†
374
HR 1815 EAS
(D) have been determined by a contracting
officer to be poorly performed due to excessive
costs or inferior quality.
(b) NEW REQUIREMENTS.—
(1) LIMITATION ON REQUIRING PUBLIC-PRIVATE
COMPETITION.—No public-private competition may be
required under Office of Management and Budget
Circular A–76 or any other provision of law or regu-
lation before the performance of a new requirement by
Federal Government employees commences, the per-
formance by Federal Government employees of work
pursuant to subsection (a) commences, or the scope of
an existing activity performed by Federal Govern-
ment employees is expanded. Office of Management
and Budget Circular A–76 shall be revised to ensure
that the heads of all Federal agencies give fair consid-
eration to the performance of new requirements by
Federal Government employees.
(2) CONSIDERATION OF FEDERAL GOVERNMENT
EMPLOYEES.—The Secretary of Defense shall, to the
maximum extent practicable, ensure that Federal
Government employees are fairly considered for the
performance of new requirements, with special consid-
eration given to new requirements that include func-
tions that—
†
375
HR 1815 EAS
(A) are similar to functions that have been
performed by Federal Government employees at
any time on or after October 1, 1980; or
(B) are associated with the performance of
inherently governmental functions.
(c) USE OF FLEXIBLE HIRING AUTHORITY.—The Sec-
retary shall include the use of the flexible hiring authority
available through the National Security Personnel System
in order to facilitate performance by Federal Government
employees of new requirements and work that is performed
under Department of Defense contracts.
(d) INSPECTOR GENERAL REPORT.—Not later than
180 days after the enactment of this Act, the Inspector Gen-
eral of the Department of Defense shall submit to the Com-
mittees on Armed Services of the Senate and the House of
Representatives a report on the compliance of the Secretary
of Defense with the requirements of this section.
(e) DEFINITIONS.—In this section:
(1) The term ‘‘National Security Personnel Sys-
tem’’ means the human resources management system
established under the authority of section 9902 of title
5, United States Code.
(2) The term ‘‘inherently governmental function’’
has the meaning given that term in section 5 of the
Federal Activities Inventory Reform Act of 1998
†
376
HR 1815 EAS
(Public Law 105–270; 112 Stat. 2384; 31 U.S.C. 501
note).
SEC. 809H. CONTRACTING FOR PROCUREMENT OF CERTAIN
SUPPLIES AND SERVICES.
(a) MODIFICATION OF LIMITATION ON CONVERSION TO
CONTRACTOR PERFORMANCE.—Section 8014(a)(3) of the
Department of Defense Appropriations Act, 2005 (Public
law 108–287; 118 Stat. 972) is amended—
(1) in subparagraph (A), by inserting ‘‘, pay-
ment that could be used in lieu of such a plan, health
savings account, or medical savings account’’ after
‘‘health insurance plan’’; and
(2) in subparagraph (B), by striking ‘‘that re-
quires’’ and all that follows through the end and in-
serting ‘‘that does not comply with the requirements
of any Federal law governing the provision of health
care benefits by Government contractors that would be
applicable if the contractor performed the activity or
function under the contract.’’.
SEC. 809I. MODIFICATION AND EXTENSION OF PILOT PRO-
GRAM ON SHARE-IN-SAVINGS CONTRACTS.
(a) INCLUSION
OF INFORMATION TECHNOLOGY IM-
PROVEMENTS
IN SHARE-IN-SAVINGS.—Paragraph (1) of
subsection (a) of section 2332 of title 10, United States
Code, is amended by adding at the end the following new
†
377
HR 1815 EAS
sentence: ‘‘Each such contract shall provide that the con-
tractor shall incur the cost of implementing information
technology improvements, including costs incurred in ac-
quiring, installing, maintaining, and upgrading informa-
tion technology equipment and training personnel in the
use of such equipment, in exchange for a share of any sav-
ings directly resulting from the implementation of such im-
provements during the term of the contract.’’.
(b) CONTRACT PERFORMANCE EVALUATION.—Such
subsection is further amended—
(1) in paragraph (3), by striking ‘‘, to the max-
imum extent practicable,’’;
(2) by striking paragraph (4);
(3) by redesignating paragraph (5) as para-
graph (7); and
(4) inserting after paragraph (3) the following
new paragraphs:
‘‘(4) The head of an agency that enters into contracts
pursuant to the authority of this section shall establish a
panel of employees of such agency, independent of any pro-
gram office or contracting office responsible for awarding
and administering such contracts, for the purpose of
verifying performance baselines and methodologies for cal-
culating savings resulting from the implementation of in-
formation technology improvements under such contracts.
†
378
HR 1815 EAS
Employees assigned to any such panel shall have experience
and expertise appropriate for the duties of such panel.
‘‘(5) Each contract awarded pursuant to the authority
of this section shall include a provision containing a quan-
tifiable baseline of current and projected costs, a method-
ology for calculating actual costs during the period of per-
formance, and a savings share ratio governing the amount
of payments the contractor is to receive under such contract
that are certified by a panel established pursuant to para-
graph (4) to be financially sound and based on the best
available information.
‘‘(6) Each contract awarded pursuant to the authority
of this section shall—
‘‘(A) provide that aggregate payments to the con-
tractor may not exceed the amount the agency would
have paid, in accordance with the baseline of current
and projected costs incorporated in such contract,
during the period covered by such contract; and
‘‘(B) require an independent annual audit of ac-
tual costs in accordance with the methodology estab-
lished under paragraph (5)(B), which shall serve as
a basis for annual payments based on savings share
ratio established in such contract.’’.
(c) EXTENSION OF PILOT PROGRAM.—Such section is
further amended—
†
379
HR 1815 EAS
(1) in subsection (b)(3)(B), by striking ‘‘fiscal
years 2003, 2004, and 2005’’ and inserting ‘‘fiscal
years 2003 through 2007’’; and
(2) in subsection (d), by striking ‘‘September 30,
2005’’ and inserting ‘‘September 30, 2007’’.
(d) REPORTS TO CONGRESS.—
(1) SECRETARY
OF
DEFENSE
REPORTS.—Not
later than March 31, 2006, and each year thereafter
until the year after the termination of the pilot pro-
gram under section 2332 of title 10, United States
Code (as amended by subsection (a)), the Secretary of
Defense shall submit to Congress a report containing
a list of each contract entered into by each Federal
agency under such section during the preceding year
that contains terms providing for the contractor to
implement information technology improvements in
exchange for a share of the savings derived from the
implementation of such improvements. The report
shall set forth, for each contract listed—
(A) the information technology performance
acquired by reason of the improvements con-
cerned;
(B) the total amount of payments made to
the contractor during the year covered by the re-
port; and