pays the 
                contractor an amount equal to a portion of the 
                savings derived by the agency from--
                          (i) any improvements in mission-
                        related or administrative processes 
                        that result from implementation of the 
                        solution; or
                          (ii) acceleration of achievement of 
                        agency missions.

           *       *       *       *       *       *       *


    CHAPTER 138--COOPERATIVE AGREEMENTS WITH NATO ALLIES AND OTHER 
COUNTRIES

           *       *       *       *       *       *       *


Sec. 2359a. Technology Transition Initiative

  (a) * * *

           *       *       *       *       *       *       *

  (i) Definition.--In this section, the term ``acquisition 
executive'', with respect to a military department or Defense 
Agency, means the official designated as the [senior 
procurement executive] Chief Acquisition Officer for that 
military department or Defense Agency for the purposes of 
section 16(3) of the Office of Federal Procurement Policy Act 
(41 U.S.C. 414(3)).

           *       *       *       *       *       *       *


CHAPTER 169--MILITARY CONSTRUCTION AND MILITARY FAMILY HOUSING

           *       *       *       *       *       *       *


Sec. 2855. Law applicable to contracts for architectural and 
                    engineering services and construction design

  (a) * * *
  (b)(1) * * *
  (2) The initial threshold amount under paragraph (1) is 
[$85,000] $300,000. The Secretary of Defense may revise that 
amount in order to ensure that small business concerns receive 
a reasonable share of contracts referred to in subsection (a).

           *       *       *       *       *       *       *

  (4) The selection and competition requirements described in 
subsection (a) shall apply to any contract for architectural 
and engineering services (including surveying and mapping 
services) that is entered into by the head of an agency (as 
such term is defined in section 2302 of this title).

           *       *       *       *       *       *       *

                              ----------                              


TITLE 31, UNITED STATES CODE

           *       *       *       *       *       *       *


SUBTITLE II--THE BUDGET PROCESS

           *       *       *       *       *       *       *


Sec. 1115. Performance plans

  (a) In carrying out the provisions of [section 1105(a)(29)] 
section 1105(a)(28), the Director of the Office of Management 
and Budget shall require each agency to prepare an annual 
performance plan covering each program activity set forth in 
the budget of such agency. Such plan shall--
          (1) * * *

           *       *       *       *       *       *       *


SUBTITLE III--FINANCIAL MANAGEMENT

           *       *       *       *       *       *       *


CHAPTER 35--ACCOUNTING AND COLLECTION

           *       *       *       *       *       *       *


SUBCHAPTER V--PROCUREMENT PROTEST SYSTEM

           *       *       *       *       *       *       *


Sec. 3553. Review of protests; effect on contracts pending decision

  (a) * * *

           *       *       *       *       *       *       *

  (d)(1) * * *

           *       *       *       *       *       *       *

  (4) The period referred to in paragraphs (2) and (3)(A), with 
respect to a contract, is the period beginning on the date of 
the contract award and ending on the later of--
          (A) the date that is 10 days after the date of the 
        contract award; [or]
          (B) the date that is 5 days after the debriefing date 
        offered to an unsuccessful offeror for any debriefing 
        that is requested and, when requested, is required[.]; 
        or
          (C) in the case of a protest of the same matter 
        regarding such contract that is submitted under section 
        2305b of title 10 or section 303N of the Federal 
        Property and Administrative Services Act of 1949, the 
        date that is 5 days after the date on which a decision 
        on that protest is issued.

           *       *       *       *       *       *       *

                              ----------                              


      SECTION 403 OF THE FEDERAL FINANCIAL MANAGEMENT ACT OF 1994

SEC. 403. FRANCHISE FUND PILOT PROGRAMS.

  (a) * * *

           *       *       *       *       *       *       *

  (f) Termination.--The provisions of this section shall expire 
on October 1, [2003] 2006.
                              ----------                              


TITLE 40, UNITED STATES CODE

           *       *       *       *       *       *       *


SUBTITLE I--FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES

           *       *       *       *       *       *       *


CHAPTER 11--SELECTION OF ARCHITECTS AND ENGINEERS

           *       *       *       *       *       *       *


Sec. 1102. Definitions

  In this chapter, the following definitions apply:
          (1) * * *

           *       *       *       *       *       *       *

          (4) Surveying and mapping.--The term ``surveying and 
        mapping'' means services performed by professionals 
        such as surveyors, photogrammetrists, hydrographers, 
        geodesists, or cartographers in the collection, 
        storage, retrieval, or dissemination of graphical or 
        digital data to depict natural or manmade physical 
        features, phenomena, or boundaries of the earth and any 
        information related to such data, including any such 
        data that comprises a survey, map, chart, geographic 
        information system, remotely sensed image or data, or 
        an aerial photograph.

           *       *       *       *       *       *       *


            SUBTITLE III--INFORMATION TECHNOLOGY MANAGEMENT

Chapter                                                             Sec.
      GENERAL......................................................11101
     * * * * * * *
11501]FORMATION TECHNOLOGY ACQUISITION PILOT PROGRAM..................

           *       *       *       *       *       *       *


CHAPTER 111--GENERAL

           *       *       *       *       *       *       *


Sec. 11101. Definitions

  In this subtitle, the following definitions apply:
          (1) * * *
          * * * * * * *
          (6) Information technology.--The term ``information 
        technology''--
                  (A) with respect to an executive agency means 
                any equipment or interconnected system or 
                subsystem of equipment, used in the automatic 
                acquisition, storage, analysis, evaluation, 
                manipulation, management, movement, control, 
                display, switching, interchange, transmission, 
                or reception of data or information by the 
                executive agency, if the equipment is used by 
                the executive agency directly or is used by a 
                contractor under a contract with the executive 
                agency that requires the use--
                          (i) of that equipment; or
                          (ii) of that equipment to a 
                        significant extent in the performance 
                        of a service or the furnishing of a 
                        product;
                  (B) includes computers, [ancillary 
                equipment,] ancillary equipment (including 
                imaging peripherals, input, output, and storage 
                devices necessary for security and 
                surveillance), peripheral equipment designed to 
                be controlled by the central processing unit of 
                a computer, software, firmware and similar 
                procedures, services (including support 
                services), and related resources; but
          * * * * * * *

     [CHAPTER 115--INFORMATION TECHNOLOGY ACQUISITION PILOT PROGRAM

                 [SUBCHAPTER I--CONDUCT OF PILOT PROGRAM

[Sec.
[11501.  Authority to conduct pilot program.
[11502.  Evaluation criteria and plans.
[11503.  Report.
[11504.  Recommended legislation.
[11505.  Rule of construction.

                [SUBCHAPTER I--CONDUCT OF PILOT PROGRAM

[Sec. 11501. Authority to conduct pilot program

  [(a) In General.--
          [(1) Purpose.--In consultation with the Administrator 
        for the Office of Information and Regulatory Affairs, 
        the Administrator for Federal Procurement Policy may 
        conduct a pilot program pursuant to the requirements of 
        section 11521 of this title to test alternative 
        approaches for the acquisition of information 
        technology by executive agencies.
          [(2) Multiagency, multi-activity conduct of each 
        program.--Except as otherwise provided in this chapter, 
        the pilot program conducted under this chapter shall be 
        carried out in not more than two procuring activities 
        in each of the executive agencies that are designated 
        by the Administrator for Federal Procurement Policy in 
        accordance with this chapter to carry out the pilot 
        program. With the approval of the Administrator for 
        Federal Procurement Policy, the head of each designated 
        executive agency shall select the procuring activities 
        of the executive agency that are to participate in the 
        test and shall designate a procurement testing official 
        who shall be responsible for the conduct and evaluation 
        of the pilot program within the executive agency.
  [(b) Limitation on Amount.--The total amount obligated for 
contracts entered into under the pilot program conducted under 
this chapter may not exceed $750,000,000. The Administrator for 
Federal Procurement Policy shall monitor those contracts and 
ensure that contracts are not entered into in violation of this 
subsection.
  [(c) Period of Programs.--
          [(1) In general.--Subject to paragraph (2), the pilot 
        program may be carried out under this chapter for the 
        period, not in excess of five years, the Administrator 
        for Federal Procurement Policy determines is sufficient 
        to establish reliable results.
          [(2) Continuing validity of contracts.--A contract 
        entered into under the pilot program before the 
        expiration of that program remains in effect according 
        to the terms of the contract after the expiration of 
        the program.

[Sec. 11502. Evaluation criteria and plans

  [(a) Measurable Test Criteria.--To the maximum extent 
practicable, the head of each executive agency conducting the 
pilot program under section 11501 of this title shall establish 
measurable criteria for evaluating the effects of the 
procedures or techniques to be tested under the program.
  [(b) Test Plan.--Before the pilot program may be conducted 
under section 11501 of this title, the Administrator for 
Federal Procurement Policy shall submit to Congress a detailed 
test plan for the program, including a detailed description of 
the procedures to be used and a list of regulations that are to 
be waived.

[Sec. 11503. Report

  [(a) Requirement.--Not later than 180 days after the 
completion of the pilot program under this chapter, the 
Administrator for Federal Procurement Policy shall--
          [(1) submit to the Director of the Office of 
        Management and Budget a report on the results and 
        findings under the program; and
          [(2) provide a copy of the report to Congress.
  [(b) Content.--The report shall include--
          [(1) a detailed description of the results of the 
        program, as measured by the criteria established for 
        the program; and
          [(2) a discussion of legislation that the 
        Administrator recommends, or changes in regulations 
        that the Administrator considers necessary, to improve 
        overall information resources management in the Federal 
        Government.

[Sec. 11504. Recommended legislation

  [If the Director of the Office of Management and Budget 
determines that the results and findings under the pilot 
program under this chapter indicate that legislation is 
necessary or desirable to improve the process for acquisition 
of information technology, the Director shall transmit the 
Director's recommendations for that legislation to Congress.

[Sec. 11505. Rule of construction

  [This chapter does not authorize the appropriation or 
obligation of amounts for the pilot program authorized under 
this chapter.]
          * * * * * * *
                              ----------                              


              SECTION 210 OF THE E-GOVERNMENT ACT OF 2002

SEC. 210. SHARE-IN-SAVINGS INITIATIVES.

  (a) * * *
          * * * * * * *
  [(c) Development of Incentives.--The Director of the Office 
of Management and Budget shall, in consultation with the 
Committee on Governmental Affairs of the Senate, the Committee 
on Government Reform of the House of Representatives, and 
executive agencies, develop techniques to permit an executive 
agency to retain a portion of the savings (after payment of the 
contractor's share of the savings) derived from share-in-
savings contracts as funds are appropriated to the agency in 
future fiscal years.
  [(d) Regulations.--Not later than 270 days after the date of 
the enactment of this Act, the Federal Acquisition Regulation 
shall be revised to implement the provisions enacted by this 
section. Such revisions shall--
          [(1) provide for the use of competitive procedures in 
        the selection and award of share-in-savings contracts 
        to--
                  [(A) ensure the contractor's share of savings 
                reflects the risk involved and market 
                conditions; and
                  [(B) otherwise yield greatest value to the 
                government; and
          [(2) allow appropriate regulatory flexibility to 
        facilitate the use of share-in-savings contracts by 
        executive agencies, including the use of innovative 
        provisions for technology refreshment and nonstandard 
        Federal Acquisition Regulation contract clauses.
  [(e) Additional Guidance.--The Administrator of General 
Services shall--
          [(1) identify potential opportunities for the use of 
        share-in-savings contracts; and
          [(2) in consultation with the Director of the Office 
        of Management and Budget, provide guidance to executive 
        agencies for determining mutually beneficial savings 
        share ratios and baselines from which savings may be 
        measured.
  [(f) OMB Report to Congress.--In consultation with executive 
agencies, the Director of the Office of Management and Budget 
shall, not later than 2 years after the date of the enactment 
of this Act, submit to Congress a report containing--
          [(1) a description of the number of share-in-savings 
        contracts entered into by each executive agency under 
        by this section and the amendments made by this 
        section, and, for each contract identified--
                  [(A) the information technology acquired;
                  [(B) the total amount of payments made to the 
                contractor; and
                  [(C) the total amount of savings or other 
                measurable benefits realized;
          [(2) a description of the ability of agencies to 
        determine the baseline costs of a project against which 
        savings can be measured; and
          [(3) any recommendations, as the Director deems 
        appropriate, regarding additional changes in law that 
        may be necessary to ensure effective use of share-in-
        savings contracts by executive agencies.
  [(g) GAO Report to Congress.--The Comptroller General shall, 
not later than 6 months after the report required under 
subsection (f) is submitted to Congress, conduct a review of 
that report and submit to Congress a report containing--
          [(1) the results of the review;
          [(2) an independent assessment by the Comptroller 
        General of the effectiveness of the use of share-in-
        savings contracts in improving the mission-related and 
        administrative processes of the executive agencies and 
        the achievement of agency missions; and
          [(3) a recommendation on whether the authority to 
        enter into share-in-savings contracts should be 
        continued.]
          * * * * * * *
  [(i) Definitions.--In this section, the terms ``contractor'', 
``savings'', and ``share-in-savings contract'' have the 
meanings given those terms in section 317 of the Federal 
Property and Administrative Services Act of 1949 (as added by 
subsection (b)).]
                              ----------                              


 SECTION 821 OF THE FLOYD D. SPENCE NATIONAL DEFENSE AUTHORIZATION ACT 
                          FOR FISCAL YEAR 2001

SEC. 821. IMPROVEMENTS IN PROCUREMENTS OF SERVICES.

  (a) * * *
  [(b) Incentive for Use of Performance-Based Service 
Contracts.--(1) A Department of Defense performance-based 
service contract or performance-based task order may be treated 
as a contract for the procurement of commercial items if--
          [(A) the contract or task order is valued at 
        $5,000,000 or less;
          [(B) the contract or task order sets forth 
        specifically each task to be performed and, for each 
        task--
                  [(i) defines the task in measurable, mission-
                related terms;
                  [(ii) identifies the specific end products or 
                output to be achieved; and
                  [(iii) contains a firm fixed price; and
          [(C) 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.
  [(2) The special simplified procedures provided in the 
Federal Acquisition Regulation pursuant to section 
2304(g)(1)(B) of title 10, United States Code, shall not apply 
to a performance-based service contract or performance-based 
task order that is treated as a contract for the procurement of 
commercial items under paragraph (1).
  [(3) Not later than 2 years after the date of the enactment 
of this Act, the Comptroller General shall submit a report on 
the implementation of this subsection to the congressional 
defense committees.
  [(4) The authority under this subsection shall not apply to 
contracts entered into or task orders issued more than 3 years 
after the date of the enactment of this Act.]
          * * * * * * *
                              ----------                              


       SECTION 8002 FEDERAL ACQUISITION STREAMLINING ACT OF 1994

SEC. 8002. REGULATIONS ON ACQUISITION OF COMMERCIAL ITEMS.

  (a) * * *
          * * * * * * *
  (d) Use of Firm, Fixed Price Contracts.--The Federal 
Acquisition Regulation shall include, for acquisitions of 
commercial items--
          (1) a requirement that firm, fixed price contracts or 
        fixed price with economic price adjustment contracts be 
        used to the maximum extent practicable; [and]
          (2) a prohibition on use of cost type contracts[.]; 
        and
          (3) authority for use of a time and materials 
        contract or a labor-hour contract for the procurement 
        of commercial services that are commonly sold to the 
        general public through such contracts.
          * * * * * * *
                              ----------                              


                     HOMELAND SECURITY ACT OF 2002

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) * * *
  (b) Table of Contents.--The table of contents for this Act is 
as follows:

Sec. 1. Short title; table of contents.
     * * * * * * *

 TITLE VIII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL; 
      UNITED STATES SECRET SERVICE; COAST GUARD; GENERAL PROVISIONS

     * * * * * * *

          Subtitle F--Federal Emergency Procurement Flexibility

Sec. 851. Definition.
     * * * * * * *
[Sec. 853. Increased simplified acquisition threshold for procurements 
          in support of humanitarian or peacekeeping operations or 
          contingency operations.]
Sec. 853. Increased simplified acquisition threshold for certain 
          procurements.
     * * * * * * *

TITLE VIII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL; 
UNITED STATES SECRET SERVICE; COAST GUARD; GENERAL PROVISIONS

           *       *       *       *       *       *       *


Subtitle F--Federal Emergency Procurement Flexibility

           *       *       *       *       *       *       *


SEC. 852. PROCUREMENTS FOR DEFENSE AGAINST OR RECOVERY FROM TERRORISM 
                    OR NUCLEAR, BIOLOGICAL, CHEMICAL, OR RADIOLOGICAL 
                    ATTACK.

  The authorities provided in this subtitle apply to any 
procurement of property or services by or for an executive 
agency that, as determined by the head of the executive agency, 
are to be used to facilitate defense against or recovery from 
terrorism or nuclear, biological, chemical, or radiological 
attack[, but only if a solicitation of offers for the 
procurement is issued during the 1-year period beginning on the 
date of the enactment of this Act].

[SEC. 853. INCREASED SIMPLIFIED ACQUISITION THRESHOLD FOR PROCUREMENTS 
                    IN SUPPORT OF HUMANITARIAN OR PEACEKEEPING 
                    OPERATIONS OR CONTINGENCY OPERATIONS.

  [(a) Temporary Threshold Amounts.--For a procurement referred 
to in section 852 that is carried out in support of a 
humanitarian or peacekeeping operation or a contingency 
operation, the simplified acquisition threshold definitions 
shall be applied as if the amount determined under the 
exception provided for such an operation in those definitions 
were--]

SEC. 853. INCREASED SIMPLIFIED ACQUISITION THRESHOLD FOR CERTAIN 
                    PROCUREMENTS.

  (a) Threshold Amounts.--For a procurement referred to in 
section 852, the simplified acquisition threshold referred to 
in section 4(11) of the Office of Federal Procurement Policy 
Act (41 U.S.C. 403(11)) is deemed to be--
          (1) * * *

           *       *       *       *       *       *       *

  [(b) Simplified Acquisition Threshold Definitions.--In this 
section, the term ``simplified acquisition threshold 
definitions'' means the following:
          [(1) Section 4(11) of the Office of Federal 
        Procurement Policy Act (41 U.S.C. 403(11)).
          [(2) Section 309(d) of the Federal Property and 
        Administrative Services Act of 1949 (41 U.S.C. 259(d)).
          [(3) Section 2302(7) of title 10, United States Code.
  [(c) Small Business Reserve.--For a procurement carried out 
pursuant to subsection (a), section 15(j) of the Small Business 
Act (15 U.S.C. 644(j)) shall be applied as if the maximum 
anticipated value identified therein is equal to the amounts 
referred to in subsection (a).]

           *       *       *       *       *       *       *


SEC. 855. APPLICATION OF CERTAIN COMMERCIAL ITEMS AUTHORITIES TO 
                    CERTAIN PROCUREMENTS.

  [(a) Authority.--
          [(1) In general.--The head of an executive agency may 
        apply the provisions of law listed in paragraph (2) to 
        a procurement referred to in section 852 without regard 
        to whether the property or services are commercial 
        items.
          [(2) Commercial item laws.--The provisions of law 
        referred to in paragraph (1) are as follows:
                  [(A) Sections 31 and 34 of the Office of 
                Federal Procurement Policy Act (41 U.S.C. 427, 
                430).
                  [(B) Section 2304(g) of title 10, United 
                States Code.
                  [(C) Section 303(g) of the Federal Property 
                and Administrative Services Act of 1949 (41 
                U.S.C. 253(g)).]
  (a) Authority.-- With respect to a procurement referred to in 
section 852, the head of an executive agency may deem any item 
or service to be a commercial item for the purpose of Federal 
procurement laws.
  (b) Inapplicability of Limitation on Use of Simplified 
Acquisition Procedures.--
          (1) In general.--The $5,000,000 limitation provided 
        in section 31(a)(2) of the Office of Federal 
        Procurement Policy Act (41 U.S.C. 427(a)(2)), section 
        2304(g)(1)(B) of title 10, United States Code, and 
        section 303(g)(1)(B) of the Federal Property and 
        Administrative Services Act of 1949 (41 U.S.C. 
        253(g)(1)(B)) shall not apply to purchases of property 
        or services [to which any of the provisions of law 
        referred to in subsection (a) are applied] under the 
        authority of this section.

           *       *       *       *       *       *       *


SEC. 857. REVIEW AND REPORT BY COMPTROLLER GENERAL.

  (a) Requirements.--Not later than March 31, [2004] 2006, the 
Comptroller General shall--
          (1) * * *

           *       *       *       *       *       *       *

                              ----------                              


               CHAPTER 35 OF TITLE 44, UNITED STATES CODE

         CHAPTER 35--COORDINATION OF FEDERAL INFORMATION POLICY

                SUBCHAPTER I--FEDERAL INFORMATION POLICY

Sec.
3501. Purposes.
     * * * * * * *

                   SUBCHAPTER II--INFORMATION SECURITY

[Sec.
[3531. Purposes.
[3532. Definitions.
[3533. Authority and functions of the Director.
[3534. Federal agency responsibilities.
[3535. Annual independent evaluation.
[3536. National security systems.
[3537. Authorization of appropriations.
[3538. Effect on existing law.]

                 [SUBCHAPTER III--INFORMATION SECURITY]

Sec.
3541. Purposes.
     * * * * * * *

                  [SUBCHAPTER II--INFORMATION SECURITY

[Sec. 3531. Purposes

  [The purposes of this subchapter are to--
          [(1) provide a comprehensive framework for ensuring 
        the effectiveness of information security controls over 
        information resources that support Federal operations 
        and assets;
          [(2) recognize the highly networked nature of the 
        current Federal computing environment and provide 
        effective governmentwide management and oversight of 
        the related information security risks, including 
        coordination of information security efforts throughout 
        the civilian, national security, and law enforcement 
        communities;
          [(3) provide for development and maintenance of 
        minimum controls required to protect Federal 
        information and information systems;
          [(4) provide a mechanism for improved oversight of 
        Federal agency information security programs;
          [(5) acknowledge that commercially developed 
        information security products offer advanced, dynamic, 
        robust, and effective information security solutions, 
        reflecting market solutions for the protection of 
        critical information infrastructures important to the 
        national defense and economic security of the nation 
        that are designed, built, and operated by the private 
        sector; and
          [(6) recognize that the selection of specific 
        technical hardware and software information security 
        solutions should be left to individual agencies from 
        among commercially developed products.

[Sec. 3532. Definitions

  [(a) In General.--Except as provided under subsection (b), 
the definitions under section 3502 shall apply to this 
subchapter.
  [(b) Additional Definitions.--As used in this subchapter--
          [(1) the term ``information security'' means 
        protecting information and information systems from 
        unauthorized access, use, disclosure, disruption, 
        modification, or destruction in order to provide--
                  [(A) integrity, which means guarding against 
                improper information modification or 
                destruction, and includes ensuring information 
                nonrepudiation and authenticity;
                  [(B) confidentiality, which means preserving 
                authorized restrictions on access and 
                disclosure, including means for protecting 
                personal privacy and proprietary information;
                  [(C) availability, which means ensuring 
                timely and reliable access to and use of 
                information; and
                  [(D) authentication, which means utilizing 
                digital credentials to assure the identity of 
                users and validate their access;
          [(2) the term ``national security system'' means any 
        information system (including any telecommunications 
        system) used or operated by an agency or by a 
        contractor of an agency, or other organization on 
        behalf of an agency, the function, operation, or use of 
        which--
                  [(A) involves intelligence activities;
                  [(B) involves cryptologic activities related 
                to national security;
                  [(C) involves command and control of military 
                forces;
                  [(D) involves equipment that is an integral 
                part of a weapon or weapons system; or
                  [(E) is critical to the direct fulfillment of 
                military or intelligence missions provided that 
                this definition does not apply to a system that 
                is used for routine administrative and business 
                applications (including payroll, finance, 
                logistics, and personnel management 
                applications);
          [(3) the term ``information technology'' has the 
        meaning given that term in section 11101 of title 40; 
        and
          [(4) the term ``information system'' means any 
        equipment or interconnected system or subsystems of 
        equipment that is used in the automatic acquisition, 
        storage, manipulation, management, movement, control, 
        display, switching, interchange, transmission, or 
        reception of data or information, and includes--
                  [(A) computers and computer networks;
                  [(B) ancillary equipment;
                  [(C) software, firmware, and related 
                procedures;
                  [(D) services, including support services; 
                and
                  [(E) related resources.

[Sec. 3533. Authority and functions of the Director

  [(a) The Director shall oversee agency information security 
policies and practices, by--
          [(1) promulgating information security standards 
        under section 11331 of title 40;
          [(2) overseeing the implementation of policies, 
        principles, standards, and guidelines on information 
        security;
          [(3) requiring agencies, consistent with the 
        standards promulgated under such section 11331 and the 
        requirements of this subchapter, to identify and 
        provide information security protections commensurate 
        with the risk and magnitude of the harm resulting from 
        the unauthorized access, use, disclosure, disruption, 
        modification, or destruction of--
                  [(A) information collected or maintained by 
                or on behalf of an agency; or
                  [(B) information systems used or operated by 
                an agency or by a contractor of an agency or 
                other organization on behalf of an agency;
          [(4) coordinating the development of standards and 
        guidelines under section 20 of the National Institute 
        of Standards and Technology Act (15 U.S.C. 278g-3) with 
        agencies and offices operating or exercising control of 
        national security systems (including the National 
        Security Agency) to assure, to the maximum extent 
        feasible, that such standards and guidelines are 
        complementary with standards and guidelines developed 
        for national security systems;
          [(5) overseeing agency compliance with the 
        requirements of this subchapter, including through any 
        authorized action under section 11303(b)(5) of title 
        40, to enforce accountability for compliance with such 
        requirements;
          [(6) reviewing at least annually, and approving or 
        disapproving, agency information security programs 
        required under section 3534(b);
          [(7) coordinating information security policies and 
        procedures with related information resources 
        management policies and procedures; and
          [(8) reporting to Congress no later than March 1 of 
        each year on agency compliance with the requirements of 
        this subchapter, including--
                  [(A) a summary of the findings of evaluations 
                required by section 3535;
                  [(B) significant deficiencies in agency 
                information security practices;
                  [(C) planned remedial action to address such 
                deficiencies; and
                  [(D) a summary of, and the views of the 
                Director on, the report prepared by the 
                National Institute of Standards and Technology 
                under section 20(d)(9) of the National 
                Institute of Standards and Technology Act (15 
                U.S.C. 278g-3).
  [(b) Except for the authorities described in paragraphs (4) 
and (7) of subsection (a), the authorities of the Director 
under this section shall not apply to national security 
systems.

[Sec. 3534. Federal agency responsibilities

  [(a) The head of each agency shall--
          [(1) be responsible for--
                  [(A) providing information security 
                protections commensurate with the risk and 
                magnitude of the harm resulting from 
                unauthorized access, use, disclosure, 
                disruption, modification, or destruction of--
                          [(i) information collected or 
                        maintained by or on behalf of the 
                        agency; and
                          [(ii) information systems used or 
                        operated by an agency or by a 
                        contractor of an agency or other 
                        organization on behalf of an agency;
                  [(B) complying with the requirements of this 
                subchapter and related policies, procedures, 
                standards, and guidelines, including--
                          [(i) information security standards 
                        promulgated by the Director under 
                        section 11331 of title 40; and
                          [(ii) information security standards 
                        and guidelines for national security 
                        systems issued in accordance with law 
                        and as directed by the President; and
                  [(C) ensuring that information security 
                management processes are integrated with agency 
                strategic and operational planning processes;
          [(2) ensure that senior agency officials provide 
        information security for the information and 
        information systems that support the operations and 
        assets under their control, including through--
                  [(A) assessing the risk and magnitude of the 
                harm that could result from the unauthorized 
                access, use, disclosure, disruption, 
                modification, or destruction of such 
                information or information systems;
                  [(B) determining the levels of information 
                security appropriate to protect such 
                information and information systems in 
                accordance with standards promulgated under 
                section 11331 of title 40 for information 
                security classifications and related 
                requirements;
                  [(C) implementing policies and procedures to 
                cost-effectively reduce risks to an acceptable 
                level; and
                  [(D) periodically testing and evaluating 
                information security controls and techniques to 
                ensure that they are effectively implemented;
          [(3) delegate to the agency Chief Information Officer 
        established under section 3506 (or comparable official 
        in an agency not covered by such section) the authority 
        to ensure compliance with the requirements imposed on 
        the agency under this subchapter, including--
                  [(A) designating a senior agency information 
                security officer who shall--
                          [(i) carry out the Chief Information 
                        Officer's responsibilities under this 
                        section;
                          [(ii) possess professional 
                        qualifications, including training and 
                        experience, required to administer the 
                        functions described under this section;
                          [(iii) have information security 
                        duties as that official's primary duty; 
                        and
                          [(iv) head an office with the mission 
                        and resources to assist in ensuring 
                        agency compliance with this section;
                  [(B) developing and maintaining an agencywide 
                information security program as required by 
                subsection (b);
                  [(C) developing and maintaining information 
                security policies, procedures, and control 
                techniques to address all applicable 
                requirements, including those issued under 
                section 3533 of this title, and section 11331 
                of title 40;
                  [(D) training and overseeing personnel with 
                significant responsibilities for information 
                security with respect to such responsibilities; 
                and
                  [(E) assisting senior agency officials 
                concerning their responsibilities under 
                paragraph (2);
          [(4) ensure that the agency has trained personnel 
        sufficient to assist the agency in complying with the 
        requirements of this subchapter and related policies, 
        procedures, standards, and guidelines; and
          [(5) ensure that the agency Chief Information 
        Officer, in coordination with other senior agency 
        officials, reports annually to the agency head on the 
        effectiveness of the agency information security 
        program, including progress of remedial actions.
  [(b) Each agency shall develop, document, and implement an 
agencywide information security program, approved by the 
Director under section 3533(a)(5), to provide information 
security for the information and information systems that 
support the operations and assets of the agency, including 
those provided or managed by another agency, contractor, or 
other source, that includes--
          [(1) periodic assessments of the risk and magnitude 
        of the harm that could result from the unauthorized 
        access, use, disclosure, disruption, modification, or 
        destruction of information and information systems that 
        support the operations and assets of the agency;
          [(2) policies and procedures that--
                  [(A) are based on the risk assessments 
                required by paragraph (1);
                  [(B) cost-effectively reduce information 
                security risks to an acceptable level;
                  [(C) ensure that information security is 
                addressed throughout the life cycle of each 
                agency information system; and
                  [(D) ensure compliance with--
                          [(i) the requirements of this 
                        subchapter;
                          [(ii) policies and procedures as may 
                        be prescribed by the Director, and 
                        information security standards 
                        promulgated under section 11331 of 
                        title 40;
                          [(iii) minimally acceptable system 
                        configuration requirements, as 
                        determined by the agency; and
                          [(iv) any other applicable 
                        requirements, including standards and 
                        guidelines for national security 
                        systems issued in accordance with law 
                        and as directed by the President;
          [(3) subordinate plans for providing adequate 
        information security for networks, facilities, and 
        systems or groups of information systems, as 
        appropriate;
          [(4) security awareness training to inform personnel, 
        including contractors and other users of information 
        systems that support the operations and assets of the 
        agency, of--
                  [(A) information security risks associated 
                with their activities; and
                  [(B) their responsibilities in complying with 
                agency policies and procedures designed to 
                reduce these risks;
          [(5) periodic testing and evaluation of the 
        effectiveness of information security policies, 
        procedures, and practices, to be performed with a 
        frequency depending on risk, but no less than annually, 
        of which such testing--
                  [(A) shall include testing of management, 
                operational, and technical controls of every 
                information system identified in the inventory 
                required under section 3505(c); and
                  [(B) may include testing relied on in a 
                evaluation under section 3535;
          [(6) a process for planning, implementing, 
        evaluating, and documenting remedial action to address 
        any deficiencies in the information security policies, 
        procedures, and practices of the agency;
          [(7) procedures for detecting, reporting, and 
        responding to security incidents, including--
                  [(A) mitigating risks associated with such 
                incidents before substantial damage is done; 
                and
                  [(B) notifying and consulting with, as 
                appropriate--
                          [(i) law enforcement agencies and 
                        relevant Offices of Inspector General;
                          [(ii) an office designated by the 
                        President for any incident involving a 
                        national security system; and
                          [(iii) any other agency or office, in 
                        accordance with law or as directed by 
                        the President; and
          [(8) plans and procedures to ensure continuity of 
        operations for information systems that support the 
        operations and assets of the agency.
  [(c) Each agency shall--
          [(1) report annually to the Director, the Committees 
        on Government Reform and Science of the House of 
        Representatives, the Committees on Governmental Affairs 
        and Commerce, Science, and Transportation of the 
        Senate, the appropriate authorization and 
        appropriations committees of Congress, and the 
        Comptroller General on the adequacy and effectiveness 
        of information security policies, procedures, and 
        practices, and compliance with the requirements of this 
        subchapter, including compliance with each requirement 
        of subsection (b);
          [(2) address the adequacy and effectiveness of 
        information security policies, procedures, and 
        practices in plans and reports relating to--
                  [(A) annual agency budgets;
                  [(B) information resources management under 
                subchapter 1 of this chapter;
                  [(C) information technology management under 
                subtitle III of title 40;
                  [(D) program performance under sections 1105 
                and 1115 through 1119 of title 31, and sections 
                2801 and 2805 of title 39;
                  [(E) financial management under chapter 9 of 
                title 31, and the Chief Financial Officers Act 
                of 1990 (31 U.S.C. 501 note; Public Law 101-
                576) (and the amendments made by that Act);
                  [(F) financial management systems under the 
                Federal Financial Management Improvement Act 
                (31 U.S.C. 3512 note); and
                  [(G) internal accounting and administrative 
                controls under section 3512 of title 31, United 
                States Code, (known as the ``Federal Managers 
                Financial Integrity Act''); and
          [(3) report any significant deficiency in a policy, 
        procedure, or practice identified under paragraph (1) 
        or (2)--
                  [(A) as a material weakness in reporting 
                under section 3512 of title 31; and
                  [(B) if relating to financial management 
                systems, as an instance of a lack of 
                substantial compliance under the Federal 
                Financial Management Improvement Act (31 U.S.C. 
                3512 note).
  [(d)(1) In addition to the requirements of subsection (c), 
each agency, in consultation with the Director, shall include 
as part of the performance plan required under section 1115 of 
title 31 a description of--
          [(A) the time periods; and
          [(B) the resources, including budget, staffing, and 
        training,
that are necessary to implement the program required under 
subsection (b).
  [(2) The description under paragraph (1) shall be based on 
the risk assessments required under subsection (b)(2)(1).
  [(e) Each agency shall provide the public with timely notice 
and opportunities for comment on proposed information security 
policies and procedures to the extent that such policies and 
procedures affect communication with the public.

[Sec. 3535. Annual independent evaluation

  [(a)(1) Each year each agency shall have performed an 
independent evaluation of the information security program and 
practices of that agency to determine the effectiveness of such 
program and practices.
  [(2) Each evaluation by an agency under this section shall 
include--
          [(A) testing of the effectiveness of information 
        security policies, procedures, and practices of a 
        representative subset of the agency's information 
        systems;
          [(B) an assessment (made on the basis of the results 
        of the testing) of compliance with--
                  [(i) the requirements of this subchapter; and
                  [(ii) related information security policies, 
                procedures, standards, and guidelines; and
          [(C) separate presentations, as appropriate, 
        regarding information security relating to national 
        security systems.
  [(b) Subject to subsection (c)--
          [(1) for each agency with an Inspector General 
        appointed under the Inspector General Act of 1978, the 
        annual evaluation required by this section shall be 
        performed by the Inspector General or by an independent 
        external auditor, as determined by the Inspector 
        General of the agency; and
          [(2) for each agency to which paragraph (1) does not 
        apply, the head of the agency shall engage an 
        independent external auditor to perform the evaluation.
  [(c) For each agency operating or exercising control of a 
national security system, that portion of the evaluation 
required by this section directly relating to a national 
security system shall be performed--
          [(1) only by an entity designated by the agency head; 
        and
          [(2) in such a manner as to ensure appropriate 
        protection for information associated with any 
        information security vulnerability in such system 
        commensurate with the risk and in accordance with all 
        applicable laws.
  [(d) The evaluation required by this section--
          [(1) shall be performed in accordance with generally 
        accepted government auditing standards; and
          [(2) may be based in whole or in part on an audit, 
        evaluation, or report relating to programs or practices 
        of the applicable agency.
  [(e) Each year, not later than such date established by the 
Director, the head of each agency shall submit to the Director 
the results of the evaluation required under this section.
  [(f) Agencies and evaluators shall take appropriate steps to 
ensure the protection of information which, if disclosed, may 
adversely affect information security. Such protections shall 
be commensurate with the risk and comply with all applicable 
laws and regulations.
  [(g)(1) The Director shall summarize the results of the 
evaluations conducted under this section in the report to 
Congress required under section 3533(a)(8).
  [(2) The Director's report to Congress under this subsection 
shall summarize information regarding information security 
relating to national security systems in such a manner as to 
ensure appropriate protection for information associated with 
any information security vulnerability in such system 
commensurate with the risk and in accordance with all 
applicable laws.
  [(3) Evaluations and any other descriptions of information 
systems under the authority and control of the Director of 
Central Intelligence or of National Foreign Intelligence 
Programs systems under the authority and control of the 
Secretary of Defense shall be made available to Congress only 
through the appropriate oversight committees of Congress, in 
accordance with applicable laws.
  [(h) The Comptroller General shall periodically evaluate and 
report to Congress on--
          [(1) the adequacy and effectiveness of agency 
        information security policies and practices; and
          [(2) implementation of the requirements of this 
        subchapter.

[Sec. 3536. Expiration

  [This subchapter shall not be in effect after May 31, 2003.

[Sec. 3537. Authorization of appropriations

  [There are authorized to be appropriated to carry out the 
provisions of this subchapter such sums as may be necessary for 
each of fiscal years 2003 through 2007.

[Sec. 3538. Effect on existing law

  [Nothing in this subchapter, section 11331 of title 40, or 
section 20 of the National Standards and Technology Act (15 
U.S.C. 278g-3) may be construed as affecting the authority of 
the President, the Office of Management and Budget or the 
Director thereof, the National Institute of Standards and 
Technology, or the head of any agency, with respect to the 
authorized use or disclosure of information, including with 
regard to the protection of personal privacy under section 552a 
of title 5, the disclosure of information under section 552 of 
title 5, the management and disposition of records under 
chapters 29, 31, or 33 of title 44, the management of 
information resources under subchapter I of chapter 35 of this 
title, or the disclosure of information to Congress or the 
Comptroller General of the United States.]

               SUBCHAPTER [III] II--INFORMATION SECURITY

Sec. 3541. Purposes

  The purposes of this subchapter are to--
          (1) * * *

           *       *       *       *       *       *       *


Sec. 3549. Effect on existing law

  Nothing in this subchapter, section 11331 of title 40, or 
section 20 of the National Standards and Technology Act (15 
U.S.C. 278g-3) may be construed as affecting the authority of 
the President, the Office of Management and Budget or the 
Director thereof, the National Institute of Standards and 
Technology, or the head of any agency, with respect to the 
authorized use or disclosure of information, including with 
regard to the protection of personal privacy under section 552a 
of title 5, the disclosure of information under section 552 of 
title 5, the management and disposition of records under 
chapters 29, 31, or 33 of title 44, the management of 
information resources under subchapter I of chapter 35 of this 
title, or the disclosure of information to the Congress or the 
Comptroller General of the United States. [While this 
subchapter is in effect, subchapter II of this chapter shall 
not apply.]

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    The Services Acquisition Reform Act (SARA), as reported by 
the Government Reform Committee on May 7, 2003, affects how the 
federal government procures federal goods and services worth 
billions of dollars. The aim of the legislation is to 
``streamline'' the procurement process. But in key areas, its 
effect will be to impede the government's ability to protect 
against waste, fraud, and abuse in federal contracting.
    On the plus side, the legislation creates a chief 
acquisition officer and establishes a training fund for 
acquisition personnel. These steps will help promote a 
professional, well-trained federal acquisition workforce.
    There are, however, significant problems with the 
legislation:
     Contractor Involvement in Federal Acquisition 
Decisions. The government-industry exchange program for 
acquisition personnel created by the bill could give private 
contractors undue influence over the federal contracting 
process.
     ``Share in Savings'' Contracts. The bill 
permanently authorizes a complicated and largely untested 
contract type called share-in-savings. These contracts are 
difficult to administer and are designed to escape 
congressional oversight.
     Inadequate Protections Against Waste, Fraud, and 
Abuse. The bill would weaken current law by allowing the 
government to enter into sole-source contracts for up to $15 
million without verifying that the prices charged are fair and 
reasonable.
     ``Other Transaction'' Authority. SARA greatly 
expands ``other transaction'' authority, which allows agencies 
to enter into contracts without regard to most federal 
procurement laws.
    Moreover, key amendments on important acquisition issues 
offered by Democratic members were rejected during the 
Committee consideration.

                            I. MAJOR ISSUES

A. Contractor Involvement in Federal Acquisition Decisions
    Section 103 of SARA establishes a government-industry 
exchange program for acquisition personnel. This legislation is 
patterned on an exchange program for information technology 
managers enacted as part of the E-Government Act of 2003 (P.L. 
107-347).
    In the case of information technology managers, an exchange 
program may make sense. But acquisition personnel have a unique 
oversight role in ensuring that contractorsare not overpaid and 
that the work performed meets federal standards. Turning these 
functions over to private sector employees puts the proverbial fox in 
charge of the henhouse. Even if private sector contractors follow 
conflict of interest laws and do not work on projects involving their 
private employers, their involvement is still inappropriate. Only 
persons who work for the government or are being paid by the government 
should be involved in making decisions about how much specific 
contractors are paid.
    During the markup, Rep. Waxman offered an amendment to 
stroke this provision, which was defeated.

B. ``Share in Savings'' Contracts

    Section 301 of the bill authorizes a contract type called 
``share-in-savings.'' Under these contracts, the contractor 
agrees to bear the initial project costs, including capital 
outlays, until the client agency begins to achieve specified 
``savings'' or ``enhanced revenues'' from the work. Payment is 
based on a percentage of the savings or revenues realized by 
the agency.
    These contracts are largely untested, both in the public 
and private sector. For this reason, after extensive 
negotiations, the E-Government Act of 2003 (P.L. 107-347) 
authorized 15 share-in-savings contracts in military 
departments and 15 in civilian agencies over a three-year 
period. The idea was that these 30 contracts would serve as 
``pilot projects.''
    SARA eliminates these carefully negotiated limits and gives 
all agencies permanent authority to enter into an unlimited 
number of share-in-savings contracts before any of the pilots 
have even begun. Moreover, SARA eliminates other safeguards in 
the E-Government Act, such as the requirement that ``share in 
savings'' contracts could not be used in revenue enhancement. 
Revenue enhancing contracts raise a host of complicated issues, 
such as ensuring that share-in-savings contracts for debt 
collection activities do not create rogue bounty hunters.
    One of the major concerns about these contracts is that 
they are a form of ``back-door'' appropriating. For other 
contracts, agencies must come to Congress for budget authority 
for the contracts. But section 301 specifically waivers this 
requirement if the government's potential liability under the 
contract is $10 million or less. This removes an important 
element of oversight and accountability.
    The Administration stated in testimony before the 
Government Committee last year that there is no reason to 
expand authority for share-in-saving beyond a pilot project 
``until there are demonstrable benefits. To date, we have not 
seen results.'' \1\
---------------------------------------------------------------------------
    \1\ Testimony of Angela Styles, Administrator of the Office of 
Federal Procurement Policy, House Subcommittee on Technology and 
Procurement Policy, Hearing on the Services Acquisition Reform Act, 
107th Cong. (Mar. 7, 2002).
---------------------------------------------------------------------------
    Rep. Waxman offered an amendment to delete this section, 
which was defeated.

C. Waiver of Safeguards against Waste, Fraud, and Abuse

    Sections 401, 404, and 502 of the bill allow the use of 
commercial acquisition procedures for goods and services that 
the bill defines as commercial in nature, but which in reality 
are not. Specifically:
     Section 401 treats any service contract that 
contains ``performance-based'' terms as a ``commercial item,'' 
even if the contract is a sole-source contract for a unique 
government service.
     Section 404 treats any contract with a contractor 
that does 90 percent of its business with the private sector as 
a ``commercial item,'' even if the contract is a sole-source 
contract for a unique government product or service.
     Section 502 treats any contract for goods or 
services needed to defined or respond to a terrorist attack as 
a commercial item.
    Some of the major safeguards at the government's disposal 
to ensure the efficient and effective use of taxpayer dollars 
are waived by these provisions. This waiver occurs because the 
safeguards are not available to the government when using 
commercial procedures. Among the most important of these 
safeguards are the Truth in Negotiations Act (TINA) and Cost 
Accounting Standards (CAS). TINA requires contractors to 
provide the government with accurate, timely, and complete 
pricing data for sole-source contracts over $550,000. CAS 
requires that contractors consistently and accurately account 
for their costs. These standards are essential for ensuring 
that the federal taxpayer is not overcharged for costs such as 
overhead or executive pensions.
    An amendment to the bill was offered by Rep. Waxman that 
would have ensured that no sole-source contract would be exempt 
from TINA and CAS. Rep. Davis, however, offered a second degree 
amendment, which passed over Rep. Waxman's objections, which 
limits the applicability of the Waxman amendment to contracts 
over $15 million.

D. ``Other Transaction'' Authority

    Section 501 of SARA would extend to all civilian agencies 
``other transaction'' authority for research and development 
projects related to defense against terrorism. This authority 
permits agencies to enter into contracts without regard to 
almost all federal statutes and regulations, including the 
Federal Acquisition Regulation, the Federal Property Act, the 
Competition in Contracting Act, the Federal Acquisition 
Streamlining Act, and the Federal Grant and Cooperative 
Agreement Act, as well as the Truth in Negotiations Act and 
Cost Accounting Standards.
    In the recently passed Homeland Security Act, the new 
Department of Homeland Security was given this authority for 
five years. The effect of the SARA provision is to repeal this 
time limit and to extend use of the authority to all agencies.
    ``Other transaction'' authority was originally granted to 
the Department of Defense to attract nontraditional 
contractors. The DOD IG has found, however, that this authority 
has not attracted a significant number of nontraditional 
defense contractors; to the contrary, traditional contractors 
have received 94.5 percent of ``other transaction'' contracts 
awarded by the Defense Department.\2\
---------------------------------------------------------------------------
    \2\ Testimony for the record of Robert J. Lieberman, Deputy 
Inspector General, Department of Defense, Subcommittee on Technology 
and Procurement Policy, Hearing on the Services Acquisition Reform Act, 
107th Cong. (Mar. 7, 2002).
---------------------------------------------------------------------------
    Moreover, the DOD IG has reported that these arrangements 
are subject to waste, fraud, and abuse. According to the IG, 
these special contracts ``do not provide the government a 
number of significant protections, ensure the prudent 
expenditure of taxpayer dollars, or prevent fraud.'' \3\
---------------------------------------------------------------------------
    \3\ Id.
---------------------------------------------------------------------------
    Rep. Maloney offered an amendment to reapply certain basic 
procurement statutes if other transaction authority is used. 
The amendment was defeated.

                   II. ACCEPTED DEMOCRATIC AMENDMENTS

    In a few important areas, Democratic amendments were 
adopted by the Committee:
     Definition of Commercial Services. An amendment to 
section 403 by Rep. Waxman was adopted. Section 403 amends the 
Office of Federal Procurement Policy Act to replace the current 
definition of ``commercial services.'' As amended by the Waxman 
amendment, the new definition is ``services offered and sold 
competitively, in substantial quantities, in the commercial 
marketplace based on established market prices for specific 
tasks performed or specific outcomes to be achieved and under 
standard commercial terms and conditions.'' The revised 
definition changes existing law by eliminating the requirement 
that commercial services be based on a catalogue price and 
permitting them to be sold based on specific outcomes to be 
achieved.
     Disclosure of Iraqi Contracts. An amendment by 
Rep. Maloney to require public disclosure of information 
regarding contracts for Iraqi reconstruction activities, if 
such contracts are not entered into using full and open 
competition, was offered and adopted.

                  III. REJECTED DEMOCRATIC AMENDMENTS

    Several key Democratic amendments were defeated on a party-
line vote:
     Contract Tracking. Rep. Kucinich offered an 
amendment to create a comprehensive, governmentwide system to 
track the cost and quality of agency contracting efforts, 
focusing on contracts entered into as the result of a public-
private competition.
     Competition Requirement. Rep. Van Hollen offered 
an amendment to require any decision by an agency to transfer 
the performance of a function from federal employees to a 
contractor to be based on the results of a public-private 
competition process.
     Standing. Rep. Kucinich offered an amendment to 
give federal employees or their representatives standing to 
appeal the results of an A-76 decision transferring federal 
jobs to private contractors.
     Corporate Expatriate. Rep. Sanchez offered an 
amendment to prohibit agencies from entering into any contract 
with a subsidiary of a publicly traded corporation if the 
corporation is incorporated in a tax haven country but the 
United States is the principal market for the public trading of 
the corporation's stock.
     Debarment. Rep. Maloney offered an amendment to 
allow debarment officials across agencies to share information 
regarding contractors' activities.
     Chief Acquisition Officer. Rep. Maloney offered an 
amendment to ensure the bill's position of Chief Acquisition 
Officer is held by a career professional.

                             IV. CONCLUSION

    While we support the goal of streamlining federal 
procurement laws, we cannot support SARA in its current form. 
Unfortunately, as reported by the Committee, the bill exposes 
the taxpayer to new forms of waste, fraud, and abuse in federal 
contracting.

                                   Henry A. Waxman.
                                   Tom Lantos.
                                   Major R. Owens.
                                   Edolphus Towns.
                                   Paul E. Kanjorski.
                                   Bernard Sanders.
                                   Carolyn B. Maloney.
                                   Elijah E. Cummings.
                                   Dennis J. Kucinich.
                                   Danny K. Davis.
                                   John F. Tierney.
                                   Wm. Lacy Clay.
                                   Diane E. Watson.
                                   Stephen F. Lynch.
                                   Chris Van Hollen.
                                   Linda T. Sanchez.
                                   C. A. Dutch Ruppersberger.
                                   Eleanor Holmes Norton.
                                   Jim Cooper.
                                   Chris Bell.