H. Rept. 111-465 - 111th Congress (2009-2010)
April 23, 2010, As Reported by the Armed Services Committee

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House Report 111-465 - IMPLEMENTING MANAGEMENT FOR PERFORMANCE AND RELATED REFORMS TO OBTAIN VALUE IN EVERY ACQUISITION ACT OF 2010




[House Report 111-465]
[From the U.S. Government Printing Office]


111th Congress 
 2d Session             HOUSE OF REPRESENTATIVES          Rept. 111-465
                                                                 Part 1
_______________________________________________________________________


 IMPLEMENTING MANAGEMENT FOR PERFORMANCE AND RELATED REFORMS TO OBTAIN 
                 VALUE IN EVERY ACQUISITION ACT OF 2010

                               __________

                              R E P O R T

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                                   ON

                               H.R. 5013

                             together with

                            ADDITIONAL VIEWS

                                     
      [Including cost estimate of the Congressional Budget Office]

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

                                     

                 April 23, 2010.--Ordered to be printed

                                -----

                 U.S. GOVERNMENT PRINTING OFFICE

89-006                   WASHINGTON : 2010









                   HOUSE COMMITTEE ON ARMED SERVICES
                     One Hundred Eleventh Congress

                    IKE SKELTON, Missouri, Chairman
JOHN SPRATT, South Carolina          HOWARD P. ``BUCK'' McKEON, 
SOLOMON P. ORTIZ, Texas                  California
GENE TAYLOR, Mississippi             ROSCOE G. BARTLETT, Maryland
SILVESTRE REYES, Texas               MAC THORNBERRY, Texas
VIC SNYDER, Arkansas                 WALTER B. JONES, North Carolina
ADAM SMITH, Washington               W. TODD AKIN, Missouri
LORETTA SANCHEZ, California          J. RANDY FORBES, Virginia
MIKE McINTYRE, North Carolina        JEFF MILLER, Florida
ROBERT A. BRADY, Pennsylvania        JOE WILSON, South Carolina
ROBERT ANDREWS, New Jersey           FRANK A. LoBIONDO, New Jersey
SUSAN A. DAVIS, California           ROB BISHOP, Utah
JAMES R. LANGEVIN, Rhode Island      MICHAEL TURNER, Ohio
RICK LARSEN, Washington              JOHN KLINE, Minnesota
JIM COOPER, Tennessee                MIKE ROGERS, Alabama
JIM MARSHALL, Georgia                TRENT FRANKS, Arizona
MADELEINE Z. BORDALLO, Guam          BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana              CATHY McMORRIS RODGERS, Washington
PATRICK J. MURPHY, Pennsylvania      K. MICHAEL CONAWAY, Texas
HANK JOHNSON, Georgia                DOUG LAMBORN, Colorado
CAROL SHEA-PORTER, New Hampshire     ROB WITTMAN, Virginia
JOE COURTNEY, Connecticut            MARY FALLIN, Oklahoma
DAVID LOEBSACK, Iowa                 DUNCAN HUNTER, California
JOE SESTAK, Pennsylvania             JOHN C. FLEMING, Louisiana
GABRIELLE GIFFORDS, Arizona          MIKE COFFMAN, Colorado
NIKI TSONGAS, Massachusetts          THOMAS J. ROONEY, Florida
GLENN NYE, Virginia                  TODD RUSSELL PLATTS, Pennsylvania
CHELLIE PINGREE, Maine
LARRY KISSELL, North Carolina
MARTIN HEINRICH, New Mexico
FRANK M. KRATOVIL, Jr., Maryland
BOBBY BRIGHT, Alabama
SCOTT MURPHY, New York
WILLIAM L. OWENS, New York
DAN BOREN, Oklahoma

                     Paul Arcangeli, Staff Director

















                            C O N T E N T S

                              ----------                              
                                                                   Page

Purpose and Background...........................................    21
Legislative History..............................................    23
Hearings.........................................................    23
Section-by-Section Analysis......................................    23
    Section 1--Short Title.......................................    23
    Section 2--Definition of Congressional Defense Committees....    23
    Section 3--Table of Contents.................................    24
TITLE I--DEFENSE ACQUISITION SYSTEM..............................    24
  OVERVIEW.......................................................    24
  ITEMS OF SPECIAL INTEREST......................................    25
    Acquisition Process for Information Technology...............    25
    Military Purpose Non-Developmental Items.....................    26
    Tailoring of Metrics.........................................    26
    Treatment of Services Acquisition in the Federal Acquisition 
      Regulation.................................................    27
  LEGISLATIVE PROVISIONS.........................................    27
    Section 101--Performance Management of the Defense 
      Acquisition System.........................................    27
    Section 102--Meaningful Consideration by Joint Requirements 
      Oversight Council of Input from Certain Officials..........    28
    Section 103--Performance Management for the Joint 
      Capabilities Integration and Development System............    29
    Section 104--Requirements for the Acquisition of Services....    29
    Section 105--Joint Evaluation Task Forces....................    30
    Section 106--Review of Defense Acquisition Guidance..........    30
    Section 107--Requirement To Include References to Services 
      Contracting throughout the Federal Acquisition Regulation..    30
    Section 108--Procurement of Military Purpose Nondevelopmental 
      Items......................................................    31
TITLE II--DEFENSE ACQUISITION WORKFORCE..........................    31
  OVERVIEW.......................................................    31
  LEGISLATIVE PROVISIONS.........................................    32
    Section 201--Acquisition Workforce Excellence................    32
    Section 202--Amendments to the Acquisition Workforce 
      Demonstration Project......................................    33
    Section 203--Incentive Programs for Civilian and Military 
      Personnel in the Acquisition Workforce.....................    34
    Section 204--Career Development for Civilian and Military 
      Personnel in the Acquisition Workforce.....................    35
    Section 205--Recertification and Training Requirements.......    35
    Section 206--Information Technology Acquisition Workforce....    36
    Section 207--Definition of Acquisition Workforce.............    36
    Section 208--Defense Acquisition University Curriculum Review    36
    Section 209--Cost Estimating Internship and Scholarship 
      Programs...................................................    37
TITLE III--FINANCIAL MANAGEMENT..................................    37
  OVERVIEW.......................................................    37
  LEGISLATIVE PROVISIONS.........................................    38
    Section 301--Incentives for Achieving Auditability...........    38
    Section 302--Measures Required after Failure To Achieve 
      Auditability...............................................    38
    Section 303--Review of Obligation and Expenditure Thresholds.    39
TITLE IV--INDUSTRIAL BASE........................................    39
  OVERVIEW.......................................................    39
  ITEMS OF SPECIAL INTEREST......................................    40
    Contract Payment Withholding.................................    40
    Department of Defense Utilization of Service Disabled 
      Veteran-Owned Small Businesses.............................    40
    Multiyear Procurement Authority..............................    41
  LEGISLATIVE PROVISIONS.........................................    42
    Section 401--Expansion of the Industrial Base................    42
    Section 402--Commercial Pricing Analysis.....................    42
    Section 403--Contractor and Grantee Disclosure of Delinquent 
      Federal Tax Debts..........................................    42
    Section 404--Independence of Contract Audits and Business 
      System Reviews.............................................    43
    Section 405--Blue Ribbon Panel on Eliminating Barriers to 
      Contracting with the Department of Defense.................    44
    Section 406--Inclusion of the Providers of Services and 
      Information Technology in the National Technology and 
      Industrial Base............................................    44
Communications from Other Committees.............................    44
Committee Position...............................................    46
Congressional Budget Office Estimate.............................    46
Committee Cost Estimate..........................................    50
Compliance with House Rule XXI...................................    50
Oversight Findings...............................................    50
General Performance Goals and Objectives.........................    50
Constitutional Authority Statement...............................    51
Federal Advisory Committee Statement.............................    51
Applicability to the Legislative Branch..........................    51
Statement of Federal Mandates....................................    51
Record Vote......................................................    51
Changes in Existing Law Made by the Bill, as Reported............    53
Additional Views.................................................    78
  Additional Views of Representative K. Michael Conaway..........    78
  Additional Views of Representative Rick Larsen.................    80
  Additional Views of Representative James R. Langevin...........    81








111th Congress                                            Rept. 111-465
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

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



 
 IMPLEMENTING MANAGEMENT FOR PERFORMANCE AND RELATED REFORMS TO OBTAIN 
                 VALUE IN EVERY ACQUISITION ACT OF 2010

                                _______
                                

                 April 23, 2010.--Ordered to be printed

                                _______
                                

   Mr. Skelton, from the Committee on Armed Services, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 5013]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Armed Services, to whom was referred the 
bill (H.R. 5013) to amend title 10, United States Code, to 
provide for performance management of the defense acquisition 
system, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Implementing Management for 
Performance and Related Reforms to Obtain Value in Every Acquisition 
Act of 2010''.

SEC. 2. DEFINITION OF CONGRESSIONAL DEFENSE COMMITTEES.

  In this Act, the term ``congressional defense committees'' has the 
meaning given that term in section 101(a)(16) of title 10, United 
States Code.

SEC. 3. TABLE OF CONTENTS.

  The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Definition of congressional defense committees.
Sec. 3. Table of contents.

                  TITLE I--DEFENSE ACQUISITION SYSTEM

Sec. 101. Performance management of the defense acquisition system.
Sec. 102. Meaningful consideration by Joint Requirements Oversight 
Council of input from certain officials.
Sec. 103. Performance management for the Joint Capabilities Integration 
and Development System.
Sec. 104. Requirements for the acquisition of services.
Sec. 105. Joint evaluation task forces.
Sec. 106. Review of defense acquisition guidance.
Sec. 107. Requirement to include references to services contracting 
throughout the Federal Acquisition Regulation.
Sec. 108. Procurement of military purpose nondevelopmental items.

                TITLE II--DEFENSE ACQUISITION WORKFORCE

Sec. 201. Acquisition workforce excellence.
Sec. 202. Amendments to the acquisition workforce demonstration 
project.
Sec. 203. Incentive programs for civilian and military personnel in the 
acquisition workforce.
Sec. 204. Career development for civilian and military personnel in the 
acquisition workforce.
Sec. 205. Recertification and training requirements.
Sec. 206. Information technology acquisition workforce.
Sec. 207. Definition of acquisition workforce.
Sec. 208. Defense Acquisition University curriculum review.
Sec. 209. Cost estimating internship and scholarship programs.

                    TITLE III--FINANCIAL MANAGEMENT

Sec. 301. Incentives for achieving auditability.
Sec. 302. Measures required after failure to achieve auditability.
Sec. 303. Review of obligation and expenditure thresholds.

                       TITLE IV--INDUSTRIAL BASE

Sec. 401. Expansion of the industrial base.
Sec. 402. Commercial pricing analysis.
Sec. 403. Contractor and grantee disclosure of delinquent Federal tax 
debts.
Sec. 404. Independence of contract audits and business system reviews.
Sec. 405. Blue ribbon panel on eliminating barriers to contracting with 
the Department of Defense.
Sec. 406. Inclusion of the providers of services and information 
technology in the national technology and industrial base.

                  TITLE I--DEFENSE ACQUISITION SYSTEM

SEC. 101. PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM.

  (a) Performance Management of the Defense Acquisition System.--
          (1) In general.--Part IV of title 10, United States Code, is 
        amended by inserting after chapter 148 the following new 
        chapter:

``CHAPTER 149--PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM

``Sec.
``2545. Performance assessment of the defense acquisition system.
``2546. Audits of performance assessment.
``2547. Use of performance assessments for managing performance.
``2548. Acquisition-related functions of the Chiefs of Staff of the 
armed forces.

``Sec. 2545. Performance assessment of the defense acquisition system

  ``(a) Performance Assessments Required.--(1) The Secretary of Defense 
shall ensure that all elements of the defense acquisition system are 
subject to regular performance assessments--
          ``(A) to determine the extent to which such elements deliver 
        appropriate value to the Department of Defense; and
          ``(B) to enable senior officials of the Department of Defense 
        to manage the elements of the defense acquisition system to 
        maximize their value to the Department.
  ``(2) The performance of each element of the defense acquisition 
system shall be assessed as needed, but not less often than annually.
  ``(3) The Secretary shall ensure that the performance assessments 
required by this subsection are appropriately tailored to reflect the 
diverse nature of defense acquisition so that the performance 
assessment of each element of the defense acquisition system accurately 
reflects the work performed by such element.
  ``(b) Systemwide Categories.--(1) The Secretary of Defense shall 
establish categories of metrics for the defense acquisition system, 
including, at a minimum, categories relating to cost, quality, 
delivery, workforce, and policy implementation that apply to all 
elements of the defense acquisition system.
  ``(2) The Secretary of Defense shall issue guidance for service 
acquisition executives within the Department of Defense on the 
establishment of metrics, and goals and standards relating to such 
metrics, within the categories established by the Secretary under 
paragraph (1) to ensure that there is sufficient uniformity in 
performance assessments across the defense acquisition system so that 
elements of the defense acquisition system can be meaningfully 
compared.
  ``(c) Metrics, Goals, and Standards.--(1) Each service acquisition 
executive of the Department of Defense shall establish metrics to be 
used in the performance assessments required by subsection (a) for each 
element of the defense acquisition system for which such executive is 
responsible within the categories established by the Secretary under 
subsection (b). Such metrics shall be appropriately tailored pursuant 
to subsection (a)(3) and may include measures of--
          ``(A) cost, quality, and delivery;
          ``(B) contractor performance;
          ``(C) excessive use of contract bundling and availability of 
        non-bundled contract vehicles;
          ``(D) workforce quality and program manager tenure (where 
        applicable);
          ``(E) the quality of market research;
          ``(F) appropriate use of integrated testing;
          ``(G) appropriate consideration of long-term sustainment; and
          ``(H) appropriate acquisition of technical data and other 
        rights and assets necessary to support long-term sustainment.
  ``(2) Each service acquisition executive within the Department of 
Defense shall establish goals and standards (including, at a minimum, a 
threshold standard and an objective goal) for each metric established 
under paragraph (1) by the executive. In establishing the goals and 
standards for an element of the defense acquisition system, a service 
acquisition executive shall consult with the head of the element to the 
maximum extent practicable, but the service acquisition executive shall 
retain the final authority to determine the goals and standards 
established. The service acquisition executive shall update the goals 
and standards as necessary and appropriate consistent with the guidance 
issued under subsection (b)(2).
  ``(3) The Under Secretary of Defense for Acquisition, Technology, and 
Logistics shall periodically review the metrics, goals, and standards 
established by service acquisition executives under this subsection to 
ensure that they are consistent with the guidance issued under 
subsection (b)(2).
  ``(d) Responsibility for Oversight and Direction of Performance 
Assessments.--(1) Performance assessments required by subsection (a) 
shall either be carried out by, or shall be subject to the oversight 
of, the Director of the Office of Performance Assessment and Root Cause 
Analysis. The authority and responsibility granted by this subsection 
is in addition to any other authority or responsibility granted to the 
Director of the Office of Performance Assessment and Root Cause 
Analysis by the Secretary of Defense or by any other provision of law. 
In the performance of duties pursuant to this section, the Director of 
the Office of Performance Assessment and Root Cause analysis shall 
coordinate with the Deputy Chief Management Officer to ensure that 
performance assessments carried out pursuant to this section are 
consistent with the performance management initiatives of the 
Department of Defense.
  ``(2) A performance assessment may be carried out by an organization 
under the control of the service acquisition executive of a military 
department if--
          ``(A) the assessment fulfills the requirements of subsection 
        (a);
          ``(B) the organization is approved to carry out the 
        assessment by the Director of the Office of Performance 
        Assessment and Root Cause Analysis; and
          ``(C) the assessment is subject to the oversight of the 
        Director of the Office of Performance Assessment and Root Cause 
        Analysis in accordance with paragraph (1).
  ``(e) Retention and Access to Records of Performance Assessments 
Within the Military Departments and Defense Agencies.--The Secretary of 
Defense shall ensure that information from performance assessments of 
all elements of the defense acquisition system are retained 
electronically and that the Director of the Office of Performance 
Assessment and Root Cause Analysis--
          ``(1) promptly receives the results of all performance 
        assessments conducted by an organization under the control of 
        the service acquisition executive of a military department; and
          ``(2) has timely access to any records and data in the 
        Department of Defense (including the records and data of each 
        military department and Defense Agency and including classified 
        and proprietary information) that the Director considers 
        necessary to review in order to perform or oversee performance 
        assessments pursuant to this section.
  ``(f) Definitions.--In this section:
          ``(1) The term `defense acquisition system' means the 
        acquisition workforce; the process by which the Department of 
        Defense manages the acquisition of goods and services, 
        including weapon systems, commodities, commercial and military 
        unique services, and information technology; and the management 
        structure for carrying out the acquisition function within the 
        Department of Defense.
          ``(2) The term `element of the defense acquisition system' 
        means an organization that operates within the defense 
        acquisition system and that focuses primarily on acquisition.
          ``(3) The term `metric' means a specific measure that serves 
        as a basis for comparison.
          ``(4) The term `threshold performance standard' means the 
        minimum acceptable level of performance in relation to a 
        metric.
          ``(5) The term `objective performance goal' means the most 
        desired level of performance in relation to a metric.
          ``(6) The term `Office of Performance Assessment and Root 
        Cause Analysis' means the office reporting to the senior 
        official designated by the Secretary of Defense under section 
        103(a) of the Weapon Systems Acquisition Reform Act of 2009 
        (Public Law 111-23, 10 U.S.C. 2430 note).

``Sec. 2546. Audits of performance assessment

  ``(a) Audits Required.--The Secretary of Defense shall ensure that 
the performance assessments of the defense acquisition system required 
by section 2545 of this title are subject to periodic audits to 
determine the accuracy, reliability, and completeness of such 
assessments.
  ``(b) Standards and Approach.--In performing the audits required by 
subsection (a), the Secretary shall ensure that such audits--
          ``(1) comply with generally accepted government auditing 
        standards issued by the Comptroller General;
          ``(2) use a risk-based approach to audit planning; and
          ``(3) appropriately account for issues associated with 
        auditing assessments of activities occurring in a contingency 
        operation.

``Sec. 2547. Use of performance assessments for managing performance

  ``(a) In General.--The Secretary of Defense shall ensure that the 
results of performance assessments are used in the management of 
elements of the defense acquisition system through direct linkages 
between the results of a performance assessment and the following:
          ``(1) The size of the bonus pool available to the workforce 
        of an element of the defense acquisition system.
          ``(2) Rates of promotion in the workforce of an element of 
        the defense acquisition system.
          ``(3) Awards for acquisition excellence.
          ``(4) The scope of work assigned to an element of the defense 
        acquisition system.
  ``(b) Additional Requirements.--The Secretary of Defense shall ensure 
that actions taken to manage the acquisition workforce pursuant to 
subsection (a) are undertaken in accordance with the requirements of 
subsections (c) and (d) of section 1701a of this title.

``Sec. 2548. Acquisition-related functions of the Chiefs of Staff of 
                    the armed forces

  ``(a) Assistance.--The Secretary of Defense shall ensure, 
notwithstanding section 3014(c)(1)(A), section 5014(c)(1)(A), and 
section 8014(c)(1)(A) of this title, that the Chief of Staff of the 
Army, the Chief of Naval Operations, the Chief of Staff of the Air 
Force, and the Commandant of the Marine Corps assist the Secretary of 
the military department concerned in the performance of the following 
acquisition-related functions of such department:
          ``(1) The development of requirements relating to the defense 
        acquisition system.
          ``(2) The development of measures to control requirements 
        creep in the defense acquisition system.
          ``(3) The development of career paths in acquisition for 
        military personnel (as required by section 1722a of this 
        title).
          ``(4) The assignment and training of contracting officer 
        representatives when such representatives are required to be 
        members of the armed forces because of the nature of the 
        contract concerned.
  ``(b) Definitions.--In this section:
          ``(1) The term `requirements creep' means the addition of new 
        technical or operational specifications after a requirements 
        document is approved.
          ``(2) The term `requirements document' means a document 
        produced in the requirements process that is provided for an 
        acquisition program to guide the subsequent development, 
        production, and testing of the program and that--
                  ``(A) justifies the need for a materiel approach, or 
                an approach that is a combination of materiel and non-
                materiel, to satisfy one or more specific capability 
                gaps;
                  ``(B) details the information necessary to develop an 
                increment of militarily useful, logistically 
                supportable, and technically mature capability, 
                including key performance parameters; or
                  ``(C) identifies production attributes required for a 
                single increment of a program.''.
          (2) Clerical amendments.--The table of chapters at the 
        beginning of subtitle A of title 10, United States Code, and at 
        the beginning of part IV of such subtitle, are each amended by 
        inserting after the item relating to chapter 148 the following 
        new item:

``149. Performance Management of the Defense Acquisition        2545''.
                            System.

  (b) Phased Implementation of Performance Assessments.--The Secretary 
of Defense shall implement the requirements of chapter 149 of title 10, 
United States Code, as added by subsection (a), in a phased manner 
while guidance is issued, and categories, metrics, goals, and standards 
are established. Implementation shall begin with a cross section of 
elements of the defense acquisition system representative of the entire 
system and shall be completed for all elements not later than two years 
after the date of the enactment of this Act.

SEC. 102. MEANINGFUL CONSIDERATION BY JOINT REQUIREMENTS OVERSIGHT 
                    COUNCIL OF INPUT FROM CERTAIN OFFICIALS.

  (a) Advisors to the Joint Requirements Oversight Council.--
          (1) Additional civilian advisors.--Subsection (d)(1) of 
        section 181 of title 10, United States Code, is amended by 
        striking ``The Under Secretary'' and all that follows through 
        ``and expertise.'' and inserting the following: ``The following 
        officials of the Department of Defense shall serve as advisors 
        to the Council on matters within their authority and expertise:
          ``(A) The Under Secretary of Defense for Acquisition, 
        Technology, and Logistics.
          ``(B) The Under Secretary of Defense (Comptroller).
          ``(C) The Under Secretary of Defense for Policy.
          ``(D) The Director of Cost Assessment and Program 
        Evaluation.''.
          (2) Role of combatant commanders as members of the jroc.--
        Paragraph (1) of subsection (c) of such section is amended--
                  (A) by striking ``and'' at the end of subparagraph 
                (D);
                  (B) by striking the period at the end of subparagraph 
                (E) and inserting ``; and''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(F) when directed by the chairman, the commander of 
                any combatant command (or, as directed by that 
                commander, the deputy commander of that command) when 
                matters related to the area of responsibility or 
                functions of that command will be under consideration 
                by the Council.''.
  (b) Amendment Related to Report.--Paragraph (2) of section 105(c) of 
the Weapon System Acquisition Reform Act of 2009 (Public Law 111-23; 
123 Stat. 1718) is amended to read as follows:
          ``(2) Matters covered.--The report shall include, at a 
        minimum, an assessment of--
                  ``(A) the extent to which the Council has effectively 
                sought, and the commanders of the combatant commands 
                have provided, meaningful input on proposed joint 
                military requirements;
                  ``(B) the extent to which the Council has 
                meaningfully considered the input and expertise of the 
                Under Secretary of Defense for Acquisition, Technology, 
                and Logistics in its discussions;
                  ``(C) the extent to which the Council has 
                meaningfully considered the input and expertise of the 
                Director of Cost Assessment and Program Evaluation in 
                its discussions;
                  ``(D) the quality and effectiveness of efforts to 
                estimate the level of resources needed to fulfill joint 
                military requirements; and
                  ``(E) the extent to which the Council has considered 
                trade-offs among cost, schedule, and performance 
                objectives.''.

SEC. 103. PERFORMANCE MANAGEMENT FOR THE JOINT CAPABILITIES INTEGRATION 
                    AND DEVELOPMENT SYSTEM.

   (a) Requirement for Program.--The Secretary of Defense shall ensure 
that the Department of Defense develops and implements a program to 
manage performance in establishing joint military requirements pursuant 
to section 181 of title 10, United States Code.
  (b) Leaders.--The Secretary of Defense shall designate an officer 
identified or designated as a joint qualified officer to serve as 
leader of a joint effort to develop the performance management program 
required by subsection (a). The Secretary shall also designate an 
officer from each Armed Force to serve as leader of the effort within 
the Armed Force concerned. Officers designated pursuant to this section 
shall have the seniority and authority necessary to oversee and direct 
all personnel engaged in establishing joint military requirements 
within the Joint Staff or within the Armed Force concerned.
  (c) Matters Covered.--The program developed pursuant to subsection 
(a) shall:
          (1) Measure the following in relation to each joint military 
        requirement:
                  (A) The time a requirements document takes to receive 
                validation through the requirements process.
                  (B) The quality of cost information associated with 
                the requirement and the extent to which cost 
                information was considered during the requirements 
                process.
                  (C) The extent to which the requirements process 
                established a meaningful level of priority for the 
                requirement.
                  (D) The extent to which the requirements process 
                considered trade-offs between cost, schedule, and 
                performance objectives.
                  (E) The quality of information on sustainment 
                associated with the requirement and the extent to which 
                sustainment information was considered during the 
                requirements process.
                  (F) Such other matters as the Secretary shall 
                determine appropriate.
          (2) Achieve, to the maximum extent practicable, the following 
        outcomes in the requirements process:
                  (A) Timeliness in delivering capability to the 
                warfighter.
                  (B) Mechanisms for controlling requirements creep.
                  (C) Responsiveness to fact-of-life changes occurring 
                after the approval of a requirements document, 
                including changes to the threat environment, the 
                emergence of new capabilities, or changes in the 
                resources estimated to procure or sustain a capability.
                  (D) The development of the personnel skills, 
                capacity, and training needed for an effective and 
                efficient requirements process.
                  (E) Such other outcomes as the Secretary shall 
                determine appropriate.
  (d) Implementation.--The program required by subsection (a) shall be 
developed and initially implemented not later than one year after the 
date of the enactment of this Act and shall apply to requirements 
documents entering the requirements process after the date of initial 
implementation.
  (e) Initial Report.--Not later than 90 days after the initial 
implementation of the program required by subsection (a), the Secretary 
shall submit to the congressional defense committees a report on the 
steps taken to develop and implement the performance management program 
for joint military requirements. The report shall address the measures 
specified in subsection (c)(1).
  (f) Final Report.--Not later than four years after the initial 
implementation of the program required by subsection (a), the Secretary 
shall submit to the congressional defense committees a report on the 
effectiveness of the program for joint military requirements in 
achieving the outcomes specified in subsection (c)(2).
  (g) Definitions.--In this section:
          (1) Requirements process.--The term ``requirements process'' 
        means the Joint Capabilities Integration and Development System 
        (JCIDS) process or any successor to such process established by 
        the Chairman of the Joint Chiefs of Staff to support the 
        statutory responsibility of the Joint Requirements Oversight 
        Council in advising the Chairman and the Secretary of Defense 
        in identifying, assessing, and validating joint military 
        capability needs, with their associated operational performance 
        criteria, in order to successfully execute missions.
          (2) Requirements document.--The term ``requirements 
        document'' means a document produced in the requirements 
        process that is provided for an acquisition program to guide 
        the subsequent development, production, and testing of the 
        program and that--
                  (A) justifies the need for a materiel approach, or an 
                approach that is a combination of materiel and non-
                materiel, to satisfy one or more specific capability 
                gaps;
                  (B) details the information necessary to develop an 
                increment of militarily useful, logistically 
                supportable, and technically mature capability, 
                including key performance parameters; or
                  (C) identifies production attributes required for a 
                single increment of a program.
          (3) Requirements creep.--The term ``requirements creep'' 
        means the addition of new technical or operational 
        specifications after a requirements document is approved.
  (h) Discretionary Implementation After 5 Years.--After the date that 
is five years after the initial implementation of the performance 
management program under this section, the requirement to implement a 
program under this section shall be at the discretion of the Secretary 
of Defense.

SEC. 104. REQUIREMENTS FOR THE ACQUISITION OF SERVICES.

   (a) Process Required.--The Secretary of Defense shall ensure that 
each military department establishes a process for identifying, 
assessing, and approving requirements for the acquisition of services, 
and that commanders of unified combatant commands and other officers 
identified or designated as joint qualified officers have an 
opportunity to participate in the process of each military department 
to provide input on joint requirements for the acquisition of services.
  (b) Guidance and Plan Required.--The Chief of Staff of the Army, the 
Chief of Naval Operations, the Chief of Staff of the Air Force, and the 
Commandant of the Marine Corps shall--
          (1) issue and maintain guidance relating to each process 
        established under subsection (a); and
          (2) develop a plan to implement each process established 
        under subsection (a).
  (c) Matters Required in Guidance.--The guidance issued under 
subsection (b) shall establish, in relation to a process for 
identifying, assessing, and approving requirements for the acquisition 
of services, the following:
          (1) Organization of such process.
          (2) The level of command responsibility required for 
        identifying and validating requirements for the acquisition of 
        services in accordance with the categories established under 
        section 2330(a)(1)(C) of title 10, United States Code.
          (3) The composition of billets necessary to operate such 
        process.
          (4) The training required for personnel engaged in such 
        process.
          (5) The relationship between doctrine and such process.
          (6) Methods of obtaining input on joint requirements for the 
        acquisition of services.
          (7) Procedures for coordinating with the acquisition process.
          (8) Considerations relating to opportunities for strategic 
        sourcing.
  (d) Matters Required in Implementation Plan.--Each plan required 
under subsection (b) shall provide for initial implementation of a 
process for identifying, assessing, and approving requirements for the 
acquisition of services not later than 180 days after the date of the 
enactment of this Act and shall provide for full implementation of such 
process at the earliest date practicable.
  (e) Consistency With Joint Guidance.--Whenever, at any time, guidance 
is issued by the Chairman of the Joint Chiefs of Staff relating to 
requirements for the acquisition of services, each process established 
under subsection (a) shall be revised in accordance with such joint 
guidance.
  (f) Definition.--The term ``requirements for the acquisition of 
services'' means objectives to be achieved through acquisitions 
primarily involving the procurement of services.

SEC. 105. JOINT EVALUATION TASK FORCES.

  (a) Task Forces Required.--For each joint military requirement 
involving a materiel solution for which the Chairman of the Joint 
Requirements Oversight Council is the validation authority, the 
Chairman shall designate a commander of a unified combatant command to 
provide a joint evaluation task force to participate in such materiel 
solution. Such task force shall--
          (1) come from a military unit or units designated by the 
        combatant commander concerned;
          (2) be selected based on the relevance of such materiel 
        solution to the mission of the unit; and
          (3) participate consistent with its operational obligations.
  (b) Responsibilities.--A task force provided pursuant to subsection 
(a) shall, for the materiel solution concerned--
          (1) provide input to the analysis of alternatives;
          (2) participate in testing (including limited user tests and 
        prototype testing);
          (3) provide input on a concept of operations and doctrine;
          (4) provide end user feedback to the resource sponsor; and
          (5) participate, through the combatant commander concerned, 
        in any alteration of the requirement for such solution.
  (c) Administrative Support.--The resource sponsor for the joint 
military requirement shall provide administrative support to the joint 
evaluation task force for purposes of carrying out this section.
  (d) Definitions.--In this section:
          (1) Resource sponsor.--The term ``resource sponsor'' means 
        the organization responsible for all common documentation, 
        periodic reporting, and funding actions required to support the 
        capabilities development and acquisition process for the 
        materiel solution.
          (2) Materiel solution.--The term ``materiel solution'' means 
        the development, acquisition, procurement, or fielding of a new 
        item, or of a modification to an existing item, necessary to 
        equip, operate, maintain, and support military activities.

SEC. 106. REVIEW OF DEFENSE ACQUISITION GUIDANCE.

  (a) Review of Guidance.--The Secretary of Defense shall review the 
acquisition guidance of the Department of Defense, including, at a 
minimum, the guidance contained in Department of Defense Instruction 
5000.02 entitled ``Operation of the Defense Acquisition System''.
  (b) Matters Considered.--The review performed under subsection (a) 
shall consider--
          (1) the extent to which it is appropriate to apply guidance 
        relating to the acquisition of weapon systems to acquisitions 
        not involving weapon systems (including the acquisition of 
        commercial goods and commodities, commercial and military 
        unique services, and information technology);
          (2) whether long-term sustainment of weapon systems is 
        appropriately emphasized;
          (3) whether appropriate mechanisms exist to communicate 
        information relating to the mission needs of the Department of 
        Defense to the industrial base in a way that allows the 
        industrial base to make appropriate investments in 
        infrastructure, capacity, and technology development to help 
        meet such needs;
          (4) the extent to which earned value management should be 
        required on acquisitions not involving the acquisition of 
        weapon systems and whether measures of quality and technical 
        performance should be included in any earned value management 
        system;
          (5) the extent to which it is appropriate to apply processes 
        primarily relating to the acquisition of weapon systems to the 
        acquisition of information technology systems, consistent with 
        the requirement to develop an alternative process for such 
        systems contained in section 804 of the National Defense 
        Authorization Act for Fiscal Year 2010 (Public Law 111-84; 123 
        Stat. 2401; 10 U.S.C. 2225 note); and
          (6) such other matters as the Secretary considers 
        appropriate.
  (c) Report.--Not later than 270 days after the date of the enactment 
of this Act, the Secretary of Defense shall submit to the Committees on 
Armed Services of the Senate and of the House of Representatives a 
report detailing any changes in the acquisition guidance of the 
Department of Defense identified during the review required by 
subsection (a), and any actions taken, or planned to be taken, to 
implement such changes

SEC. 107. REQUIREMENT TO INCLUDE REFERENCES TO SERVICES CONTRACTING 
                    THROUGHOUT THE FEDERAL ACQUISITION REGULATION.

  (a) Findings.--Congress finds the following:
          (1) The acquisition of services can be extremely complex, and 
        program management skills, tools, and processes need to be 
        applied to services acquisitions.
          (2) An emphasis on the concept of ``services'' throughout the 
        Federal Acquisition Regulation would enhance and support the 
        procurement and project management community in all aspects of 
        the acquisition planning process, including requirements 
        development, assessment of reasonableness, and post-award 
        management and oversight.
  (b) Requirement for Changes to FAR.--The Federal Acquisition 
Regulation shall be revised to provide, throughout the Regulation, 
appropriate references to services contracting that are in addition to 
references provided in part 37 (which relates specifically to services 
contracting).
  (c) Deadline.--This section shall be carried out within 270 days 
after the date of the enactment of this Act.

SEC. 108. PROCUREMENT OF MILITARY PURPOSE NONDEVELOPMENTAL ITEMS.

  (a) In General.--
          (1) Procurement of military purpose nondevelopmental items.--
        Chapter 141 of title 10, United States Code, is amended by 
        adding at the end the following new section:

``Sec. 2410r. Military purpose nondevelopmental items

  ``(a) Definitions.--In this section:
          ``(1) The term `military purpose nondevelopmental item' means 
        an item--
                  ``(A) developed exclusively at private expense;
                  ``(B) that meets a validated military requirement and 
                for which the United States has rights in technical 
                data as prescribed in section 2320(a)(2)(B) of this 
                title, as certified in writing by the responsible 
                program manager;
                  ``(C) for which delivery of an initial lot of 
                production-representative items may be made within nine 
                months after contract award; and
                  ``(D) for which the unit cost is less than 
                $10,000,000.
          ``(2) The term `item' has the meaning provided in section 
        2302(3) of this title.
  ``(b) Requirements.--The Secretary of Defense shall ensure that, with 
respect to a contract for the acquisition of a military purpose 
nondevelopmental item, the following requirements apply:
          ``(1) The contract shall be awarded using competitive 
        procedures in accordance with section 2304 of this title.
          ``(2) Certain contract clauses, as specified in regulations 
        prescribed under subsection (c), shall be included in each such 
        contract.
          ``(3) The type of contract used shall be a firm, fixed price 
        type contract.
  ``(c) Regulations.--The Secretary of Defense shall prescribe 
regulations to carry out this section. Such regulations shall be 
included in regulations of the Department of Defense prescribed as part 
of the Federal Acquisition Regulation. At a minimum, the regulations 
shall include--
          ``(1) a list of contract clauses to be included in each 
        contract for the acquisition of a military purpose 
        nondevelopmental item;
          ``(2) definitions for the terms `developed' and `exclusively 
        at private expense' that--
                  ``(A) are consistent with the definitions developed 
                for such terms in accordance with 2320(a)(3) of this 
                title; and
                  ``(B) also exclude an item developed in part or in 
                whole with--
                          ``(i) foreign government funding; or
                          ``(ii) foreign or Federal Government loan 
                        financing at nonmarket rates; and
          ``(3) standards for evaluating the reasonableness of price 
        for the military purpose nondevelopmental item, in lieu of 
        certified cost or pricing data.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of such chapter is amended by adding at the end the 
        following new item:

``2410r. Military purpose nondevelopmental items.''.

  (b) Cost or Pricing Data Exception.--Section 2306a(b)(1) of title 10, 
United States Code, is amended--
          (1) by striking ``or'' at the end of subparagraph (B);
          (2) by striking the period at the end of subparagraph (C) and 
        inserting ``; or''; and
          (3) by adding at the end the following new subparagraph:
                  ``(D) for the acquisition of a military purpose 
                nondevelopmental item, as defined in section 2410r of 
                this title, if the contracting officer determines in 
                writing that--
                          ``(i) the contract, subcontract or 
                        modification will be a firm, fixed price type 
                        contract; and
                          ``(ii) the offeror has submitted sufficient 
                        information to evaluate, through price 
                        analysis, the reasonableness of the price for 
                        the military purpose nondevelopmental item.''.
  (c) Effective Date.--Section 2410r of title 10, United States Code, 
as added by subsection (a), and the amendment made by subsection (b), 
shall apply with respect to contracts entered into after the date that 
is 120 days after the date of the enactment of this Act.

                TITLE II--DEFENSE ACQUISITION WORKFORCE

SEC. 201. ACQUISITION WORKFORCE EXCELLENCE.

  (a) In General.--
          (1) Acquisition workforce excellence.--Subchapter I of 
        chapter 87 of title 10, United States Code, is amended by 
        inserting after section 1701 the following new section:

``Sec. 1701a. Management for acquisition workforce excellence

  ``(a) Purpose.--The purpose of this chapter is to require the 
Department of Defense to develop and manage a highly skilled 
professional acquisition workforce--
          ``(1) in which excellence and contribution to mission is 
        rewarded;
          ``(2) which has the technical expertise and business skills 
        to ensure the Department receives the best value for the 
        expenditure of public resources;
          ``(3) which serves as a model for performance management of 
        employees of the Department; and
          ``(4) which is managed in a manner that complements and 
        reinforces the performance management of the defense 
        acquisition system pursuant to chapter 149 of this title.
  ``(b) Performance Management.--In order to achieve the purpose set 
forth in subsection (a), the Secretary of Defense shall--
          ``(1) use the full authorities provided in subsections (a) 
        through (d) of section 9902 of title 5, including flexibilities 
        related to performance management and hiring and to training of 
        managers;
          ``(2) require managers to develop performance plans for 
        individual members of the acquisition workforce in order to 
        give members an understanding of how their performance 
        contributes to their organization's mission and the success of 
        the defense acquisition system (as defined in section 2545 of 
        this title);
          ``(3) to the extent appropriate, use the lessons learned from 
        the acquisition demonstration project carried out under section 
        1762 of this title related to contribution-based compensation 
        and appraisal, and how those lessons may be applied within the 
        General Schedule system;
          ``(4) develop attractive career paths;
          ``(5) encourage continuing education and training;
          ``(6) develop appropriate procedures for warnings during 
        performance evaluations and due process for members of the 
        acquisition workforce who consistently fail to meet performance 
        standards;
          ``(7) take full advantage of the Defense Civilian Leadership 
        Program established under section 1112 of the National Defense 
        Authorization Act for Fiscal Year 2010, (Public Law 111-84; 123 
        Stat. 2496; 10 U.S.C. 1580 note prec.);
          ``(8) use the authorities for highly qualified experts under 
        section 9903 of title 5, to hire experts who are skilled 
        acquisition professionals to--
                  ``(A) serve in leadership positions within the 
                acquisition workforce to strengthen management and 
                oversight;
                  ``(B) provide mentors to advise individuals within 
                the acquisition workforce on their career paths and 
                opportunities to advance and excel within the 
                acquisition workforce; and
                  ``(C) assist with the design of education and 
                training courses and the training of individuals in the 
                acquisition workforce; and
          ``(9) use the authorities for expedited security clearance 
        processing pursuant to section 1564 of this title.
  ``(c) Negotiations.--Any action taken by the Secretary under this 
section, or to implement this section, shall be subject to the 
requirements of chapter 71 of title 5.
  ``(d) Regulations.--Any rules or regulations prescribed pursuant to 
this section shall be deemed an agency rule or regulation under section 
7117(a)(2) of title 5, and shall not be deemed a Government-wide rule 
or regulation under section 7117(a)(1) of such title.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of such subchapter is amended by inserting after the 
        item relating to section 1701 the following new item:

``1701a. Management for acquisition workforce excellence.''.

  (b) Authority to Appoint Highly Qualified Experts on Part-time 
Basis.--Section 9903(b)(1) of title 5, United States Code, is amended 
by inserting ``, on a full-time or part-time basis,'' after ``positions 
in the Department of Defense'' the first place it appears.

SEC. 202. AMENDMENTS TO THE ACQUISITION WORKFORCE DEMONSTRATION 
                    PROJECT.

  (a) Codification Into Title 10.--
          (1) In general.--Chapter 87 of title 10, United States Code, 
        is amended by inserting after section 1761 the following new 
        section:

``Sec. 1762. Demonstration project relating to certain acquisition 
                    personnel management policies and procedures

  ``(a) Commencement.--The Secretary of Defense is encouraged to carry 
out a demonstration project, the purpose of which is to determine the 
feasibility or desirability of one or more proposals for improving the 
personnel management policies or procedures that apply with respect to 
the acquisition workforce of the Department of Defense and supporting 
personnel assigned to work directly with the acquisition workforce.
  ``(b) Terms and Conditions.--(1) Except as otherwise provided in this 
subsection, any demonstration project described in subsection (a) shall 
be subject to section 4703 of title 5 and all other provisions of such 
title that apply with respect to any demonstration project under such 
section.
  ``(2) Subject to paragraph (3), in applying section 4703 of title 5 
with respect to a demonstration project described in subsection (a)--
          ``(A) `180 days' in subsection (b)(4) of such section shall 
        be deemed to read `120 days';
          ``(B) `90 days' in subsection (b)(6) of such section shall be 
        deemed to read `30 days'; and
          ``(C) subsection (d)(1) of such section shall be disregarded.
  ``(3) Paragraph (2) shall not apply with respect to a demonstration 
project unless--
          ``(A) for each organization or team participating in the 
        demonstration project--
                  ``(i) at least one-third of the workforce 
                participating in the demonstration project consists of 
                members of the acquisition workforce; and
                  ``(ii) at least two-thirds of the workforce 
                participating in the demonstration project consists of 
                members of the acquisition workforce and supporting 
                personnel assigned to work directly with the 
                acquisition workforce; and
          ``(B) the demonstration project commences before October 1, 
        2007.
  ``(c) Limitation on Number of Participants.--The total number of 
persons who may participate in the demonstration project under this 
section may not exceed 120,000.
  ``(d) Effect of Reorganizations.--The applicability of paragraph (2) 
of subsection (b) to an organization or team shall not terminate by 
reason that the organization or team, after having satisfied the 
conditions in paragraph (3) of such subsection when it began to 
participate in a demonstration project under this section, ceases to 
meet one or both of the conditions set forth in subparagraph (A) of 
such paragraph (3) as a result of a reorganization, restructuring, 
realignment, consolidation, or other organizational change.
  ``(e) Assessment.--(1) The Secretary of Defense shall designate an 
independent organization to review the acquisition workforce 
demonstration project described in subsection (a).
  ``(2) Such assessment shall include:
          ``(A) A description of the workforce included in the project.
          ``(B) An explanation of the flexibilities used in the project 
        to appoint individuals to the acquisition workforce and whether 
        those appointments are based on competitive procedures and 
        recognize veteran's preferences.
          ``(C) An explanation of the flexibilities used in the project 
        to develop a performance appraisal system that recognizes 
        excellence in performance and offers opportunities for 
        improvement.
          ``(D) The steps taken to ensure that such system is fair and 
        transparent for all employees in the project.
          ``(E) How the project allows the organization to better meet 
        mission needs.
          ``(F) An analysis of how the flexibilities in subparagraphs 
        (B) and (C) are used, and what barriers have been encountered 
        that inhibit their use.
          ``(G) Whether there is a process for (i) ensuring ongoing 
        performance feedback and dialogue among supervisors, managers, 
        and employees throughout the performance appraisal period, and 
        (ii) setting timetables for performance appraisals.
          ``(H) The project's impact on career progression.
          ``(I) The project's appropriateness or inappropriateness in 
        light of the complexities of the workforce affected.
          ``(J) The project's sufficiency in terms of providing 
        protections for diversity in promotion and retention of 
        personnel.
          ``(K) The adequacy of the training, policy guidelines, and 
        other preparations afforded in connection with using the 
        project.
          ``(L) Whether there is a process for ensuring employee 
        involvement in the development and improvement of the project.
  ``(3) The first such assessment under this subsection shall be 
completed not later than September 30, 2011, and subsequent assessments 
shall be completed every two years thereafter until the termination of 
the project. The Secretary shall submit to the covered congressional 
committees a copy of the assessment within 30 days after receipt by the 
Secretary of the assessment.
  ``(f) Covered Congressional Committees.--In this section, the term 
`covered congressional committees' means--
          ``(1) the Committees on Armed Services of the Senate and the 
        House of Representatives;
          ``(2) the Committee on Homeland Security and Governmental 
        Affairs of the Senate; and
          ``(3) the Committee on Oversight and Government Reform of the 
        House of Representatives.
  ``(g) Termination of Authority.--The authority to conduct a 
demonstration program under this section shall terminate on September 
30, 2017.
  ``(h) Conversion.--Within six months after the authority to conduct a 
demonstration project under this section is terminated as provided in 
subsection (g), employees in the project shall convert to the civilian 
personnel system created pursuant to section 9902 of title 5.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of subchapter V of chapter 87 of title 10, United 
        States Code, is amended by inserting after the item relating to 
        section 1761 the following new item:

``1762. Demonstration project relating to certain acquisition personnel 
management policies and procedures.''.

  (b) Conforming Repeal.--Section 4308 of the National Defense 
Authorization Act for Fiscal Year 1996 (Public Law 104-106; 10 U.S.C. 
1701 note) is repealed.

SEC. 203. INCENTIVE PROGRAMS FOR CIVILIAN AND MILITARY PERSONNEL IN THE 
                    ACQUISITION WORKFORCE.

  (a) In General.--Chapter 87 of title 10, United States Code, is 
amended by inserting after section 1762, as added by section 202, the 
following new section:

``Sec. 1763. Incentive programs for civilian and military personnel in 
                    the acquisition workforce

  ``(a) Civilian Acquisition Workforce Incentives.--The Secretary of 
Defense, acting through the Under Secretary of Defense for Acquisition, 
Technology, and Logistics, shall provide for an enhanced system of 
incentives for the encouragement of excellence in the acquisition 
workforce by providing rewards for employees who contribute to 
achieving the agency's performance goals. The system of incentives 
shall include provisions that--
          ``(1) relate salary increases, bonuses, and awards to 
        performance and contribution to the agency mission (including 
        the extent to which the performance of personnel in such 
        workforce contributes to achieving the goals and standards 
        established for acquisition programs pursuant to section 2545 
        of this title;
          ``(2) provide for consideration, in personnel evaluations and 
        promotion decisions, of the extent to which the performance of 
        personnel in such workforce contributes to achieving such goals 
        and standards;
          ``(3) use the Department of Defense Civilian Workforce 
        Incentive Fund established pursuant to section 9902(a) of title 
        5; and
          ``(4) provide opportunities for career broadening experiences 
        for high performers.
  ``(b) Military Acquisition Workforce Incentives.--The Secretaries of 
the military departments shall fully use and enhance incentive programs 
that reward individuals, through recognition certificates or cash 
awards, for suggestions of process improvements that contribute to 
improvements in efficiency and economy and a better way of doing 
business.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
subchapter V of chapter 87 of title 10, United States Code, is amended 
by inserting after the item relating to section 1762, as added by 
section 202, the following new item:

``1763. Incentive programs for civilian and military personnel in the 
acquisition workforce.''.

SEC. 204. CAREER DEVELOPMENT FOR CIVILIAN AND MILITARY PERSONNEL IN THE 
                    ACQUISITION WORKFORCE.

  (a) Career Paths.--
          (1) Amendment.--Chapter 87 of title 10, United States Code, 
        is amended by inserting after section 1722a the following new 
        section:

``Sec. 1722b. Special requirements for civilian employees in the 
                    acquisition field

  ``(a) Requirement for Policy and Guidance Regarding Civilian 
Personnel in Acquisition.--The Secretary of Defense, acting through the 
Under Secretary of Defense for Acquisition, Technology, and Logistics, 
shall establish policies and issue guidance to ensure the proper 
development, assignment, and employment of civilian members of the 
acquisition workforce to achieve the objectives specified in subsection 
(b).
  ``(b) Objectives.--Policies established and guidance issued pursuant 
to subsection (a) shall ensure, at a minimum, the following:
          ``(1) A career path in the acquisition field that attracts 
        the highest quality civilian personnel, from either within or 
        outside the Federal Government.
          ``(2) A deliberate workforce development strategy that 
        increases attainment of key experiences that contribute to a 
        highly qualified acquisition workforce.
          ``(3) Sufficient opportunities for promotion and advancement 
        in the acquisition field.
          ``(4) A sufficient number of qualified, trained members 
        eligible for and active in the acquisition field to ensure 
        adequate capacity, capability, and effective succession for 
        acquisition functions, including contingency contracting, of 
        the Department of Defense.
  ``(c) Inclusion of Information in Annual Report.--The Secretary of 
Defense shall include in the report to Congress required under section 
115b(d) of this title the following information related to the 
acquisition workforce for the period covered by the report (which shall 
be shown for the Department of Defense as a whole and separately for 
the Army, Navy, Air Force, Marine Corps, Defense Agencies, and Office 
of the Secretary of Defense):
          ``(1) The total number of persons serving in the Acquisition 
        Corps, set forth separately for members of the armed forces and 
        civilian employees, by grade level and by functional specialty.
          ``(2) The total number of critical acquisition positions 
        held, set forth separately for members of the armed forces and 
        civilian employees, by grade level and by other appropriate 
        categories (including by program manager, deputy program 
        manager, and division head positions). For each such category, 
        the report shall specify the number of civilians holding such 
        positions compared to the total number of positions filled.
          ``(3) The number of employees to whom the requirements of 
        subsections (b)(2)(A) and (b)(2)(B) of section 1732 of this 
        title did not apply because of the exceptions provided in 
        paragraphs (1) and (2) of section 1732(c) of this title, set 
        forth separately by type of exception.
          ``(4) The number of program managers and deputy program 
        managers who were reassigned after completion of a major 
        milestone occurring closest in time to the date on which the 
        person has served in the position for four years (as required 
        under section 1734(b) of this title), and the proportion of 
        those reassignments to the total number of reassignments of 
        program managers and deputy program managers, set forth 
        separately for program managers and deputy program managers. 
        The Secretary also shall include the average length of 
        assignment served by program managers and deputy program 
        managers so reassigned.
          ``(5) The number of persons, excluding those reported under 
        paragraph (4), in critical acquisition positions who were 
        reassigned after a period of three years or longer (as required 
        under section 1734(a) of this title), and the proportion of 
        those reassignments to the total number of reassignments of 
        persons, excluding those reported under paragraph (4), in 
        critical acquisition positions.
          ``(6) The number of times a waiver authority was exercised 
        under section 1724(d), 1732(d), 1734(d), or 1736(c) of this 
        title or any other provision of this chapter (or other 
        provision of law) which permits the waiver of any requirement 
        relating to the acquisition workforce, and in the case of each 
        such authority, the reasons for exercising the authority. The 
        Secretary may present the information provided under this 
        paragraph by category or grouping of types of waivers and 
        reasons.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of subchapter II of chapter 87 of title 10, United 
        States Code, is amended by inserting after the item relating to 
        section 1722a the following new item:

``1722b. Special requirements for civilian employees in the acquisition 
field.''.

  (b) Career Education and Training.--Chapter 87 of title 10, United 
States Code, is amended in section 1723 by redesignating subsection (b) 
as subsection (c) and inserting after subsection (a) the following new 
subsection:
  ``(b) Career Path Requirements.--For each career path, the Secretary 
of Defense, acting through the Under Secretary of Defense for 
Acquisition, Technology, and Logistics shall establish requirements for 
the completion of course work and related on-the-job training and 
demonstration of qualifications in the critical acquisition-related 
duties and tasks of the career path. The Secretary of Defense, acting 
through the Under Secretary, shall also--
          ``(1) encourage individuals in the acquisition workforce to 
        maintain the currency of their acquisition knowledge and 
        generally enhance their knowledge of related acquisition 
        management disciplines through academic programs and other 
        self-developmental activities; and
          ``(2) develop key work experiences, including the creation of 
        a program sponsored by the Department of Defense that 
        facilitates the periodic interaction between individuals in the 
        acquisition workforce and the end user in such end user's 
        environment to enhance the knowledge base of such workforce, 
        for individuals in the acquisition workforce so that the 
        individuals may gain in-depth knowledge and experience in the 
        acquisition process and become seasoned, well-qualified members 
        of the acquisition workforce.''.

SEC. 205. RECERTIFICATION AND TRAINING REQUIREMENTS.

  (a) Continuing Education.--Section 1723 of title 10, United States 
Code, as amended by section 204, is further amended by amending 
subsection (a) to read as follows:
  ``(a) Qualification Requirements.--(1) The Secretary of Defense shall 
establish education, training and experience requirements for each 
acquisition position, based on the level of complexity of duties 
carried out in the position. In establishing such requirements, the 
Secretary shall ensure the availability and sufficiency of training in 
all areas of acquisition, including additional training courses with an 
emphasis on services contracting, long-term sustainment strategies, 
information technology, and rapid acquisition.
  ``(2) In establishing such requirements for positions other than 
critical acquisition positions designated pursuant to section 1733 of 
this title, the Secretary may state the requirements by categories of 
positions.
  ``(3) The Secretary of Defense, acting through the Under Secretary of 
Defense for Acquisition, Technology, and Logistics, shall establish 
requirements for continuing education and periodic renewal of an 
individual's certification. Any requirement for a certification renewal 
shall not require a renewal more often than once every five years.''.
  (b) Standards for Training.--
          (1) In general.--Subchapter IV of Chapter 87 of title 10, 
        United States Code, is amended by adding at the end the 
        following new section:

``Sec. 1748. Guidance and standards for acquisition workforce training

  ``(a) Fulfillment Standards.--The Secretary of Defense, acting 
through the Under Secretary of Defense for Acquisition, Technology, and 
Logistics, shall develop fulfillment standards, and implement and 
maintain a program, for purposes of the training requirements of 
sections 1723, 1724, and 1735 of this title. Such fulfillment standards 
shall consist of criteria for determining whether an individual has 
demonstrated competence in the areas that would be taught in the 
training courses required under those sections. If an individual meets 
the appropriate fulfillment standard, the applicable training 
requirement is fulfilled.
  ``(b) Guidance and Standards Relating to Contracts for Training.--The 
Secretary of Defense shall develop appropriate guidance and standards 
to ensure that the Department of Defense will continue, where 
appropriate and cost-effective, to enter into contracts for the 
training requirements of sections 1723, 1724, and 1735 of this title, 
while maintaining appropriate control over the content and quality of 
such training.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of such subchapter is amended by adding at the end 
        the following new item:

``1748. Guidance and standards for acquisition workforce training.''.

          (3) Deadline for fulfillment standards.--The fulfillment 
        standards required under section 1748(a) of title 10, United 
        States Code, as added by paragraph (1), shall be developed not 
        later than 90 days after the date of the enactment of this Act.
          (4) Conforming repeal.--Section 853 of Public Law 105-85 (111 
        Stat. 1851) is repealed.

SEC. 206. INFORMATION TECHNOLOGY ACQUISITION WORKFORCE.

  (a) In General.--
          (1) Information technology.--Subchapter II of chapter 87 of 
        title 10, United States Code, is amended by adding at the end 
        the following new section:

``Sec. 1725. Information technology acquisition positions

  ``(a) Plan Required.--The Secretary of Defense shall develop and 
carry out a plan to strengthen the part of the acquisition workforce 
that specializes in information technology. The plan shall include the 
following:
          ``(1) Defined targets for billets devoted to information 
        technology acquisition.
          ``(2) Specific certification requirements for individuals in 
        the acquisition workforce who specialize in information 
        technology acquisition.
          ``(3) Defined career paths for individuals in the acquisition 
        workforce who specialize in information technology 
        acquisitions.
  ``(b) Definitions.--In this section:
          ``(1) The term `information technology' has the meaning 
        provided such term in section 11101 of title 40 and includes 
        information technology incorporated into a major weapon system.
          ``(2) The term `major weapon system' has the meaning provided 
        such term in section 2379(f) of this title.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of such subchapter is amended by adding at the end 
        the following new item:

``1725. Information technology acquisition positions.''.

  (b) Deadline.--The Secretary of Defense shall develop the plan 
required under section 1725 of title 10, United States Code, as added 
by subsection (a), not later than 180 days after the date of the 
enactment of this Act.

SEC. 207. DEFINITION OF ACQUISITION WORKFORCE.

  Section 101(a) of title 10, United States Code, is amended by 
inserting after paragraph (17) the following new paragraph:
          ``(18) The term `acquisition workforce' means the persons 
        serving in acquisition positions within the Department of 
        Defense, as designated pursuant to section 1721(a) of this 
        title.''.

SEC. 208. DEFENSE ACQUISITION UNIVERSITY CURRICULUM REVIEW.

  (a) Curriculum Review.--Not later than one year after the date of the 
enactment of this Act, the Under Secretary of Defense for Acquisition, 
Technology, and Logistics shall lead a review of the curriculum offered 
by the Defense Acquisition University to ensure it adequately supports 
the training and education requirements of acquisition professionals, 
particularly in service contracting, long term sustainment strategies, 
information technology, and rapid acquisition. The review shall also 
involve the service acquisition executives of each military department.
  (b) Analysis of Funding Requirements for Training.--Following the 
review conducted under subsection (a), the Secretary of Defense shall 
analyze the most recent future-years defense program to determine the 
amounts of estimated expenditures and proposed appropriations necessary 
to support the training requirements of the amendments made by section 
205 of this Act, including any new training requirements determined 
after the review conducted under subsection (a). The Secretary shall 
identify any additional funding needed for such training requirements 
in the separate chapter on the defense acquisition workforce required 
in the next annual strategic workforce plan under 115b of title 10, 
United States Code.
  (c) Requirement for Ongoing Curriculum Development With Certain 
Schools.--
          (1) Requirement.--Section 1746 of title 10, United States 
        Code, is amended by adding at the end the following new 
        subsection:
  ``(c) Curriculum Development.--The President of the Defense 
Acquisition University shall work with the relevant professional 
schools and degree-granting institutions of the Department of Defense 
and military departments to ensure that best practices are used in 
curriculum development to support acquisition workforce positions.''.
          (2) Amendment to section heading.--(A) The heading of section 
        1746 of such title is amended to read as follows:

``Sec. 1746. Defense Acquisition University''.

          (B) The item relating to section 1746 in the table of 
        sections at the beginning of subchapter IV of chapter 87 of 
        such title is amended to read as follows:

``1746. Defense Acquisition University.''.

SEC. 209. COST ESTIMATING INTERNSHIP AND SCHOLARSHIP PROGRAMS.

  (a) Purpose.--The purpose of this section is to require the 
Department of Defense to develop internship and scholarship programs in 
cost estimating to underscore the importance of cost estimating, as a 
core acquisition function, to the acquisition process.
  (b) Requirement.--The Secretary of Defense shall develop intern and 
scholarship programs in cost estimating for purposes of improving 
education and training in cost estimating and providing an opportunity 
to meet any certification requirements in cost estimating.
  (c) Implementation.--Such programs shall be established not later 
than 270 days after the date of the enactment of this Act and shall be 
implemented for a four-year period following establishment of the 
programs.

                    TITLE III--FINANCIAL MANAGEMENT

SEC. 301. INCENTIVES FOR ACHIEVING AUDITABILITY.

   (a) Preferential Treatment Authorized.--The Under Secretary of 
Defense (Comptroller) shall ensure that any component of the Department 
of Defense that the Under Secretary determines has financial statements 
validated as ready for audit earlier than September 30, 2017, shall 
receive preferential treatment, as the Under Secretary determines 
appropriate--
          (1) in financial matter matters, including--
                  (A) consistent with the need to fund urgent 
                warfighter requirements and operational needs, priority 
                in the release of appropriated funds to such component;
                  (B) relief from the frequency of financial reporting 
                of such component in cases in which such reporting is 
                not required by law;
                  (C) relief from departmental obligation and 
                expenditure thresholds to the extent that such 
                thresholds establish requirements more restrictive than 
                those required by law; or
                  (D) such other measures as the Under Secretary 
                considers appropriate; and
          (2) in the availability of personnel management incentives, 
        including--
                  (A) the size of the bonus pool available to the 
                financial and business management workforce of the 
                component;
                  (B) the rates of promotion within the financial and 
                business management workforce of the component;
                  (C) awards for excellence in financial and business 
                management; or
                  (D) the scope of work assigned to the financial and 
                business management workforce of the component.
  (b) Inclusion of Information in Report.--The Under Secretary shall 
include information on any measure initiated pursuant to this section 
in the next semiannual report pursuant to section 1003(b) of the 
National Defense Authorization Act for Fiscal Year 2010 (Public Law 
111-84; 123 Stat. 2439; 10 U.S.C. 2222 note) after such measure is 
initiated.
  (c) Expiration.--This section shall expire on September 30, 2017.
  (d) Definition.--In this section, the term ``component of the 
Department of Defense'' means any organization within the Department of 
Defense that is required to submit an auditable financial statement to 
the Secretary of Defense.

SEC. 302. MEASURES REQUIRED AFTER FAILURE TO ACHIEVE AUDITABILITY.

  (a) In General.--The Secretary of Defense shall ensure that 
corrective measures are immediately taken to address the failure of a 
component of the Department of Defense to achieve a financial statement 
validated as ready for audit by September 30, 2017.
  (b) Measures Required.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary shall develop and issue guidance 
detailing measures to be taken in accordance with subsection (a). Such 
measures shall include--
          (1) the development of a remediation plan to ensure the 
        component can achieve a financial statement validated as ready 
        for audit within one year;
          (2) additional reporting requirements that may be necessary 
        to mitigate financial risk to the component;
          (3) delaying the release of appropriated funds to such 
        component, consistent with the need to fund urgent warfighter 
        requirements and operational needs, until such time as the 
        Secretary is assured that the component will achieve a 
        financial statement validated as ready for audit within one 
        year;
          (4) specific consequences for key personnel in order to 
        ensure accountability within the leadership of the component; 
        and
          (5) such other measures as the Secretary considers 
        appropriate.
  (c) Definition.--The term ``component'' of the Department of Defense 
means any organization within the Department of Defense that is 
required to submit an auditable financial statement to the Secretary of 
Defense.

SEC. 303. REVIEW OF OBLIGATION AND EXPENDITURE THRESHOLDS.

  (a) Sense of Congress.--It is the sense of Congress that--
          (1) Department of Defense program managers should be 
        encouraged to place a higher priority on seeking the best value 
        for the Government than on meeting arbitrary benchmarks for 
        spending; and
          (2) actions to carry out paragraph (1) should be supported by 
        the Department's leadership at every level.
  (b) Policy Review.--Not later than 180 days after the date of the 
enactment of this Act, the Chief Management Officer of the Department 
of Defense, in coordination with the Chief Management Officer of each 
military department, shall review and update as necessary all relevant 
policy and instruction regarding obligation and expenditure benchmarks 
to ensure that such guidance does not inadvertantly prevent achieving 
the best value for the Government in the obligation and expenditure of 
funds.
  (c) Process Review.--Not later than one year after the date of the 
enactment of this Act, the Chief Management Officer, in coordination 
with the Chief Management Officer of each military department, the 
Director of the Office of Performance Assessment and Root Cause 
Analysis, the Under Secretary of Defense (Comptroller), and the 
Comptrollers of the military departments, shall conduct a comprehensive 
review of the use and value of obligation and expenditure benchmarks 
and propose new benchmarks or processes for tracking financial 
performance, including, as appropriate--
          (1) increased reliance on individual obligation and 
        expenditure plans for measuring program financial performance;
          (2) mechanisms to improve funding stability and to increase 
        the predictability of the release of funding for obligation and 
        expenditure; and
          (3) streamlined mechanisms for a program manager to submit an 
        appeal for funding changes and to have such appeal evaluated 
        promptly.
  (d) Training.--The Under Secretary of Defense for Acquisition, 
Technology, and Logistics and the Under Secretary of Defense 
(Comptroller) shall ensure that as part of the training required for 
program managers and business managers, an emphasis is placed on 
obligating and expending appropriated funds in a manner that achieves 
the best value for the Government and that the purpose and limitations 
of obligation and expenditure benchmarks are made clear.

                       TITLE IV--INDUSTRIAL BASE

SEC. 401. EXPANSION OF THE INDUSTRIAL BASE.

  (a) Program to Expand Industrial Base Required.--The Secretary of 
Defense shall establish a program to expand the industrial base of the 
Department of Defense to increase the Department's access to innovation 
and the benefits of competition.
  (b) Identifying and Communicating With Nontraditional Suppliers.--The 
program established under subsection (a) shall use tools and resources 
available within the Federal Government and available from the private 
sector, to provide a capability for identifying and communicating with 
nontraditional suppliers, including commercial firms and firms of all 
business sizes, that are engaged in markets of importance to the 
Department of Defense.
  (c) Industrial Base Review.--The program required by subsection (a) 
shall include a continuous effort to review the industrial base 
supporting the Department of Defense, including the identification of 
markets of importance to the Department of Defense.
  (d) Definition.--In this section:
          (1) Nontraditional suppliers.--The term ``nontraditional 
        suppliers'' means firms that have received contracts from the 
        Department of Defense with a total value of not more than 
        $100,000 in the previous 5 years.
          (2) Markets of importance to the department of defense.--The 
        term ``markets of importance to the Department of Defense'' 
        means industrial sectors in which the Department of Defense 
        spends more than $500,000,000 annually.

SEC. 402. COMMERCIAL PRICING ANALYSIS.

  Section 803(c) of the Strom Thurmond National Defense Authorization 
Act for Fiscal Year 1999 (Public Law 105-261; 10 U.S.C. 2306a note) is 
amended to read as follows:
  ``(c) Commercial Price Trend Analysis.--
          ``(1) The Secretary of Defense shall develop and implement 
        procedures that, to the maximum extent practicable, provide for 
        the collection and analysis of information on price trends for 
        categories of exempt commercial items described in paragraph 
        (2).
          ``(2) A category of exempt commercial items referred to in 
        paragraph (1) consists of exempt commercial items that are in a 
        single Federal Supply Group or Federal Supply Class, are 
        provided by a single contractor, or are otherwise logically 
        grouped for the purpose of analyzing information on price 
        trends.
          ``(3) The analysis of information on price trends under 
        paragraph (1) shall include, in any category in which 
        significant escalation in prices is identified, a more detailed 
        examination of the causes of escalation for such prices within 
        the category and whether such price escalation is consistent 
        across the Department of Defense.
          ``(4) The head of a Department of Defense agency or the 
        Secretary of a military department shall take appropriate 
        action to address any unjustified escalation in prices being 
        paid for items procured by that agency or military department 
        as identified in an analysis conducted pursuant to paragraph 
        (1).
          ``(5) Not later than April 1 of each of year, the Secretary 
        of Defense shall submit to the Committee on Armed Services of 
        the Senate and the Committee on Armed Services of the House of 
        Representatives a report on the analyses of price trends that 
        were conducted for categories of exempt commercial items during 
        the preceding fiscal year under the procedures prescribed 
        pursuant to paragraph (1). The report shall include a 
        description of the actions taken to identify and address any 
        unjustified price escalation for the categories of items.
          ``(6) This subsection shall not be in effect on and after 
        April 1, 2013.''.

SEC. 403. CONTRACTOR AND GRANTEE DISCLOSURE OF DELINQUENT FEDERAL TAX 
                    DEBTS.

  (a) Requirement.--
          (1) In general.--Chapter 37 of title 31, United States Code, 
        is amended by adding at the end of subchapter II the following 
        new section:

``Sec. 3720F. Contractor and grantee disclosure of delinquent Federal 
                    tax debts

  ``(a) Requirement Relating to Contracts.--The head of any executive 
agency that issues an invitation for bids or a request for proposals 
for a contract in an amount greater than the simplified acquisition 
threshold shall require each person that submits a bid or proposal to 
submit with the bid or proposal a form--
          ``(1) certifying that the person does not have a seriously 
        delinquent tax debt; and
          ``(2) authorizing the Secretary of the Treasury to disclose 
        to the head of the agency information strictly limited to 
        verifying whether the person has a seriously delinquent tax 
        debt.
  ``(b) Requirement Relating to Grants.--The head of any executive 
agency that offers a grant in excess of an amount equal to the 
simplified acquisition threshold may not award such grant to any person 
unless such person submits with the application for such grant a form--
          ``(1) certifying that the person does not have a seriously 
        delinquent tax debt; and
          ``(2) authorizing the Secretary of the Treasury to disclose 
        to the head of the executive agency information strictly 
        limited to verifying whether the person has a seriously 
        delinquent tax debt.
  ``(c) Form for Release of Information.--The Secretary of the Treasury 
shall make available to all executive agencies a standard form for the 
certification and authorization described in subsections (a) and (b).
  ``(d) Definitions.--In this section:
          ``(1) Contract.--The term `contract' means a binding 
        agreement entered into by an executive agency for the purpose 
        of obtaining property or services, but does not include--
                  ``(A) a contract for property or services that is 
                intended to be entered into through the use of 
                procedures other than competitive procedures by reason 
                of section 2304(c)(2) of this title; or
                  ``(B) a contract designated by the head of the agency 
                as necessary to the national security of the United 
                States.
          ``(2) Executive agency.--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)).
          ``(3) Person.--The term `person' includes--
                  ``(A) an individual;
                  ``(B) a partnership; and
                  ``(C) a corporation.
          ``(4) Seriously delinquent tax debt.--The term `seriously 
        delinquent tax debt'--
                  ``(A) means any Federal tax liability--
                          ``(i) that exceeds $3,000;
                          ``(ii) that has been assessed by the 
                        Secretary of the Treasury and not paid; and
                          ``(iii) for which a notice of lien has been 
                        filed in public records; and
                  ``(B) does not include any Federal tax liability--
                          ``(i) being paid in a timely manner under an 
                        offer-in-compromise or installment agreement;
                          ``(ii) with respect to which collection due 
                        process proceedings are not completed; or
                          ``(iii) with respect to which collection due 
                        process proceedings are completed and no 
                        further payment is required.
          ``(5) Simplified acquisition threshold.--The term `simplified 
        acquisition threshold' has the meaning given that term in 
        section 4(11) of the Office of Federal Procurement Policy Act 
        (41 U.S.C. 403(11)).
  ``(e) Regulations.--The Administrator for Federal Procurement Policy, 
in consultation with the Secretary of the Treasury, shall promulgate 
regulations that--
          ``(1) treat corporations and partnerships as having a 
        seriously delinquent tax debt if such corporation or 
        partnership is controlled (directly or indirectly) by persons 
        who have a seriously delinquent tax debt;
          ``(2) provide for the proper application of subsections 
        (a)(2) and (b)(2) in the case of corporations and partnerships; 
        and
          ``(3) provide for the proper application of subsection (a) to 
        first-tier subcontractors that are identified in a bid or 
        proposal and are a significant part of a bid or proposal 
        team.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 37 of such title is amended by adding 
        after the item relating to section 3720E the following new 
        item:

``3720F. Contractor and grantee disclosure of delinquent Federal tax 
debts.''.

  (b) Revision of Federal Acquisition Regulation.--Not later than 90 
days after the final promulgation of regulations under section 3720F(e) 
of title 31, United States Code, as added by subsection (a), the 
Federal Acquisition Regulation shall be revised to incorporate the 
requirements of section 3720F of such title.

SEC. 404. INDEPENDENCE OF CONTRACT AUDITS AND BUSINESS SYSTEM REVIEWS.

  (a) Defense Contract Audit Agency General Counsel.--
          (1) In general.--Subchapter II of chapter 8 of title 10, 
        United States Code, is amended by adding at the end the 
        following new section:

``Sec. 204. Defense Contract Audit Agency general counsel

  ``(a) General Counsel.--The Director of the Defense Contract Audit 
Agency shall appoint a General Counsel of the Defense Contract Audit 
Agency.
  ``(b) Duties.--(1) The General Counsel shall perform such functions 
as the Director may prescribe and shall serve at the discretion of the 
Director.
  ``(2) Notwithstanding section 140(b) of this title, the General 
Counsel shall be the chief legal officer of the Defense Contract Audit 
Agency.
  ``(3) The Defense Contract Audit Agency shall be the exclusive legal 
client of the General Counsel.
  ``(c) Office of the General Counsel.--There is established an Office 
of the General Counsel within the Defense Contract Audit Agency. The 
Director may appoint to the Office to serve as staff of the General 
Counsel such legal counsel as the Director determines is 
appropriate.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of subchapter II of chapter 8 of such title is 
        amended by adding at the end the following new item:

``204. Defense Contract Audit Agency general counsel.''.

  (b) Criteria for Business System Reviews.--
          (1) In general.--Chapter 131 of title 10, United States Code, 
        is amended by inserting after section 2222 the following new 
        section:

``Sec. 2222a. Criteria for business system reviews

  ``(a) Criteria for Business System Reviews.--The Secretary of Defense 
shall ensure that any contractor business system review carried out by 
a military department, a Defense Agency, or a Department of Defense 
Field Activity--
          ``(1) complies with generally accepted government auditing 
        standards issued by the Comptroller General;
          ``(2) is performed by an audit team that does not engage in 
        any other official activity (audit-related or otherwise) 
        involving the contractor concerned;
          ``(3) is performed in a time and manner consistent with a 
        documented assessment of the risk to the Federal Government; 
        and
          ``(4) involves testing on a representative sample of 
        transactions sufficient to fully examine the integrity of the 
        contractor business system concerned.
  ``(b) Contractor Business System Review Defined.--In this section, 
the term `contractor business system review' means an audit of 
policies, procedures, and internal controls relating to accounting and 
management systems of a contractor.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 131 of such title is amended by inserting 
        after the item relating to section 2222 the following new item:

``2222a. Criteria for business system reviews.''.

  (c) Contract Audit Guidance.--Not later than 180 days after the date 
of the enactment of this Act, the Secretary of Defense shall issue 
guidance relating to contract audits carried out by a military 
department, a defense agency, or a Department of Defense field activity 
that are not contractor business system reviews, as described under 
section 2222a of title 10, United States Code, that--
          (1) requires that such audits comply with generally accepted 
        government auditing standards issued by the Comptroller General 
        and are performed in a time and manner consistent with a 
        documented assessment of risk to the Federal Government;
          (2) establishes guidelines for discussions of the scope of 
        the audit with the contractor concerned that ensure that such 
        scope is not improperly influenced by the contractor;
          (3) provides for withholding of contract payments when 
        necessary to compel the submission of documentation from the 
        contractor; and
          (4) requires that the results of contract audits performed on 
        behalf of an agency of the Department of Defense be shared with 
        other Federal agencies upon request, without reimbursement.
  (d) Effective Dates.--
          (1) Section 204.--Section 204 of title 10, United States 
        Code, as added by subsection (a), shall take effect on the date 
        of the enactment of this Act.
          (2) Section 2222a.--Section 2222a of title 10, United States 
        Code, as added by subsection (b), shall take effect 180 days 
        after the date of the enactment of this Act.

SEC. 405. BLUE RIBBON PANEL ON ELIMINATING BARRIERS TO CONTRACTING WITH 
                    THE DEPARTMENT OF DEFENSE.

  (a) Requirement to Establish.--The Secretary of Defense shall 
establish a panel consisting of owners of large and small businesses 
that are not traditional defense suppliers, for purposes of creating a 
set of recommendations on eliminating barriers to contracting with the 
Department of Defense and its defense supply centers.
  (b) Members.--The panel shall consist of nine members, of whom--
          (1) three shall be appointed by the Secretary of the Army;
          (2) three shall be appointed by the Secretary of the Navy; 
        and
          (3) three shall be appointed by the Secretary of the Air 
        Force.
  (c) Appointment Deadline.--Members shall be appointed to the panel 
not later than 180 days after the date of the enactment of this Act.
  (d) Duties.--The panel shall be responsible for developing a set of 
recommendations on eliminating barriers to contracting with the 
Department of Defense and its defense supply centers.
  (e) Report.--Not later than one year after the date of the enactment 
of this Act, the panel shall submit to Congress a report containing its 
recommendations.

SEC. 406. INCLUSION OF THE PROVIDERS OF SERVICES AND INFORMATION 
                    TECHNOLOGY IN THE NATIONAL TECHNOLOGY AND 
                    INDUSTRIAL BASE.

  (a) Revised Definitions.--Section 2500 of title 10, United States 
Code, is amended--
          (1) in paragraph (1), by striking ``or maintenance'' and 
        inserting ``integration, services, or information technology'';
          (2) in paragraph (4), by striking ``or production'' and 
        inserting ``production, integration, services, or information 
        technology'';
          (3) in paragraph (9)(A), by striking ``and manufacturing'' 
        and inserting ``manufacturing, integration, services, and 
        information technology''; and
          (4) by adding at the end the following new paragraph:
          ``(15) The term `integration' means the process of providing 
        systems engineering and technical direction for a system for 
        the purpose of achieving capabilities that satisfy contract 
        requirements.''.
  (b) Revised Objectives.--Section 2501(a) of such title is amended--
          (1) in paragraph (1), by striking ``Supplying and equipping'' 
        and inserting ``Supplying, equipping, and supporting'';
          (2) in paragraph (2), by striking ``and logistics for'' and 
        inserting ``logistics, and other activities in support of'';
          (3) in paragraph (4), by striking ``and produce'' and 
        inserting ``, produce, and support''; and
          (4) by redesignating paragraph (6) as paragraph (8) and 
        inserting after paragraph (5) the following new paragraphs:
          ``(6) Providing for the generation of services capabilities 
        that are not core functions of the armed forces and that are 
        critical to military operations within the national technology 
        and industrial base.
          ``(7) Providing for the development, production, and 
        integration of information technology within the national 
        technology and industrial base.''.
  (c) Revised Assessments.--Section 2505(b)(4) of such title is amended 
by inserting after ``of this title)'' the following ``or major 
automated information systems (as defined in section 2445a of this 
title)''.
  (d) Revised Policy Guidance.--Section 2506(a) of such title is 
amended by striking ``budget allocation, weapons'' and inserting 
``strategy, management, budget allocation,''.

                         Purpose and Background

    The purpose of H.R. 5013, the Implementing Management for 
Performance and Related Reforms to Obtain Value in Every 
Acquisition Act of 2010, is to amend title 10, United States 
Code, and to establish other new statutory requirements, to 
improve performance and the quality of outcomes in the defense 
acquisition system. On March 17, 2009, Chairman Ike Skelton and 
then-Ranking Member John McHugh appointed a Panel on Defense 
Acquisition Reform from among members of the committee to carry 
out a comprehensive review of the defense acquisition system. 
The review was motivated by a general sense that the Department 
of Defense's (DOD) acquisition system was not responsive enough 
to today's mission needs, not rigorous enough in protecting 
taxpayers, and not disciplined enough in the acquisition of 
weapon systems for tomorrow's wars.
    A central finding of this review was that while the nature 
of defense acquisition has substantially changed in the last 
two decades, the defense acquisition system has not kept pace. 
The system remains structured primarily for the acquisition of 
weapon systems at a time when services represent a much larger 
share of the Department's acquisitions. As a result, the 
Department's formal acquisition policy has limited application 
to the majority of the Department's acquisitions. Furthermore, 
while the Department is currently working to modernize in the 
``information age,'' the acquisition system is particularly 
poorly designed for the acquisition of information technology. 
Even in the acquisition of weapon systems, the Department's 
historical strength, the system continues to generate 
development timeframes for major systems measured in decades, 
an approach which has resulted in unacceptable cost growth, 
negative effects on industry, and in too many cases, a failure 
to timely meet warfighter needs.
    The acquisition of weapon systems, the acquisition of 
commercial goods and commodities, the acquisition of services, 
and the acquisition of information technology have diverse 
features and challenges. Across all categories of acquisition, 
however, significant improvements can be made in: managing the 
acquisition system; improving the requirements process; 
developing and incentivizing the highest quality acquisition 
workforce; reforming financial management; and getting the best 
from the industrial base. This bill would put in place the 
statutory framework needed to achieve these improvements.
    For most categories of acquisition, only anecdotal 
information exists about instances where the system either 
performed well, or poorly. Even where real performance metrics 
currently exist, they are not sufficient. H.R. 5013 would 
establish a performance management program that would allow 
DOD's senior leaders to identify and correct problems in the 
defense acquisition system, and reinforce and reward success. 
This bill would expand the mandate of the Office of Performance 
Assessment and Root Cause Analysis (PARCA) to serve a 
performance assessment function for the acquisition system. 
PARCA would track organizations throughout the defense 
acquisition system in meeting pre-negotiated goals for 
acquisition performance. Organizations would see real 
consequences for both success and failure in meeting their 
goals.
    In addition to instituting performance management for the 
acquisition system, this bill would establish a performance 
management approach for the requirements processes upon which 
the acquisition process depends. Challenges with the 
requirements process are a major factor in poor acquisition 
outcomes. Most concerning is that the requirements process for 
the acquisition of services, the largest category of 
acquisition, is almost entirely ad hoc. The process for 
developing requirements for the acquisition of weapon systems 
is overly cumbersome, but also lacking in the expertise and 
capacity required to truly vet joint military requirements. 
This bill would substantially improve both processes.
    H.R. 5013 would establish the acquisition workforce as a 
model within the Department for more flexible personnel 
management that rewards success and includes accountability. 
The Department's Acquisition Workforce Demonstration Project 
and the authorities in section 1113 of the National Defense 
Authorization Act for Fiscal Year 2010 (Public Law 111-84) 
provide a solid foundation for creating an acquisition 
workforce that can obtain the value the Department needs. The 
Department requires flexibility to efficiently hire qualified 
new employees, and to manage its workforce in a manner that 
promotes superior performance. This bill provides these tools 
so that the Department can develop new regulations for the 
civilian workforce including fair, credible, and transparent 
methods for hiring and assigning personnel, and for appraising 
and incentivizing employee performance.
    Underlying the success of the defense acquisition system is 
the Department's financial management system. The inability to 
provide accurate and timely financial information prevents the 
Department from adequately managing its acquisition programs 
and from implementing true acquisition reform. The implications 
of poor financial management stretch beyond the Department of 
Defense. Indeed, given that the Department is the largest 
agency in the federal government, owning 86 percent of the 
government's assets (estimated at $4.6 trillion), it is 
essential that the Department maintain strong financial 
management and business systems. This bill would provide 
incentives to DOD components that are able to obtain clean 
audit opinions before the statutory deadline of September 30, 
2017, and also imposes consequences if this deadline is not 
met.
    H.R. 5013 also focuses on how to get the most out of the 
industrial base. The Department has long worked to protect 
those elements of the defense industrial base that are 
perishable and unique to the Department. The committee supports 
this priority. However, the committee believes that the 
Department can enhance competition and gain access to more 
innovative technology by developing measures to utilize more of 
the industrial base, especially small- and mid-tier businesses. 
The committee also believes that the Department is best served 
when it deals with responsible contractors. Contracting 
officers need access to accurate information on contractors 
that are known to be in violation of the law in making the 
determination about whether a contractor is responsible.

                          Legislative History

    H.R. 5013 was introduced on April 14, 2010, and referred to 
the Committee on Armed Services, and in addition to the 
Committee on Oversight and Government Reform.
    On April 21, 2010, the Committee on Armed Services held a 
mark-up session to consider H.R. 5013, as introduced. The 
committee, a quorum being present, ordered reported H.R. 5013, 
as amended, to the House with a favorable recommendation by a 
record vote of 56-0.

                                Hearings

    Committee consideration of the matters contained in H.R. 
5013, the Implementing Management for Performance and Related 
Reforms to Obtain Value in Every Acquisition Act of 2010, was 
informed by multiple committee hearings. The committee's Panel 
on Defense Acquisition Reform held 14 hearings and 2 briefings 
on various aspects of the defense acquisition system. These 
hearings involved testimony from many current and former 
officials of the Department of Defense who are knowledgeable on 
acquisition matters as well as representatives of industry and 
of the acquisition workforce. The panel's work culminated in a 
hearing on March 11, 2010, with the Honorable Ashton Carter, 
Under Secretary of Defense for Acquisition, Technology, and 
Logistics, the Honorable Robert Hale, Under Secretary of 
Defense (Comptroller), Ms. Elizabeth A. McGrath, Acting Deputy 
Chief Management Officer, Department of Defense, and Mr. Shay 
Assad, Acting Assistant Secretary of Defense for Acquisition 
and Director, Defense Procurement and Acquisition Policy, on 
Administration perspectives on managing the defense acquisition 
system and the defense acquisition workforce. The witnesses 
provided testimony on the panel's interim findings and 
recommendations allowing the committee to gain the 
Administration's views on the matters that form the core of 
H.R. 5013.

                      Section-by-Section Analysis

    The following is a section-by-section analysis of those 
sections of H.R. 5013, as amended, by the Committee on Armed 
Services.

                         Section 1--Short Title

    This section would establish the short title of the bill as 
the ``Implementing Management for Performance and Related 
Reforms to Obtain Value in Every Acquisition Act of 2010.''

       Section 2--Definition of Congressional Defense Committees

    This section would define the term ``congressional defense 
committee'' as it is defined in section 101 of title 10, United 
States Code. The term would include the Senate Armed Services 
Committee, the House Armed Services Committee, the Subcommittee 
on Defense of the Senate Appropriations Committee, and the 
Subcommittee on Defense of the House Appropriations Committee.

                      Section 3--Table of Contents

    This section would contain the table of contents for the 
bill.

                  TITLE I--DEFENSE ACQUISITION SYSTEM

                                OVERVIEW

    Although Department of Defense policy and the name of this 
title refer explicitly to a ``defense acquisition system,'' 
there is in fact very little of the unity in the system that 
such a term implies. The Under Secretary of Defense for 
Acquisition, Technology, and Logistics (USD(AT&L)) exercises 
direct oversight over a relatively small percentage of 
acquisitions, mostly major defense acquisition programs, and 
recently, very large service contracts. Likewise, the bulk of 
overarching defense acquisition policy and congressional 
oversight focus applies to this portion of the defense 
acquisition system. The rest of the system, representing a 
majority of acquisition spending, is largely outside the day to 
day purview of USD (AT&L) and many of the most well known 
acquisition statutes do not apply. Much of the defense 
acquisition system is run entirely by the military departments 
and is not centrally managed. Furthermore, the character of the 
defense acquisition system varies greatly depending on the 
nature of the item being acquired. Acquisition at the 
Department of Defense (DOD) is funded, managed, overseen, and 
operated according to notably different processes depending on 
whether the category of item being acquired is a weapon system; 
a commercial good or commodity; an item being acquired rapidly 
in response to an urgent operational need; a military-unique or 
commercial service; or information technology.
    The diversity in the acquisition system is in many cases 
appropriate. It does, however, present a significant management 
challenge, one that the Department is often unable to meet. Two 
of the major purposes of this title are to create a structure 
flexible enough to be used in managing the entire defense 
acquisition system, and to manage the system to achieve 
specific performance goals.
    The Goldwater Nichols Act (Public Law 99-433) assigned 
control of the acquisition system to the civilian leadership of 
the Department of Defense. The committee continues to support 
this principle, but is concerned that the perceived divide 
between acquisition and the responsibilities of the military 
service chiefs has become so wide that it hinders both the 
acquisition and requirements processes. This title would 
clarify that the military service chiefs have a role in 
assigning and guiding the training of military personnel in the 
acquisition process and in coordinating requirements with 
acquisition.
    Obtaining consistent, realistic requirements able to serve 
as a basis for the acquisition process is a critical problem in 
the defense acquisition system. Requirements in the weapon 
system acquisition context are governed by the Joint 
Capabilities Integration and Development System (JCIDS). The 
committee has received significant feedback about problems with 
the JCIDS process and its ability to coordinate with 
acquisition. While the challenges in JCIDS are concerning, an 
even greater challenge exists in the context of requirements 
for the acquisition of services which are determined almost 
entirely in an ad hoc process. This title is intended to create 
a tool for improving JCIDS and requires the Department to 
establish a workable process for identifying, assessing, and 
approving requirements for the acquisition of services.
    The Department's policy guidance on acquisition is found 
primarily in DOD Instruction (DODI) 5000.02, ``Operation of the 
Defense Acquisition System.'' DODI 5000.02 was revised in 
December 2008 and again in December 2009 to reflect passage of 
the Weapon Systems Acquisition Reform Act of 2009 (Public Law 
111-23). It is in many ways an excellent document with 
significant improvements in the areas of weapon systems 
acquisition and in establishing a policy for the acquisition of 
services. However, the Department needs to improve the 
communication of its policy guidance on service contracting and 
reexamine DODI 5000.02 and related guidance to ensure that 
mandates and requirements that are particular to the 
acquisition of weapon systems are not being inappropriately 
applied to other areas of acquisition, particularly the 
acquisition of services and information technology. The 
committee also recognizes that there will be acquisitions 
involving one or more categories of acquisition, such as a 
contract involving hardware and information technology 
elements. The Department should ensure that its acquisition 
professionals have sufficient guidance and expertise in all 
categories of acquisition to best meet the needs of the 
government. The Department should also develop guidance for 
formally communicating information on the Department's mission 
needs with industry that is independent of specific acquisition 
program and contracts. The purpose of this dialogue would be to 
provide industry with the insight needed to make necessary 
investments in capacity, infrastructure, and technology 
development to meet the Department's needs. Therefore, the 
committee urges the Department to involve the commercial and 
defense industrial bases in the assessment of mechanisms to 
communicate information to industry. This title would require 
the Department to review its acquisition policy guidance to 
address these matters.

                       ITEMS OF SPECIAL INTEREST


             Acquisition Process for Information Technology

    The National Defense Authorization Act for Fiscal Year 2010 
(Public Law 111-84) included section 804, which called for an 
alternative acquisition process for information technology (IT) 
systems. The committee's Panel on Defense Acquisition Reform 
held a detailed hearing on issues in the acquisition of IT as 
part of its comprehensive review of the defense acquisition 
system.
    The committee endorses the panel's IT acquisition-related 
findings, and encourages the Department of Defense to integrate 
these findings into its implementation plan for section 804. 
The panel's full set of findings can be found in its report, 
and includes recommendations that an alternative process for IT 
acquisition:
          (1) Determine clear performance metrics for specific 
        programs from the start;
          (2) Foster an ongoing dialogue during the technology 
        development process between the system developers and 
        the warfighters;
          (3) Promote an open architecture approach that allows 
        for more modularization of hardware and software;
          (4) Develop a plan for how to strengthen the IT 
        acquisition workforce;
          (5) Implement alternative milestone decision points 
        that are more consistent with commercial product 
        development for IT;
          (6) Develop a process for competitive prototyping in 
        the IT environment;
          (7) Develop a new test and evaluation approach that 
        merges developmental and operational testing in a 
        parallel fashion;
          (8) Place greater emphasis on the up-front market 
        analysis; and
          (9) Conduct a rigorous analysis of contracting 
        mechanisms and contract incentive structures to 
        determine which work best for IT acquisitions.

                Military Purpose Non-Developmental Items

    The committee is aware of firms who develop products 
exclusively for the military, but accept no government research 
and development funding. These are typically smaller firms 
motivated to keep overhead costs to a minimum, much like firms 
competing in the commercial market. The committee notes that 
section 108 of this Act is intended to provide the Department 
of Defense with another tool to gain access to the country's 
total industrial base, especially smaller and non-traditional 
suppliers, as recommended by the Panel on Defense Acquisition 
Reform. The proposed military purpose non-developmental item 
exception to the submission of certified cost or pricing data, 
which is similar in effect to an existing exception for 
commercial items, is narrowly focused. The committee urges the 
Department to appropriately utilize this authority to eliminate 
the need for government research and development in cases where 
industry can and will develop its own solutions for military 
requirements and to speed the delivery of components and 
products to the warfighter.

                          Tailoring of Metrics

    The proposed new performance assessment system that would 
be established by section 101 of this Act includes a list of 
potential metrics. This list is illustrative of the kinds of 
metrics the committee intends the Department of Defense to 
address. The committee notes that metrics relating to contract 
bundling and the acquisition of technical data were added to 
the list by a vote of the committee. The committee has provided 
the Secretary of Defense with discretion in the use of these 
metrics so that the system retains the flexibility to tailor 
metrics to each element of the defense acquisition system as 
the section requires. The committee recognizes that some 
metrics could not be usefully applied across the entire defense 
acquisition system. However, the committee intends that these 
metrics should be applied where their application is relevant.
    The committee also urges the Department, in implementing a 
performance assessment system, to include a metric or metrics 
relating to small business utilization wherever appropriate for 
elements of the defense acquisition system. As with other 
metrics, a metric relating to small business utilization would 
require each applicable element of the defense acquisition 
system to develop a minimum standard and an objective goal for 
small business utilization. The committee notes that while the 
totality of the goals and standards for the defense acquisition 
system should support the Department in achieving its overall 
goals for small business utilization, goals and standards for 
different elements of the defense acquisition system can and 
should vary widely from each other and from the overall 
Department of Defense goal for utilization of small businesses.

Treatment of Services Acquisition in the Federal Acquisition Regulation

    The committee recognizes that while specific rules have 
been created over the last few decades on government purchases 
and practices, the focus in the past primarily has been on 
goods, hardware, and real property, which has resulted in a 
culture that failed to fully recognize the applicability of 
certain regulatory principles to services acquisitions. As 
highlighted in the report of the Panel on Defense Acquisition 
Reform, ``services require at least the same level of 
discipline as weapon systems acquisition. Such discipline is 
critical for planning, requirements definition, market 
research, price reasonableness determinations, and project 
management and oversight.'' While the Federal Acquisition 
Regulation (FAR) now includes references to the term 
``services'', the committee believes that a more focused 
emphasis on services acquisition throughout the FAR would 
enhance and support the procurement and project management 
community in all aspects of the acquisition planning process. 
The congressional findings in section 107 of this Act would 
reinforce this view by noting that specific program management 
skills, tools, and processes need to be applied to services 
acquisitions. Appropriate cross references within FAR Part 37 
(which specifically covers services acquisition) to other 
relevant parts of the FAR, as well as additional references to 
services throughout the remainder of the FAR, would facilitate 
this focus.

                         LEGISLATIVE PROVISIONS


 Section 101--Performance Management of the Defense Acquisition System

    This section would create a new chapter 149 in title 10, 
United States Code, entitled ``Performance Management of the 
Defense Acquisition System'', adding the following new 
sections: section 2545, relating to performance assessments of 
the defense acquisition system; section 2546, relating to 
audits of performance assessments; section 2547, relating to 
the use of performance assessments for managing performance; 
and section 2548, relating to the acquisition-related functions 
of the Chiefs of Staff of the Armed Forces. This section would 
direct the Secretary of Defense to implement the requirements 
of the new chapter 149 in a phased manner over a 2 year period 
beginning on the date of enactment of this Act.
    Section 2545, as added by this section, would require the 
Secretary of Defense to ensure that all elements of the defense 
acquisition system are subject to regular performance 
assessments at least annually. It would require each service 
acquisition executive within the Department of Defense to 
create metrics for each element of the defense acquisition 
system within system-wide categories developed by the 
Secretary. Each metric would be associated with specific goals 
and standards. The metrics, goals, and standards would be 
tailored to, and negotiated with, the specific element of the 
defense acquisition system being assessed. The Director of the 
Office of Performance Assessment and Root Cause Analysis 
(PARCA) would be responsible for overseeing all performance 
assessments in the Department and this section would provide 
PARCA with the authority to access and retain all records 
necessary to fulfill this function.
    Section 2546, as added by this section, would require that 
the performance assessments performed under the new section 
2545 be subjected to periodic audits to determine their 
accuracy, reliability, and completeness. Audits under this 
section would be required to meet generally accepted government 
auditing standards; use a risk based approach to audit 
planning; and appropriately account for issues associated with 
auditing assessments of activities occurring in a contingency 
operation.
    Section 2547, as added by this section, would require that 
the results of the performance assessments performed under the 
new section 2545 be used in the management of elements of the 
defense acquisition system through: adjustments to the size of 
bonus pools available to the workforce of an element of the 
defense acquisition system; changes in rates of promotion; 
awards for acquisition excellence; and changes in the scope of 
work assigned to the organization. Section 2547 would require 
that actions taken to manage the acquisition workforce under 
such section would be subject to existing requirements relating 
to labor negotiations and the issuance of regulations, as 
referenced in subsections (c) and (d) of section 1701a of title 
10, United States Code, as added by section 201 of this Act.
    Section 2548, as added by this section, would clarify that 
the Chiefs of Staff of the Armed Forces may assist the 
secretaries of their respective military departments in the 
following acquisition-related functions: the development of 
requirements; the development of measures to control 
requirements creep; the development of career paths in 
acquisition for military personnel; and the assignment and 
training of contracting officer representatives when such 
representatives are required to be members of the armed forces.

 Section 102--Meaningful Consideration by Joint Requirements Oversight 
                Council of Input from Certain Officials

    This section would amend section 181 of title 10, United 
States Code, to add the Under Secretary of Defense for Policy 
to the list of civilian advisors to the Joint Requirements 
Oversight Council (JROC) and to allow the Chairman of the JROC 
to invite a combatant commander, or the deputy commander, to 
serve as a member of the JROC when matters related to such 
command are under discussion. This section would also require 
the Government Accountability Office (GAO) to assess whether 
the JROC is giving meaningful consideration to the input of: 
combatant commanders; the Under Secretary of Defense for 
Acquisition, Technology, and Logistics; and the Director of 
Cost Assessment and Performance Evaluation. This section would 
require GAO to assess the extent to which consideration is 
being given to input from these officials during the evaluation 
of joint military requirements and report its findings, along 
with a report on related matters, to be submitted to the Senate 
Committee on Armed Services and the House Committee on Armed 
Services by May 22, 2011, in accordance with section 105 of the 
Weapon System Acquisition Reform Act of 2009 (Public Law 111-
23).

    Section 103--Performance Management for the Joint Capabilities 
                   Integration and Development System

    This section would require the Secretary of Defense to 
develop a performance management program for the Joint 
Capabilities Integration and Development System (JCIDS) to 
measure performance in JCIDS and to ensure that JCIDS: delivers 
timely capability to the warfighter; controls requirements 
creep (including the growth of requirements at a level below 
those specified in the requirements documents considered by 
JCIDS); is responsive to changes in threats, emerging 
capabilities, and costs; and develops skilled requirements 
personnel. The program required by this section would be 
initially implemented within one year after the date of 
enactment of this Act and would apply to requirements documents 
entering JCIDS after that date. This section would require an 
initial report on measures of performance for JCIDS within 90 
days after initial implementation and a final report on the 
outcomes of the performance management program four years after 
the date of initial implementation. This section would make 
continuation of the performance management program subject to 
the Secretary of Defense's discretion five years after the date 
of enactment of this Act.

       Section 104--Requirements for the Acquisition of Services

    This section would require each of the Chiefs of Staff of 
the Armed Forces to establish a process for identifying, 
assessing, and approving requirements for the acquisition of 
services. This section would require that each process provide 
an opportunity for combatant commanders to provide input on 
their joint requirements and that each process be revised to be 
consistent with any future guidance issued by the Chairman of 
the Joint Chiefs of Staff relating to joint requirements for 
the acquisition of services. This section would require the 
issuance of guidance for each military service relating to: the 
organization of the requirements process; the level of command 
responsibility required to validate requirements for each 
category of services acquisition; the composition of billets 
necessary to operate the requirements process; the training 
required; the relationship to doctrine; methods of obtaining 
input on joint requirements for services; procedures for 
coordinating with the acquisition process; and opportunities 
for strategic sourcing. This section would require that such 
processes be initially implemented within 180 days after the 
date of enactment of this Act and fully implemented at the 
earliest date practicable. Lastly, the committee expects that 
such processes be consistent with the management structure for 
the procurement of services, as required by section 2330 of 
title 10, United States Code, and to provide for appropriate 
interaction and communication with the senior officials 
designated by section 2330 as responsible for the management of 
acquisition of contract services.

               Section 105--Joint Evaluation Task Forces

    This section would require the Chairman of the Joint 
Requirements Oversight Council to designate the commander of a 
unified combatant command to provide a joint evaluation task 
force to participate in each major defense acquisition program. 
The task force would come from a military unit selected by the 
combatant commander, based on the relevance of the program to 
the unit's mission, and consistent with the unit's operational 
obligations. The task force would participate in all stages of 
the development and low rate initial production of the program 
and would provide user feedback to the resource sponsor for the 
program. This section would require that the task force receive 
administrative support from the program's resource sponsor.

          Section 106--Review of Defense Acquisition Guidance

    This section would require the Secretary of Defense to 
review the acquisition guidance of the Department of Defense 
(DOD) to consider the extent to which guidance related to 
weapon systems acquisition is appropriately applied to other 
areas of acquisition; whether long-term sustainment of weapon 
systems is appropriately emphasized; whether appropriate 
mechanisms exist to communicate information relating to DOD's 
mission needs to the industrial base; the extent to which 
earned value management (as described in the Office of 
Management and Budget circular A-11) should be required on non-
weapon systems and whether measures of quality and technical 
performance should be included in the Department's 
implementation of earned value management; and the extent to 
which weapon systems processes should apply to the acquisition 
of information technology. This section would require that a 
report on the review and all actions taken, be submitted to the 
Senate Committee on Armed Services and the House Committee on 
Armed Services within 270 days of the date of enactment of this 
Act. Finally, the committee does not intend for this review to 
unnecessarily impose additional government unique requirements 
on the acquisition of commercial and commodity items.

Section 107--Requirement To Include References to Services Contracting 
             Throughout the Federal Acquisition Regulation

    This section includes congressional findings related to the 
complexity of services acquisition. This section would require 
that the Federal Acquisition Regulation (FAR) be revised to 
provide appropriate references to services contracting 
throughout the FAR within 270 days after the date of enactment 
of this Act.

  Section 108--Procurement of Military Purpose Nondevelopmental Items

    This section would create an exception to the requirement 
for an offer or to submit certified cost or pricing data with a 
bid or proposal in accordance with section 2306a of title 10, 
United States Code, in certain circumstances involving the 
acquisition of a military purpose non-developmental item 
(MPNDI). This section would also amend chapter 141 of title 10, 
United States Code, by inserting a new section 2410r, which 
would define a MPNDI as an item developed exclusively at 
private expense; that meets a validated military requirement; 
that can be delivered in production quantities within nine 
months of contract award; and has a unit cost less than $10.0 
million. Additionally, section 2410r, as added by this section, 
would require the Secretary of Defense to issue regulations 
regarding the procurement of a MPNDI, specifying at a minimum, 
that a contract for a MPNDI be awarded utilizing competitive 
procedures in accordance with section 2304 of title 10, United 
States Code; that the contract be a firm fixed price contract; 
that an item developed exclusively at private expense may not 
have been funded in whole or in part with funding from a 
foreign government or through a government sponsored loan whose 
terms are more favorable than the prevailing market terms for a 
similar loan; and standards to evaluate price reasonableness in 
lieu of certified cost or pricing data from the contractor. The 
amendments to title 10 made by this section would apply with 
respect to contracts entered into 120 days after the date of 
enactment of this Act.

                TITLE II--DEFENSE ACQUISITION WORKFORCE


                                OVERVIEW

    The Department of Defense (DOD) acquisition workforce is at 
the heart of the Department's acquisition system. The committee 
recognizes, however, that the size of the acquisition workforce 
was significantly downsized in the post-cold war drawdown and 
has remained relatively steady, at the decreased levels, 
despite significant increases during the last decade in the 
number and complexity of DOD contract actions, and the higher 
dollar values of DOD contracts.
    The committee notes that a consistent theme throughout the 
hearings held by the Panel on Defense Acquisition Reform was 
the need for a renewed emphasis on the DOD acquisition 
workforce, both military and civilian. As stated in the panel's 
report, ``Ensuring that the acquisition workforce is adequately 
staffed, skilled and trained, and improving the workforce's 
quality and performance are as important as improvements to 
acquisition processes and structures.'' This is particularly 
important given that the Government Accountability Office, 
since 1992, has identified the Department's contract management 
as a high-risk area and cited problems caused by an inadequate 
acquisition workforce, such as unmet expectations, contract 
overpayment, and increased exposure to potential waste, fraud 
and abuse.
    The committee agrees with the panel's assessment that ``the 
Department should establish the acquisition workforce as a 
model within the Department for more flexible personnel 
management that rewards success and includes accountability.'' 
The committee notes that the authorities and flexibilities 
provided under section 9902 of title 5, United States Code, and 
the Department's Acquisition Workforce Demonstration Project 
provide a solid foundation for creating an acquisition 
workforce that will provide the value the Department needs. 
According to the panel's findings and recommendations, ``to 
achieve this, the Department requires flexibility to 
efficiently hire qualified new employees, and to manage its 
workforce in a manner that promotes superior performance. Using 
these tools the Department can develop new regulations for the 
civilian workforce which include fair, credible, and 
transparent methods for hiring and assigning personnel, and for 
appraising and incentivizing employee performance.'' To that 
end, the committee recommends legislation, elsewhere in this 
title, that would require the Department to develop and manage 
a highly skilled professional acquisition workforce. This title 
would build upon the original foundation for a professional 
acquisition workforce established pursuant to the Defense 
Acquisition Workforce Improvement Act, codified at chapter 87 
of title 10, United States Code. It also would reinforce the 
management, hiring, and training flexibilities enacted last 
year in the National Defense Authorization Act for Fiscal Year 
2010 (Public Law 111-84) and codified as section 9902 of title 
5, United States Code.
    The panel's report also stated that ``the Department's need 
for acquisition personnel extends beyond contracting officials 
to systems engineers, development planners, software engineers, 
cost estimators, developmental testers, product support 
managers, and other highly skilled professionals. The quality 
of the new employees is at least as important as the 
quantity.'' Therefore, the Panel recommended in its report that 
the military services be given a clearer responsibility for 
staffing, training and rewarding their buying activities to 
meet performance standards, including developing individual and 
organizational goals to achieve cost savings and efficiency 
improvements.
    To ensure that the Department has the most effective 
workforce possible, this title also would provide additional 
tools to the Department to rebuild its acquisition workforce. 
These provisions are based on the panel's recommendations that 
called for the development of career paths, and requirements 
for continuing education, including obtaining key work 
experiences, and periodic recertification. Finally, this title 
would enact recommendations made by the panel regarding the 
need to strengthen the information technology (IT) workforce in 
order to improve outcomes for IT acquisitions.

                         LEGISLATIVE PROVISIONS


             Section 201--Acquisition Workforce Excellence

    This section would amend title 10, United States Code by 
inserting a new section 1701a, that would require the 
Department of Defense (DOD) to develop and manage a highly 
skilled professional acquisition workforce. This section would 
implement the recommendations of the Panel on Defense 
Acquisition Reform by authorizing the Secretary of Defense to 
develop a system focused on rewarding, when appropriate, the 
acquisition workforce for its excellence and contribution to 
mission, ensuring that the technical expertise and business 
skills needed to obtain best value are resident within the 
workforce, and managing the workforce in a manner that 
complements and reinforces the performance management of the 
defense acquisition system pursuant to section 101 of this Act.
    This section would require the Department of Defense to use 
several existing authorities. The committee notes that the most 
significant of these authorities are the flexibilities provided 
pursuant to section 9902 of title 5, United States Code, 
related to performance management, hiring, and training of 
managers within the General Schedule (GS) system. The committee 
further notes that the defense acquisition demonstration 
project, which is extended for an additional five years 
elsewhere under this Act, may provide some important lessons 
for the Department's efforts to develop a DOD-wide performance 
management program within the GS system. This section also 
would direct the Secretary of Defense to require managers to 
develop individual performance plans for members of the 
acquisition workforce as well as appropriate procedures for due 
process for members of the acquisition workforce who 
consistently fail to meet performance standards. This section 
also would authorize additional actions to be taken to restore 
the focus on professionalizing the acquisition workforce 
through the development of attractive career paths, encouraging 
continuing education and training, and utilizing the Defense 
Civilian Leadership Program established under section 1112 of 
the National Defense Authorization Act for Fiscal Year 2010 
(Public Law 111-84). In order to facilitate the hiring for 
positions within the acquisition workforce, this section would 
allow the use of expedited security clearance processing as 
authorized pursuant to section 1564 of title 10, United States 
Code.
    The committee recognizes that while the Department is 
aggressively moving forward with hiring new personnel within 
the acquisition workforce, there still may be a significant gap 
in personnel with relevant knowledge and experience. Therefore, 
this section would provide the Department with greater 
authority to hire highly qualified experts, pursuant to section 
9903 of title 5, United States Code, for temporary leadership 
roles in critical positions, providing mentors to advise 
employees on their career paths and opportunities to advance 
and excel in the acquisition profession, and assist with the 
design of education and training programs for the acquisition 
workforce. This section would clarify that highly qualified 
experts hired by the Department could be hired on a part-time 
basis.
    Finally, actions taken under this section would be subject 
to the requirements of chapter 71 of title 5, United States 
Code, and would be deemed an agency rule or regulation under 
section 7177(a)(2) of title 5, United States Code.

  Section 202--Amendments to the Acquisition Workforce Demonstration 
                                Project

    This section would amend title 10, United States Code, by 
inserting a new section 1762 that would codify the authority 
for the Department of Defense Acquisition Workforce 
Demonstration (DAWD) Project, which originally was established 
pursuant to section 4303 of the National Defense Authorization 
Act for Fiscal Year 1996 (Public Law 104-106). The original 
authority was to expire on September 30, 2012. The committee 
recognizes that the organizations that had transitioned to the 
DAWD project had limited experience with the project before 
they were converted to the National Security Personnel System 
(NSPS). Now that the authority for NSPS has been repealed, 
pursuant to section 1113 of the National Defense Authorization 
Act for Fiscal Year 2010 (Public Law 111-84), those 
organizations that had been in the DAWD project previously will 
be converted back to the project. However, the committee is 
aware of the stress that may be imposed on the personnel system 
and the individual employees if they were converted from NSPS 
back to the DAWD project and, within less than two years, 
converted to the General Schedule (GS) system. Therefore, this 
section would extend the authority for the project to September 
30, 2017; within six months after the authority terminates, all 
employees within the acquisition demonstration project must be 
transferred to the performance management system, under the GS 
system, that is being developed pursuant to section 9902 of 
title 5, United States Code. This is intended to provide a more 
orderly transition for the affected employees. However, the 
committee intends that the extension of this authority is only 
for those organizations that had fully implemented a defense 
acquisition workforce demonstration project, pursuant to Office 
of Personnel Management regulations, including the issuance of 
a Federal Register notice that such project would be initiated.
    This section also would require the Secretary of Defense to 
undertake an independent assessment of the project to capture 
the lessons learned from it and the adequacy of the project in 
establishing career paths, promoting training, and protecting 
diversity in promotion. A copy of the assessment would be 
provided to the Senate Committee on Armed Services, the House 
Committee on Armed Services, the Senate Committee on Homeland 
Security and Governmental Affairs, and the House Committee on 
Oversight and Government Reform beginning in 2011, and every 
two years thereafter, until the termination of the DAWD 
project.

Section 203--Incentive Programs for Civilian and Military Personnel in 
                       the Acquisition Workforce

    This section would amend title 10, United States Code, by 
inserting a new section 1763 that would require the Secretary 
of Defense to develop an enhanced system of incentives for the 
encouragement of excellence in the civilian acquisition 
workforce, including connecting salary increases, bonuses, 
promotions and awards to performance and contribution to agency 
mission. In addition to other incentives that may be 
considered, this section also would direct the Secretary to use 
the Department of Defense Civilian Workforce Incentive Fund 
established pursuant to section 9902 of title 5, United States 
Code. This section would encourage opportunities for special 
career broadening experiences for high performers. The 
committee intends that such experiences would include broad 
opportunities, to include but not be limited to, educational 
sabbaticals, or attendance at acquisition relevant seminars or 
conferences both within the United States or overseas.
    This section also would direct the military departments to 
enhance their existing incentive programs. The committee is 
aware that at least the Defense Logistics Agency, the 
Department of the Navy, and Department of the Air Force each 
have programs that make cash awards or personal decorations to 
employees that make suggestions for savings or process 
improvements that benefit their organization. This section 
would encourage the Secretary of Defense to extend such 
incentives to members of the military in the acquisition 
workforce wherever possible.

Section 204--Career Development for Civilian and Military Personnel in 
                       the Acquisition Workforce

    This section would amend title 10, United States Code, by 
inserting a new section 1722b that would require the Secretary 
of Defense to develop attractive career paths for civilians in 
the acquisition workforce. The committee agrees with the 
assessment of the Panel on Defense Acquisition Reform that a 
renewed focus on career development for civilians in the 
acquisition workforce is necessary. Similar action already was 
taken for military personnel in the Duncan Hunter National 
Defense Authorization Act for Fiscal Year 2009 (Public Law 110-
417). This section would require the Secretary of Defense to 
issue guidance to fulfill this requirement to ensure career 
paths exist that attract the highest quality civilian 
personnel, are consistent with a deliberate workforce 
development strategy, provide sufficient opportunities for 
promotion and advancement, and provide a sufficient number of 
trained and qualified people in the workforce. This section 
would require detailed information on the status of the 
civilian and military acquisition workforce, including 
information on this effort, be included in the Department's 
strategic human capital management plan, required by section 
115b of title 10, United States Code.
    This section also would amend section 1723 of title 10, 
United States Code, to require the Secretary to develop and 
support career training and development for each career path 
(for both civilian and military career paths), including key 
work experiences that allow individuals to develop in-depth 
knowledge in the acquisition process. Key work experiences for 
members of the acquisition workforce would include periodic 
interaction with the end-user community to develop greater 
knowledge and understanding of how the hardware or service 
provided is used in the field.

         Section 205--Recertification and Training Requirements

    This section would further amend section 1723 of title 10, 
United States Code, by requiring the Secretary of Defense to 
increase training for members of the acquisition workforce, 
with additional emphasis on the acquisition of services, long 
term sustainment strategies, acquisition of information 
technology, and rapid acquisition. With regard specifically to 
services acquisition, the committee is aware that while the 
volume of service contracting has grown, services contracting 
training has not kept pace. The committee recognizes that 
Defense Acquisition University has created the Learning Center 
of Excellence for Service Acquisition, but is concerned that 
adequate professional-level courses for services program 
managers continue to be lacking.
    This section also would direct the Secretary to establish 
requirements for continuing education and periodic 
recertification. The committee notes that currently the 
Department makes its training investment up front for 
certification, which means that once an individual obtains a 
level three certification (currently, the highest certification 
level), that individual retains that certification for the 
remainder of his or her career. The committee believes that 
periodic recertification, not more than every five years, would 
add value to ensuring the professionalism of the acquisition 
workforce, as well as currency of their knowledge, similar to 
that afforded other professions that have continuing education 
and recertification requirements.
    This section would further amend title 10, United States 
Code, by inserting a new section 1748 that would require the 
Secretary to establish fulfillment standards to supplement this 
training that takes into account an individual's demonstrated 
competencies in certain areas, as well as creating standards 
relating to the appropriate use of private sector contractors 
to provide training.

       Section 206--Information Technology Acquisition Workforce

    This section would amend title 10, United States Code, by 
inserting a new section 1725 that would require the Secretary 
of Defense to strengthen the part of the acquisition workforce 
that specializes in information technology (IT), including 
establishing defined targets for billets for IT acquisition, 
defined career paths in IT acquisition and specific 
certification requirements for IT acquisition. This section 
would require that such actions be taken within 180 days of 
enactment of this Act. These actions would implement the 
recommendations of the Panel on Defense Acquisition Reform for 
the Department to ``develop a plan for how to strengthen the IT 
acquisition workforce, especially as it increases the size of 
the overall acquisition workforce in the coming years.'' The 
committee urges the Secretary to ensure the plan for the IT 
workforce developed in accordance with this section is tied to 
key attributes of any new IT acquisition system, as required by 
section 804 of the National Defense Authorization Act for 
Fiscal Year 2010 (Public Law 111-84), and is integrated into 
the Department's overall acquisition workforce strategic plan.

            Section 207--Definition of Acquisition Workforce

    This section would add a definition of the acquisition 
workforce to section 101 of title 10, United States Code. The 
acquisition workforce is defined as those designated pursuant 
to section 1721(a) of title 10, United States Code.

     Section 208--Defense Acquisition University Curriculum Review

    This section would require the Under Secretary of Defense 
for Acquisition, Technology, and Logistics to conduct a review 
of the curriculum offered by the Defense Acquisition University 
(DAU), not later than one year following the date of enactment 
of this Act, to ensure its support for the training and 
education of members of the acquisition workforce. The review 
would include a focus on education and training courses 
developed in services contracting, long-term sustainment 
strategies, information technology and rapid acquisition. This 
section also would require the Secretary of Defense, following 
the review of the Under Secretary of Defense for Acquisition, 
Technology, and Logistics, to determine the adequacy of funding 
for training and education and identify any additional funding 
needed in the next annual strategic workforce plan required by 
section 115(b) of title 10, United States Code.
    This section also would amend 1746 of title 10, United 
States Code, to require the DAU president to coordinate with 
the relevant professional schools and degree granting 
institutions within the Department of the Defense and the 
military departments on best practices for curriculum 
development. This section is intended to improve the 
interaction between the various educational entities within the 
Department related to training and education of the acquisition 
workforce.

    Section 209--Cost Estimating Internship and Scholarship Programs

    This section would require the Secretary of Defense to 
establish internship and scholarship programs in cost 
estimating within 270 days after the date of enactment of this 
Act. As noted in the report of the Panel on Defense Acquisition 
Reform, courses taught on financial economics do not address 
the underlying sources for cost estimating. Yet sound cost 
estimating is essential to the acquisition process and should 
be considered a core acquisition function. As recommended by 
the panel, the committee agrees that internship and scholarship 
programs specifically focused on cost estimating will benefit 
the acquisition process. The programs established by this 
section would be for a four year period.

                    TITLE III--FINANCIAL MANAGEMENT

                                OVERVIEW

    The committee remains concerned that the inability to 
provide accurate and timely financial information prevents the 
Department of Defense from adequately managing its acquisition 
programs and from implementing true acquisition reform. The 
Government Accountability Office (GAO) has repeatedly reported 
on the vulnerability of the Department's financial management 
systems. In its most recent update to its high-risk series, GAO 
found that, ``Weaknesses in DOD's financial management 
adversely affect not only the reliability of reported financial 
data, but also the efficiency and effectiveness of its business 
operations. Transforming DOD's financial management operations 
to provide timely, reliable, accurate, and useful information 
for management operations, including financial reporting and 
decision making, is a significant challenge.''
    Several major pieces of legislation, such as the Chief 
Financial Officers Act of 1990 (Public Law 101-576) and the 
Federal Financial Management Improvement Act of 1996 (Title 
VIII of Public Law 104-208) have required published audits of 
financial statements, reporting by auditors regarding whether 
the Department's financial management systems comply 
substantially with federal accounting standards, and other 
measures intended to ensure financial management systems 
provide accurate, reliable, and timely financial management 
information. In response to a congressional mandate, the 
Department issued its first biennial Financial Improvement and 
Audit Readiness Plan in December 2005, to delineate its 
strategy for addressing financial management challenges and 
achieving clean audit opinions. This 2005 report projected that 
69 percent of assets and 80 percent of liabilities would be 
``clean'' by 2009; yet in the March 2009 report, the Department 
projects it will have only achieved an unqualified audit on 45 
percent of its assets and liabilities by 2009. The Department 
appears to be falling behind its original plan to achieve full 
compliance with the law by 2017.
    In response to these concerns, in section 1003 of the 
National Defense Authorization Act for Fiscal Year 2010 (Public 
Law 111-84), Congress adopted a more detailed statutory 
requirement for the Secretary of Defense to develop a plan to 
ensure that the financial statements of the Department are 
validated as ready for audit by September 30, 2017. The 
committee's recommendations in this title are intended to 
provide both organizational and personal incentives to the 
defense financial and business management workforce to not only 
meet this deadline, but to accelerate preparation of such 
financial statements in order to provide greater accountability 
and minimize fraud, waste, and abuse. Finally, the committee 
intends for the Department to make the necessary improvements 
in its own financial control systems in order to comply with 
the law by 2017 and notes that compliance cannot be achieved by 
simply passing these requirements to industry without 
addressing the Department's internal problems.

                         LEGISLATIVE PROVISIONS


           Section 301--Incentives for Achieving Auditability

    This section would require the Under Secretary of Defense 
(Comptroller) to extend preferential treatment, as the Under 
Secretary considers appropriate, to a Department of Defense 
component that has financial statements validated as ready for 
audit earlier than the current statutory deadline of September 
30, 2017. Such preferential treatment may include priority in 
the release of appropriated funds; relief from non-statutory 
financial reporting; relief from departmental obligation and 
expenditure thresholds, the size of the bonus pools available 
to the component's financial and business management workforce; 
the rates of promotion for such workforce; awards for 
excellence for such workforce; and the scope of work assigned 
to such workforce. This section would require that actions 
taken by the Under Secretary be reported as part of the 
existing report on financial audit improvement efforts, 
pursuant to section 1003(b) of the National Defense 
Authorization Act for Fiscal Year 2010 (Public Law 111-84). The 
authority to provide such preferential treatment would expire 
in 2017.

  Section 302--Measures Required after Failure To Achieve Auditability

    This section would require the Secretary of Defense to take 
corrective measures to immediately address the failure of a 
Department of Defense component to achieve a financial 
statement validated as ready for audit by September 30, 2017. 
This section would further require the Secretary to issue 
guidance within 180 days after the date of enactment of this 
Act detailing corrective measures to be taken, including the 
development of a one-year remediation plan; additional 
financial reporting consistent with the level of financial risk 
to the component; the delay of release of appropriated funds, 
consistent with warfighting requirements and operational needs; 
and specific consequences for key personnel to ensure 
accountability within the leadership of the component.

      Section 303--Review of Obligation and Expenditure Thresholds

    This section would express the sense of Congress that 
program managers should be encouraged to place higher priority 
on seeking and obtaining best value than on meeting arbitrary 
benchmarks for spending, and that Department of Defense leaders 
at every level should support this priority. This section also 
would require that the Chief Management Officer (CMO) of the 
Department of Defense review existing policy regarding 
obligation and expenditure benchmarks, within 180 days after 
the date of enactment of this Act, to ensure that such guidance 
does not inadvertently prevent the Department from obtaining 
best value. Further, this section would require the CMO, within 
one year after the date of enactment of this Act and in 
coordination with additional officials, to conduct a 
comprehensive review of the use and value of obligation and 
expenditure benchmarks. This review would consider new 
benchmarks or processes for tracking financial performance, 
including: an increased reliance on individual obligation and 
expenditure plans for measuring programs' financial 
performance; mechanisms to improve funding stability; and 
streamlined mechanisms for a program manager to submit an 
appeal for funding changes. Lastly, this section would require 
the Under Secretary of Defense for Acquisition, Technology, and 
Logistics and the Under Secretary of Defense (Comptroller) to 
ensure that training for program managers and business managers 
emphasizes obligating and expending funds in a manner that 
achieves best value for the government.

                       TITLE IV--INDUSTRIAL BASE

                                OVERVIEW

    The management of the defense industrial base has been a 
challenge for the Department dating back to the creation of the 
armed forces. Discussions of the industrial base often focus on 
retaining unique and perishable defense industrial 
capabilities. The committee supports this important strategic 
priority for the Department. However, the committee believes 
that priority also must be placed on giving the Department 
access to as much of the country's total industrial base as 
possible, including business firms of all sizes. The committee 
notes that many innovative technologies are being developed at 
smaller firms, and that even among larger firms, companies that 
are primarily commercial in nature have been technology leaders 
in recent years.
    Federal agencies, with certain exceptions, are required to 
provide public notice of solicitations for contracts. However, 
the simple posting of a solicitation notice on a website does 
not represent a concerted effort to push information about 
potential contracts to relevant firms. The committee 
acknowledges that industry also bears a responsibility to 
develop its own business. Firms interested in doing business 
with the Department must cultivate relationships within 
industry and the Department, attend conferences and industry 
days, and utilize other methods to proactively gain insight 
into the Department's future needs, rather than waiting for a 
notice of solicitation. However, the committee believes that 
the Department of Defense would benefit by utilizing resources 
from the Department of Commerce, Small Business Administration, 
General Service Administration, and the private sector to 
directly notify firms in relevant industrial classifications of 
upcoming contract awards. A small investment in additional 
outreach to industry could demonstrate a large return in 
increased competition, lower prices, and innovation. This title 
is intended to impel the Department of Defense to expand the 
defense industrial base to increase competition and expand the 
Department of Defense's access to innovation. It would also 
expand the Department of Defense's efforts to monitor the 
industrial base by increasing the focus on providers of 
services and information technology.
    While expanding the industrial base is an important goal, 
it supports the mission of the Department of Defense only to 
the extent that firms obtaining defense contracts are 
responsible, high-quality suppliers. The Government 
Accountability Office reported that in 2007, more than 60,000 
federal contractors have tax debts totaling $7.7 billion. This 
title would provide the Department of Defense with additional 
tools to identify irresponsible contractors and to detect 
unjustifiable price escalation.

                       ITEMS OF SPECIAL INTEREST


                      Contract Payment Withholding

    The committee concurs with the assessment of the Panel on 
Defense Acquisition Reform that Congress created a new obstacle 
to federal agencies accessing the commercial marketplace by 
establishing a requirement that agencies withhold three percent 
of all contract payments in anticipation of taxes owed to the 
Treasury in section 511 of the Tax Increase Prevention and 
Reconciliation Act of 2005 (Public Law 109-222). This 
requirement is currently scheduled to take effect in 2012. The 
committee is concerned that this requirement would place an 
unfair burden on tax compliant firms and will discourage such 
firms from bidding on defense contracts. The committee supports 
repeal of the three percent contract payment withholding 
requirement for defense contracts. The committee addresses 
concerns about contractors with seriously delinquent tax debts 
in a more targeted and effective way in section 403 of this 
Act.

  Department of Defense Utilization of Service Disabled Veteran-Owned 
                            Small Businesses

    The committee notes that the Government Accountability 
Office (GAO) released a report on October 23, 2009, entitled, 
``Service Disabled Veteran-Owned Small Business Program: Case 
Studies Show Fraud and Abuse Allowed Ineligible Firms to Obtain 
Millions of Dollars in Contracts'' which identified $100.0 
million of contracts awarded to firms under the set-aside 
program for Service Disabled Veteran-Owned Small Businesses 
(SDVOB) even though the firms did not actually qualify to 
participate in the program. The committee supports the SDVOB 
program and is concerned that the award of contracts to 
ineligible firms denied actual SDVOBs the opportunity to obtain 
these contracts. The committee notes that the Department of 
Veterans Affairs maintains a Vendor Information Pages database 
that has been designated by the Office of Federal Procurement 
Policy as a definitive source of information on veterans in 
business and urges the Department of Defense to utilize this 
resource in determining eligibility for SDVOB set-asides 
awarded by the Department. The committee directs the Secretary 
of Defense to review the issues identified in the GAO report 
and determine whether any measures should be taken by the 
Department to address them, and further directs the Secretary 
to submit a report to the Senate Committee on Armed Services 
and the House Committee on Armed Services on what, if any, 
measures the Secretary has taken or intends to take as a result 
of the review by April 1, 2011.

                    Multiyear Procurement Authority

    The committee concurs with the assessment of the Panel on 
Defense Acquisition Reform that multiyear procurement contracts 
are a potentially useful tool that allows the Department of 
Defense to reduce procurement costs and provide funding 
stability for defense acquisition programs. The committee also 
notes that multiyear procurement contracts should not be 
entered into frivolously, as such contracts commit taxpayers to 
significant liability in the event the Department changes its 
procurement plans and substantially alters the terms of such a 
contract or terminates the contract. Subsection 2306b(a) of 
title 10, United States Code, provides a description of the 
numerous factors to be considered prior to entering into a 
multiyear procurement contract. In particular, paragraph (1) of 
subsection 2306b(a) requires the potential for ``substantial 
savings'' for a multiyear contract in comparison to single-year 
procurements. During consideration of the National Defense 
Authorization Act for Fiscal Year 2008 (Public Law 110-181), 
Congress debated and ultimately declined to set a statutory 
definition for the term ``substantial savings''. Instead, the 
conferees stated in the conference report (H. Rept. 110-477) 
accompanying the National Defense Authorization Act for Fiscal 
Year 2008 that the term ``means savings that exceed 10 percent 
of the total costs of carrying out the program through annual 
contracts, except that multiyear contracts for major systems 
providing savings estimated at less than 10 percent should only 
be considered if the Department presents an exceptionally 
strong case that the proposal meets the other requirements of 
section 2306b(a).'' The committee is concerned that although 
Congress explicitly declined to impose criteria for 
``substantial savings'', the Department may be rigidly applying 
a 10 percent savings standard as the threshold for 
``substantial savings''.
    Therefore, the committee urges the Secretary of Defense to 
consider the totality of the factors required to be considered 
under subsection 2306b(a) of title 10, United States Code, when 
deciding whether to request multiyear procurement authority. 
Further, the committee discourages the Secretary from applying 
a universal standard for savings to be achieved in a multiyear 
procurement contract. Finally, the committee directs the 
Secretary to conduct an assessment of ongoing defense 
procurements for property to identify those procurements that 
meet the criteria of paragraphs (2), (3), (4), and (6) of 
subsection 2306b(a) of title 10 and subparagraphs (1)(C) and 
(1)(D) of subsection 2306b(i), United States Code, to determine 
which procurements may merit further evaluation to assess the 
benefits of a multiyear procurement contract. The committee 
further directs the Secretary to submit a report on the 
assessment to the Senate Armed Services Committee and the House 
Armed Services Committee by April 1, 2011.

                         LEGISLATIVE PROVISIONS


             Section 401--Expansion of the Industrial Base

    This section would require the Secretary of Defense to 
establish a program to expand the defense industrial base by 
identifying and communicating with non-traditional suppliers 
using tools and resources available within the federal 
government and in the private sector. The program would include 
a continuous effort to review the defense industrial base and 
identify markets of importance to Department of Defense. The 
committee notes that for the purposes of such a review, the 
defense industrial base should include systems integrators, 
suppliers of services and information technology, consistent 
with the revision of the definition of the national technology 
and industrial base required by section 406 of this Act.

                Section 402--Commercial Pricing Analysis

    This section would revise and extend an existing report on 
commercial price trends established in section 803 of the Strom 
Thurmond National Defense Authorization Act for Fiscal Year 
1999 (Public Law 105-261) to identify and evaluate cases where 
the Department of Defense is facing unjustified price 
escalation for a category of commercial items. This section 
would require the report to be submitted annually on April 1 to 
the Senate Armed Services Committee and the House Armed 
Services Committee. The reporting requirement would expire on 
April 1, 2013.

 Section 403--Contractor and Grantee Disclosure of Delinquent Federal 
                               Tax Debts

    This section would require potential federal contractors 
and grantees to submit certifications as to whether they have a 
seriously delinquent tax debt during the bid proposal and grant 
application processes and to authorize the Secretary of the 
Treasury to verify these certifications. This section would 
require the Secretary of the Treasury to develop and 
disseminate a standard authorization form for this purpose. The 
requirement for disclosure would apply to individuals, 
partnerships, and corporations. This section defines a 
seriously delinquent tax debt as a debt exceeding $3,000; which 
has been assessed by the Secretary of the Treasury and not 
paid; and for which a notice of lien has been filed in public 
records. A seriously delinquent tax debt would not include a 
tax liability being paid in a timely manner in accordance with 
an agreement with the Department of Treasury; a liability still 
involved in collection due process proceedings; or an assessed 
liability for which no further payment is required at the end 
of a collection due process proceeding. This section would 
require the Administrator of the Office of Federal Procurement 
Policy, in consultation with the Secretary of the Treasury, to 
promulgate regulations that would also cover corporations and 
partnerships controlled by individuals, partnerships, or 
corporations with a seriously delinquent tax debt and would 
apply the requirements of this section to first-tier 
subcontractors that are a significant part of a bid proposal 
team. The Federal Acquisition Regulation (FAR) would be revised 
90 days after such regulations are finalized.
    The committee is aware that FAR part 52.209-5 currently 
requires an offeror to certify whether it has been notified of 
any delinquent federal taxes within a three-year period 
preceding an offer. The committee did not include a time limit 
on a look-back period for the disclosure required by this 
section. The committee intends for an offeror or grant 
applicant to disclose any tax liability that meets the 
definition of a seriously delinquent tax debt. However, the 
committee notes that a previous tax liability that has been 
paid would not constitute a seriously delinquent tax debt. 
Further, the committee intends for the regulations promulgated 
in accordance with subsection (e)(1) to apply to individuals, 
partnerships, or corporations that have a controlling ownership 
stake in an offeror or grant applicant. The committee does not 
intend for such regulations to compel the disclosure of a 
personal tax liability for an individual who is an officer or 
an employee of a partnership or corporation, but who has no 
controlling equity. Lastly, the committee intends that the FAR 
be revised to remove any requirement that principals without 
control of a partnership or corporation disclose personal tax 
information.

   Section 404--Independence of Contract Audits and Business System 
                                Reviews

    This section would add a new section 204 to title 10, 
United States Code, to provide for an independent General 
Counsel within the Defense Contract Audit Agency (DCAA) to 
serve as DCAA's chief legal officer effective on the date of 
enactment of this Act. This section would also add new section 
2222a to title 10, United States Code, to require the 
Department of Defense, effective 180 days after the date of 
enactment of this Act, to carry out reviews of contractor 
business systems: in accordance with generally accepted 
government auditing standards; using an independent audit team; 
using risk-based audit planning; and by performing testing on a 
representative sample sufficient to fully validate the 
integrity of the systems concerned. This section would further 
require the Secretary of Defense to issue guidance within 180 
days of the date of enactment of this Act relating to contract 
audits that are not business system reviews. Such guidance 
should require contract audits to comply with generally 
accepted government auditing standards; establish guidelines 
for discussions of audit scope with the contractor; provide for 
withholding of contract payments when necessary to compel the 
submission of documentation; and require that the results of 
contract audits be shared with other federal agencies upon 
request without reimbursement.

 Section 405--Blue Ribbon Panel on Eliminating Barriers to Contracting 
                     with the Department of Defense

    This section would require the Secretary of Defense to 
establish a panel consisting of owners of large and small 
businesses that are not traditional defense suppliers to 
formulate recommendations on eliminating barriers to 
contracting with the Department of Defense and its supply 
centers. The panel would consist of a total of nine members, 
three members appointed by the secretaries of each of the 
military departments. The appointments would be made within 180 
days of the date of enactment of this Act. This section would 
require the panel to submit a report to Congress within one 
year of the date of enactment of this Act.

  Section 406--Inclusion of the Providers of Services and Information 
       Technology in the National Technology and Industrial Base

    This section would insert references to services and 
information technology in several places in chapter 148 of 
title 10, United States Code, which relates to the National 
Technology and Industrial Base, including: the definition of 
the industrial base; the national security objectives for the 
industrial base; assessments of the industrial base; and 
industrial base policy. This section would also add references 
to integration as an important industrial capability.

                  Communications From Other Committees

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                    Washington, DC, April 22, 2010.
Hon. Ike Skelton,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: I am writing about H.R. 5013, the 
``Implementing Management for Performance and Related Reforms 
to Obtain Value in Every Acquisition Act of 2010'', which the 
Committee on Armed Services ordered reported on April 21, 2010.
    I appreciate your efforts to consult with the Committee on 
Oversight and Government Reform regarding those provisions of 
H.R. 5013 that fall within the Oversight Committee's 
jurisdiction. These provisions involve the federal workforce 
and federal acquisition policy.
    In the interest of expediting consideration of H.R. 5013, 
the Oversight Committee will not object to its consideration in 
the House. I would, however, request your support for the 
appointment of conferees from the Oversight Committee should 
H.R. 5013 or a similar Senate bill be considered in conference 
with the Senate. Moreover, this letter should not be construed 
to prejudice the Oversight Committee's jurisdictional interest 
or prerogatives in the subject matter of H.R. 5013, or any 
other similar legislation.
    I request that you include our exchange of letters on this 
matter in the Congressional Record during consideration of this 
legislation on the House floor.
    With warm regards, I am
            Sincerely,
                                            Edolphus Towns,
                                                          Chairman.
                                ------                                

                          House of Representatives,
                               Committee on Armed Services,
                                    Washington, DC, April 23, 2010.
Hon. Edolphus Towns,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: Thank you for your letter regarding your 
Committee's jurisdictional interest in H.R. 5013, the 
Implementing Management for Performance and Related Reforms to 
Obtain Value in Every Acquisition Act of 2010.
    I appreciate your willingness to support expediting floor 
consideration of this important legislation. I acknowledge that 
H.R. 5013 contains provisions under the jurisdiction of the 
Committee on Oversight and Government Reform. I understand and 
agree that your willingness to waive further consideration of 
the bill is without prejudice to your Committee's 
jurisdictional interests in this or similar legislation in the 
future. In the event a House-Senate conference on this or 
similar legislation is convened, I would support your request 
for an appropriate number of conferees.
    I will include a copy of your letter and this response in 
the Congressional Record in the debate on the bill. Thank you 
for your cooperation as we work towards enactment of this 
legislation.
            Very truly yours,
                                               Ike Skelton,
                                                          Chairman.
                                ------                                

                          House of Representatives,
                               Committee on Ways and Means,
                                    Washington, DC, April 21, 2010.
Hon. Ike Skelton,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: Thank you for working with the Committee 
on Ways and Means (``Committee'') on H.R. 5013, the 
``Implementing Management for Performance and Related Reforms 
to Obtain Value in Every Acquisition Act of 2010.'' As you 
know, section 403 of H.R. 5013 is of jurisdictional interest to 
the Committee as it would require tax return information to be 
supplied by the Internal Revenue Service (``IRS'').
    Generally, tax return information is confidential. However, 
Section 6103(c) of the Internal Revenue Code permits the 
Secretary of the Treasury to disclose the tax return 
information of a taxpayer to such person as the taxpayer 
designates. The Committee continues to monitor the expanding 
IRS workload and remains concerned about programs that greatly 
increase the agency's workload outside of its core mission. In 
calendar year 2009, the IRS made nearly 11,000 tax disclosures 
under section 6103(c). It is unknown how many additional 
disclosures will be made under H.R. 5013. As such, the 
Committee worked with the Armed Services Committee to develop a 
provision that is administrable by the IRS. The Committee 
remains committed to ensuring that any additional 
responsibilities imposed on the IRS do not strain agency 
resources and welcomes the opportunity to re-evaluate this 
provision in the future.
    As we have discussed, this exchange of letters will be 
placed in the Committee Report on H.R. 5013 and inserted in the 
Congressional Record as part of the consideration of this 
legislation in the House. Thank you for the cooperative spirit 
in which you have worked with the Committee regarding this 
matter.
            Sincerely,
                                           Sander M. Levin,
                                                          Chairman.
                                ------                                

                          House of Representatives,
                               Committee on Armed Services,
                                    Washington, DC, April 23, 2010.
Hon. Sander Levin,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: Thank you for your letter regarding H.R. 
5013, the Implementing Management for Performance and Related 
Reforms to Obtain Value in Every Acquisition Act of 2010. I 
agree that the Committee on Ways and Means has valid 
jurisdictional claims to certain provisions in this important 
legislation, and I am most appreciative of your decision not to 
schedule a mark-up of this bill in the interest of expediting 
consideration. I agree that by agreeing to waive consideration 
of certain provisions of the bill, the Committee on Ways and 
Means is not waiving its jurisdiction over these matters.
    This exchange of letters will be included in the committee 
report of the bill and inserted in the Congressional Record as 
part of consideration of the bill in the House. Thank you for 
your cooperation as we work towards enactment of this 
legislation.
            Very truly yours,
                                               Ike Skelton,
                                                          Chairman.

                           Committee Position

    On April 21, 2010, the Committee on Armed Services, a 
quorum being present, ordered reported H.R. 5013, as amended, 
to the House with a favorable recommendation by a record vote 
of 56-0.

                  Congressional Budget Office Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the cost estimate prepared by 
the Congressional Budget Office and submitted pursuant to 
section 402 of the Congressional Budget Act of 1974 is as 
follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington DC, April 23, 2010.
Hon. Ike Skelton,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5013, the 
Implementing Management for Performance and Related Reforms to 
Obtain Value in Every Acquisition Act of 2010.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is David Newman.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

H.R. 5013--Implementing Management for Performance and Related Reforms 
        to Obtain Value in Every Acquisition Act of 2010

    Summary: H.R. 5013 would require the Department of Defense 
(DoD) to use performance management techniques to improve the 
defense acquisition system and the acquisition workforce. The 
bill also would require new standards and techniques for 
training and rewarding that workforce.
    CBO estimates that implementing H.R. 5013 would cost about 
$250 million over the 2011-2015 period, assuming the 
appropriation of the necessary amounts. That estimate reflects 
the direct costs of implementing H.R. 5013. Although the bill 
might yield improvements in the efficiency and effectiveness of 
DoD's acquisition system, CBO has no basis for determining 
whether such improvements would occur or to what extent they 
might result in savings to the government to offset some or all 
of the above implementation cost.
    Pay-as-you-go procedures do not apply to this legislation 
because it would not affect direct spending or revenues.
    H.R. 5013 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. 5013 is shown in the following table. 
The costs of this legislation fall within budget function 050 
(national defense).

----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                    ------------------------------------------------------------
                                                       2011      2012      2013      2014      2015    2011-2015
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Performance Management and Assessments:
    Estimated Authorization Level..................         4         8         8         8         9         37
    Estimated Outlays..............................         3         8         8         8         9         36
Increased Bonuses:
    Estimated Authorization Level..................         0         7         7         7         7         28
    Estimated Outlays..............................         0         7         7         7         7         28
Training and Recertification:
    Estimated Authorization Level..................        12        23        45        45        45        170
    Estimated Outlays..............................        10        21        42        45        45        163
Scholarships for Cost Estimators:
    Estimated Authorization Level..................         0         2         3         4         5         14
    Estimated Outlays..............................         0         2         3         4         5         14
General Counsel:
    Estimated Authorization Level..................         1         1         1         1         1          5
    Estimated Outlays..............................         1         1         1         1         1          5
    Total Changes:
        Estimated Authorization Level..............        17        41        64        65        67        254
        Estimated Outlays..........................        14        39        61        65        67        246
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that H.R. 
5013 will be enacted near the start of fiscal year 2011 and 
that the estimated authorization amounts will be appropriated 
starting in that year.

            TITLE I--PERFORMANCE MANAGEMENT AND ASSESSMENTS

    Section 101 would require DoD to establish performance 
metrics and specific goals for the defense acquisition system 
and would require the Office of Performance Assessment and Root 
Cause Analysis (PARCA) to assess whether those metrics and 
goals were being achieved. PARCA was established in May 2009, 
and under current law, will grow to a staff of about 30 people 
that will assess the performance of the acquisition system in 
developing and procuring major weapon systems. Under section 
101, PARCA's assessment responsibilities would expand to other 
areas such as the acquisition of information technology systems 
and of contracts for services. On the basis of information from 
DoD, CBO estimates that accomplishing those additional 
oversight responsibilities could require another 25 personnel. 
CBO expects those additional personnel would be hired over the 
2011-2012 period at a cost of $3 million in 2011 and $36 
million over the 2011-2015 period.

              TITLE II--THE DEFENSE ACQUISITION WORKFORCE

    Title II includes several provisions that would require DoD 
to improve the skills and performance of the acquisition 
workforce.
    Increased Bonuses. Under section 203, DoD would be required 
to develop an enhanced system of incentives to encourage 
excellence in and improve the performance of the acquisition 
workforce. Such incentives include providing attractive career 
paths for acquisition personnel, tying promotions to 
accomplishments, and connecting bonuses and awards to personnel 
performance and agency outcomes. It would direct DoD to extend 
such incentives to military personnel to the extent possible. 
CBO expects that such a system could result in the payment of 
additional bonuses. In 2008, the last year for which such data 
is available, DoD paid an average of about $1,000 in bonuses 
for each DoD civilian. Because it would take time to develop 
performance standards and the criteria to connect those 
standards to enhanced bonus payments, such payments probably 
would not begin before 2012. Assuming bonuses then increased 
modestly (for example, by about 5 percent), the 136,000-person 
acquisition workforce could receive additional payments of $7 
million in 2012 and $28 million over the 2012-2015 period, 
assuming appropriation of the necessary amounts.
    Training and Recertification. Section 205 would require 
that DoD provide more training for the defense acquisition 
workforce and would institute a requirement for periodic 
recertification of acquisition personnel.
    The bill would direct DoD to provide additional training on 
the acquisition of services and information technology systems, 
and on the use of rapid acquisition authorities. To meet that 
directive, the Defense Acquisition University would need to 
develop and deliver three new curricula for those subjects 
consisting of three online courses each (one for entry-level 
personnel, one for mid-career personnel, and one for senior 
management) at a total cost of about $5 million per year, CBO 
estimates.
    Under section 205, acquisition personnel would be required 
to recertify their qualifications every five years and that 
recertification process would require attendance at one 
resident course and one online course, CBO estimates. Some 
personnel would advance to the next level of acquisition 
workforce certification, rather than recertify at their current 
level. Others would not recertify because of noncompliance or 
attrition from the workforce. CBO estimates that about 25 
percent of the acquisition workforce would pursue 
recertification every five years at an annual cost of about $40 
million. CBO expects that the recertification process would not 
begin in full until 2013 to allow time for the development of 
course materials.
    In total, additional training for and recertification of 
acquisition workforce personnel would cost $10 million in 2011 
and $163 million over the 2011-2015 period, assuming 
appropriation of the necessary amounts.
    Scholarships for Cost Estimators. Title 2 also would direct 
DoD to establish a program to provide scholarships and 
internships in cost estimating for acquisition workforce 
personnel. CBO estimates that DoD would provide scholarships of 
around $15,000 annually for masters degree programs to 100 
students in 2012, and to 250 students a year by 2015. Such a 
program would cost $2 million in 2012 and $14 million over the 
2012-2015 period, CBO estimates.

       TITLE IV--EXPANSION AND ASSESSMENT OF THE INDUSTRIAL BASE

    Title IV includes provisions to expand the base of 
companies and industries that supply goods and services to DoD, 
and to improve the way that those industries are monitored.
    General Counsel's Office. Section 404 would establish a 
dedicated office of the general counsel for the Defense 
Contract Audit Agency at a cost of $1 million per year and a 
total of $5 million over the 2011-2015 period, CBO estimates.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 5013 
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: David B. Newman. 
Impact on State, Local, and Tribal Governments: Burke Doherty. 
Impact on the Private Sector: Elizabeth Bass.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                        Committee Cost Estimate

    Pursuant to clause 3(d) of rule XIII of the Rules of the 
House of Representatives, the committee generally concurs with 
the estimate as contained in the report of the Congressional 
Budget Office.

                     Compliance With House Rule XXI

    H.R. 5013, the Implementing Management for Performance and 
Related Reforms to Obtain Value in Every Acquisition Act of 
2010, does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits as defined in clause 9 of 
rule XXI.

                           Oversight Findings

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives, the committee reports that the 
findings and recommendations of the committee, based on 
oversight activities pursuant to clause 2(b)(1) of rule X, are 
incorporated in the descriptive portions of this report.
    With respect to clause 3(c)(2) of rule XIII of the Rules of 
the House of Representatives, this legislation does not include 
any new spending or credit authority, nor does it provide for 
any increase or decrease in tax revenues or expenditures.
    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the bill does not authorize 
specific program funding.

                General Performance Goals and Objectives

    In compliance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the goal of H.R. 5013 is to 
overhaul the defense acquisition system to clean up waste, 
fraud, and abuse through the following four objectives: (1) 
introducing real accountability standards in the acquisition 
process; (2) improving the management of the acquisition 
workforce; (3) reforming the Department of Defense's financial 
management; and (4) expanding and strengthening the industrial 
base.
    To introduce real accountability standards in the 
acquisition process, this bill would require the Department of 
Defense to apply performance management to the defense 
acquisition system, create metrics with specific goals and 
standards, better manage requirements for weapons, and create a 
requirements process for the acquisition of services, and 
establish a joint evaluation task force to bring a greater 
operational perspective to acquisition.
    To improve the management of the acquisition workforce, 
this bill would require the Department of Defense to develop 
and manage a highly skilled, performance-based workforce 
focused on creating incentives for and rewarding excellence. It 
would require the Department to develop attractive career paths 
for acquisition personnel, increase training opportunities and 
recertification requirements, and strengthen the information 
technology portion of the workforce.
    To reform the Department of Defense's financial management 
system, the bill would require the Department to develop 
meaningful consequences for success and failure in financial 
management in order to achieve a clean audit by September 2017, 
and encourage program managers to place a higher priority on 
achieving best value rather than meeting arbitrary benchmarks 
for spending.
    To expand and strengthen the industrial base, this bill 
would require the Secretary of Defense to establish a program 
that would identify and communicate with non-traditional 
suppliers and continually review the industrial base and 
identify markets of importance. It would create a blue ribbon 
panel of businesses to provide recommendations for eliminating 
barriers to working with the Department. Additionally, it would 
require federal contractors to disclose any seriously 
delinquent tax debt and require the Department of Defense to 
review contractor business systems using an independent audit 
team.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the committee finds the authority for 
this legislation in Article I, Section 8 of the United States 
Constitution.

                  Federal Advisory Committee Statement

    The committee finds that this legislation establishes or 
authorizes the establishment of an advisory committee within 
the definition of 5 U.S.C. App., section 5(b).

                Applicability to the Legislative Branch

    The committee finds that this legislation does not relate 
to the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

                     Statement of Federal Mandates

    Pursuant to section 423 of Public Law 104-4, this 
legislation contains no federal mandates with respect to state, 
local, and tribal governments, nor with respect to the private 
sector. Similarly, the bill provides no unfunded federal 
intergovernmental mandates.

                              Record Vote

    In accordance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, a record vote was taken with 
respect to the committee's consideration of H.R. 5013. The 
record of this vote is included in this report.
    The committee ordered reported H.R. 5013, as amended, to 
the House with a favorable recommendation by a record vote of 
56-0, a quorum being present.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

         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):

                      TITLE 10, UNITED STATES CODE

                    Subtitle A--General Military Law

            PART I. ORGANIZATION AND GENERAL MILITARY POWERS

Chapter                                                             Sec.
      Definitions....................................................101
     * * * * * * *

                PART IV. SERVICE, SUPPLY, AND PROCUREMENT

      Planning and Coordination.....................................2201
     * * * * * * *
2545Performance Management of the Defense Acquisition System..........

           *       *       *       *       *       *       *


PART I--ORGANIZATION AND GENERAL MILITARY POWERS

           *       *       *       *       *       *       *


                         CHAPTER 1--DEFINITIONS

Sec. 101. Definitions

  (a) In General.--The following definitions apply in this 
title:
          (1)* * *

           *       *       *       *       *       *       *

          (18) The term ``acquisition workforce'' means the 
        persons serving in acquisition positions within the 
        Department of Defense, as designated pursuant to 
        section 1721(a) of this title.

           *       *       *       *       *       *       *


CHAPTER 7--BOARDS, COUNCILS, AND COMMITTEES

           *       *       *       *       *       *       *


Sec. 181. Joint Requirements Oversight Council

  (a)* * *

           *       *       *       *       *       *       *

  (c) Composition.--(1) The Joint Requirements Oversight 
Council is composed of--
          (A)* * *

           *       *       *       *       *       *       *

          (D) an Air Force officer in the grade of general; 
        [and]
          (E) a Marine Corps officer in the grade of 
        general[.]; and
          (F) when directed by the chairman, the commander of 
        any combatant command (or, as directed by that 
        commander, the deputy commander of that command) when 
        matters related to the area of responsibility or 
        functions of that command will be under consideration 
        by the Council.

           *       *       *       *       *       *       *

  (d) Advisors.--(1) [The Under Secretary of Defense for 
Acquisition, Technology, and Logistics, the Under Secretary of 
Defense (Comptroller), and the Director of Cost Assessment and 
Program Evaluation shall serve as advisors to the Council on 
matters within their authority and expertise.] The following 
officials of the Department of Defense shall serve as advisors 
to the Council on matters within their authority and expertise:
          (A) The Under Secretary of Defense for Acquisition, 
        Technology, and Logistics.
          (B) The Under Secretary of Defense (Comptroller).
          (C) The Under Secretary of Defense for Policy.
          (D) The Director of Cost Assessment and Program 
        Evaluation.

           *       *       *       *       *       *       *


CHAPTER 8--DEFENSE AGENCIES AND DEPARTMENT OF DEFENSE FIELD

           *       *       *       *       *       *       *


          SUBCHAPTER II--MISCELLANEOUS DEFENSE AGENCY MATTERS

Sec
201. Certain intelligence officials: consultation and concurrence 
          regarding appointments; evaluation of performance.
     * * * * * * *
204. Defense Contract Audit Agency general counsel.

           *       *       *       *       *       *       *


Sec. 204. Defense Contract Audit Agency general counsel

  (a) General Counsel.--The Director of the Defense Contract 
Audit Agency shall appoint a General Counsel of the Defense 
Contract Audit Agency.
  (b) Duties.--(1) The General Counsel shall perform such 
functions as the Director may prescribe and shall serve at the 
discretion of the Director.
  (2) Notwithstanding section 140(b) of this title, the General 
Counsel shall be the chief legal officer of the Defense 
Contract Audit Agency.
  (3) The Defense Contract Audit Agency shall be the exclusive 
legal client of the General Counsel.
  (c) Office of the General Counsel.--There is established an 
Office of the General Counsel within the Defense Contract Audit 
Agency. The Director may appoint to the Office to serve as 
staff of the General Counsel such legal counsel as the Director 
determines is appropriate.

           *       *       *       *       *       *       *


PART II--PERSONNEL

           *       *       *       *       *       *       *


               CHAPTER 87--DEFENSE ACQUISITION WORKFORCE

         SUBCHAPTER I--GENERAL AUTHORITIES AND RESPONSIBILITIES

Sec.
1701. Management policies.
1701a. Management for acquisition workforce excellence.

           *       *       *       *       *       *       *


Sec. 1701a. Management for acquisition workforce excellence

  (a) Purpose.--The purpose of this chapter is to require the 
Department of Defense to develop and manage a highly skilled 
professional acquisition workforce--
          (1) in which excellence and contribution to mission 
        is rewarded;
          (2) which has the technical expertise and business 
        skills to ensure the Department receives the best value 
        for the expenditure of public resources;
          (3) which serves as a model for performance 
        management of employees of the Department; and
          (4) which is managed in a manner that complements and 
        reinforces the performance management of the defense 
        acquisition system pursuant to chapter 149 of this 
        title.
  (b) Performance Management.--In order to achieve the purpose 
set forth in subsection (a), the Secretary of Defense shall--
          (1) use the full authorities provided in subsections 
        (a) through (d) of section 9902 of title 5, including 
        flexibilities related to performance management and 
        hiring and to training of managers;
          (2) require managers to develop performance plans for 
        individual members of the acquisition workforce in 
        order to give members an understanding of how their 
        performance contributes to their organization's mission 
        and the success of the defense acquisition system (as 
        defined in section 2545 of this title);
          (3) to the extent appropriate, use the lessons 
        learned from the acquisition demonstration project 
        carried out under section 1762 of this title related to 
        contribution-based compensation and appraisal, and how 
        those lessons may be applied within the General 
        Schedule system;
          (4) develop attractive career paths;
          (5) encourage continuing education and training;
          (6) develop appropriate procedures for warnings 
        during performance evaluations and due process for 
        members of the acquisition workforce who consistently 
        fail to meet performance standards;
          (7) take full advantage of the Defense Civilian 
        Leadership Program established under section 1112 of 
        the National Defense Authorization Act for Fiscal Year 
        2010, (Public Law 111-84; 123 Stat. 2496; 10 U.S.C. 
        1580 note prec.);
          (8) use the authorities for highly qualified experts 
        under section 9903 of title 5, to hire experts who are 
        skilled acquisition professionals to--
                  (A) serve in leadership positions within the 
                acquisition workforce to strengthen management 
                and oversight;
                  (B) provide mentors to advise individuals 
                within the acquisition workforce on their 
                career paths and opportunities to advance and 
                excel within the acquisition workforce; and
                  (C) assist with the design of education and 
                training courses and the training of 
                individuals in the acquisition workforce; and
          (9) use the authorities for expedited security 
        clearance processing pursuant to section 1564 of this 
        title.
  (c) Negotiations.--Any action taken by the Secretary under 
this section, or to implement this section, shall be subject to 
the requirements of chapter 71 of title 5.
  (d) Regulations.--Any rules or regulations prescribed 
pursuant to this section shall be deemed an agency rule or 
regulation under section 7117(a)(2) of title 5, and shall not 
be deemed a Government-wide rule or regulation under section 
7117(a)(1) of such title.

           *       *       *       *       *       *       *


              SUBCHAPTER II--DEFENSE ACQUISITION POSITIONS

Sec
1721. Designation of acquisition positions.
     * * * * * * *
1722b. Special requirements for civilian employees in the acquisition 
          field.
     * * * * * * *
1725. Information technology acquisition positions.

           *       *       *       *       *       *       *


Sec. 1722b. Special requirements for civilian employees in the 
                    acquisition field

  (a) Requirement for Policy and Guidance Regarding Civilian 
Personnel in Acquisition.--The Secretary of Defense, acting 
through the Under Secretary of Defense for Acquisition, 
Technology, and Logistics, shall establish policies and issue 
guidance to ensure the proper development, assignment, and 
employment of civilian members of the acquisition workforce to 
achieve the objectives specified in subsection (b).
  (b) Objectives.--Policies established and guidance issued 
pursuant to subsection (a) shall ensure, at a minimum, the 
following:
          (1) A career path in the acquisition field that 
        attracts the highest quality civilian personnel, from 
        either within or outside the Federal Government.
          (2) A deliberate workforce development strategy that 
        increases attainment of key experiences that contribute 
        to a highly qualified acquisition workforce.
          (3) Sufficient opportunities for promotion and 
        advancement in the acquisition field.
          (4) A sufficient number of qualified, trained members 
        eligible for and active in the acquisition field to 
        ensure adequate capacity, capability, and effective 
        succession for acquisition functions, including 
        contingency contracting, of the Department of Defense.
  (c) Inclusion of Information in Annual Report.--The Secretary 
of Defense shall include in the report to Congress required 
under section 115b(d) of this title the following information 
related to the acquisition workforce for the period covered by 
the report (which shall be shown for the Department of Defense 
as a whole and separately for the Army, Navy, Air Force, Marine 
Corps, Defense Agencies, and Office of the Secretary of 
Defense):
          (1) The total number of persons serving in the 
        Acquisition Corps, set forth separately for members of 
        the armed forces and civilian employees, by grade level 
        and by functional specialty.
          (2) The total number of critical acquisition 
        positions held, set forth separately for members of the 
        armed forces and civilian employees, by grade level and 
        by other appropriate categories (including by program 
        manager, deputy program manager, and division head 
        positions). For each such category, the report shall 
        specify the number of civilians holding such positions 
        compared to the total number of positions filled.
          (3) The number of employees to whom the requirements 
        of subsections (b)(2)(A) and (b)(2)(B) of section 1732 
        of this title did not apply because of the exceptions 
        provided in paragraphs (1) and (2) of section 1732(c) 
        of this title, set forth separately by type of 
        exception.
          (4) The number of program managers and deputy program 
        managers who were reassigned after completion of a 
        major milestone occurring closest in time to the date 
        on which the person has served in the position for four 
        years (as required under section 1734(b) of this 
        title), and the proportion of those reassignments to 
        the total number of reassignments of program managers 
        and deputy program managers, set forth separately for 
        program managers and deputy program managers. The 
        Secretary also shall include the average length of 
        assignment served by program managers and deputy 
        program managers so reassigned.
          (5) The number of persons, excluding those reported 
        under paragraph (4), in critical acquisition positions 
        who were reassigned after a period of three years or 
        longer (as required under section 1734(a) of this 
        title), and the proportion of those reassignments to 
        the total number of reassignments of persons, excluding 
        those reported under paragraph (4), in critical 
        acquisition positions.
          (6) The number of times a waiver authority was 
        exercised under section 1724(d), 1732(d), 1734(d), or 
        1736(c) of this title or any other provision of this 
        chapter (or other provision of law) which permits the 
        waiver of any requirement relating to the acquisition 
        workforce, and in the case of each such authority, the 
        reasons for exercising the authority. The Secretary may 
        present the information provided under this paragraph 
        by category or grouping of types of waivers and 
        reasons.

Sec. 1723. General education, training, and experience requirements

  [(a) Qualification Requirements.--The Secretary of Defense 
shall establish education, training, and experience 
requirements for each acquisition position, based on the level 
of complexity of duties carried out in the position. In 
establishing such requirements for positions other than 
critical acquisition positions designated pursuant to section 
1733 of this title, the Secretary may state the requirements by 
categories of positions.]
  (a) Qualification Requirements.--(1) The Secretary of Defense 
shall establish education, training and experience requirements 
for each acquisition position, based on the level of complexity 
of duties carried out in the position. In establishing such 
requirements, the Secretary shall ensure the availability and 
sufficiency of training in all areas of acquisition, including 
additional training courses with an emphasis on services 
contracting, long-term sustainment strategies, information 
technology, and rapid acquisition.
  (2) In establishing such requirements for positions other 
than critical acquisition positions designated pursuant to 
section 1733 of this title, the Secretary may state the 
requirements by categories of positions.
  (3) The Secretary of Defense, acting through the Under 
Secretary of Defense for Acquisition, Technology, and 
Logistics, shall establish requirements for continuing 
education and periodic renewal of an individual's 
certification. Any requirement for a certification renewal 
shall not require a renewal more often than once every five 
years.
  (b) Career Path Requirements.--For each career path, the 
Secretary of Defense, acting through the Under Secretary of 
Defense for Acquisition, Technology, and Logistics shall 
establish requirements for the completion of course work and 
related on-the-job training and demonstration of qualifications 
in the critical acquisition-related duties and tasks of the 
career path. The Secretary of Defense, acting through the Under 
Secretary, shall also--
          (1) encourage individuals in the acquisition 
        workforce to maintain the currency of their acquisition 
        knowledge and generally enhance their knowledge of 
        related acquisition management disciplines through 
        academic programs and other self-developmental 
        activities; and
          (2) develop key work experiences, including the 
        creation of a program sponsored by the Department of 
        Defense that facilitates the periodic interaction 
        between individuals in the acquisition workforce and 
        the end user in such end user's environment to enhance 
        the knowledge base of such workforce, for individuals 
        in the acquisition workforce so that the individuals 
        may gain in-depth knowledge and experience in the 
        acquisition process and become seasoned, well-qualified 
        members of the acquisition workforce.
  [(b)] (c) Limitation on Credit for Training or Education.--
Not more than one year of a period of time spent pursuing a 
program of academic training or education in acquisition may be 
counted toward fulfilling any requirement established under 
this chapter for a certain period of experience.

           *       *       *       *       *       *       *


Sec. 1725. Information technology acquisition positions

  (a) Plan Required.--The Secretary of Defense shall develop 
and carry out a plan to strengthen the part of the acquisition 
workforce that specializes in information technology. The plan 
shall include the following:
          (1) Defined targets for billets devoted to 
        information technology acquisition.
          (2) Specific certification requirements for 
        individuals in the acquisition workforce who specialize 
        in information technology acquisition.
          (3) Defined career paths for individuals in the 
        acquisition workforce who specialize in information 
        technology acquisitions.
  (b) Definitions.--In this section:
          (1) The term ``information technology'' has the 
        meaning provided such term in section 11101 of title 40 
        and includes information technology incorporated into a 
        major weapon system.
          (2) The term ``major weapon system'' has the meaning 
        provided such term in section 2379(f) of this title.

           *       *       *       *       *       *       *


                 SUBCHAPTER IV--EDUCATION AND TRAINING

Sec
1741. Policies and programs: establishment and implementation.
     * * * * * * *
[1746. Defense acquisition university structure.]
1746. Defense Acquisition University.
     * * * * * * *
1748. Guidance and standards for acquisition workforce training.

           *       *       *       *       *       *       *


[Sec. 1746. Defense acquisition university structure]

Sec. 1746. Defense Acquisition University

  (a)* * *

           *       *       *       *       *       *       *

  (c) Curriculum Development.--The President of the Defense 
Acquisition University shall work with the relevant 
professional schools and degree-granting institutions of the 
Department of Defense and military departments to ensure that 
best practices are used in curriculum development to support 
acquisition workforce positions.

           *       *       *       *       *       *       *


Sec. 1748. Guidance and standards for acquisition workforce training

  (a) Fulfillment Standards.--The Secretary of Defense, acting 
through the Under Secretary of Defense for Acquisition, 
Technology, and Logistics, shall develop fulfillment standards, 
and implement and maintain a program, for purposes of the 
training requirements of sections 1723, 1724, and 1735 of this 
title. Such fulfillment standards shall consist of criteria for 
determining whether an individual has demonstrated competence 
in the areas that would be taught in the training courses 
required under those sections. If an individual meets the 
appropriate fulfillment standard, the applicable training 
requirement is fulfilled.
  (b) Guidance and Standards Relating to Contracts for 
Training.--The Secretary of Defense shall develop appropriate 
guidance and standards to ensure that the Department of Defense 
will continue, where appropriate and cost-effective, to enter 
into contracts for the training requirements of sections 1723, 
1724, and 1735 of this title, while maintaining appropriate 
control over the content and quality of such training.

              SUBCHAPTER V--GENERAL MANAGEMENT PROVISIONS

Sec.
1761.  Management information system.
1762.  Demonstration project relating to certain acquisition personnel 
          management policies and procedures.
1763.  Incentive programs for civilian and military personnel in the 
          acquisition workforce.

           *       *       *       *       *       *       *


Sec. 1762. Demonstration project relating to certain acquisition 
                    personnel management policies and procedures

  (a) Commencement.--The Secretary of Defense is encouraged to 
carry out a demonstration project, the purpose of which is to 
determine the feasibility or desirability of one or more 
proposals for improving the personnel management policies or 
procedures that apply with respect to the acquisition workforce 
of the Department of Defense and supporting personnel assigned 
to work directly with the acquisition workforce.
  (b) Terms and Conditions.--(1) Except as otherwise provided 
in this subsection, any demonstration project described in 
subsection (a) shall be subject to section 4703 of title 5 and 
all other provisions of such title that apply with respect to 
any demonstration project under such section.
  (2) Subject to paragraph (3), in applying section 4703 of 
title 5 with respect to a demonstration project described in 
subsection (a)--
          (A) ``180 days'' in subsection (b)(4) of such section 
        shall be deemed to read ``120 days'';
          (B) ``90 days'' in subsection (b)(6) of such section 
        shall be deemed to read ``30 days''; and
          (C) subsection (d)(1) of such section shall be 
        disregarded.
  (3) Paragraph (2) shall not apply with respect to a 
demonstration project unless--
          (A) for each organization or team participating in 
        the demonstration project--
                  (i) at least one-third of the workforce 
                participating in the demonstration project 
                consists of members of the acquisition 
                workforce; and
                  (ii) at least two-thirds of the workforce 
                participating in the demonstration project 
                consists of members of the acquisition 
                workforce and supporting personnel assigned to 
                work directly with the acquisition workforce; 
                and
          (B) the demonstration project commences before 
        October 1, 2007.
  (c) Limitation on Number of Participants.--The total number 
of persons who may participate in the demonstration project 
under this section may not exceed 120,000.
  (d) Effect of Reorganizations.--The applicability of 
paragraph (2) of subsection (b) to an organization or team 
shall not terminate by reason that the organization or team, 
after having satisfied the conditions in paragraph (3) of such 
subsection when it began to participate in a demonstration 
project under this section, ceases to meet one or both of the 
conditions set forth in subparagraph (A) of such paragraph (3) 
as a result of a reorganization, restructuring, realignment, 
consolidation, or other organizational change.
  (e) Assessment.--(1) The Secretary of Defense shall designate 
an independent organization to review the acquisition workforce 
demonstration project described in subsection (a).
  (2) Such assessment shall include:
          (A) A description of the workforce included in the 
        project.
          (B) An explanation of the flexibilities used in the 
        project to appoint individuals to the acquisition 
        workforce and whether those appointments are based on 
        competitive procedures and recognize veteran's 
        preferences.
          (C) An explanation of the flexibilities used in the 
        project to develop a performance appraisal system that 
        recognizes excellence in performance and offers 
        opportunities for improvement.
          (D) The steps taken to ensure that such system is 
        fair and transparent for all employees in the project.
          (E) How the project allows the organization to better 
        meet mission needs.
          (F) An analysis of how the flexibilities in 
        subparagraphs (B) and (C) are used, and what barriers 
        have been encountered that inhibit their use.
          (G) Whether there is a process for (i) ensuring 
        ongoing performance feedback and dialogue among 
        supervisors, managers, and employees throughout the 
        performance appraisal period, and (ii) setting 
        timetables for performance appraisals.
          (H) The project's impact on career progression.
          (I) The project's appropriateness or 
        inappropriateness in light of the complexities of the 
        workforce affected.
          (J) The project's sufficiency in terms of providing 
        protections for diversity in promotion and retention of 
        personnel.
          (K) The adequacy of the training, policy guidelines, 
        and other preparations afforded in connection with 
        using the project.
          (L) Whether there is a process for ensuring employee 
        involvement in the development and improvement of the 
        project.
  (3) The first such assessment under this subsection shall be 
completed not later than September 30, 2011, and subsequent 
assessments shall be completed every two years thereafter until 
the termination of the project. The Secretary shall submit to 
the covered congressional committees a copy of the assessment 
within 30 days after receipt by the Secretary of the 
assessment.
  (f) Covered Congressional Committees.--In this section, the 
term ``covered congressional committees'' means--
          (1) the Committees on Armed Services of the Senate 
        and the House of Representatives;
          (2) the Committee on Homeland Security and 
        Governmental Affairs of the Senate; and
          (3) the Committee on Oversight and Government Reform 
        of the House of Representatives.
  (g) Termination of Authority.--The authority to conduct a 
demonstration program under this section shall terminate on 
September 30, 2017.
  (h) Conversion.--Within six months after the authority to 
conduct a demonstration project under this section is 
terminated as provided in subsection (g), employees in the 
project shall convert to the civilian personnel system created 
pursuant to section 9902 of title 5.

Sec. 1763. Incentive programs for civilian and military personnel in 
                    the acquisition workforce

  (a) Civilian Acquisition Workforce Incentives.--The Secretary 
of Defense, acting through the Under Secretary of Defense for 
Acquisition, Technology, and Logistics, shall provide for an 
enhanced system of incentives for the encouragement of 
excellence in the acquisition workforce by providing rewards 
for employees who contribute to achieving the agency's 
performance goals. The system of incentives shall include 
provisions that--
          (1) relate salary increases, bonuses, and awards to 
        performance and contribution to the agency mission 
        (including the extent to which the performance of 
        personnel in such workforce contributes to achieving 
        the goals and standards established for acquisition 
        programs pursuant to section 2545 of this title;
          (2) provide for consideration, in personnel 
        evaluations and promotion decisions, of the extent to 
        which the performance of personnel in such workforce 
        contributes to achieving such goals and standards;
          (3) use the Department of Defense Civilian Workforce 
        Incentive Fund established pursuant to section 9902(a) 
        of title 5; and
          (4) provide opportunities for career broadening 
        experiences for high performers.
  (b) Military Acquisition Workforce Incentives.--The 
Secretaries of the military departments shall fully use and 
enhance incentive programs that reward individuals, through 
recognition certificates or cash awards, for suggestions of 
process improvements that contribute to improvements in 
efficiency and economy and a better way of doing business.

           *       *       *       *       *       *       *


               PART IV--SERVICE, SUPPLY, AND PROCUREMENT

Chapter                                                             Sec.
      Planning and Coordination.....................................2201
     * * * * * * *
2545Performance Management of the Defense Acquisition System..........

           *       *       *       *       *       *       *


                 CHAPTER 131--PLANNING AND COORDINATION

Sec.
2201. Apportionment of funds: authority for exemption; excepted 
          expenses.
     * * * * * * *
2222a. Criteria for business system reviews.

           *       *       *       *       *       *       *


Sec. 2222a. Criteria for business system reviews

  (a) Criteria for Business System Reviews.--The Secretary of 
Defense shall ensure that any contractor business system review 
carried out by a military department, a Defense Agency, or a 
Department of Defense Field Activity--
          (1) complies with generally accepted government 
        auditing standards issued by the Comptroller General;
          (2) is performed by an audit team that does not 
        engage in any other official activity (audit-related or 
        otherwise) involving the contractor concerned;
          (3) is performed in a time and manner consistent with 
        a documented assessment of the risk to the Federal 
        Government; and
          (4) involves testing on a representative sample of 
        transactions sufficient to fully examine the integrity 
        of the contractor business system concerned.
  (b) Contractor Business System Review Defined.--In this 
section, the term ``contractor business system review'' means 
an audit of policies, procedures, and internal controls 
relating to accounting and management systems of a contractor.

           *       *       *       *       *       *       *


CHAPTER 137--PROCUREMENT GENERALLY

           *       *       *       *       *       *       *


Sec. 2306a. Cost or pricing data: truth in negotiations

  (a)* * *
  (b) Exceptions.--
          (1) In general.--Submission of certified cost or 
        pricing data shall not be required under subsection (a) 
        in the case of a contract, a subcontract, or 
        modification of a contract or subcontract--
                  (A)* * *
                  (B) for the acquisition of a commercial item; 
                [or]
                  (C) in an exceptional case when the head of 
                the procuring activity, without delegation, 
                determines that the requirements of this 
                section may be waived and justifies in writing 
                the reasons for such determination[.]; or
                  (D) for the acquisition of a military purpose 
                nondevelopmental item, as defined in section 
                2410r of this title, if the contracting officer 
                determines in writing that--
                          (i) the contract, subcontract or 
                        modification will be a firm, fixed 
                        price type contract; and
                          (ii) the offeror has submitted 
                        sufficient information to evaluate, 
                        through price analysis, the 
                        reasonableness of the price for the 
                        military purpose nondevelopmental item.

           *       *       *       *       *       *       *


           CHAPTER 141--MISCELLANEOUS PROCUREMENT PROVISIONS

Sec
2381. Contracts: regulations for bids.
     * * * * * * *
2410r. Military purpose nondevelopmental items.

           *       *       *       *       *       *       *


Sec. 2410r. Military purpose nondevelopmental items

  (a) Definitions.--In this section:
          (1) The term ``military purpose nondevelopmental 
        item'' means an item--
                  (A) developed exclusively at private expense;
                  (B) that meets a validated military 
                requirement and for which the United States has 
                rights in technical data as prescribed in 
                section 2320(a)(2)(B) of this title, as 
                certified in writing by the responsible program 
                manager;
                  (C) for which delivery of an initial lot of 
                production-representative items may be made 
                within nine months after contract award; and
                  (D) for which the unit cost is less than 
                $10,000,000.
          (2) The term ``item'' has the meaning provided in 
        section 2302(3) of this title.
  (b) Requirements.--The Secretary of Defense shall ensure 
that, with respect to a contract for the acquisition of a 
military purpose nondevelopmental item, the following 
requirements apply:
          (1) The contract shall be awarded using competitive 
        procedures in accordance with section 2304 of this 
        title.
          (2) Certain contract clauses, as specified in 
        regulations prescribed under subsection (c), shall be 
        included in each such contract.
          (3) The type of contract used shall be a firm, fixed 
        price type contract.
  (c) Regulations.--The Secretary of Defense shall prescribe 
regulations to carry out this section. Such regulations shall 
be included in regulations of the Department of Defense 
prescribed as part of the Federal Acquisition Regulation. At a 
minimum, the regulations shall include--
          (1) a list of contract clauses to be included in each 
        contract for the acquisition of a military purpose 
        nondevelopmental item;
          (2) definitions for the terms ``developed'' and 
        ``exclusively at private expense'' that--
                  (A) are consistent with the definitions 
                developed for such terms in accordance with 
                2320(a)(3) of this title; and
                  (B) also exclude an item developed in part or 
                in whole with--
                          (i) foreign government funding; or
                          (ii) foreign or Federal Government 
                        loan financing at nonmarket rates; and
          (3) standards for evaluating the reasonableness of 
        price for the military purpose nondevelopmental item, 
        in lieu of certified cost or pricing data.

           *       *       *       *       *       *       *


 CHAPTER 148--NATIONAL DEFENSE TECHNOLOGY AND INDUSTRIAL BASE, DEFENSE 
REINVESTMENT, AND DEFENSE CONVERSION

           *       *       *       *       *       *       *


                       SUBCHAPTER I--DEFINITIONS

Sec. 2500. Definitions

  In this chapter:
          (1) The term ``national technology and industrial 
        base'' means the persons and organizations that are 
        engaged in research, development, production, [or 
        maintenance] integration, services, or information 
        technology activities conducted within the United 
        States and Canada.

           *       *       *       *       *       *       *

          (4) The term ``technology and industrial base 
        sector'' means a group of public or private persons and 
        organizations that engage in, or are capable of 
        engaging in, similar research, development, [or 
        production] production, integration, services, or 
        information technology activities.

           *       *       *       *       *       *       *

          (9) The term ``eligible firm'' means a company or 
        other business entity that, as determined by the 
        Secretary of Commerce--
                  (A) conducts a significant level of its 
                research, development, engineering, [and 
                manufacturing] manufacturing, integration, 
                services, and information technology activities 
                in the United States; and

           *       *       *       *       *       *       *

          (15) The term ``integration'' means the process of 
        providing systems engineering and technical direction 
        for a system for the purpose of achieving capabilities 
        that satisfy contract requirements.

                  SUBCHAPTER II--POLICIES AND PLANNING

Sec. 2501. National security objectives concerning national technology 
                    and industrial base

  (a) National Security Objectives for National Technology And 
Industrial Base.--It is the policy of Congress that the 
national technology and industrial base be capable of meeting 
the following national security objectives:
          (1) [Supplying and equipping] Supplying, equipping, 
        and supporting the force structure of the armed forces 
        that is necessary to achieve--
                  (A)* * *

           *       *       *       *       *       *       *

          (2) Sustaining production, maintenance, repair, [and 
        logistics for] logistics, and other activities in 
        support of military operations of various durations and 
        intensity.

           *       *       *       *       *       *       *

          (4) Reconstituting within a reasonable period the 
        capability to develop [and produce], produce, and 
        support supplies and equipment, including 
        technologically advanced systems, in sufficient 
        quantities to prepare fully for a war, national 
        emergency, or mobilization of the armed forces before 
        the commencement of that war, national emergency, or 
        mobilization.

           *       *       *       *       *       *       *

          (6) Providing for the generation of services 
        capabilities that are not core functions of the armed 
        forces and that are critical to military operations 
        within the national technology and industrial base.
          (7) Providing for the development, production, and 
        integration of information technology within the 
        national technology and industrial base.
          [(6)] (8) Maintaining critical design skills to 
        ensure that the armed forces are provided with systems 
        capable of ensuring technological superiority over 
        potential adversaries.

           *       *       *       *       *       *       *


Sec. 2505. National technology and industrial base: periodic defense 
                    capability assessments

  (a)* * *
  (b) Assessment Process.--The Secretary of Defense shall 
ensure that technology and industrial capability assessments--
          (1)* * *

           *       *       *       *       *       *       *

          (4) consider the effects of the termination of major 
        defense acquisition programs (as the term is defined in 
        section 2430 of this title) or major automated 
        information systems (as defined in section 2445a of 
        this title) in the previous fiscal year on the sectors 
        and capabilities in the assessment.

           *       *       *       *       *       *       *


Sec. 2506. Department of Defense technology and industrial base policy 
                    guidance

  (a) Departmental Guidance.--The Secretary of Defense shall 
prescribe departmental guidance for the attainment of each of 
the national security objectives set forth in section 2501(a) 
of this title. Such guidance shall provide for technological 
and industrial capability considerations to be integrated into 
the [budget allocation, weapons] strategy, management, budget 
allocation, acquisition, and logistics support decision 
processes.

           *       *       *       *       *       *       *


 CHAPTER 149--PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM

Sec.
2545. Performance assessment of the defense acquisition system.
2546. Audits of performance assessment.
2547. Use of performance assessments for managing performance.
2548. Acquisition-related functions of the Chiefs of Staff of the armed 
          forces.

Sec. 2545. Performance assessment of the defense acquisition system

  (a) Performance Assessments Required.--(1) The Secretary of 
Defense shall ensure that all elements of the defense 
acquisition system are subject to regular performance 
assessments--
          (A) to determine the extent to which such elements 
        deliver appropriate value to the Department of Defense; 
        and
          (B) to enable senior officials of the Department of 
        Defense to manage the elements of the defense 
        acquisition system to maximize their value to the 
        Department.
  (2) The performance of each element of the defense 
acquisition system shall be assessed as needed, but not less 
often than annually.
  (3) The Secretary shall ensure that the performance 
assessments required by this subsection are appropriately 
tailored to reflect the diverse nature of defense acquisition 
so that the performance assessment of each element of the 
defense acquisition system accurately reflects the work 
performed by such element.
  (b) Systemwide Categories.--(1) The Secretary of Defense 
shall establish categories of metrics for the defense 
acquisition system, including, at a minimum, categories 
relating to cost, quality, delivery, workforce, and policy 
implementation that apply to all elements of the defense 
acquisition system.
  (2) The Secretary of Defense shall issue guidance for service 
acquisition executives within the Department of Defense on the 
establishment of metrics, and goals and standards relating to 
such metrics, within the categories established by the 
Secretary under paragraph (1) to ensure that there is 
sufficient uniformity in performance assessments across the 
defense acquisition system so that elements of the defense 
acquisition system can be meaningfully compared.
  (c) Metrics, Goals, and Standards.--(1) Each service 
acquisition executive of the Department of Defense shall 
establish metrics to be used in the performance assessments 
required by subsection (a) for each element of the defense 
acquisition system for which such executive is responsible 
within the categories established by the Secretary under 
subsection (b). Such metrics shall be appropriately tailored 
pursuant to subsection (a)(3) and may include measures of--
          (A) cost, quality, and delivery;
          (B) contractor performance;
          (C) excessive use of contract bundling and 
        availability of non-bundled contract vehicles;
          (D) workforce quality and program manager tenure 
        (where applicable);
          (E) the quality of market research;
          (F) appropriate use of integrated testing;
          (G) appropriate consideration of long-term 
        sustainment; and
          (H) appropriate acquisition of technical data and 
        other rights and assets necessary to support long-term 
        sustainment.
  (2) Each service acquisition executive within the Department 
of Defense shall establish goals and standards (including, at a 
minimum, a threshold standard and an objective goal) for each 
metric established under paragraph (1) by the executive. In 
establishing the goals and standards for an element of the 
defense acquisition system, a service acquisition executive 
shall consult with the head of the element to the maximum 
extent practicable, but the service acquisition executive shall 
retain the final authority to determine the goals and standards 
established. The service acquisition executive shall update the 
goals and standards as necessary and appropriate consistent 
with the guidance issued under subsection (b)(2).
  (3) The Under Secretary of Defense for Acquisition, 
Technology, and Logistics shall periodically review the 
metrics, goals, and standards established by service 
acquisition executives under this subsection to ensure that 
they are consistent with the guidance issued under subsection 
(b)(2).
  (d) Responsibility for Oversight and Direction of Performance 
Assessments.--(1) Performance assessments required by 
subsection (a) shall either be carried out by, or shall be 
subject to the oversight of, the Director of the Office of 
Performance Assessment and Root Cause Analysis. The authority 
and responsibility granted by this subsection is in addition to 
any other authority or responsibility granted to the Director 
of the Office of Performance Assessment and Root Cause Analysis 
by the Secretary of Defense or by any other provision of law. 
In the performance of duties pursuant to this section, the 
Director of the Office of Performance Assessment and Root Cause 
analysis shall coordinate with the Deputy Chief Management 
Officer to ensure that performance assessments carried out 
pursuant to this section are consistent with the performance 
management initiatives of the Department of Defense.
  (2) A performance assessment may be carried out by an 
organization under the control of the service acquisition 
executive of a military department if--
          (A) the assessment fulfills the requirements of 
        subsection (a);
          (B) the organization is approved to carry out the 
        assessment by the Director of the Office of Performance 
        Assessment and Root Cause Analysis; and
          (C) the assessment is subject to the oversight of the 
        Director of the Office of Performance Assessment and 
        Root Cause Analysis in accordance with paragraph (1).
  (e) Retention and Access to Records of Performance 
Assessments Within the Military Departments and Defense 
Agencies.--The Secretary of Defense shall ensure that 
information from performance assessments of all elements of the 
defense acquisition system are retained electronically and that 
the Director of the Office of Performance Assessment and Root 
Cause Analysis--
          (1) promptly receives the results of all performance 
        assessments conducted by an organization under the 
        control of the service acquisition executive of a 
        military department; and
          (2) has timely access to any records and data in the 
        Department of Defense (including the records and data 
        of each military department and Defense Agency and 
        including classified and proprietary information) that 
        the Director considers necessary to review in order to 
        perform or oversee performance assessments pursuant to 
        this section.
  (f) Definitions.--In this section:
          (1) The term ``defense acquisition system'' means the 
        acquisition workforce; the process by which the 
        Department of Defense manages the acquisition of goods 
        and services, including weapon systems, commodities, 
        commercial and military unique services, and 
        information technology; and the management structure 
        for carrying out the acquisition function within the 
        Department of Defense.
          (2) The term ``element of the defense acquisition 
        system'' means an organization that operates within the 
        defense acquisition system and that focuses primarily 
        on acquisition.
          (3) The term ``metric'' means a specific measure that 
        serves as a basis for comparison.
          (4) The term ``threshold performance standard'' means 
        the minimum acceptable level of performance in relation 
        to a metric.
          (5) The term ``objective performance goal'' means the 
        most desired level of performance in relation to a 
        metric.
          (6) The term ``Office of Performance Assessment and 
        Root Cause Analysis'' means the office reporting to the 
        senior official designated by the Secretary of Defense 
        under section 103(a) of the Weapon Systems Acquisition 
        Reform Act of 2009 (Public Law 111-23, 10 U.S.C. 2430 
        note).

Sec. 2546. Audits of performance assessment

  (a) Audits Required.--The Secretary of Defense shall ensure 
that the performance assessments of the defense acquisition 
system required by section 2545 of this title are subject to 
periodic audits to determine the accuracy, reliability, and 
completeness of such assessments.
  (b) Standards and Approach.--In performing the audits 
required by subsection (a), the Secretary shall ensure that 
such audits--
          (1) comply with generally accepted government 
        auditing standards issued by the Comptroller General;
          (2) use a risk-based approach to audit planning; and
          (3) appropriately account for issues associated with 
        auditing assessments of activities occurring in a 
        contingency operation.

Sec. 2547. Use of performance assessments for managing performance

  (a) In General.--The Secretary of Defense shall ensure that 
the results of performance assessments are used in the 
management of elements of the defense acquisition system 
through direct linkages between the results of a performance 
assessment and the following:
          (1) The size of the bonus pool available to the 
        workforce of an element of the defense acquisition 
        system.
          (2) Rates of promotion in the workforce of an element 
        of the defense acquisition system.
          (3) Awards for acquisition excellence.
          (4) The scope of work assigned to an element of the 
        defense acquisition system.
  (b) Additional Requirements.--The Secretary of Defense shall 
ensure that actions taken to manage the acquisition workforce 
pursuant to subsection (a) are undertaken in accordance with 
the requirements of subsections (c) and (d) of section 1701a of 
this title.

Sec. 2548. Acquisition-related functions of the Chiefs of Staff of the 
                    armed forces

  (a) Assistance.--The Secretary of Defense shall ensure, 
notwithstanding section 3014(c)(1)(A), section 5014(c)(1)(A), 
and section 8014(c)(1)(A) of this title, that the Chief of 
Staff of the Army, the Chief of Naval Operations, the Chief of 
Staff of the Air Force, and the Commandant of the Marine Corps 
assist the Secretary of the military department concerned in 
the performance of the following acquisition-related functions 
of such department:
          (1) The development of requirements relating to the 
        defense acquisition system.
          (2) The development of measures to control 
        requirements creep in the defense acquisition system.
          (3) The development of career paths in acquisition 
        for military personnel (as required by section 1722a of 
        this title).
          (4) The assignment and training of contracting 
        officer representatives when such representatives are 
        required to be members of the armed forces because of 
        the nature of the contract concerned.
  (b) Definitions.--In this section:
          (1) The term ``requirements creep'' means the 
        addition of new technical or operational specifications 
        after a requirements document is approved.
          (2) The term ``requirements document'' means a 
        document produced in the requirements process that is 
        provided for an acquisition program to guide the 
        subsequent development, production, and testing of the 
        program and that--
                  (A) justifies the need for a materiel 
                approach, or an approach that is a combination 
                of materiel and non-materiel, to satisfy one or 
                more specific capability gaps;
                  (B) details the information necessary to 
                develop an increment of militarily useful, 
                logistically supportable, and technically 
                mature capability, including key performance 
                parameters; or
                  (C) identifies production attributes required 
                for a single increment of a program.

           *       *       *       *       *       *       *

                              ----------                              


    SECTION 105 OF THE WEAPON SYSTEM ACQUISITION REFORM ACT OF 2009

SEC. 105. ROLE OF THE COMMANDERS OF THE COMBATANT COMMANDS IN 
                    IDENTIFYING JOINT MILITARY REQUIREMENTS.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Comptroller General of the United States Review of 
Implementation.--
          (1)* * *
          [(2) Matters covered.--The report shall include, at a 
        minimum, an assessment of--
                  [(A) the extent to which the Council has 
                effectively sought, and the commanders of the 
                combatant commands have provided, meaningful 
                input on proposed joint military requirements;
                  [(B) the quality and effectiveness of efforts 
                to estimate the level of resources needed to 
                fulfill joint military requirements; and
                  [(C) the extent to which the Council has 
                considered trade-offs among cost, schedule, and 
                performance objectives.]
          (2) Matters covered.--The report shall include, at a 
        minimum, an assessment of--
                  (A) the extent to which the Council has 
                effectively sought, and the commanders of the 
                combatant commands have provided, meaningful 
                input on proposed joint military requirements;
                  (B) the extent to which the Council has 
                meaningfully considered the input and expertise 
                of the Under Secretary of Defense for 
                Acquisition, Technology, and Logistics in its 
                discussions;
                  (C) the extent to which the Council has 
                meaningfully considered the input and expertise 
                of the Director of Cost Assessment and Program 
                Evaluation in its discussions;
                  (D) the quality and effectiveness of efforts 
                to estimate the level of resources needed to 
                fulfill joint military requirements; and
                  (E) the extent to which the Council has 
                considered trade-offs among cost, schedule, and 
                performance objectives.

           *       *       *       *       *       *       *

                              ----------                              


TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *


PART III--EMPLOYEES

           *       *       *       *       *       *       *


SUBPART I--MISCELLANEOUS

           *       *       *       *       *       *       *


CHAPTER 99--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM

           *       *       *       *       *       *       *


Sec. 9903. Attracting highly qualified experts

  (a)* * *
  (b) Authority.--Under the program, the Secretary may--
          (1) appoint personnel from outside the civil service 
        and uniformed services (as such terms are defined in 
        section 2101) to positions in the Department of 
        Defense, on a full-time or part-time basis, without 
        regard to any provision of this title governing the 
        appointment of employees to positions in the Department 
        of Defense;

           *       *       *       *       *       *       *

                              ----------                              


        NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1996

DIVISION D--FEDERAL ACQUISITION REFORM

           *       *       *       *       *       *       *


TITLE XLIII--ADDITIONAL REFORM PROVISIONS

           *       *       *       *       *       *       *


[SEC. 4308. DEMONSTRATION PROJECT RELATING TO CERTAIN PERSONNEL 
                    MANAGEMENT POLICIES AND PROCEDURES.

  [(a) Commencement.--The Secretary of Defense is encouraged to 
take such steps as may be necessary to provide for the 
commencement of a demonstration project, the purpose of which 
would be to determine the feasibility or desirability of one or 
more proposals for improving the personnel management policies 
or procedures that apply with respect to the acquisition 
workforce of the Department of Defense and supporting personnel 
assigned to work directly with the acquisition workforce.
  [(b) Terms and Conditions.--
          [(1) In general.--Except as otherwise provided in 
        this subsection, any demonstration project described in 
        subsection (a) shall be subject to section 4703 of 
        title 5, United States Code, and all other provisions 
        of such title that apply with respect to any 
        demonstration project under such section.
          [(2) Exceptions.--Subject to paragraph (3), in 
        applying section 4703 of title 5, United States Code, 
        with respect to a demonstration project described in 
        subsection (a)--
                  [(A) ``180 days'' in subsection (b)(4) of 
                such section shall be deemed to read ``120 
                days'';
                  [(B) ``90 days'' in subsection (b)(6) of such 
                section shall be deemed to read ``30 days''; 
                and
                  [(C) subsection (d)(1) of such section shall 
                be disregarded.
          [(3) Conditions.--Paragraph (2) shall not apply with 
        respect to a demonstration project unless--
                  [(A) for each organization or team 
                participating in the demonstration project--
                          [(i) at least one-third of the 
                        workforce participating in the 
                        demonstration project consists of 
                        members of the acquisition workforce; 
                        and
                          [(ii) at least two-thirds of the 
                        workforce participating in the 
                        demonstration project consists of 
                        members of the acquisition workforce 
                        and supporting personnel assigned to 
                        work directly with the acquisition 
                        workforce; and
                  [(B) the demonstration project commences 
                before October 1, 2007.
  [(c) Definition.--For purposes of this section, the term 
``acquisition workforce'' refers to the persons serving in 
acquisition positions within the Department of Defense, as 
designated pursuant to section 1721(a) of title 10, United 
States Code.
  [(d) Limitation on Number of Participants.--The total number 
of persons who may participate in the demonstration project 
under this section may not exceed 120,000.
  [(e) Effect of Reorganizations.--The applicability of 
paragraph (2) of subsection (b) to an organization or team 
shall not terminate by reason that the organization or team, 
after having satisfied the conditions in paragraph (3) of such 
subsection when it began to participate in a demonstration 
project under this section, ceases to meet one or both of the 
conditions set forth in subparagraph (A) of such paragraph (3) 
as a result of a reorganization, restructuring, realignment, 
consolidation, or other organizational change.
  [(f) Termination of Authority.--The authority to conduct a 
demonstration program under this section shall terminate on 
September 30, 2012.]

           *       *       *       *       *       *       *

                              ----------                              


 SECTION 853 OF THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 
                                  1998

                          (Public Law 105-85)

[SEC. 853. GUIDANCE AND STANDARDS FOR DEFENSE ACQUISITION WORKFORCE 
                    TRAINING REQUIREMENTS.

  [The Secretary of Defense shall develop appropriate guidance 
and standards to ensure that the Department of Defense will 
continue, where appropriate and cost-effective, to enter into 
contracts for the training requirements of sections 1723, 1724, 
and 1735 of title 10, United States Code, while maintaining 
appropriate control over the content and quality of such 
training.]
                              ----------                              


 STROM THURMOND NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1999

DIVISION A--DEPARTMENT OF DEFENSE AUTHORIZATIONS

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *


SEC. 803. DEFENSE COMMERCIAL PRICING MANAGEMENT IMPROVEMENT.

  (a)* * *

           *       *       *       *       *       *       *

  [(c) Commercial Price Trend Analysis.--(1) The Secretary of 
Defense shall develop and implement procedures that, to the 
maximum extent that is practicable and consistent with the 
efficient operation of the Department of Defense, provide for 
the collection and analysis of information on price trends for 
categories of exempt commercial items described in paragraph 
(2).
  [(2) A category of exempt commercial items referred to in 
paragraph (1) consists of exempt commercial items--
          [(A) that are in a single Federal Supply Group or 
        Federal Supply Class, are provided by a single 
        contractor, or are otherwise logically grouped for the 
        purpose of analyzing information on price trends; and
          [(B) for which there is a potential for the price 
        paid to be significantly higher (on a percentage basis) 
        than the prices previously paid in procurements of the 
        same or similar items for the Department of Defense, as 
        determined by the head of the procuring Department of 
        Defense agency or the Secretary of the procuring 
        military department on the basis of criteria prescribed 
        by the Secretary of Defense.
  [(3) The head of a Department of Defense agency or the 
Secretary of a military department shall take appropriate 
action to address any unreasonable escalation in prices being 
paid for items procured by that agency or military department 
as identified in an analysis conducted pursuant to paragraph 
(1).
  [(4) Not later than April 1 of each of fiscal years 2000 
through 2009, the Secretary of Defense shall submit to the 
Committee on Armed Services of the Senate and the Committee on 
Armed Services of the House of Representatives a report on the 
analyses of price trends that were conducted by the Secretary 
of each military department and the Director of the Defense 
Logistics Agency for categories of exempt commercial items 
during the preceding fiscal year under the procedures 
prescribed pursuant to paragraph (1). The report shall include 
a description of the actions taken by each Secretary and the 
Director to identify and address any unreasonable price 
escalation for the categories of items.]
  (c) Commercial Price Trend Analysis.--
          (1) The Secretary of Defense shall develop and 
        implement procedures that, to the maximum extent 
        practicable, provide for the collection and analysis of 
        information on price trends for categories of exempt 
        commercial items described in paragraph (2).
          (2) A category of exempt commercial items referred to 
        in paragraph (1) consists of exempt commercial items 
        that are in a single Federal Supply Group or Federal 
        Supply Class, are provided by a single contractor, or 
        are otherwise logically grouped for the purpose of 
        analyzing information on price trends.
          (3) The analysis of information on price trends under 
        paragraph (1) shall include, in any category in which 
        significant escalation in prices is identified, a more 
        detailed examination of the causes of escalation for 
        such prices within the category and whether such price 
        escalation is consistent across the Department of 
        Defense.
          (4) The head of a Department of Defense agency or the 
        Secretary of a military department shall take 
        appropriate action to address any unjustified 
        escalation in prices being paid for items procured by 
        that agency or military department as identified in an 
        analysis conducted pursuant to paragraph (1).
          (5) Not later than April 1 of each of year, the 
        Secretary of Defense shall submit to the Committee on 
        Armed Services of the Senate and the Committee on Armed 
        Services of the House of Representatives a report on 
        the analyses of price trends that were conducted for 
        categories of exempt commercial items during the 
        preceding fiscal year under the procedures prescribed 
        pursuant to paragraph (1). The report shall include a 
        description of the actions taken to identify and 
        address any unjustified price escalation for the 
        categories of items.
          (6) This subsection shall not be in effect on and 
        after April 1, 2013.

           *       *       *       *       *       *       *

                              ----------                              


TITLE 31, UNITED STATES CODE

           *       *       *       *       *       *       *


Subtitle III--FINANCIAL MANAGEMENT

           *       *       *       *       *       *       *


                           CHAPTER 37--CLAIMS

                          SUBCHAPTER I--GENERAL

Sec.
3701.  Definitions and application.
     * * * * * * *

          SUBCHAPTER II--CLAIMS OF THE UNITED STATES GOVERNMENT

     * * * * * * *
3720F.   Contractor and grantee disclosure of delinquent Federal tax 
          debts.

           *       *       *       *       *       *       *


SUBCHAPTER II--CLAIMS OF THE UNITED STATES GOVERNMENT

           *       *       *       *       *       *       *


Sec. 3720F. Contractor and grantee disclosure of delinquent Federal tax 
                    debts

  (a) Requirement Relating to Contracts.--The head of any 
executive agency that issues an invitation for bids or a 
request for proposals for a contract in an amount greater than 
the simplified acquisition threshold shall require each person 
that submits a bid or proposal to submit with the bid or 
proposal a form--
          (1) certifying that the person does not have a 
        seriously delinquent tax debt; and
          (2) authorizing the Secretary of the Treasury to 
        disclose to the head of the agency information strictly 
        limited to verifying whether the person has a seriously 
        delinquent tax debt.
  (b) Requirement Relating to Grants.--The head of any 
executive agency that offers a grant in excess of an amount 
equal to the simplified acquisition threshold may not award 
such grant to any person unless such person submits with the 
application for such grant a form--
          (1) certifying that the person does not have a 
        seriously delinquent tax debt; and
          (2) authorizing the Secretary of the Treasury to 
        disclose to the head of the executive agency 
        information strictly limited to verifying whether the 
        person has a seriously delinquent tax debt.
  (c) Form for Release of Information.--The Secretary of the 
Treasury shall make available to all executive agencies a 
standard form for the certification and authorization described 
in subsections (a) and (b).
  (d) Definitions.--In this section:
          (1) Contract.--The term ``contract'' means a binding 
        agreement entered into by an executive agency for the 
        purpose of obtaining property or services, but does not 
        include--
                  (A) a contract for property or services that 
                is intended to be entered into through the use 
                of procedures other than competitive procedures 
                by reason of section 2304(c)(2) of this title; 
                or
                  (B) a contract designated by the head of the 
                agency as necessary to the national security of 
                the United States.
          (2) Executive agency.--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)).
          (3) Person.--The term ``person'' includes--
                  (A) an individual;
                  (B) a partnership; and
                  (C) a corporation.
          (4) Seriously delinquent tax debt.--The term 
        ``seriously delinquent tax debt''--
                  (A) means any Federal tax liability--
                          (i) that exceeds $3,000;
                          (ii) that has been assessed by the 
                        Secretary of the Treasury and not paid; 
                        and
                          (iii) for which a notice of lien has 
                        been filed in public records; and
                  (B) does not include any Federal tax 
                liability--
                          (i) being paid in a timely manner 
                        under an offer-in-compromise or 
                        installment agreement;
                          (ii) with respect to which collection 
                        due process proceedings are not 
                        completed; or
                          (iii) with respect to which 
                        collection due process proceedings are 
                        completed and no further payment is 
                        required.
          (5) Simplified acquisition threshold.--The term 
        ``simplified acquisition threshold'' has the meaning 
        given that term in section 4(11) of the Office of 
        Federal Procurement Policy Act (41 U.S.C. 403(11)).
  (e) Regulations.--The Administrator for Federal Procurement 
Policy, in consultation with the Secretary of the Treasury, 
shall promulgate regulations that--
          (1) treat corporations and partnerships as having a 
        seriously delinquent tax debt if such corporation or 
        partnership is controlled (directly or indirectly) by 
        persons who have a seriously delinquent tax debt;
          (2) provide for the proper application of subsections 
        (a)(2) and (b)(2) in the case of corporations and 
        partnerships; and
          (3) provide for the proper application of subsection 
        (a) to first-tier subcontractors that are identified in 
        a bid or proposal and are a significant part of a bid 
        or proposal team.

           *       *       *       *       *       *       *


                            Additional Views

                                ------                                


         ADDITIONAL VIEWS OF REPRESENTATIVE K. MICHAEL CONAWAY

    I strongly support H.R. 5013. It will be instrumental in 
improving the full range of the defense acquisition system and 
I am particularly pleased that the measure takes bold steps 
towards improving financial management within the Department of 
Defense. The bill is the culmination of a year's worth of 
effort by the Committee's Panel on Defense Acquisition Reform, 
established by Chairman Skelton and former Ranking Member 
McHugh in March, 2009. The members of the panel, led by 
Chairman Rob Andrews, approached their work in a nonpartisan 
basis and delivered a comprehensive report. I am pleased to 
have been associated with this endeavor and thank the Chairman 
and Ranking Member McKeon for acting so quickly to translate 
the Panel's recommendations into legislation.
    I believe this bill will go a long way to improving the way 
we measure value in acquisition, creating a more responsive 
requirements process, managing elements of the acquisition 
system other than major weapon systems, and sustaining the 
acquisition workforce. But this bill also plays a critical role 
in improving the financial management practices of the 
Department of Defense (DOD) by incentivizing the Department to 
obtain an unqualified audit opinion. The publication of a clean 
audit of DOD would finally give the American people confidence 
that their tax dollars are being accounted for and spent wisely 
in the defense of this great nation.
    Since 1990, there has been a requirement for the Federal 
Government to publish audited financial statements. But the 
Federal Government has not complied. A large share of the 
responsibility for this circumstance rests with DOD. The 
Department of Defense is the largest agency in the Federal 
Government, owning 86 percent of the Government's assets, 
estimated at $4.6 trillion. Over the last two decades millions 
of dollars have been spent by DOD in the quest to obtain 
auditable financial statements. It will not be an easy task, 
but it is possible and it is necessary to implement the 
financial control systems necessary to generate auditable data. 
This bill ensures that DOD is not held to a separate standard 
from public business and the rest of government.
    The reliability of financial data is crucial to improve 
acquisition outcomes. Without understanding where the 
Department's money is being spent or understanding what assets 
it owns, there will never be any accountability for acquisition 
costs or new requirements. Perhaps every dime they spend is 
being well spent. But we will never know and neither will DOD, 
unless financial accountability becomes a priority for the 
Department.
    If correctly implemented, this timely legislation will 
allow America's tax dollars to be stretched further by yielding 
greater savings and will have a substantial impact on reducing 
waste, fraud and abuse.
    I applaud the Panel and the House Armed Services Committee 
for adopting these recommendations and encourage each of the 
components of the Department of Defense to take full advantage 
of the incentives provided in this bill to accelerate the 
publication of auditable financial statements.
                                                K. Michael Conaway.

             ADDITIONAL VIEWS OF REPRESENTATIVE RICK LARSEN

    Mr. Chairman, I strongly support the IMPROVE Acquisition 
Act (H.R. 5013) and the efforts of the House Armed Services 
Committee and Defense Acquisition Reform Panel to ensure that 
the Department of Defense is spending taxpayer dollars wisely. 
I would like to thank you, Ranking Member McKeon, Congressman 
Andrews, and Congressman Mike Conaway for all of your diligent 
work in drafting this legislation.
    We are all aware that many major systems purchased by the 
Department of Defense have experienced cost overruns and 
delays; the Government Accountability Office has found that 95 
major weapons programs were a combined $295 billion over-budget 
and on average 21 months behind schedule. This is unacceptable.
    Last year, Congress passed and the President signed into 
law the Weapon Systems Acquisition Reform Act, which addresses 
deep-seated and systemic problems in how we procure major 
weapons systems. This law requires the Department of Defense to 
provide more realistic estimates of how much weapons will cost 
and punish those programs that are failing to meet schedule and 
cost goals. This law also demands additional focus during the 
early stages of weapons development, when small program changes 
can have major long-term consequences. When it comes to defense 
procurement, an ounce of oversight is worth a pound of cure.
    While the Weapon Systems Acquisition Reform Act centered on 
the problems associated with acquiring major weapons systems, 
which comprise only about 20% of the Department of Defense's 
acquisition budget, the IMPROVE Acquisition Act builds on this 
work and focuses on making sure that the remaining 80% of 
acquisition dollars are providing the best value for taxpayers. 
This legislation will require the Department of Defense to 
strengthen its acquisition workforce, ensure accountability in 
its financial management system, and responsibly expand the 
industrial base to foster competition that benefits taxpayers 
and service members alike. I encourage my colleagues in the 
Senate to consider similar legislation to drive cost savings 
for taxpayers and achieve better results for our men and women 
in uniform.
    I recognize that the hard work of reforming defense 
acquisition does not end with this legislation. The House Armed 
Services Committee must continue to engage in active oversight 
to ensure that taxpayer dollars are well spent and our military 
service members have access to the weapons and equipment they 
need to do their job. I look forward to working with you and 
other members of the Committee to achieve these goals.
                                                       Rick Larsen.

          ADDITIONAL VIEWS OF REPRESENTATIVE JAMES R. LANGEVIN

    I would like to express my support for passage of H.R. 
5013, the Implementing Management for Performance and Related 
Reforms to Obtain Value in Every Acquisition Act of 2010. This 
legislation reflects the hard work of the Committee's 
Acquisition Reform Panel and goes a long way to reforming our 
defense acquisition system to better serve and protect our 
nation. Due to unavoidable circumstances, I regrettably missed 
casting a vote in favor of the bill in the Committee. I look 
forward to supporting it once it is considered on the floor of 
the House of Representatives.

                                                 James R. Langevin.