852 
the development or production of the major system 
to an entity owned in whole or in part by the prime 
contractor. 
(d) DEFINITIONS.—In this section: 
(1) LEAD
SYSTEMS
INTEGRATOR.—The term 
‘‘lead systems integrator’’ means— 
(A) a prime contractor for the development 
or production of a major system, if the prime 
contractor is not expected at the time of award 
to perform a substantial portion of the work on 
the system and the major subsystems; or 
(B) a prime contractor under a contract 
for procurement of services the primary purpose 
of which to perform acquisition functions closely 
associated with inherently governmental func-
tions with respect to the development or pro-
duction of a major system. 
(2) MAJOR SYSTEM.—The term ‘‘major system’’ 
has the meaning given such term in section 2302d 
of title 10, United States Code. 
(3) DEMONSTRATION PHASE LEVEL.—For pur-
poses of this section, the term ‘‘demonstration phase 
level’’ means—
853 
(A) work performed prior to first article 
testing and approval (as defined in part 9.3 of 
the Federal Acquisition Regulation; or 
(B) a level comparable to the level identi-
fied in subparagraph (A) which the FAR Coun-
cil determines, by regulation, after consider-
ation of the definition of low-rate initial produc-
tion (as defined in section 2400 of title 10, 
United States Code. 
(e) INAPPLICABILITY
TO
DEPARTMENT
OF
DE-
FENSE.—This section does not apply to the Department 
of Defense. 
SEC. 4204. REGULATIONS ON EXCESSIVE PASS-THROUGH 
CHARGES. 
(a) REGULATIONS REQUIRED.— 
(1) Not later than 180 days after the date of 
enactment of this Act, the Federal Acquisition Regu-
lation shall be amended ensure that excessive pass- 
through charges on contracts or (or task or delivery 
orders) are not paid by the Federal Government. 
(2) SCOPE OF REGULATIONS.—The regulations 
prescribed under this subsection— 
(A) shall not apply to any firm, fixed-price 
contract or subcontract (or task or delivery 
order) that is—
854 
(i) awarded on the basis of adequate 
price competition; or 
(ii) for the acquisition of a commercial 
item, as defined in section 4(12) of the Of-
fice of Federal Procurement Policy Act (41 
U.S.C. 403(12)); and 
(B) may include such additional exceptions 
as the Federal Acquisition Regulation Council 
determines to be necessary in the interest of the 
government. 
(3) DEFINITION.—In this section, the term ‘‘ex-
cessive pass-through charge’’ means a charge to the 
Government by the contractor or subcontractor that 
is for overhead or profit on work performed by a 
lower-tier contractor or subcontractor (other than 
charges for the direct costs of managing lower-tier 
contracts and subcontracts and overhead and profit 
based on such direct costs) and for which the con-
tractor or subcontractor adds no, or negligible, value 
to a contract or subcontract. 
(b) INAPPLICABILITY
TO
DEPARTMENT
OF
DE-
FENSE.—This section does not apply to the Department 
of Defense.
855 
SEC. 4205. LINKING OF AWARD AND INCENTIVE FEES TO 
ACQUISITION OUTCOMES. 
(a) GUIDANCE ON LINKING OF AWARD AND INCEN-
TIVE FEES TO ACQUISITION OUTCOMES.—Not later than 
12 months after the date of the enactment of this Act, 
the Federal Acquisition Regulation shall be amended to 
provide executive agencies with instructions, including 
definitions, on the appropriate use of award and incentive 
fees in Federal acquisition programs. 
(b) ELEMENTS.—The regulations under subsection 
(a) shall— 
(1) ensure that all new contracts using award 
fees link such fees to acquisition outcomes (which 
shall be defined in terms of program cost, schedule, 
and performance); 
(2) establish standards for identifying the ap-
propriate level of officials authorized to approve the 
use of award and incentive fees in new contracts; 
(3) provide guidance on the circumstances in 
which contractor performance may be judged to be 
‘‘excellent’’ or ‘‘superior’’ and the percentage of the 
available award fee which contractors should be paid 
for such performance; 
(4) establish standards for determining the per-
centage of the available award fee, if any, which con-
tractors should be paid for performance that is
856 
judged to be ‘‘acceptable’’, ‘‘average’’, ‘‘expected’’, 
‘‘good’’, or ‘‘satisfactory’’; 
(5) ensure that no award fee may be paid for 
contractor performance that is judged to be below 
satisfactory performance or performance that does 
not meet the basic requirements of the contract; 
(6) provide specific direction on the cir-
cumstances, if any, in which it may be appropriate 
to roll over award fees that are not earned in one 
award fee period to a subsequent award fee period 
or periods; 
(7) ensure consistent use of guidelines and defi-
nitions relating to award and incentive fees across 
the Federal Government; 
(8) ensure that each executive agency— 
(A) collects relevant data on award and in-
centive fees paid to contractors; and 
(B) has mechanisms in place to evaluate 
such data on a regular basis; 
(9) include performance measures to evaluate 
the effectiveness of award and incentive fees as a 
tool for improving contractor performance and 
achieving desired program outcomes; and 
(10) provide mechanisms for sharing proven in-
centive strategies for the acquisition of different
857 
types of products and services among contracting 
and program management officials. 
SEC. 4206. MINIMIZING ABUSE OF COMMERCIAL SERVICES 
ITEM AUTHORITY. 
(a) REGULATIONS REQUIRED.—Not later than 180 
days after the date of the enactment of this Act, the Fed-
eral Acquisition Regulation shall be amended for the pro-
curement of commercial services. 
(b) 
APPLICABILITY
OF
COMMERCIAL
PROCE-
DURES.— 
(1) SERVICES OF A TYPE SOLD IN MARKET-
PLACE.—The regulations modified pursuant to sub-
section (a) shall ensure that services that are not of-
fered and sold competitively in substantial quantities 
in the commercial marketplace, but are of a type of-
fered and sold competitively in substantial quantities 
in the commercial marketplace, may be treated as 
commercial items for purposes of section 254b of 
title 41, United States Code (relating to truth in ne-
gotiations), only if the contracting officer determines 
in writing that the offeror has submitted sufficient 
information to evaluate, through price analysis, the 
reasonableness of the price for such services. 
(2) INFORMATION SUBMITTED.—To the extent 
necessary to make a determination under paragraph
858 
(1), the contracting officer may request the offeror 
to submit— 
(A) prices paid for the same or similar 
commercial items under comparable terms and 
conditions by both government and commercial 
customers; and 
(B) if the contracting officer determines 
that the information described in subparagraph 
(A) is not sufficient to determine the reason-
ableness of price, other relevant information re-
garding the basis for price or cost, including in-
formation on labor costs, material costs, and 
overhead rates. 
(c) TIME-AND-MATERIALS CONTRACTS.— 
(1) COMMERCIAL
ITEM
ACQUISITIONS.—The 
regulations pursuant to subsection (a) shall ensure 
that procedures applicable to time-and-materials 
contracts and labor-hour contracts for commercial 
item acquisitions may be used only for the following: 
(A) Services procured for support of a 
commercial item, as described in section 
4(12)(E) of the Office Federal Procurement 
Policy Act (41 U.S.C. 403(12)(E)). 
(B) Emergency repair services.
859 
(C) Any other commercial services only to 
the extent that the head of the agency con-
cerned approves a determination in writing by 
the contracting officer that— 
(i) the services to be acquired are 
commercial services as defined in section 
4(12)(F) of the Office of Federal Procure-
ment Policy Act (41 U.S.C. 403(12)(F)); 
(ii) if the services to be acquired are 
subject to subsection (b), the offeror of the 
services has submitted sufficient informa-
tion in accordance with that subsection; 
(iii) such services are commonly sold 
to the general public through use of time- 
and-materials or labor-hour contracts; and 
(iv) the use of a time-and-materials or 
labor-hour contract type is in the best in-
terest of the Government. 
(2) NON-COMMERCIAL
ITEM
ACQUISITIONS.— 
Nothing in this subsection shall be construed to pre-
clude the use of procedures applicable to time-and- 
materials contracts and labor-hour contracts for 
non-commercial item acquisitions for the acquisition 
of any category of services.
860 
TITLE XLIII—ACQUISITION 
WORKFORCE 
SEC. 
4301. 
ACQUISITION 
WORKFORCE 
DEVELOPMENT 
FUND. 
(a) PURPOSE.—The purpose of this section is to en-
sure that there are resources available to recruit, hire, 
educate, train and retain members of the Federal acquisi-
tion workforce with the requisite competencies and skills 
to ensure that the government receives best value property 
and services in its acquisitions. 
(b) ESTABLISHMENT
OF FUND.—Title III of the 
Federal Property and Administrative Services Act of 1949 
(40 U.S.C. 101, et seq.) is amended by adding at the end 
the following new section: 
‘‘SEC. 
324. 
ACQUISITION 
WORKFORCE 
DEVELOPMENT 
FUND. 
‘‘(a) The Administrator of General Services shall es-
tablish an acquisition workforce development fund. 
‘‘(1) The Administrator shall manage the fund 
through the Federal Acquisition Institute to recruit, 
hire, educate, train and retain members of the acqui-
sition workforce of the executive agencies other than 
the Department of Defense. 
‘‘(2) The Administrator, in consultation with 
the Administrator for Federal Procurement Policy
861 
and the Chief Acquisition Officers or Senior Pro-
curement Executives, as appropriate, of the execu-
tive agencies, other than the Department of Defense, 
shall issue detailed guidance for the administration 
and use of the Fund. Such guidance shall include 
provisions— 
‘‘(A) requiring agencies to identify mem-
bers of their acquisition workforce consistent 
with section 433(i) of title 41. 
‘‘(B) identifying areas of need in the acqui-
sition workforce for which amounts in the Fund 
may be used, including— 
‘‘(i) changes to the types of skills 
needed; 
‘‘(ii) incentives to retain qualified, ex-
perienced personnel; and 
‘‘(iii) incentives for attracting new, 
high-quality personnel; 
‘‘(C) describing the manner and timing for 
applications for amounts in the Fund to be sub-
mitted; 
‘‘(D) describing the evaluation criteria to 
be used for approving or prioritizing applica-
tions for amounts in the Fund in any fiscal 
year; and
862 
‘‘(E) describing measurable objectives of 
performance for determining whether amounts 
in the Fund are being used in compliance with 
this section. 
‘‘(3) The Director of the Office of Management 
and Budget shall be the approving official for any 
disbursements from the Fund. 
‘‘(4) The costs of administering the fund, in-
cluding the direct and indirect costs of those employ-
ees, not to exceed 5 percent per annum, shall be 
paid out of the fund. 
‘‘(5) Amounts in the fund may not be used to 
pay the base salary of any full-time equivalent posi-
tion currently filled as of date of enactment of the 
Clean Contracting Act of 2008. 
‘‘(b) There shall be credited to the acquisition work-
force development fund the following percentages of the 
value of funds expended by executive agencies for service 
contracts, other than services relating to research and de-
velopment and services relating to construction: 
‘‘(1) For fiscal year 2009, 0.5 percent. 
‘‘(2) For fiscal year 2010, 1 percent. 
‘‘(3) For fiscal year 2011, 1.5 percent. 
‘‘(4) For any fiscal year after fiscal year 2011, 
2 percent.
863 
‘‘(c) The Director of the Office and Management and 
Budget may reduce the amount to be credited upon a de-
termination that the funds being credited are excess to 
the needs of the acquisition workforce development fund. 
In no event shall the Director of the Office of Management 
Budget reduce the percentage for any fiscal year below 
a percentage that results in the deposit in a fiscal year 
of an amount equal to the following: 
‘‘(1) For fiscal year 2009, 75,000,000. 
‘‘(2) For fiscal year 2010, 100,000,000. 
‘‘(3) For fiscal year 2011, 125,000,000. 
‘‘(4) 
For 
an 
fiscal 
year 
after 
2011, 
150,000,000. 
‘‘(d) Not later than 30 days after the end of fiscal 
year 2008, and 30 days after the end of each fiscal year 
quarter thereafter, the head of each executive agency shall 
remit to the General Services Administration the amount 
required to be credited to the fund with respect to the 
contracts, leases, task and delivery order described in sub-
section (b). 
‘‘(e) The Administrator of General Services, through 
the Office of the Chief Acquisition Officer, shall ensure 
that funds collected under this section are not used for 
any purposes other than the purposes specified in sub-
section (a).
864 
‘‘(f) Amounts credited to the fund shall be in addition 
to funds requested and appropriated for salaries, benefits, 
education and training for all current acquisition work-
force members. 
‘‘(g) Amounts credited to the fund shall remain avail-
able until expended. 
‘‘(h) Not later than 60 days after the end of each 
fiscal year beginning with fiscal year 2008, the Adminis-
trator of General Services shall submit to the congres-
sional committees identified in subsection (i) a report on 
the operation of the fund during such fiscal year. Each 
report shall include, for the fiscal year covered by such 
report, the following: 
‘‘(1) A statement of the amounts remitted to 
the Administrator for crediting to the Fund for such 
fiscal year by each executive agency and a statement 
of the amounts credited to the Fund. 
‘‘(2) A description of the expenditures made 
from the Fund, including the purpose of such ex-
penditures. 
‘‘(3) A description and assessment of improve-
ments in the Federal acquisition workforce resulting 
from such expenditures, including the extent to 
which the fund has been used to increase the num-
ber of individuals in the acquisition workforce rel-