IB
Union Calendar No. 319
105TH CONGRESS
2D SESSION
H. R. 1778
[Report No. 105–133, Part I]
To reform the Department of Defense.
IN THE HOUSE OF REPRESENTATIVES
JUNE 4, 1997
Mr. SPENCE (for himself and Mr. DELLUMS (by request)) introduced the fol-
lowing bill; which was referred to the Committee on National Security,
and in addition to the Committees on Commerce, and Transportation and
Infrastructure, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
JUNE 17, 1997
Reported from the Committee on National Security with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
JUNE 17, 1997
Referral to the Committees on Commerce and Transportation and
Infrastructure extended for a period ending not later than July 18, 1997
JUNE 17, 1997
The bill and amendment recommended by the Committee on National Security
referred to the Committee on Government Reform and Oversight for a
period ending not later than July 18, 1997 for consideration of such pro-
visions of the bill and amendment as fall within the jurisdiction of that
committee pursuant to clause 1(g), rule X
JULY 18, 1997
Referral to the Committees on Commerce, Government Reform and Oversight,
and Transportation and Infrastructure extended for a period ending not
later than September 30, 1997
SEPTEMBER 30, 1997
Referral to the Committees on Commerce, Transportation and Infrastructure,
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and Government Reform and Oversight extended for a period ending not
later than March 30, 1998
MARCH 30, 1998
Referral to the Committees on Commerce, Transportation and Infrastructure,
and Government Reform and Oversight extended for a period ending not
later than March 31, 1998
MARCH 31, 1998
Referral to the Committees on Commerce, Transportation and Infrastructure,
and Government Reform and Oversight extended for a period ending not
later than April 1, 1998
APRIL 1, 1998
Referral to the Committees on Commerce, Transportation and Infrastructure,
and Government Reform and Oversight extended for a period ending not
later than April 30, 1998
APRIL 30, 1998
Referral to the Committees on Commerce, Transportation and Infrastructure,
and Government Reform and Oversight extended for a period ending not
later than June 2, 1998
JUNE 2, 1998
Referral to the Committees on Commerce, Transportation and Infrastructure,
and Government Reform and Oversight extended for a period ending not
later than June 3, 1998
JUNE 3, 1998
Referral to the Committees on Commerce, Transportation and Infrastructure,
and Government Reform and Oversight extended for a period ending not
later than June 4, 1998
JUNE 4, 1998
Committees on Commerce, Transportation and Infrastructure, and Govern-
ment Reform and Oversight discharged; committed to the Committee of
the Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on June 4, 1997]
A BILL
To reform the Department of Defense.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘De-
fense Reform Act of 1997’’.
(b) TABLE OF CONTENTS.—The table of contents of this
Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Congressional defense committees defined.
TITLE I—DEFENSE PERSONNEL REFORMS
Sec. 101. Reduction in personnel assigned to management headquarters and head-
quarters support activities.
Sec. 102. Additional reduction in defense acquisition workforce.
Sec. 103. Change in required reduction in annuity for certain defense acquisition
personnel who are separated before age 55.
Sec. 104. Separation pay for defense acquisition personnel.
Sec. 105. Personnel reductions in United States Transportation Command.
TITLE II—DEFENSE BUSINESS PRACTICES REFORMS
Subtitle A—Competitive Procurement Requirements
Sec. 201. Competitive procurement of finance and accounting services.
Sec. 202. Competitive procurement of services to dispose of surplus defense prop-
erty.
Sec. 203. Competitive procurement of functions performed by Defense Information
Systems Agency.
Sec. 204. Competitive procurement of printing and duplication services.
Sec. 205. Competitive procurement of certain ophthalmic services.
Sec. 206. Increased use by Defense Agencies of contractors to perform commercial
and industrial type functions.
Subtitle B—Reform of Conversion Process
Sec. 211. Development of standard forms regarding performance work statement
and request for proposal for conversion of certain operational
functions of military installations.
Sec. 212. Study and notification requirements for conversion of commercial and
industrial type functions to contractor performance.
Sec. 213. Collection and retention of cost information data on contracted out serv-
ices and functions.
Subtitle C—Other Reforms
Sec. 221. Reduction in overhead costs of Inventory Control Points.
Sec. 222. Consolidation of procurement technical assistance and electronic com-
merce technical assistance.
Sec. 223. Permanent authority regarding conveyance of utility systems.
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TITLE III—DEFENSE ENVIRONMENTAL REFORMS
Subtitle A—Superfund Reforms Generally
Sec. 301. Revision of methods of remediation.
Sec. 302. Requirement to consider reasonably anticipated future land use.
Sec. 303. Limitation on criminal liability of Federal officers, employees, and
agents.
Sec. 304. State role at Federal facilities.
Subtitle B—Superfund and Other Environmental Law Reforms Applicable to
Department of Defense or Department of Energy
Sec. 311. Standards for remedial actions conducted at defense facilities not on the
National Priorities List.
Sec. 312. Authority of Secretary of Defense and Secretary of Energy to terminate
long-term operation and maintenance of remedial actions and
corrective actions.
Sec. 313. Notification to Congress of costs of Department of Energy environ-
mental compliance agreements.
Sec. 314. Clean Air Act standards for military sources.
Sec. 315. Authority of Administrator of Environmental Protection Agency with
respect to application of Solid Waste Disposal Act to military
munitions.
TITLE IV—MISCELLANEOUS ADDITIONAL DEFENSE REFORMS
Sec. 401. Long-term charter contracts for acquisition of auxiliary vessels for the
Department of Defense.
Sec. 402. Fiber-optics based telecommunications linkage of military installations.
Sec. 403. Repeal of requirement for contractor guarantees on major weapon sys-
tems.
Sec. 404. Requirements relating to micro-purchases of commercial items.
Sec. 405. Availability of simplified procedures to commercial item procurements.
Sec. 406. Termination of the Armed Services Patent Advisory Board.
Sec. 407. Coordination of Department of Defense criminal investigations and au-
dits.
Sec. 408. Department of Defense boards, commissions, and advisory committees.
TITLE V—COMMISSION ON DEFENSE ORGANIZATION AND
STREAMLINING
Sec. 501. Establishment of Commission.
Sec. 502. Duties of Commission.
Sec. 503. Reports.
Sec. 504. Powers.
Sec. 505. Commission procedures.
Sec. 506. Personnel matters.
Sec. 507. Miscellaneous administrative provisions.
Sec. 508. Funding.
Sec. 509. Termination of the Commission.
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SEC. 2. CONGRESSIONAL DEFENSE COMMITTEES DEFINED.
For purposes of this Act, the term ‘‘congressional de-
fense committees’’ means—
(1) the Committee on Armed Services and the
Committee on Appropriations of the Senate; and
(2) the Committee on National Security and the
Committee on Appropriations of the House of Rep-
resentatives.
TITLE I—DEFENSE PERSONNEL
REFORMS
SEC. 101. REDUCTION IN PERSONNEL ASSIGNED TO MAN-
AGEMENT 
HEADQUARTERS 
AND 
HEAD-
QUARTERS SUPPORT ACTIVITIES.
(a) IN GENERAL.—(1) Chapter 3 of title 10, United
States Code, is amended by adding at the end the following
new section:
‘‘§ 130a. Management headquarters and headquarters
support activities personnel: limitation
‘‘(a) LIMITATION.—Effective October 1, 2001, the num-
ber of management headquarters and headquarters support
activities personnel in the Department of Defense may not
exceed the 75 percent of the baseline number.
‘‘(b) PHASED REDUCTION.—The number of manage-
ment headquarters and headquarters support activities per-
sonnel in the Department of Defense—
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‘‘(1) as of October 1, 1998, may not exceed 90
percent of the baseline number;
‘‘(2) as of October 1, 1999, may not exceed 85
percent of the baseline number; and
‘‘(3) as of October 1, 2000, may not exceed 80
percent of the baseline number.
‘‘(c) BASELINE NUMBER.—In this section, the term
‘baseline number’ means the number of management head-
quarters and headquarters support activities personnel in
the Department of Defense as of October 1, 1997.
‘‘(d) MANAGEMENT
HEADQUARTERS
AND
HEAD-
QUARTERS SUPPORT ACTIVITIES PERSONNEL DEFINED.—
In this section:
‘‘(1) The term ‘management headquarters and
headquarters support activities personnel’ means
military and civilian personnel of the Department of
Defense who are assigned to, or employed in, func-
tions in management headquarters activities or in
management headquarters support activities.
‘‘(2) The terms ‘management headquarters ac-
tivities’ and ‘management headquarters support ac-
tivities’ have the meanings given those terms in
Department of Defense Directive 5100.73, entitled
‘Department of Defense Management Headquarters
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and Headquarters Support Activities’, as in effect on
November 12, 1996.
‘‘(e) LIMITATION ON REASSIGNMENT OF FUNCTIONS.—
In carrying out reductions in the number of personnel as-
signed to, or employed in, management headquarters and
headquarters support activities in order to comply with this
section, the Secretary of Defense and the Secretaries of the
military departments may not reassign functions in order
to evade the requirements of this section.
‘‘(f) FLEXIBILITY.—If the Secretary of Defense deter-
mines, and certifies to Congress, that the limitation in sub-
section (b) with respect to any fiscal year would adversely
affect United States national security, the Secretary may
waive the limitation under that subsection with respect to
that fiscal year. If the Secretary of Defense determines, and
certifies to Congress, that the limitation in subsection (a)
during fiscal year 2001 would adversely affect United
States national security, the Secretary may waive the limi-
tation under that subsection with respect to that fiscal year.
The authority under this subsection may be used only once,
with respect to a single fiscal year.’’.
(2) The table of sections at the beginning of such chap-
ter is amended by adding at the end the following new item:
‘‘130a. Management headquarters and headquarters support activities personnel:
limitation.’’.
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(b) IMPLEMENTATION REPORT.—Not later than Janu-
ary 15, 1998, the Secretary of Defense shall submit to Con-
gress a report—
(1) containing a plan to achieve the personnel
reductions required by section 130a of title 10, United
States Code, as added by subsection (a); and
(2) including the recommendations of the Sec-
retary regarding—
(A) the revision, replacement, or augmenta-
tion of Department of Defense Directive 5100.73,
entitled ‘‘Department of Defense Management
Headquarters and Headquarters Support Activi-
ties’’, as in effect on November 12, 1996; and
(B) the revision of the definitions of the
terms ‘‘management headquarters activities’’ and
‘‘management headquarters support activities’’
under that Directive so that those terms apply
uniformly throughout the Department of Defense.
(c) CODIFICATION OF PRIOR PERMANENT LIMITATION
ON OSD PERSONNEL.—(1) Chapter 4 of title 10, United
States Code, is amended by adding at the end a new section
143 consisting of—
(A) a heading as follows:
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‘‘§ 143. Office of the Secretary of Defense personnel:
limitation’’;
and
(B) a text consisting of the text of subsections (a)
through (f) of section 903 of the National Defense Au-
thorization Act for Fiscal Year 1997 (Public Law
104–201; 110 Stat. 2617).
(2) The table of sections at the beginning of such chap-
ter is amended by adding at the end the following new item:
‘‘143. Office of the Secretary of Defense personnel: limitation.’’.
(3) Section 903 of the National Defense Authorization
Act for Fiscal Year 1997 (Public Law 104–201; 110 Stat.
2617) is repealed.
SEC. 102. ADDITIONAL REDUCTION IN DEFENSE ACQUISI-
TION WORKFORCE.
(a) IN GENERAL.—(1) Chapter 87 of title 10, United
States Code, is amended by adding at the end the following
new section:
‘‘§ 1765. Limitations on number of personnel
‘‘(a) LIMITATION.—Effective October 1, 2001, the num-
ber of defense acquisition personnel may not exceed the base-
line number reduced by 124,000.
‘‘(b) PHASED REDUCTION.—The number of the number
of defense acquisition personnel—
‘‘(1) as of October 1, 1998, may not exceed the
baseline number reduced by 40,000;
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‘‘(2) as of October 1, 1999, may not exceed the
baseline number reduced by 80,000; and
‘‘(3) as of October 1, 2000, may not exceed the
baseline number reduced by 102,000;
‘‘(c) BASELINE NUMBER.—For purposes of this sec-
tion, the baseline number is the total number of defense ac-
quisition personnel as of October 1, 1997.
‘‘(d) DEFENSE ACQUISITION PERSONNEL DEFINED.—
(1) In this section, the term ‘defense acquisition personnel’
means military and civilian personnel (other than civilian
personnel described in paragraph (2)) who are assigned to,
or employed in, acquisition organizations of the Depart-
ment of Defense (as specified in Department of Defense In-
struction numbered 5000.58 dated January 14, 1992).
‘‘(2) Such term does not include civilian employees of
the Department of Defense who are employed at a mainte-
nance depot.’’.
(2) The table of sections at the beginning of such chap-
ter is amended by adding at the end the following new item:
‘‘1765. Limitations on number of personnel.’’.
(b) IMPLEMENTATION REPORT.—Not later than Janu-
ary 15, 1998, the Secretary of Defense shall submit to Con-
gress a report—
(1) containing a plan to achieve the personnel
reductions required by section 1765 of title 10, United
States Code, as added by subsection (a); and
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(2) containing any recommendations (including
legislative proposals) that the Secretary considers nec-
essary to fully achieve such reductions.
(c) TECHNICAL REFERENCE CORRECTION.—Section
1721(c) of title 10, United States Code, is amended by strik-
ing out ‘‘November 25, 1988’’ and inserting in lieu thereof
‘‘November 12, 1996’’.
SEC. 103. CHANGE IN REQUIRED REDUCTION IN ANNUITY
FOR CERTAIN DEFENSE ACQUISITION PER-
SONNEL WHO ARE SEPARATED BEFORE AGE
55.
(a) ALTERNATIVE REDUCTION.—In the case of a civil-
ian employee of the Department of Defense described in sub-
section (b) who is separated during fiscal year 1998 in the
manner described in section 8336(d) of title 5, United
States Code, the resulting reduction in annuity required to
be made under section 8339(h) of such title shall be 1⁄12 of
1 percent for each full month the employee is under 55 years
of age at the date of separation (rather than 1⁄6 of 1 per-
cent).
(b) ELIGIBLE DEFENSE ACQUISITION PERSONNEL.—
A civilian employee of the Department of Defense referred
to in subsection (a) is a civilian employee who, as of the
date of separation—
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(1) is covered by the definition of ‘‘defense acqui-
sition personnel’’ in section 1765(d) of title 10,
United States Code, as added by section 102;
(2) is serving in grade GS–13 of the General
Schedule or above; and
(3) is 50 years of age or older.
(c) EXCEPTION.—Subsection (a) shall not apply if the
civilian employee accepts separation pay—
(1) under section 5597 of title 5, United States
Code; or
(2) under section 104.
(d) REPORTING REQUIREMENTS.—(1) Not later than
March 31, 1998, the Secretary of Defense shall submit to
Congress a report specifying—
(A) the number of civilian employees of the De-
partment of Defense (by age and grade) who have re-
ceived the alternative annuity reduction authorized
by this section; and
(B) the anticipated number of such employees
who will receive the alternative annuity reduction
during fiscal year 1998.
(2) Not later than December 1, 1998, the Secretary of
Defense shall submit to Congress a final report covering fis-
cal year 1998 and containing the information required by
paragraph (1)(A).
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(d) RELATIONSHIP TO OTHER SPECIAL AUTHORITY.—
A civilian employee who receives separation pay under this
section may not also receive a change under section 103
in the reduction otherwise made to the employee’s annuity
under section 8339(h) of title 5, United States Code.
(e) REPORT.—In the report required for fiscal year
1998 under section 4436(c) of the National Defense Author-
ization Act for Fiscal Year 1993 (Public Law 102–484; 5
U.S.C. 5597 note), the Secretary of Defense shall include,
as a separate portion of the report, information on the man-
ner in which the authority provided in this section was im-
plemented and the effectiveness and costs of carrying out
the authority.
SEC. 105. PERSONNEL REDUCTIONS IN UNITED STATES
TRANSPORTATION COMMAND.
(a) PURPOSE OF LIMITATION.—The purpose of the
limitation on the number of United States Transportation
Command personnel established by section 165(d) of title
10, United States Code, as added by subsection (b), is to
recognize and continue the effort of the Secretary of Defense
to eliminate administrative duplication and inefficiencies
in the United States Transportation Command.
(b) LIMITATION.—Section 165 of title 10, United
States Code, is amended by adding at the end the following
new subsection:
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‘‘(d) LIMITATION
ON UNITED STATES TRANSPOR-
TATION COMMAND PERSONNEL.—(1) Effective October 1,
1998, the number of United States Transportation Com-
mand personnel may not exceed 66,238.
‘‘(2) In this subsection, the term ‘United States Trans-
portation Command personnel’ means military and civil-
ian personnel who are assigned to, or employed in, the
United States Transportation Command (including the
components of that combatant command).’’.
(c) SOURCE OF REDUCTIONS.—(1) In reducing the
number of United States Transportation Command person-
nel in order to meet the limitation required by section
165(d) of title 10, United States Code, as added by sub-
section (b), the Secretary of Defense shall limit such reduc-
tions to United States Transportation Command personnel
described in paragraph (2).
(2) The United States Transportation Command per-
sonnel referred to in paragraph (1) are members of the
Armed Forces and civilian personnel of the Department of
Defense who are assigned to, or employed in, the United
States Transportation Command (including the compo-
nents of that combatant command) and who are in one of
the following occupational classifications established to
group similar occupations and work positions into a con-
sistent structure:
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(A) Enlisted members in the Functional Support
and Administration classification (designated as oc-
cupational code 5XX), as described in Department of
Defense Instruction 1312.1, dated August 9, 1995, re-
garding ‘‘Department of Defense Occupational Infor-
mation Collection and Reporting’’.
(B) Officers in the General Officers and Execu-
tives classification (designated as occupational code
1XX), Administrators (designated as occupational
code 7XX), and Supply, Procurement, and Allied Of-
ficers classification (designated as occupational code
8XX), as described in such instruction.
(C) Civilian personnel in the Program Manage-
ment classification (designated as occupational code
GS–0340), Accounting and Budget classification (des-
ignated as occupational code GS–0500 and related
codes), Business and Industry classification (des-
ignated as occupational code GS–1100 and related
codes), and Supply classification (designated as occu-
pational code GS–2000 and related codes), as de-
scribed in Office of Personnel Management document
El–12, dated November 1, 1995, entitled ‘‘Federal Oc-
cupational Groups’’.
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TITLE II—DEFENSE BUSINESS
PRACTICES REFORMS
Subtitle A—Competitive
Procurement Requirements
SEC. 201. COMPETITIVE PROCUREMENT OF FINANCE AND
ACCOUNTING SERVICES.
(a) COMPETITIVE PROCUREMENT REQUIRED.—Chap-
ter 165 of title 10, United States Code, is amended by add-
ing at the end the following new section:
‘‘§ 2784. Competitive procurement of finance and ac-
counting services
‘‘(a) COMPETITIVE PROCUREMENT REQUIRED.—Be-
ginning not later than October 1, 1998, the Secretary of
Defense shall competitively procure finance and accounting
services for the Department of Defense, including non-
appropriated fund instrumentalities of the Department of
Defense. The Secretary shall establish procedures to conduct
competitions among private-sector sources and the Defense
Finance and Accounting Service and other interested Fed-
eral agencies. Such procedures shall not permit a compo-
nent of the Defense Finance and Accounting Service to com-
pete against any other component of the Defense Finance
and Accounting Service to provide such finance and ac-
counting services.
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‘‘(b) IMPROVEMENT OF COMPETITIVE ABILITY.—Be-
fore conducting a competition under subsection (a) for the
procurement of finance and accounting services that are
being provided by a component of the Defense Finance and
Accounting Service, the Secretary of Defense shall provide
the component with an opportunity to establish its most
efficient organization.
‘‘(c) REPORTING REQUIREMENTS.—Not later than 90
days after the end of each fiscal year in which finance and
accounting services are competitively procured under sub-
section (a), the Secretary of Defense shall submit to Con-
gress a report specifying the total volume of finance and
accounting services procured by the Department of Defense
during that fiscal year—
‘‘(1) from sources within the Department of De-
fense;
‘‘(2) from private-sector sources; and
‘‘(3) from other sources in the Federal Govern-
ment.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of such chapter is amended by adding at the
end the following new item:
‘‘2784. Competitive procurement of finance and accounting services.’’.
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SEC. 202. COMPETITIVE PROCUREMENT OF SERVICES TO
DISPOSE OF SURPLUS DEFENSE PROPERTY.
(a) COMPETITIVE
PROCUREMENT
REQUIRED.—(1)
Chapter 153 of title 10, United States Code, is amended
by inserting after section 2572 the following new section:
‘‘§ 2573. Competitive procurement of services to dis-
pose of surplus property
‘‘(a) COMPETITIVE PROCUREMENT OF SERVICES.—Be-
ginning not later than October 1, 1998, the Secretary of
Defense shall competitively procure services for the Depart-
ment of Defense in connection with the disposal of surplus
property at each site at which the Defense Reutilization and
Marketing Service operates. The Secretary shall establish
procedures to conduct competitions among private-sector
sources and the Defense Reutilization and Marketing Serv-
ice and other interested Federal agencies for the perform-
ance of such services at a particular site.
‘‘(b) IMPROVEMENT OF COMPETITIVE ABILITY.—Be-
fore conducting a competition under subsection (a) for the
procurement of services described in such subsection that are
being provided by a component of the Defense Reutilization
and Marketing Service, the Secretary of Defense shall pro-
vide the component with an opportunity to establish its
most efficient organization.
‘‘(c) REPORTING REQUIREMENTS.—Not later than 90
days after the end of each fiscal year in which services for
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the disposal of surplus property are competitively procured
under subsection (a), the Secretary of Defense shall submit
to Congress a report specifying—
‘‘(1) the type and volume of such services pro-
cured by the Department of Defense during that fiscal
year from the Defense Reutilization and Marketing
Service and from other sources;
‘‘(2) the former sites of the Defense Reutilization
and Marketing Service operated during that fiscal
year by contractors (other than the Defense Reutiliza-
tion and Marketing Service); and
‘‘(3) the total amount of any fees paid by such
contractors in connection with the performance of
such services during that fiscal year.
‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to alter the requirements regarding
the identification or demilitarization of an item of excess
property or surplus property of the Department of Defense
before the disposal of the item.
‘‘(e) DEFINITIONS.—In this section:
‘‘(1) The term ‘surplus property’ means any per-
sonal excess property which is not required for the
needs and the discharge of the responsibilities of all
Federal agencies and the disposal of which is the re-
sponsibility of the Department of Defense.
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‘‘(2) The term ‘excess property’ means any per-
sonal property under the control of the Department of
Defense which is not required for its needs and the
discharge of its responsibilities, as determined by the
Secretary of Defense.’’.
(2) The table of sections at the beginning of such chap-
ter is amended by inserting after the item relating to section
2572 the following new item:
‘‘2573. Competitive procurement of services to dispose of surplus property.’’.
(b) IMPLEMENTATION REPORT.—Not later than March
1, 1998, the Secretary of Defense shall submit to Congress
a report—
(1) containing a plan to implement the competi-
tive procurement requirements of section 2573 of title
10, United States Code, as added by subsection (a);
and
(2) identifying other functions of the Defense Re-
utilization and Marketing Service that the Secretary
considers suitable for performance by private-sector
sources.
SEC. 203. COMPETITIVE PROCUREMENT OF FUNCTIONS
PERFORMED BY DEFENSE INFORMATION SYS-
TEMS AGENCY.
(a) COMPETITIVE
PROCUREMENT
REQUIRED.—(1)
Chapter 146 of title 10, United States Code, is amended
by adding at the end the following new section:
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‘‘§ 2474. Competitive procurement of information serv-
ices
‘‘(a) COMPETITIVE PROCUREMENT REQUIRED.—Be-
ginning not later than October 1, 1998, the Secretary of
Defense shall competitively procure those commercial and
industrial type functions performed before that date by the
Defense Information Systems Agency. The Secretary shall
establish procedures to conduct competitions among private-
sector sources and the Defense Information Systems Agency
and other interested Federal agencies.
‘‘(b) IMPROVEMENT OF COMPETITIVE ABILITY.—Be-
fore conducting a competition under subsection (a) for the
procurement of information services that are being provided
by a component of the Defense Information Systems Agency,
the Secretary of Defense shall provide the component with
an opportunity to establish its most efficient organization.
‘‘(c) EXCEPTION FOR CLASSIFIED FUNCTIONS.—(1)
The requirement of subsection (a) shall not apply to the
procurement of services involving a classified function per-
formed by the Defense Information Systems Agency.
‘‘(2) In this subsection, the term ‘classified function’
means any telecommunications or information services
that—
‘‘(A) involve intelligence activities;
‘‘(B) involve cryptologic activities related to na-
tional security;
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‘‘(C) involve command and control of military
forces;
‘‘(D) involve equipment that is an integral part
of a weapon or weapons system; or
‘‘(E) are critical to the direct fulfillment of mili-
tary or intelligence missions (other than routine ad-
ministrative and business applications, such as pay-
roll, finance, logistics, and personnel management ap-
plications).
‘‘(d) REPORTING REQUIREMENTS.—Not later than 90
days after the end of each fiscal year in which services are
competitively procured under subsection (a), the Secretary
of Defense shall submit to Congress a report specifying the
type and volume of such services procured by the Depart-
ment of Defense during that fiscal year—
‘‘(1) from sources within the Department of De-
fense;
‘‘(2) from private-sector sources; and
‘‘(3) from other sources in the Federal Govern-
ment.’’.
(2) The table of sections at the beginning of such chap-
ter is amended by adding at the end the following new item:
‘‘2474. Competitive procurement of information services.’’.
(b) IMPLEMENTATION REPORT.—Not later than March
1, 1998, the Secretary of Defense shall submit to Congress
a report—
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(1) containing a plan to implement the competi-
tive procurement requirements of section 2474 of title
10, United States Code, as added by subsection (a);
(2) describing the services currently provided by
the Defense Information Systems Agency that will be
affected by such requirements; and
(3) describing the manner in which the Secretary
proposes to change the support infrastructure of the
Defense Information Systems Agency to meet such re-
quirements.
SEC. 204. COMPETITIVE PROCUREMENT OF PRINTING AND
DUPLICATION SERVICES.
(a) EXTENSION.—Subsection (a) of section 351 of the
National Defense Authorization Act for Fiscal Year 1996
(Public Law 104–106; 110 Stat. 266) is amended—
(1) by striking out ‘‘and 1997’’ and inserting in
lieu thereof ‘‘through 1998’’; and
(2) by striking out ‘‘Defense Printing Service’’
and inserting in lieu thereof ‘‘Defense Automation
and Printing Service’’.
(b) PROHIBITION ON SURCHARGE FOR SERVICES.—
Such section is further amended by adding at the end the
following new subsection:
‘‘(d) PROHIBITION ON IMPOSITION OF SURCHARGE.—
The Defense Automation and Printing Service may not im-
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pose a surcharge on any printing and duplication service
for the Department of Defense that is procured from a
source outside of the Department.’’.
SEC. 205. COMPETITIVE PROCUREMENT OF CERTAIN OPH-
THALMIC SERVICES.
(a) COMPETITIVE PROCUREMENT REQUIRED.—Begin-
ning not later than October 1, 1998, the Secretary of De-
fense shall competitively procure from private-sector
sources, or other sources outside of the Department of De-
fense, all ophthalmic services related to the provision of sin-
gle vision and multivision eyeware for members of the
Armed Forces, retired members, and certain covered bene-
ficiaries under chapter 55 of title 10, United States Code,
who would otherwise receive such opthalmic services through
the Department of Defense.
(b) EXCEPTION.—Subsection (a) shall not apply to the
extent that the Secretary of Defense determines that the use
of sources within the Department of Defense to provide such
ophthalmic services—
(1) is necessary to meet the readiness require-
ments of the Armed Forces; or
(2) is more cost effective.
(c) COMPLETION OF EXISTING ORDERS.—Subsection
(a) shall not apply to orders for ophthalmic services received
on or before September 30, 1998.
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SEC. 206. INCREASED USE BY DEFENSE AGENCIES OF CON-
TRACTORS TO PERFORM COMMERCIAL AND
INDUSTRIAL TYPE FUNCTIONS.
(a) INCREASED USE REQUIRED.—Section 2461 of title
10, United States Code, is amended—
(1) by redesignating subsection (g) as subsection
(h); and
(2) by inserting after subsection (f) the following
new subsection:
‘‘(g) INCREASED USE OF CONTRACTORS BY DEFENSE
AGENCIES.—(1) In each fiscal year beginning after Septem-
ber 30, 1999, not less than 33 percent of the commercial
and industrial type functions of the Defense Agencies shall
be performed by private contractors. The Secretary of
Defense may achieve this goal before that date.
‘‘(2) In this subsection, the term ‘Defense Agency’
means a program activity specified in the table entitled
‘Program and Financing’ for operation and maintenance,
Defense-wide activities, in the budget of the President trans-
mitted to Congress for fiscal year 1998 pursuant to section
1105 of title 31 (and any successor of such activity).’’.
(b) IMPLEMENTATION PLAN.—Not later than March 1,
1998, the Secretary of Defense shall submit to Congress a
plan to accomplish the increased rate of outsourcing re-
quired by subsection (g) of section 2461 of title 10, United
States Code, as added by subsection (a). The plan shall
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identify the specific Defense Agency functions to be consid-
ered for contractor performance, the number of military and
civilian positions affected, and relevant milestones for the
outsourcing of the identified functions.
Subtitle B—Reform of Conversion
Process
SEC. 211. DEVELOPMENT OF STANDARD FORMS REGARDING
PERFORMANCE WORK STATEMENT AND RE-
QUEST FOR PROPOSAL FOR CONVERSION OF
CERTAIN OPERATIONAL FUNCTIONS OF MILI-
TARY INSTALLATIONS.
(a) STANDARD FORMS REQUIRED.—Chapter 146 of
title 10, United States Code, is amended by inserting after
section 2474, as added by section 203, the following new
section:
‘‘§ 2475. Military installations: use of standard forms
in conversion process
‘‘(a) STANDARDIZATION OF REQUIREMENTS.—(1) The
Secretary of Defense shall develop standard forms (to be
known as a ‘standard performance work statement’ and a
‘standard request for proposal’) to be used in the consider-
ation for conversion to contractor performance of those com-
mercial services and functions at military installations that
have been converted to contractor performance at a rate of
50 percent or more, as determined under subsection (c).
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‘‘(2) A separate standard form shall be developed for
each service and function covered by paragraph (1) and the
forms shall be used throughout the Department of Defense
in lieu of the performance work statement and request for
proposal otherwise required under the procedures and
requirements of Office of Management and Budget Circular
A–76 (or any successor administrative regulation or pol-
icy).
‘‘(3) The Secretary shall develop and implement the
standard forms not later than October 1, 1998.
‘‘(b) INAPPLICABILITY OF ELEMENTS OF OMB CIR-
CULAR A–76.—On and after October 1, 1998, the proce-
dures and requirements of Office of Management and Budg-
et Circular A–76 regarding performance work statements
and requests for proposals shall not apply with respect to
the conversion to contractor performance at a military in-
stallation of a service or function for which a standard form
is required under subsection (a).
‘‘(c) DETERMINATION OF CONTRACTOR PERFORMANCE
PERCENTAGE.—In determining the percentage at which a
particular commercial service or function at military in-
stallations has been converted to contractor performance,
the Secretary of Defense shall take into consideration all
military installations and use the final estimate of the per-
centage of contractor performance of service and functions
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contained in the most recent commercial and industrial
activity inventory database established under Office of
Management and Budget Circular A–76.
‘‘(d) EXCLUSION OF MULTI-FUNCTION CONVERSION.—
If a commercial service or function for which a standard
form is developed under subsection (a) is combined with an-
other service or function (for which such a form is not re-
quired) for purposes of considering the services and func-
tions at the military installation for conversion to contrac-
tor performance, a standard form developed under sub-
section (a) may not be used in the conversion process in
lieu of the procedures and requirements of Office of Manage-
ment and Budget Circular A–76 regarding performance
work statements and requests for proposals.
‘‘(e) EFFECT ON OTHER LAWS.—Nothing in this sec-
tion shall be construed to supersede any other requirements
or limitations, specifically contained in this chapter, on the
conversion to contractor performance of activities performed
by civilian employees of the Department of Defense.
‘‘(f) MILITARY INSTALLATION DEFINED.—In this sec-
tion, the term ‘military installation’ means a base camp,
post, station, yard, center, homeport facility for any ship,
or other activity under the jurisdiction of the Department
of Defense, including any leased facility.’’.
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(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of such chapter is amended by inserting after
the item relating to section 2474, as added by section 203,
the following new item:
‘‘2475. Military installations: use of standard forms in conversion process.’’.
SEC. 212. STUDY AND NOTIFICATION REQUIREMENTS FOR
CONVERSION OF COMMERCIAL AND INDUS-
TRIAL TYPE FUNCTIONS TO CONTRACTOR
PERFORMANCE.
(a) NOTIFICATION.—Section 2461 of title 10, United
States Code, is amended by striking out subsections (a) and
(b) and inserting in lieu thereof the following new sub-
sections:
‘‘(a) NOTIFICATION OF CONVERSION STUDY.—(1) In
the case of a commercial or industrial type function of the
Department of Defense that on October 1, 1980, was being
performed by Department of Defense civilian employees, the
Secretary of Defense shall notify Congress of any decision
to study the function for possible conversion to performance
by a private contractor. The notification shall include infor-
mation regarding the anticipated length and cost of the
study.
‘‘(2) A study of a commercial or industrial type func-
tion for possible conversion to contractor performance shall
include the following:
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‘‘(A) A comparison of the performance of the
function by Department of Defense civilian employees
and by private contractor to determine whether con-
tractor performance will result in savings to the Gov-
ernment over the life of the contract.
‘‘(B) An examination of the potential economic
effect on employees who would be affected by the con-
version, and the potential economic effect on the local
community and the United States if more than 75
employees perform the function.
‘‘(C) An examination of the effect of contracting
for performance of the function on the military mis-
sion of the function.
‘‘(b) NOTIFICATION OF CONVERSION DECISION.—If, as
a result of the completion of a study under subsection (a)
regarding the possible conversion of a function to perform-
ance by a private contractor, a decision is made to convert
the function to contractor performance, the Secretary of De-
fense shall notify Congress of the conversion decision. The
notification shall—
‘‘(1) indicate that the study conducted regarding
conversion of the function to performance by a private
contractor has been completed;
‘‘(2) certify that the comparison required by sub-
section (a)(2)(A) as part of the study demonstrates
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that the performance of the function by a private con-
tractor will result in savings to the Government over
the life of the contract;
‘‘(3) certify that the entire comparison is avail-
able for examination; and
‘‘(4) contain a timetable for completing conver-
sion of the function to contractor performance.’’.
(b) WAIVER FOR SMALL FUNCTIONS.—Subsection (d)
of such section is amended by striking out ‘‘45 or fewer’’
and inserting in lieu thereof ‘‘20 or fewer’’.
SEC. 213. COLLECTION AND RETENTION OF COST INFORMA-
TION DATA ON CONTRACTED OUT SERVICES
AND FUNCTIONS.
(a) COLLECTION AND RETENTION REQUIRED.—Sec-
tion 2463 of title 10, United States Code, is amended—
(1) by redesignating subsections (a) and (b) as
subsections (b) and (c), respectively; and
(2) by inserting after the section heading the fol-
lowing new subsection:
‘‘(a) REQUIREMENTS IN CONNECTION WITH CONVER-
SION
TO CONTRACTOR PERFORMANCE.—With respect to
each contract converting the performance of a service or
function of the Department of Defense to contractor per-
formance (and any extension of such a contract), the Sec-
retary of Defense shall collect, during the term of the con-
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tract or extension, but not to exceed five years, cost informa-
tion data regarding performance of the service or function
by private contractor employees. The Secretary shall pro-
vide for the permanent retention of information collected
under this subsection.’’.
(b) CONFORMING AMENDMENTS.—Such section is fur-
ther amended—
(1) in subsection (b), as redesignated by sub-
section (a)(1)—
(A) by striking out the subsection heading
and inserting in lieu thereof ‘‘REQUIREMENTS IN
CONNECTION WITH RETURN TO EMPLOYEE PER-
FORMANCE.—’’; and
(B) by striking out ‘‘to which this section
applies’’ and inserting in lieu thereof ‘‘described
in subsection (c),’’; and
(2) in subsection (c), as redesignated by sub-
section (a)(1)—
(A) by striking out the subsection heading
and inserting in lieu thereof ‘‘COVERED FISCAL
YEARS.—’’; and
(B) by striking out ‘‘This section’’ and in-
serting in lieu thereof ‘‘Subsection (b)’’.
(c) CLERICAL AMENDMENTS.—(1) The heading of such
section is amended to read as follows:
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‘‘§ 2463. Collection and retention of cost information
data on contracted out services and func-
tions’’.
(2) The item relating to such section in the table of
sections at the beginning of chapter 146 of title 10, United
States Code, is amended to read as follows:
‘‘2463. Collection and retention of cost information data on contracted out services
and functions.’’.
Subtitle C—Other Reforms
SEC. 221. REDUCTION IN OVERHEAD COSTS OF INVENTORY
CONTROL POINTS.
(a) REDUCTION IN COSTS REQUIRED.—The Secretary
of Defense shall take such actions as may be necessary to
reduce the annual overhead costs of the supply management
activities of the Defense Logistics Agency and the military
departments (known as Inventory Control Points) so that
the annual overhead costs are not more than eight percent
of annual net sales at standard price by the Inventory Con-
trol Points.
(b) TIME TO ACHIEVE REDUCTION.—The Secretary
shall achieve the cost reductions required by subsection (a)
not later than September 30, 2000.
(c) IMPLEMENTATION PLAN.—Not later than March 1,
1998, the Secretary of Defense shall submit to Congress a
plan to achieve the reduction in overhead costs required by
subsection (a).
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(d) DEFINITIONS.—For purposes of this section:
(1) The term ‘‘overhead costs’’ means the total
expenses of the Inventory Control Points, excluding—
(A) annual materiel costs; and
(B) military and civilian personnel related
costs, defined as personnel compensation and
benefits under the March 1996 Department of
Defense Financial Management Regulations, Vol-
ume 2A, Chapter 1, Budget Account Title File
(Object Classification Name/Code), object classi-
fications 200, 211, 220, 221, 222, and 301.
(2) The term ‘‘net sales at standard price’’ has
the meaning given that term in the March 1996 De-
partment of Defense Financial Management Regula-
tions, Volume 2B, Chapter 9, and displayed in ‘‘Ex-
hibit Fund—14 Revenue and Expenses’’ for the sup-
ply management business areas.
SEC. 222. CONSOLIDATION OF PROCUREMENT TECHNICAL
ASSISTANCE AND ELECTRONIC COMMERCE
TECHNICAL ASSISTANCE.
(a) CONSOLIDATION OF ASSISTANCE.—Chapter 142 of
title 10, United States Code, is amended as follows:
(1) Sections 2412, 2414, 2417, and 2418 are
each amended by inserting ‘‘and electronic commerce’’
after ‘‘procurement’’ each place it appears.
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(2) Section 2413 is amended—
(A) in subsection (b), by striking out ‘‘pro-
curement technical assistance’’ and inserting in
lieu thereof ‘‘both procurement technical assist-
ance and electronic commerce technical assist-
ance’’; and
(B) in subsection (c), by inserting ‘‘and
electronic commerce’’ after ‘‘procurement’’.
(b) REQUIREMENT TO USE COMPETITIVE PROCE-
DURES.—Section 2413 of such title is amended by adding
at the end the following new subsection:
‘‘(d) The Secretary shall use competitive procedures in
entering into cooperative agreements under subsection (a).’’.
(c) LIMITATION ON USE OF FUNDS.—Section 2417 of
such title is amended—
(1) by striking out ‘‘The Director’’ and inserting
in lieu thereof the following: ‘‘(b) ADMINISTRATIVE
COSTS.—The Director’’; and
(2) by inserting before subsection (b) (as des-
ignated by paragraph (1)) the following:
‘‘(a) LIMITATION ON USE OF FUNDS.—In any fiscal
year the Secretary of Defense may use for the program au-
thorized by this chapter only funds specifically appro-
priated for the program for that fiscal year.’’.
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(d) CLERICAL AMENDMENTS.—(1) The heading for
chapter 142 of such title is amended to read as follows:
‘‘CHAPTER 
142—PROCUREMENT 
AND
ELECTRONIC COMMERCE TECHNICAL
ASSISTANCE PROGRAM’’.
(2) The tables of chapters at the beginning of subtitle
A, and at the beginning of part IV of subtitle A, of such
title are each amended by striking out the item relating to
chapter 142 and inserting in lieu thereof the following:
‘‘142. Procurement and Electronic Commerce Technical
Assistance Program .................................................. 2411’’.
(3) The heading for section 2417 of such title is amend-
ed to read as follows:
‘‘§ 2417. Funding provisions’’.
(4) The table of sections at the beginning of chapter
142 of such title is amended by striking out the item relat-
ing to section 2417 and inserting in lieu thereof the follow-
ing:
‘‘2417. Funding provisions.’’.
SEC. 223. PERMANENT AUTHORITY REGARDING CONVEY-
ANCE OF UTILITY SYSTEMS.
(a) IN GENERAL.—Chapter 159 of title 10, United
States Code, is amended by inserting after section 2687 the
following new section:
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‘‘§ 2688. Utility systems: permanent conveyance au-
thority
‘‘(a) CONVEYANCE AUTHORITY.—The Secretary of a
military department may convey a utility system, or part
of a utility system, under the jurisdiction of the Secretary
to a municipal, private, regional, district, or cooperative
utility company or other entity. The conveyance may con-
sist of all right, title, and interest of the United States in
the utility system or such lesser estate as the Secretary con-
siders appropriate to serve the interests of the United
States.
‘‘(b) UTILITY SYSTEM DEFINED.—In this section, the
term ‘utility system’ includes the following:
‘‘(1) Electrical generation and supply systems.
‘‘(2) Water supply and treatment systems.
‘‘(3) Wastewater collection and treatment sys-
tems.
‘‘(4) Steam or hot or chilled water generation
and supply systems.
‘‘(5) Natural gas supply systems.
‘‘(6) Sanitary landfills or lands to be used for
sanitary landfills.
‘‘(7) Similar utility systems.
‘‘(c) CONSIDERATION.—(1) The Secretary of a military
department may accept consideration received for a convey-
ance under subsection (a) in the form of a cash payment
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or a reduction in utility rate charges for a period of time
sufficient to amortize the monetary value of the utility sys-
tem, including any real property interests, conveyed.
‘‘(2) Cash payments received shall be credited to an
appropriation account designated as appropriate by the
Secretary of Defense. Amounts so credited shall be available
for the same time period as the appropriation credited and
shall be used only for the purposes authorized for that ap-
propriation.
‘‘(d) CONGRESSIONAL NOTIFICATION.—A conveyance
may not be made under subsection (a) until—
‘‘(1) the Secretary of the military department
concerned submits to the appropriate committees of
Congress (as defined in section 2801(c)(4) of this
title) a report containing an economic analysis (based
upon accepted life-cycle costing procedures approved
by the Secretary of Defense) which demonstrates that
the full cost to the United States of the proposed con-
veyance is cost-effective when compared with alter-
native means of furnishing the same utility systems;
and
‘‘(2) a period of 21 days has elapsed after the
date on which the report is received by the commit-
tees.
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‘‘(e) ADDITIONAL TERMS AND CONDITIONS.—The Sec-
retary of the military department concerned may require
such additional terms and conditions in a conveyance en-
tered into under subsection (a) as the Secretary considers
appropriate to protect the interests of the United States.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of such chapter is amended by inserting after
the item relating to section 2687 the following new item:
‘‘2688. Utility systems: permanent conveyance authority.’’.
TITLE III—ENVIRONMENTAL
REFORMS
Subtitle A—Superfund Reforms
Generally
SEC. 301. REVISION OF METHODS OF REMEDIATION.
Section 121(b) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (42
U.S.C. 9621(b)) is amended by striking out paragraphs (1)
and (2) and inserting in lieu thereof the following:
‘‘(1) METHODS OF REMEDIATION.—(A) Remedies
selected at individual facilities shall be protective of
human health and the environment over the long
term. A remedial action may achieve protection of
human health and the environment through—
‘‘(i) treatment that reduces the toxicity, mo-
bility, or volume of hazardous substances, pollut-
ants, or contaminants;
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‘‘(ii) containment or other engineering con-
trols to limit exposure;
‘‘(iii) a combination of treatment and con-
tainment; or
‘‘(iv) other methods of protection.
‘‘(B) The method or methods of remediation ap-
propriate for a given facility shall be determined
through the evaluation of remedial alternatives and
the selection process under paragraph (2). When de-
termining the appropriate remedial method, treat-
ment is to be preferred for hot spots as defined under
paragraph (2)(C).
‘‘(2) APPROPRIATE REMEDIAL ACTION.—
‘‘(A) IN
GENERAL.—The President shall
identify and select an appropriate remedy that
minimizes exposures by comparing alternative
remedies and balancing the following factors
with respect to each such remedy:
‘‘(i) The effectiveness of the remedy, in-
cluding its implementability.
‘‘(ii) The long-term reliability of the
remedy, that is, its capability to achieve
long-term protection of human health and
the environment considering the preference
for treatment of hot spots.
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‘‘(iii) The short-term risk posed by the
implementation of the remedy to the affected
community, to those engaged in the cleanup
effort, and to the environment.
‘‘(iv) The acceptability of the remedy
to the affected community.
‘‘(v) The reasonableness of the cost of
the remedy.
‘‘(vi) The results of any risk assess-
ments conducted with respect to the remedy.
‘‘(vii) The costs, both direct and indi-
rect, of the remedy.
‘‘(B) DEFERRAL OF REMEDIAL ACTION.—
The President may defer the selection of a reme-
dial action if the President determines that—
‘‘(i) the hazardous substance, pollutant,
or contaminant can be contained in a man-
ner sufficient to protect human health and
the environment; and
‘‘(ii) an innovative technology is ex-
pected to be available in the near future
that will provide a more cost-effective
remedy.
‘‘(C) HOT
SPOTS.—The following shall
apply to the remediation of hot spots:
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‘‘(i) For purposes of this section, the
term ‘hot spot’ means a discrete area within
a facility that contains hazardous sub-
stances, pollutants or contaminants (I) that
are present in high concentrations, are
highly mobile, and cannot be reliably con-
tained; or (II) that would present a signifi-
cant risk to human health or the environ-
ment. The President shall develop guidelines
for the identification of hot spots. Such
guidelines shall recommend appropriate
field investigations that will not require ex-
traordinarily complex or costly measures.
‘‘(ii) In determining an appropriate
remedy for hot spots, the President shall
consider the factors under subparagraph
(A). With respect to the factor in clause (v)
of subparagraph (A), the President shall use
a higher threshold for evaluating the reason-
ableness of costs for hot spot treatment rel-
ative to the remediation of non-hot spot
materials.
‘‘(iii) The President shall select a rem-
edy requiring treatment of materials con-
stituting hot spots to the maximum extent