To require internal ethics compliance programs by Department of Defense contractors, and for other purposes.

Summary: Defense Contracting Ethics Oversight Act of 2007 - Directs the Secretary of Defense to prescribe in regulations a requirement that a Department of Defense (DOD) contracting officer may not determine a contractor to be responsible for the award of a covered contract for DOD (one in excess of $5 million) unless the contracting entity has in place, within 30 days after contract award, an internal ethics compliance program to facilitate the timely detection and disclosure of improper conduct in connection with the award or performance of the contract, and to ensure that appropriate corrective action is taken with respect to such conduct. Allows for the suspension or debarment of contractors determined not to have reported suspected improper conduct.

Requires a report from the Administrator of Federal Procurement Policy to Congress on personal financial conflicts of interests of contractor employees and employees of federally funded research and development centers.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Defense Contracting Ethics Oversight 
Act of 2007''.

SEC. 2. ETHICS COMPLIANCE BY DEPARTMENT OF DEFENSE CONTRACTORS.

    (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Defense shall prescribe in 
regulations a requirement that a contracting officer of the Department 
of Defense may not determine a contractor to be responsible for 
purposes of the award of a covered contract for the Department unless 
the entity to be awarded the contract has in place, by the deadline 
specified in subsection (c), an internal ethics compliance program, 
including a code of ethics and internal controls, to facilitate the 
timely detection and disclosure of improper conduct in connection with 
the award or performance of the covered contract and to ensure that 
appropriate corrective action is taken with respect to such conduct.
    (b) Elements of Ethics Compliance Program.--Each ethics compliance 
program required of a contractor under subsection (a) shall include the 
following:
            (1) Requirements for periodic reviews of the performance of 
        the covered contract to ensure compliance of contractor 
        personnel with applicable Government contracting requirements, 
        including laws, regulations, and contractual requirements.
            (2) Internal reporting mechanisms, such as a hot-line, for 
        contractor personnel to report suspected improper conduct among 
        contractor personnel.
            (3) Audits of the performance of the covered contract.
            (4) Mechanisms for disciplinary actions against contractor 
        personnel found to have engaged in improper conduct, including 
        the exclusion of such personnel from the exercise of 
        substantial authority.
            (5) Mechanisms for the reporting to appropriate Government 
        officials, including the contracting officer and the Office of 
        the Inspector General of the Department of Defense, of 
        suspected improper conduct among contractor personnel, 
        including suspected conduct involving corruption of a 
        Government official or individual acting on behalf of the 
        Government, not later than 30 days after the date of discovery 
        of such suspected conduct.
            (6) Mechanisms to ensure full cooperation with Government 
        officials responsible for investigating suspected improper 
        conduct among contractor personnel and for taking corrective 
        actions.
            (7) Mechanisms to ensure the recurring provision of 
        training to contractor personnel on the requirements and 
        mechanisms of the ethics compliance program.
            (8) Mechanisms to ensure the oversight of the ethics 
        compliance program by contractor personnel with substantial 
        authority within the contractor.
    (c) Deadline for Program.--The deadline specified in this 
subsection for a contractor having in place an ethics compliance 
program required under subsection (a) for purposes of a covered 
contract is 30 days after the date of the award of the contract.
    (d) Determination of Existence of Program.--In determining whether 
a contractor has in place an ethics compliance program required under 
subsection (a), a contracting officer of the Department may use the 
assistance of the Office of the Inspector General of the Department of 
Defense.
    (e) Suspension or Debarment.--The regulations prescribed under 
subsection (a) shall provide that any contractor under a covered 
contract whose personnel are determined not to have reported suspected 
improper conduct in accordance with the requirements and mechanisms of 
the ethics compliance program concerned may, at the election of the 
Secretary of Defense, be suspended from the contract or debarred from 
further contracting with the Department of Defense.
    (f) Covered Contract Defined.--In this section, the term ``covered 
contract'' means any contract to be awarded to a contractor of the 
Department of Defense if, in the year before the contract is to be 
awarded, the total amount of contracts of the contractor with the 
Federal Government exceeded $5,000,000.

SEC. 3. REPORT TO CONGRESS ON PERSONAL FINANCIAL CONFLICTS OF INTEREST.

    (a) Report.--Not later than 180 days after the date of the 
enactment of this Act, the Administrator for Federal Procurement 
Policy, after consultation with the Director of the Office of 
Government Ethics, shall submit to Congress a report that contains--
            (1) a description of current Federal laws, regulations, and 
        practices relating to restrictions on personal financial 
        interests applicable to Federal employees and non-Federal 
        employees; and
            (2) the Administrator's findings and any recommendations 
        for establishing a requirement for compliance with restrictions 
        relating to personal financial interests such as those that 
        apply to Federal employees by--
                    (A) those employees of a covered Government 
                contractor who are specifically retained for and engage 
                in providing advice to one or more Federal agencies; 
                and
                    (B) employees of federally funded research and 
                development centers.
    (b) Definitions.--In this section:
            (1) Covered government contractor.--The term ``covered 
        Government contractor'' means any entity (other than a Federal 
        agency) awarded a contract by a Federal agency under which one 
        or more individuals hired by the entity perform an acquisition 
        planning function that is closely associated with the 
        responsibilities of a Federal employee. For purposes of the 
        preceding sentence, the term ``acquisition planning function'' 
        means the function of providing advice to a Federal agency on 
        acquisition planning with respect to a particular acquisition 
        or acquisitions.
            (2) Federal employee.--The term ``Federal employee'' means 
        an employee of a Federal agency.
            (3) Federal agency.--The term ``Federal agency'' means any 
        of the following:
                    (A) any executive department or independent 
                establishment in the executive branch of the 
                Government, including any wholly owned Government 
                corporation.
                    (B) any establishment in the legislative or 
                judicial branch of the Government (except the Senate, 
                the House of Representatives, and the Architect of the 
                Capitol and any activities under the Architect's 
                direction).
            (4) Federally funded research and development center.--The 
        term ``federally funded research and development center'' means 
        a federally funded research and development center identified 
        by the National Science Foundation in accordance with the 
        Federal Acquisition Regulation.