II 

113TH CONGRESS 

2D SESSION S. 2286 

To provide for greater oversight of Department of Defense service contracts. 

IN THE SENATE OF THE UNITED STATES 

MAY 1, 2014 

Mr. WALSH introduced the following bill; which was read twice and referred 

to the Committee on Armed Services 

A BILL 

To provide for greater oversight of Department of Defense 

service contracts. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Cutting Contractor 

5 Use and Taxpayer Savings Act of 2014’’. 

6 SEC. 2. FINDINGS. 

7 Congress makes the following findings: 

8 (1) Since 2002, the Department of Defense has 

9 spent more than $2,000,000,000,000 on service con10 tractors. 


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1 (2) The decade-long trend of outsourcing work 

2 has created a shadow government of service contrac3 tors that are largely dependent on the taxpayers as 

4 their sole source of revenue. 

5 (3) Studies show that service contractors can 

6 cost taxpayers up to twice what it costs for members 

7 of the Armed Forces to perform the work. 

8 (4) In 2013, the Department of Defense spent 

9 nearly $180,000,000,000 on service contractors, 

10 making it the largest buyer of services in the Fed11 eral Government. 

12 (5) Approximately 30 percent of the intelligence 

13 community workforce is made up of service contrac14 tors, employees that work for companies whose pri15 mary goal is to make a profit and have never sworn 

16 an oath to defend and protect the United States. 

17 (6) Since 2002, Congress has repeatedly en18 acted legislation to improve the Department of De19 fense’s management of service contractors. However, 

20 in 2013 the Government Accountability Office 

21 (GAO) found that, while the Department has taken 

22 action to address such legislative requirements, there 

23 are no metrics in place to determine the effects of 

24 those actions. 


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1 SEC. 3. INSPECTOR GENERAL ANALYSIS OF SERVICE CON2 TRACTOR INVENTORY. 

3 (a) IN GENERAL.—Not later than 180 days after the 

4 date of the enactment of this Act, and annually thereafter, 

5 the Inspector General of the Department of Defense shall 

6 submit to the congressional defense committees a com7 prehensive analysis of the global inventory Department of 

8 Defense service contractors. 

9 (b) ELEMENTS.—The analysis required under sub10 section (a) shall include the following elements: 

11 (1) A comprehensive inventory of Department 

12 of Defense service contractors. 

13 (2) An analysis of the types of service contracts 

14 that were significantly expanded after fiscal year 

15 2002. 

16 (3) Identification of redundancies in the inven17 tory. 

18 (c) PUBLIC AVAILABILITY.—The analysis required 

19 under subsection (a) shall be made publically available. 

20 SEC. 4. DEFENSE CONTRACT AUDIT AGENCY REPORTING 

21 ON SERVICE CONTRACTS. 

22 (a) AUDITS.—The Defense Contract Audit Agency, 

23 in conducting audits of defense contracts, shall distinguish 

24 service contracts in its analysis, including by distin25 guishing the percentage of payment awarded for service 


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1 elements on contracts containing both manufacturing and 

2 service elements. 

3 (b) REPORTING.—Not later than 180 days after the 

4 date of the enactment of this Act, and annually thereafter, 

5 the Defense Contract Audit Agency shall submit to the 

6 congressional defense committees a report containing its 

7 findings pursuant to subsection (a). The report shall be 

8 made publically available. 

9 SEC. 5. SERVICE ACQUISITION IMPROVEMENT PLAN. 

10 (a) PLAN REQUIRED.—Not later than 180 days after 

11 the date of the enactment of this Act, the Under Secretary 

12 of Defense for Acquisition, Technology and Logistics shall, 

13 in consultation with the senior services managers of the 

14 military departments, submit to the congressional defense 

15 committees a plan to improve the acquisition of services 

16 by the Department of Defense. 

17 (b) ELEMENTS.—The plan required under subsection 

18 (a) shall include the following elements: 

19 (1) Baseline data on the status of service acqui20 sition, including budget and spending data on serv21 ices by volume, type, and location. 

22 (2) Specific goals for improving service acquisi23 tion. 

24 (3) Metrics to assess progress in meeting the 

25 goals outlined under paragraph (2). 


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1 SEC. 6. REPORTING ON USE OF SERVICE CONTRACTS BY IN2 TELLIGENCE COMMUNITY. 

3 (a) ANNUAL REPORT.—Not later than 180 days after 

4 the date of the enactment of this Act, and annually there5 after, the Director of National Intelligence shall submit 

6 to the congressional defense committees and the Select 

7 Committee on Intelligence of the Senate and the Perma8 nent Select Committee on Intelligence of the House of 

9 Representatives a report with an inventory of service con10 tractors used by each element of the intelligence commu11 nity (as defined in section 3 of the National Security Act 

12 of 1947 (50 U.S.C. 3003)). 

13 (b) FORM.—The report required under subsection (a) 

14 may be submitted in classified form, but shall contain an 

15 unclassified summary including the total amount expended 

16 by each element of the intelligence community on service 

17 contracts. 

18 SEC. 7. LIMITATION ON ALLOWABLE GOVERNMENT CON19 TRACTOR COMPENSATION COSTS. 

20 (a) LIMITATION.— 

21 (1) CIVILIAN CONTRACTS.—Paragraph (16) of 

22 section 4304(a) of title 41, United States Code, is 

23 amended to read as follows: 

24 ‘‘(16) Costs of compensation of contractor and 

25 subcontractor employees for a fiscal year, regardless 

26 of the contract funding source, to the extent that 


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1 such compensation exceeds the annual salary of the 

2 President as determined under section 102 of title 3, 

3 except that the head of an executive agency may es4 tablish one or more narrowly targeted exceptions for 

5 scientists, engineers, or other specialists upon a de6 termination that such exceptions are needed to en7 sure that the executive agency has continued access 

8 to needed skills and capabilities.’’. 

9 (2) DEFENSE CONTRACTS.—Subparagraph (P) 

10 of section 2324(e)(1) of title 10, United States 

11 Code, is amended to read as follows: 

12 ‘‘(P) Costs of compensation of contractor and 

13 subcontractor employees for a fiscal year, regardless 

14 of the contract funding source, to the extent that 

15 such compensation exceeds the annual salary of the 

16 President as determined under section 102 of title 3, 

17 except that the head of an executive agency may es18 tablish one or more narrowly targeted exceptions for 

19 scientists, engineers, or other specialists upon a de20 termination that such exceptions are needed to en21 sure that the executive agency has continued access 

22 to needed skills and capabilities.’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) REPEAL.—Section 1127 of title 41, United 

25 States Code, is repealed. 


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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions at the beginning of chapter 11 of such title is 

3 amended by striking the item relating to section 

4 1127. 

5 (c) APPLICABILITY.—This section and the amend6 ments made by this section shall apply only with respect 

7 to costs of compensation incurred under contracts entered 

8 into on or after the date that is 180 days after the date 

9 of the enactment of this Act. 

10 (d) REPORTS.— 

11 (1) IN GENERAL.—Not later than 60 days after 

12 the end of each fiscal year, the Director of the Office 

13 of Management and Budget shall submit a report on 

14 contractor compensation to— 

15 (A) the Committee on Armed Services of 

16 the Senate; 

17 (B) the Committee on Armed Services of 

18 the House of Representatives; 

19 (C) the Committee on Homeland Security 

20 and Governmental Affairs of the Senate; 

21 (D) the Committee on Oversight and Gov22 ernment Reform of the House of Representa23 tives; 

24 (E) the Committee on Appropriations of 

25 the Senate; and 


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1 (F) the Committee on Appropriations of 

2 the House of Representatives. 

3 (2) ELEMENTS.—The report required under 

4 paragraph (1) shall include— 

5 (A) the total number of contractor employ6 ees, by executive agency, in the narrowly tar7 geted exception positions described in section 

8 4304(a)(16) of title 41, United States Code (as 

9 amended by subsection (a)(1)), and section 

10 2324(e)(1)(P) of title 10, United States Code 

11 (as amended by subsection (a)(2)), during the 

12 preceding fiscal year; 

13 (B) the taxpayer-funded compensation 

14 amounts received by each contractor employee 

15 in a narrowly targeted exception position during 

16 such fiscal year; and 

17 (C) the duties and services performed by 

18 contractor employees in the narrowly targeted 

19 exception positions during such fiscal year. 

20 SEC. 8. REDUCTION IN SERVICE CONTRACT SPENDING. 

21 (a) THREE-YEAR REQUIREMENT.— 

22 (1) LIMITATION.—The aggregate amount obli23 gated and expended by the Department of Defense 

24 for service contracts in fiscal years beginning after 

25 September 30, 2017, may not exceed the lesser of— 


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1 (A) the amount equal to 67 percent of the 

2 aggregate amount expended for service con3 tracts in fiscal year 2014; or 

4 (B) the amount equal to 67 percent of the 

5 amount appropriated for the Department of De6 fense for the current fiscal year and available 

7 for service contracts. 

8 (2) INAPPLICABILITY OF LIMITATION.—The 

9 limitation in paragraph (1)(B) shall not apply if the 

10 Secretary of Defense certifies to Congress in writing 

11 that the aggregate amount to be obligated and ex12 pended by the Department of Defense in such fiscal 

13 year for service contracts will not exceed the amount 

14 specified in paragraph (1)(A). 

15 (b) TEN-YEAR REQUIREMENT.—The amount obli16 gated and expended by the Department of Defense on 

17 service contracts in fiscal years beginning after September 

18 30, 2024, may not exceed the amount obligated or ex19 pended by the Department of Defense on service contracts 

20 in fiscal year 2002 (adjusted for inflation). 

21 SEC. 9. CONGRESSIONAL DEFENSE COMMITTEES DEFINED. 

22 In this Act, the term ‘‘congressional defense commit23 tees’’ has the meaning given the term in section 

24 101(a)(16) of title 10, United States Code. 

Æ 


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