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certified that the foreign person has dem-
onstrated that the cost of the offeror’s proposal 
is not materially affected by the subsidy. 
(d) WAIVER.—The President may waive the prohibi-
tion in this section with respect to a specific contract if 
the President (without delegation) determines that failure 
to waive the prohibition would result in a significant and 
imminent threat to national security. The President shall 
submit to Congress a notice of any waiver granted under 
this subsection within 7 days after granting it. 
(e) DURATION OF PROHIBITION.—In the case of a 
subsidy that the World Trade Organization has ruled is 
a prohibited subsidy as described in subsection (a)(2)(B), 
the prohibition under subsection (a) shall not apply to a 
contract for the procurement of goods or services that 
were the subject of the consultation after— 
(1) the dispute is resolved; and 
(2) either— 
(A) a mutual agreement has been reached 
between the United States and the foreign gov-
ernment with respect to the prohibited subsidy; 
or 
(B) the foreign government has agreed to 
comply with the requirements of the ruling 
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issued by the World Trade Organization in the 
dispute. 
(f) DEFINITIONS.—In this section: 
(1) The term ‘‘Agreement on Subsidies and 
Countervailing Measures’’ means the agreement de-
scribed in section 101(d)(12) of the Uruguay Round 
Agreements Act (19 U.S.C. 3501(d)(12)). 
(2) The term ‘‘foreign person’’ means— 
(A) an individual who is not a United 
States person or an alien lawfully admitted for 
permanent residence into the United States; or 
(B) a corporation, partnership, or other 
nongovernmental entity which is not a United 
States person. 
(3) The term ‘‘United States person’’ means— 
(A) a natural person who is a citizen of the 
United States or who owes permanent alle-
giance to the United States; and 
(B) a corporation or other legal entity 
which is organized under the laws of the United 
States, any State or territory thereof, or the 
District of Columbia, if natural persons de-
scribed in subparagraph (A) own, directly or in-
directly, more than 50 percent of the out-
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standing capital stock or other beneficial inter-
est in such legal entity. 
(4) The term ‘‘major defense acquisition pro-
gram’’ means a Department of Defense acquisition 
program that is a major defense acquisition program 
for purposes of section 2430 of title 10, United 
States Code. 
(5) The term ‘‘Milestone B approval’’ has the 
meaning provided that term in section 2366(e)(7) of 
such title. 
SEC. 805. DOMESTIC INDUSTRIAL BASE CONSIDERATIONS 
DURING SOURCE SELECTION. 
(a) REGULATIONS REQUIRED.—Not later than 120 
days after the date of the enactment of this Act, the Sec-
retary of Defense shall prescribe regulations regarding the 
application of a domestic industrial base evaluation factor 
during source selection for a major defense acquisition 
program of the Department of Defense. Such regulations 
shall— 
(1) allow the source selection authority to con-
sider impacts on the domestic industrial base as an 
evaluation factor during the source selection process; 
(2) provide the source selection authority flexi-
bility with regard to the importance assigned to such 
an evaluation factor; and 
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(3) provide defense acquisition officials with the 
authority to impose penalties on the contractor 
awarded the contract resulting from the source se-
lection, including fines and contract termination, 
if— 
(A) the domestic industrial base evaluation 
factor was used during source selection; 
(B) the evaluation factor had a material 
effect on the outcome of the source selection; 
and 
(C) the official determines that the poten-
tial contractor knowingly or willfully misrepre-
sented impacts to the domestic industrial base 
during source selection. 
(b) IMPACTS ON DOMESTIC INDUSTRIAL BASE.—For 
purposes of the regulations, the Secretary shall consider, 
at a minimum, the following to be impacts on the domestic 
industrial base: 
(1) The creation or maintenance of domestic ca-
pability for production of critical supplies. 
(2) The creation or maintenance of domestic 
jobs. 
(3) The creation or maintenance of domestic 
scientific and technological competencies or manu-
facturing skills. 
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(c) REPORT REQUIRED.—The Secretary of Defense 
shall notify the congressional defense committees at least 
30 days before the issuance of a request for proposal for 
any major defense acquisition program that will not use 
a domestic industrial base evaluation factor during the 
source selection process. Such notification shall include— 
(1) a brief description of the major defense ac-
quisition program; 
(2) a justification for not using a domestic in-
dustrial base evaluation factor; and 
(3) an assessment of potential impacts on the 
domestic industrial base, if known, as a result of not 
using a domestic industrial base evaluation factor. 
(d) DEFINITIONS.—In this section: 
(1) DOMESTIC
INDUSTRIAL
BASE.—The term 
‘‘domestic industrial base’’ means— 
(A) persons and organizations that are en-
gaged in research, development, production, or 
maintenance activities conducted within the 
United States and United States territories; 
and 
(B) includes, at a minimum, prime con-
tractors, as well as second and third tier sub-
contractors, engaged in such activities. 
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(2) MAJOR DEFENSE ACQUISITION PROGRAM.— 
The term ‘‘major defense acquisition program’’ has 
the meaning provided in section 2430 of title 10, 
United States Code. 
(3) SOURCE SELECTION.—The term ‘‘source se-
lection’’, with respect to a major defense acquisition 
program, means the selection, through the use of 
competitive procedures or such other procurement 
procedures as may be applicable, of a contractor to 
perform a contract to carry out the program. 
(4) 
SOURCE
SELECTION
AUTHORITY.—The 
term ‘‘source selection authority’’, with respect to a 
major defense acquisition program, means the offi-
cial in the Department of Defense designated as re-
sponsible for the source selection for that program. 
SEC. 806. COMMERCIAL SOFTWARE REUSE PREFERENCE. 
(a) IN GENERAL.—The Secretary of Defense shall 
ensure that contracting officials identify and evaluate, at 
all stages of the acquisition process (including concept re-
finement, concept decision, and technology development), 
opportunities for the use of commercial computer software 
and, if practicable, use such software instead of developing 
new software. 
(b) REGULATIONS.—The Secretary of Defense shall 
review and revise the Defense Federal Acquisition Regula-
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tion Supplement, Part 207.103, to clarify that the pref-
erence for commercial items in the acquisition process in-
cludes a preference for commercial computer software, and 
the preference applies at all stages of the acquisition proc-
ess. 
SEC. 
807. 
COMPREHENSIVE 
PROPOSAL 
ANALYSIS 
RE-
QUIRED DURING SOURCE SELECTION. 
(a) REGULATIONS REQUIRED.—Not later than 120 
days after the date of the enactment of this Act, the Sec-
retary of Defense shall prescribe regulations regarding the 
comprehensive evaluation of a proposal for a major de-
fense acquisition program for which a significant propor-
tion of the research, design, development, manufacturing, 
assembly, or test and evaluation will be performed outside 
the United States. Such regulations shall— 
(1) require the offeror of such a proposal, in 
addition to providing a breakdown of costs as re-
quired by the Federal Acquisition Regulation, to 
provide a breakdown of costs not borne by the offer-
or as a result of activities performed outside the 
United States, and such costs shall— 
(A) include, at a minimum, costs borne by 
a foreign government that are not borne by a 
local, State, or Federal Government in the 
United States, such as government-borne— 
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(i) health care; 
(ii) retirement compensation; and 
(iii) workman’s compensation; 
(B) not include direct labor and material 
costs; and 
(C) be limited to those costs that would 
otherwise be allowable and allocable to the con-
tract for the major defense acquisition program 
if all activities were performed in the United 
States; 
(2) be applicable only to proposals submitted in 
response to a solicitation from the Department of 
Defense that requires cost or pricing data; 
(3) require the contracting officer responsible 
for conducting proposal analysis to consider such 
costs in any cost and price analysis performed; and 
(4) require the contracting officer to certify, 
prior to source selection, that the contracting officer 
has no reasonable grounds to believe that the final 
assessed price excludes any cost or other element of 
price (such as the monetary policy of a foreign gov-
ernment) that other offers performing in the United 
States could not also exclude. 
(b) ADDITIONAL APPLICABILITY WITH RESPECT TO 
SUBCONTRACTORS.—The regulations under subsection (a) 
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also shall apply with respect to any subcontractor (at any 
tier) of a prospective contractor if the subcontractor is ex-
pected to perform outside the United States a significant 
portion of the research, design, development, manufac-
turing, assembly, or test and evaluation under the pro-
posal being evaluated. 
(c) DEFINITION.—In this section, the term ‘‘major 
defense acquisition program’’ means a Department of De-
fense acquisition program that is a major defense acquisi-
tion program for the purposes of section 2430 of title 10, 
United States Code. 
Subtitle B—Amendments to Gen-
eral 
Contracting 
Authorities, 
Procedures, and Limitations 
SEC. 811. ACQUISITION WORKFORCE EXPEDITED HIRING 
AUTHORITY. 
Section 1705 of title 10, United States Code, is 
amended by adding at the end the following new sub-
section: 
‘‘(h) EXPEDITED HIRING AUTHORITY.— 
‘‘(1) For purposes of sections 3304, 5333, and 
5753 of title 5, United States Code, the Secretary 
of Defense may— 
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‘‘(A) designate any category of acquisition 
positions within the Department of Defense as 
shortage category positions; and 
‘‘(B) utilize the authorities in such sections 
to recruit and appoint highly qualified persons 
directly to positions so designated. 
‘‘(2) The Secretary may not appoint a person to 
a position of employment under this subsection after 
September 30, 2012.’’. 
SEC. 812. DEFINITION OF SYSTEM FOR DEFENSE ACQUISI-
TION CHALLENGE PROGRAM. 
Section 2359b of title 10, United States Code, is 
amended by adding at the end the following new sub-
section: 
‘‘(l) SYSTEM DEFINED.—In this section, the term 
‘system’— 
‘‘(1) means— 
‘‘(A) the organization of hardware, soft-
ware, material, facilities, personnel, data, and 
services needed to perform a designated func-
tion with specified results (such as the gath-
ering of specified data, its processing, and its 
delivery to users); or 
‘‘(B) a combination of two or more inter-
related pieces (or sets) of equipment arranged 
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(6) Such other options as the Secretary deems 
to best satisfy the criteria identified under sub-
section (b). 
(d) REPORT.—(1) Not later than 180 days after the 
date of enactment of this Act, the Secretary shall submit 
to the Committees on Armed Services of the Senate and 
the House of Representatives, the Committee on Home-
land Security and Governmental Affairs of the Senate, 
and the Committee on Oversight and Government Reform 
of the House of Representatives a report on the acquisi-
tion strategy adopted pursuant to subsection (a). 
(2) The report shall include a discussion of each of 
the options considered pursuant to subsection (c) and the 
extent to which each option addresses the criteria identi-
fied under subsection (b), and shall include a plan to im-
plement within 18 months after the date of enactment of 
this Act the acquisition strategy adopted by the Secretary. 
(e) REVIEW OF ACQUISITION STRATEGY.—As consid-
ered appropriate by the Secretary, but not less often than 
once every 3 years, the Secretary shall review and, as nec-
essary, update the acquisition strategy adopted pursuant 
to subsection (a) to ensure that it best addresses the cri-
teria identified under subsection (b). 
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