H. R. 1585—210 
(2) the amount requested for each type of service to be 
provided. 
(c) CONTRACT SERVICES DEFINED.—In this section, the term 
‘‘contract services’’— 
(1) means services from contractors; but 
(2) excludes services relating to research and development 
and services relating to military construction. 
SEC. 807. INVENTORIES AND REVIEWS OF CONTRACTS FOR SERVICES. 
(a) INVENTORY REQUIREMENT.—Section 2330a of title 10, United 
States Code, is amended— 
(1) by redesignating subsection (d) as subsection (g); 
(2) by striking subsection (c) and inserting the following: 
‘‘(c) INVENTORY.—(1) Not later than the end of the third quarter 
of each fiscal year, the Secretary of Defense shall submit to Congress 
an annual inventory of the activities performed during the preceding 
fiscal year pursuant to contracts for services for or on behalf of 
the Department of Defense. The entry for an activity on an inven-
tory under this subsection shall include, for the fiscal year covered 
by such entry, the following: 
‘‘(A) The functions and missions performed by the con-
tractor. 
‘‘(B) The contracting organization, the component of the 
Department of Defense administering the contract, and the 
organization whose requirements are being met through con-
tractor performance of the function. 
‘‘(C) The funding source for the contract under which the 
function is performed by appropriation and operating agency. 
‘‘(D) The fiscal year for which the activity first appeared 
on an inventory under this section. 
‘‘(E) The number of full-time contractor employees (or its 
equivalent) paid for the performance of the activity. 
‘‘(F) A determination whether the contract pursuant to 
which the activity is performed is a personal services contract. 
‘‘(G) A summary of the data required to be collected for 
the activity under subsection (a). 
‘‘(2) The inventory required under this subsection shall be sub-
mitted in unclassified form, but may include a classified annex. 
‘‘(d) PUBLIC AVAILABILITY OF INVENTORIES.—Not later than 30 
days after the date on which an inventory under subsection (c) 
is required to be submitted to Congress, the Secretary shall— 
‘‘(1) make the inventory available to the public; and 
‘‘(2) publish in the Federal Register a notice that the inven-
tory is available to the public. 
‘‘(e) REVIEW AND PLANNING REQUIREMENTS.—Within 90 days 
after the date on which an inventory is submitted under subsection 
(c), the Secretary of the military department or head of the Defense 
Agency responsible for activities in the inventory shall— 
‘‘(1) review the contracts and activities in the inventory 
for which such Secretary or agency head is responsible; 
‘‘(2) ensure that— 
‘‘(A) each contract on the list that is a personal services 
contract has been entered into, and is being performed, 
in accordance with applicable statutory and regulatory 
requirements; 
‘‘(B) the activities on the list do not include any inher-
ently governmental functions; and
H. R. 1585—211 
‘‘(C) to the maximum extent practicable, the activities 
on the list do not include any functions closely associated 
with inherently governmental functions; 
‘‘(3) identify activities that should be considered for conver-
sion— 
‘‘(A) to performance by civilian employees of the 
Department of Defense pursuant to section 2463 of this 
title; or 
‘‘(B) to an acquisition approach that would be more 
advantageous to the Department of Defense; and 
‘‘(4) develop a plan to provide for appropriate consideration 
of the conversion of activities identified under paragraph (3) 
within a reasonable period of time. 
‘‘(f) RULE
OF CONSTRUCTION.—Nothing in this section shall 
be construed to authorize the performance of personal services 
by a contractor except where expressly authorized by a provision 
of law other than this section.’’; and 
(3) by adding at the end of subsection (g) (as so redesig-
nated) the following new paragraphs: 
‘‘(3) FUNCTION
CLOSELY
ASSOCIATED
WITH
INHERENTLY 
GOVERNMENTAL FUNCTIONS.—The term ‘function closely associ-
ated with inherently governmental functions’ has the meaning 
given that term in section 2383(b)(3) of this title. 
‘‘(4) INHERENTLY
GOVERNMENTAL
FUNCTIONS.—The term 
‘inherently governmental functions’ has the meaning given that 
term in section 2383(b)(2) of this title. 
‘‘(5) PERSONAL
SERVICES
CONTRACT.—The term ‘personal 
services contract’ means a contract under which, as a result 
of its terms or conditions or the manner of its administration 
during performance, contractor personnel are subject to the 
relatively continuous supervision and control of one or more 
Government officers or employees, except that the giving of 
an order for a specific article or service, with the right to 
reject the finished product or result, is not the type of super-
vision or control that makes a contract a personal services 
contract.’’. 
(b) EFFECTIVE DATE.— 
(1) The amendments made by subsection (a) shall be effec-
tive upon the date of the enactment of this Act. 
(2) The first inventory required by section 2330a(c) of title 
10, United States Code, as added by subsection (a), shall be 
submitted not later than the end of the third quarter of fiscal 
year 2008. 
SEC. 808. INDEPENDENT MANAGEMENT REVIEWS OF CONTRACTS FOR 
SERVICES. 
(a) GUIDANCE AND INSTRUCTIONS.—Not later than 180 days 
after the date of the enactment of this Act, the Secretary of Defense 
shall issue guidance, with detailed implementation instructions, 
for the Department of Defense to provide for periodic independent 
management reviews of contracts for services. The independent 
management review guidance and instructions issued pursuant to 
this subsection shall be designed to evaluate, at a minimum— 
(1) contract performance in terms of cost, schedule, and 
requirements; 
(2) the use of contracting mechanisms, including the use 
of competition, the contract structure and type, the definition
H. R. 1585—212 
of contract requirements, cost or pricing methods, the award 
and negotiation of task orders, and management and oversight 
mechanisms; 
(3) the contractor’s use, management, and oversight of sub-
contractors; 
(4) the staffing of contract management and oversight func-
tions; and 
(5) the extent of any pass-throughs, and excessive pass- 
through charges (as defined in section 852 of the John Warner 
National Defense Authorization Act for Fiscal Year 2007), by 
the contractor. 
(b) ADDITIONAL SUBJECT OF REVIEW.—In addition to the mat-
ters required by subsection (a), the guidance and instructions issued 
pursuant to subsection (a) shall provide for procedures for the 
periodic review of contracts under which one contractor provides 
oversight for services performed by other contractors. In particular, 
the procedures shall be designed to evaluate, at a minimum— 
(1) the extent of the agency’s reliance on the contractor 
to perform acquisition functions closely associated with inher-
ently governmental functions as defined in section 2383(b)(3) 
of title 10, United States Code; and 
(2) the financial interest of any prime contractor performing 
acquisition functions described in paragraph (1) in any contract 
or subcontract with regard to which the contractor provided 
advice or recommendations to the agency. 
(c) ELEMENTS.—The guidance and instructions issued pursuant 
to subsection (a) shall address, at a minimum— 
(1) the contracts subject to independent management 
reviews, including any applicable thresholds and exceptions; 
(2) the frequency with which independent management 
reviews shall be conducted; 
(3) the composition of teams designated to perform inde-
pendent management reviews; 
(4) any phase-in requirements needed to ensure that quali-
fied staff are available to perform independent management 
reviews; 
(5) procedures for tracking the implementation of rec-
ommendations made by independent management review 
teams; and 
(6) procedures for developing and disseminating lessons 
learned from independent management reviews. 
(c) REPORTS.— 
(1) REPORT ON GUIDANCE AND INSTRUCTION.—Not later than 
270 days after the date of the enactment of this Act, the 
Secretary of Defense shall submit to the congressional defense 
committees a report setting forth the guidance and instructions 
issued pursuant to subsection (a). 
(2) GAO REPORT ON IMPLEMENTATION.—Not later than two 
years after the date of the enactment of this Act, the Comp-
troller General of the United States shall submit to the congres-
sional defense committees a report on the implementation of 
the guidance and instructions issued pursuant to subsection 
(a).
H. R. 1585—213 
SEC. 809. IMPLEMENTATION AND ENFORCEMENT OF REQUIREMENTS 
APPLICABLE 
TO 
UNDEFINITIZED 
CONTRACTUAL 
ACTIONS. 
(a) GUIDANCE AND INSTRUCTIONS.—Not later than 180 days 
after the date of the enactment of this Act, the Secretary of Defense 
shall issue guidance, with detailed implementation instructions, 
for the Department of Defense to ensure the implementation and 
enforcement of requirements applicable to undefinitized contractual 
actions. 
(b) ELEMENTS.—The guidance and instructions issued pursuant 
to subsection (a) shall address, at a minimum— 
(1) the circumstances in which it is, and is not, appropriate 
for Department of Defense officials to use undefinitized contrac-
tual actions; 
(2) approval requirements (including thresholds) for the 
use of undefinitized contractual actions; 
(3) procedures for ensuring that timelines for the 
definitization of undefinitized contractual actions are met; 
(4) procedures for ensuring compliance with regulatory 
limitations on the obligation of funds pursuant to undefinitized 
contractual actions; 
(5) procedures for ensuring compliance with regulatory 
limitations on profit or fee with respect to costs incurred before 
the definitization of an undefinitized contractual action; and 
(6) reporting requirements for undefinitized contractual 
actions that fail to meet required timelines for definitization 
or fail to comply with regulatory limitations on the obligation 
of funds or on profit or fee. 
(c) REPORTS.— 
(1) REPORT ON GUIDANCE AND INSTRUCTIONS.—Not later 
than 210 days after the date of the enactment of this Act, 
the Secretary of Defense shall submit to the congressional 
defense committees a report setting forth the guidance and 
instructions issued pursuant to subsection (a). 
(2) GAO REPORT.—Not later than two years after the date 
of the enactment of this Act, the Comptroller General of the 
United States shall submit to the congressional defense commit-
tees a report on the extent to which the guidance and instruc-
tions issued pursuant to subsection (a) have resulted in 
improvements to— 
(A) the level of insight that senior Department of 
Defense officials have into the use of undefinitized contrac-
tual actions; 
(B) the appropriate use of undefinitized contractual 
actions; 
(C) the timely definitization of undefinitized contrac-
tual actions; and 
(D) the negotiation of appropriate profits and fees for 
undefinitized contractual actions. 
SEC. 810. CLARIFICATION OF LIMITED ACQUISITION AUTHORITY FOR 
SPECIAL OPERATIONS COMMAND. 
Section 167(e)(4) of title 10, United States Code, is amended— 
(1) by redesignating subparagraph (C) as subparagraph 
(D); and 
(2) by inserting after subparagraph (B) the following new 
subparagraph:
H. R. 1585—214 
‘‘(C)(i) The staff of the commander shall include a command 
acquisition executive, who shall be responsible for the overall super-
vision of acquisition matters for the special operations command. 
The command acquisition executive shall have the authority to— 
‘‘(I) negotiate memoranda of agreement with the military 
departments to carry out the acquisition of equipment, material, 
supplies, and services described in subparagraph (A) on behalf 
of the command; 
‘‘(II) supervise the acquisition of equipment, material, sup-
plies, and services described in subparagraph (A), regardless 
of whether such acquisition is carried out by the command, 
or by a military department pursuant to a delegation of 
authority by the command; 
‘‘(III) represent the command in discussions with the mili-
tary departments regarding acquisition programs for which 
the command is a customer; and 
‘‘(IV) work with the military departments to ensure that 
the command is appropriately represented in any joint working 
group or integrated product team regarding acquisition pro-
grams for which the command is a customer. 
‘‘(ii) The command acquisition executive of the special oper-
ations command shall be included on the distribution list for acquisi-
tion directives and instructions of the Department of Defense.’’. 
Subtitle B—Provisions Relating to Major 
Defense Acquisition Programs 
SEC. 811. REQUIREMENTS APPLICABLE TO MULTIYEAR CONTRACTS 
FOR THE PROCUREMENT OF MAJOR SYSTEMS OF THE 
DEPARTMENT OF DEFENSE. 
(a) ADDITIONAL REQUIREMENTS APPLICABLE TO MULTIYEAR CON-
TRACTS.—Section 2306b of title 10, United States Code, is amended 
as follows: 
(1) Subsection (a) of such section is amended by adding 
at the end the following new paragraph: 
‘‘(7) In the case of a contract in an amount equal to or 
greater than $500,000,000, that the conditions required by sub-
paragraphs (C) through (F) of paragraph (1) of subsection (i) 
will be met, in accordance with the Secretary’s certification 
and determination under such subsection, by such contract.’’. 
(2) Subsection (i)(1) of such section is amended by inserting 
after ‘‘unless’’ the following: ‘‘the Secretary of Defense certifies 
in writing by no later than March 1 of the year in which 
the Secretary requests legislative authority to enter into such 
contract that’’. 
(3) Subsection (i)(1) of such section is further amended— 
(A) by redesignating subparagraph (B) as subpara-
graph (G); and 
(B) by striking subparagraph (A) and inserting the 
following: 
‘‘(A) The Secretary has determined that each of the require-
ments in paragraphs (1) through (6) of subsection (a) will 
be met by such contract and has provided the basis for such 
determination to the congressional defense committees. 
‘‘(B) The Secretary’s determination under subparagraph (A) 
was made after the completion of a cost analysis performed
H. R. 1585—215 
by the Cost Analysis Improvement Group of the Department 
of Defense and such analysis supports the findings. 
‘‘(C) The system being acquired pursuant to such contract 
has not been determined to have experienced cost growth in 
excess of the critical cost growth threshold pursuant to section 
2433(d) of this title within 5 years prior to the date the Sec-
retary anticipates such contract (or a contract for advance 
procurement entered into consistent with the authorization for 
such contract) will be awarded. 
‘‘(D) A sufficient number of end items of the system being 
acquired under such contract have been delivered at or within 
the most current estimates of the program acquisition unit 
cost or procurement unit cost for such system to determine 
that current estimates of such unit costs are realistic. 
‘‘(E) During the fiscal year in which such contract is to 
be awarded, sufficient funds will be available to perform the 
contract in such fiscal year, and the future-years defense pro-
gram for such fiscal year will include the funding required 
to execute the program without cancellation. 
‘‘(F) The contract is a fixed price type contract.’’. 
(4) Subsection (i) of such section is further amended by 
adding at the end the following new paragraphs: 
‘‘(5) The Secretary may make the certification under paragraph 
(1) notwithstanding the fact that one or more of the conditions 
of such certification are not met if the Secretary determines that, 
due to exceptional circumstances, proceeding with a multiyear con-
tract under this section is in the best interest of the Department 
of Defense and the Secretary provides the basis for such determina-
tion with the certification. 
‘‘(6) The Secretary of Defense may not delegate the authority 
to make the certification under paragraph (1) or the determination 
under paragraph (5) to an official below the level of Under Secretary 
of Defense for Acquisition, Technology, and Logistics. 
‘‘(7) The Secretary of Defense shall send a notification con-
taining the findings of the agency head under subsection (a), and 
the basis for such findings, 30 days prior to the award of a multiyear 
contract for a defense acquisition program that has been specifically 
authorized by law.’’. 
(5) Such section is further amended by adding at the end 
the following new subsection: 
‘‘(m) INCREASED FUNDING AND REPROGRAMMING REQUESTS.— 
Any request for increased funding for the procurement of a major 
system under a multiyear contract authorized under this section 
shall be accompanied by an explanation of how the request for 
increased funding affects the determinations made by the Secretary 
under subsection (i).’’. 
(b) APPLICABILITY.—The amendments made by this section shall 
take effect on the date of the enactment of this Act and shall 
apply with respect to multiyear contracts for the purchase of major 
systems for which legislative authority is requested on or after 
that date. 
SEC. 812. CHANGES TO MILESTONE B CERTIFICATIONS. 
Section 2366a of title 10, United States Code, is amended— 
(1) by amending subsection (a) to read as follows: 
‘‘(a) CERTIFICATION.—A major defense acquisition program may 
not receive Milestone B approval, or Key Decision Point B approval
H. R. 1585—216 
in the case of a space program, until the milestone decision 
authority— 
‘‘(1) has received a business case analysis and certifies 
on the basis of the analysis that— 
‘‘(A) the program is affordable when considering the 
ability of the Department of Defense to accomplish the 
program’s mission using alternative systems; 
‘‘(B) the program is affordable when considering the 
per unit cost and the total acquisition cost in the context 
of the total resources available during the period covered 
by the future-years defense program submitted during the 
fiscal year in which the certification is made; 
‘‘(C) reasonable cost and schedule estimates have been 
developed to execute the product development and produc-
tion plan under the program; and 
‘‘(D) funding is available to execute the product 
development and production plan under the program, 
through the period covered by the future-years defense 
program submitted during the fiscal year in which the 
certification is made, consistent with the estimates 
described in subparagraph (C) for the program; and 
‘‘(2) further certifies that— 
‘‘(A) appropriate market research has been conducted 
prior to technology development to reduce duplication of 
existing technology and products; 
‘‘(B) the Department of Defense has completed an anal-
ysis of alternatives with respect to the program; 
‘‘(C) the Joint Requirements Oversight Council has 
accomplished its duties with respect to the program pursu-
ant to section 181(b) of this title, including an analysis 
of the operational requirements for the program; 
‘‘(D) the technology in the program has been dem-
onstrated in a relevant environment; 
‘‘(E) the program demonstrates a high likelihood of 
accomplishing its intended mission; and 
‘‘(F) the program complies with all relevant policies, 
regulations, and directives of the Department of Defense.’’; 
(2) by redesignating subsections (b), (c), (d), and (e) as 
subsections (c), (d), (e), and (f), respectively; 
(3) by inserting after subsection (a) the following new sub-
section (b): 
‘‘(b) CHANGES TO CERTIFICATION.—(1) The program manager 
for a major defense acquisition program that has received certifi-
cation under subsection (a) shall immediately notify the milestone 
decision authority of any changes to the program that— 
‘‘(A) alter the substantive basis for the certification of the 
milestone decision authority relating to any component of such 
certification specified in paragraph (1) or (2) of subsection (a); 
or 
‘‘(B) otherwise cause the program to deviate significantly 
from the material provided to the milestone decision authority 
in support of such certification. 
‘‘(2) Upon receipt of information under paragraph (1), the mile-
stone decision authority may withdraw the certification concerned 
or rescind Milestone B approval (or Key Decision Point B approval 
in the case of a space program) if the milestone decision authority 
determines that such certification or approval is no longer valid.’’;
H. R. 1585—217 
(4) in subsection (c), as redesignated by paragraph (1)— 
(A) by inserting ‘‘(1)’’ before ‘‘The certification’’; and 
(B) by adding at the end the following new paragraph 
(2): 
‘‘(2) A summary of any information provided to the milestone 
decision authority pursuant to subsection (b) and a description 
of the actions taken as a result of such information shall be sub-
mitted with the first Selected Acquisition Report submitted under 
section 2432 of this title after receipt of such information by the 
milestone decision authority.’’; 
(5) in subsection (d), as so redesignated— 
(A) by striking ‘‘authority may waive’’ and inserting 
the following: ‘‘authority may, at the time of Milestone 
B approval (or Key Decision Point B approval in the case 
of a space program) or at the time that such milestone 
decision authority withdraws a certification or rescinds 
Milestone B approval (or Key Decision Point B approval 
in the case of a space program) pursuant to subsection 
(b)(2), waive’’; and 
(B) by striking ‘‘paragraph (1), (2), (3), (4), (5), (6), 
(7), (8), or (9)’’ and inserting ‘‘paragraph (1) or (2)’’; and 
(6) in subsection (e), as so redesignated, by striking ‘‘sub-
section (c)’’ and inserting ‘‘subsection (d)’’. 
SEC. 813. COMPTROLLER GENERAL REPORT ON DEPARTMENT OF 
DEFENSE ORGANIZATION AND STRUCTURE FOR MAJOR 
DEFENSE ACQUISITION PROGRAMS. 
(a) REPORT REQUIRED.—Not later than one year after the date 
of the enactment of this Act, the Comptroller General of the United 
States shall submit to the congressional defense committees a report 
on potential modifications of the organization and structure of the 
Department of Defense for major defense acquisition programs. 
(b) ELEMENTS.—The report required by subsection (a) shall 
include the results of a review, conducted by the Comptroller Gen-
eral for purposes of the report, regarding the feasibility and advis-
ability of, at a minimum, the following: 
(1) Revising the acquisition process for major defense 
acquisition programs by establishing shorter, more frequent 
acquisition program milestones. 
(2) Requiring certifications of program status to the defense 
acquisition executive and Congress prior to milestone approval 
for major defense acquisition programs. 
(3) Establishing a new office (to be known as the ‘‘Office 
of Independent Assessment’’) to provide independent cost esti-
mates and performance estimates for major defense acquisition 
programs. 
(4) Requiring the milestone decision authority for a major 
defense acquisition program to specify, at the time of Milestone 
B approval, or Key Decision Point B approval, as applicable, 
the period of time that will be required to deliver an initial 
operational capability to the relevant combatant commanders. 
(5) Establishing a materiel solutions process for addressing 
identified gaps in critical warfighting capabilities, under which 
process the Under Secretary of Defense for Acquisition, Tech-
nology, and Logistics circulates among the military departments 
and appropriate Defense Agencies a request for proposals for 
technologies and systems to address such gaps.
H. R. 1585—218 
(6) Modifying the role played by chiefs of staff of the Armed 
Forces in the requirements, resource allocation, and acquisition 
processes. 
(7) Establishing a process in which the commanders of 
combatant commands assess, and provide input on, the capabili-
ties needed to successfully accomplish the missions in the oper-
ational and contingency plans of their commands over a long- 
term planning horizon of 15 years or more, taking into account 
expected changes in threats, the geo-political environment, and 
doctrine, training, and operational concepts. 
(c) CONSULTATION.—In conducting the review required under 
subsection (b) for the report required by subsection (a), the Comp-
troller General shall obtain the views of the following: 
(1) Senior acquisition officials currently serving in the 
Department of Defense. 
(2) Senior military officers involved in setting requirements 
for the joint staff, the Armed Forces, and the combatant com-
mands currently serving in the Department of Defense. 
(3) Individuals who formerly served as senior acquisition 
officials in the Department of Defense. 
(4) Participants in previous reviews of the organization 
and structure of the Department of Defense for the acquisition 
of major weapon systems, including the President’s Blue Ribbon 
Commission on Defense Management in 1986. 
(5) Other experts on the acquisition of major weapon sys-
tems. 
(6) Appropriate experts in the Government Accountability 
Office. 
SEC. 814. CLARIFICATION OF SUBMISSION OF COST OR PRICING DATA 
ON NONCOMMERCIAL MODIFICATIONS OF COMMERCIAL 
ITEMS. 
(a) MEASUREMENT OF PERCENTAGE AT CONTRACT AWARD.—Sec-
tion 2306a(b)(3)(A) of title 10, United States Code, is amended 
by inserting after ‘‘total price of the contract’’ the following: ‘‘(at 
the time of contract award)’’. 
(b) HARMONIZATION
OF THRESHOLDS
FOR COST
OR PRICING 
DATA.—Section 2306a(b)(3)(A) of title 10, United States Code, is 
amended by striking ‘‘$500,000’’ and inserting ‘‘the amount specified 
in subsection (a)(1)(A)(i), as adjusted from time to time under sub-
section (a)(7),’’. 
SEC. 815. CLARIFICATION OF RULES REGARDING THE PROCUREMENT 
OF COMMERCIAL ITEMS. 
(a) TREATMENT
OF SUBSYSTEMS, COMPONENTS, AND SPARE 
PARTS AS COMMERCIAL ITEMS.— 
(1) IN GENERAL.—Section 2379 of title 10, United States 
Code, is amended— 
(A) in subsection (a)— 
(i) by redesignating paragraph (2) as paragraph 
(3); 
(ii) in paragraph (1)(B), by striking ‘‘and’’ at the 
end; and 
(iii) by inserting after paragraph (1), the following: 
‘‘(2) the offeror has submitted sufficient information to 
evaluate, through price analysis, the reasonableness of the 
price for such system; and’’;
H. R. 1585—219 
(B) by striking subsection (b) and inserting the fol-
lowing new subsection (b): 
‘‘(b) TREATMENT
OF SUBSYSTEMS
AS COMMERCIAL ITEMS.—A 
subsystem of a major weapon system (other than a commercially 
available off-the-shelf item as defined in section 35(c) of the Office 
of Federal Procurement Policy Act (41 U.S.C. 431(c))) shall be 
treated as a commercial item and purchased under procedures 
established for the procurement of commercial items only if— 
‘‘(1) the subsystem is intended for a major weapon system 
that is being purchased, or has been purchased, under proce-
dures established for the procurement of commercial items 
in accordance with the requirements of subsection (a); or 
‘‘(2) the contracting officer determines in writing that— 
‘‘(A) the subsystem is a commercial item, as defined 
in section 4(12) of the Office of Federal Procurement Policy 
Act (41 U.S.C. 403(12)); and 
‘‘(B) the offeror has submitted sufficient information 
to evaluate, through price analysis, the reasonableness of 
the price for such subsystem.’’; 
(C) by redesignating subsections (c) and (d) as sub-
sections (e) and (f), respectively; and 
(D) by inserting after subsection (b) the following new 
subsections (c) and (d): 
‘‘(c) TREATMENT OF COMPONENTS AND SPARE PARTS AS COMMER-
CIAL ITEMS.—(1) A component or spare part for a major weapon 
system (other than a commercially available off-the-shelf item as 
defined in section 35(c) of the Office of Federal Procurement Policy 
Act (41 U.S.C. 431(c))) may be treated as a commercial item for 
the purposes of section 2306a of this title only if— 
‘‘(A) the component or spare part is intended for— 
‘‘(i) a major weapon system that is being purchased, 
or has been purchased, under procedures established for 
the procurement of commercial items in accordance with 
the requirements of subsection (a); or 
‘‘(ii) a subsystem of a major weapon system that is 
being purchased, or has been purchased, under procedures 
established for the procurement of commercial items in 
accordance with the requirements of subsection (b); or 
‘‘(B) the contracting officer determines in writing that— 
‘‘(i) the component or spare part is a commercial item, 
as defined in section 4(12) of the Office of Federal Procure-
ment Policy Act (41 U.S.C. 403(12)); and 
‘‘(ii) the offeror has submitted sufficient information 
to evaluate, through price analysis, the reasonableness of 
the price for such component or spare part. 
‘‘(2) This subsection shall apply only to components and spare 
parts that are acquired by the Department of Defense through 
a prime contract or a modification to a prime contract (or through 
a subcontract under a prime contract or modification to a prime 
contract on which the prime contractor adds no, or negligible, 
value). 
‘‘(d) INFORMATION SUBMITTED.—To the extent necessary to 
make a determination under subsection (a)(2), (b)(2), or (c)(1)(B), 
the contracting officer may request the offeror to submit— 
‘‘(1) prices paid for the same or similar commercial items 
under comparable terms and conditions by both government 
and commercial customers; and
H. R. 1585—220 
‘‘(2) if the contracting officer determines that the informa-
tion described in paragraph (1) is not sufficient to determine 
the reasonableness of price, other relevant information 
regarding the basis for price or cost, including information 
on labor costs, material costs, and overhead rates.’’. 
(2) CONFORMING AMENDMENT TO TECHNICAL DATA PROVI-
SION.—Section 2321(f)(2) of such title is amended by striking 
‘‘(whether or not under a contract for commercial items)’’ and 
inserting ‘‘(other than technical data for a commercially avail-
able off-the-shelf item as defined in section 35(c) of the Office 
of Federal Procurement Policy Act (41 U.S.C. 431(c)))’’. 
(b) SALES OF COMMERCIAL ITEMS TO NONGOVERNMENTAL ENTI-
TIES.—Not later than 180 days after the date of the enactment 
of this Act, the Secretary of Defense shall modify the regulations 
of the Department of Defense on the procurement of commercial 
items in order to clarify that the terms ‘‘general public’’ and ‘‘non-
governmental entities’’ in such regulations do not include the Fed-
eral Government or a State, local, or foreign government. 
SEC. 816. REVIEW OF SYSTEMIC DEFICIENCIES ON MAJOR DEFENSE 
ACQUISITION PROGRAMS. 
(a) ANNUAL REVIEW.—The Under Secretary of Defense for 
Acquisition, Technology, and Logistics shall conduct an annual 
review of systemic deficiencies in the major defense acquisition 
programs of the Department of Defense for each fiscal year in 
which three or more major defense acquisition programs— 
(1) experience a critical cost growth threshold breach; 
(2) have a section 2366a certification withdrawn; or 
(3) have a Milestone A approval or Key Decision Point 
A approval rescinded, by the milestone decision authority under 
subsection (b) of section 2366b of title 10, United States Code, 
as added by section 943 of this Act. 
(b) CONTENT OF REVIEW.—The review conducted under sub-
section (a) shall— 
(1) identify common factors, including any systemic defi-
ciencies in the budget, requirements, and acquisition policies 
and practices, that may have contributed to problems with 
major defense acquisition programs covered by the criteria in 
subsection (a); 
(2) assess the adequacy of corrective actions taken or to 
be taken to address cost growth or other performance defi-
ciencies in programs covered by the criteria in subsection (a); 
and 
(3) make recommendations for any changes in budget, 
requirements, and acquisition policies and practices that may 
be appropriate to avoid similar problems with major defense 
acquisition programs in the future. 
(c) DEFINITIONS.—In this section: 
(1) CRITICAL COST GROWTH THRESHOLD BREACH.—The term 
‘‘critical cost growth threshold breach’’ means a determination 
under section 2433(d) of title 10, United States Code, by the 
Secretary of a military department with respect to a major 
defense acquisition program that the program acquisition unit 
cost has increased by a percentage equal to or greater than 
the critical cost growth threshold or that the procurement unit 
cost has increased by a percentage equal to or greater than 
the critical cost growth threshold.
H. R. 1585—221 
(2) SECTION 2366a CERTIFICATION.—The term ‘‘section 2366a 
certification’’ means a certification with respect to a major 
defense acquisition program under section 2366a(a) of title 
10, United States Code, by the milestone decision authority. 
(d) REPORT.—Not later than July 15, 2008, and not later than 
August 15 of each year from 2009 through 2012, the Secretary 
of Defense shall submit to the congressional defense committees 
a report on the results of the annual review conducted (if any) 
for the preceding fiscal year under subsection (a). 
(e) SUNSET.—The requirement to conduct an annual review 
under subsection (a) shall terminate on September 30, 2012. 
SEC. 817. INVESTMENT STRATEGY FOR MAJOR DEFENSE ACQUISITION 
PROGRAMS. 
(a) REPORT REQUIRED.—Not later than May 1, 2008, the Sec-
retary of Defense shall submit to the congressional defense commit-
tees a report on the strategies of the Department of Defense for 
balancing the allocation of funds and other resources among major 
defense acquisition programs. 
(b) ELEMENTS.—The report required by subsection (a) shall 
address, at a minimum, the ability of the organizations, policies, 
and procedures of the Department of Defense to provide for— 
(1) establishing priorities among needed capabilities under 
major defense acquisition programs, and assessing the 
resources (including funds, technologies, time, and personnel) 
needed to achieve such capabilities; 
(2) balancing the cost, schedule, and requirements of major 
defense acquisition programs, including those within the same 
functional or mission area, to ensure the most efficient use 
of resources; and 
(3) ensuring that the budget, requirements, and acquisition 
processes of the Department of Defense work in a complemen-
tary manner to achieve desired results. 
(c) ROLE OF TRI-CHAIR COMMITTEE IN RESOURCE ALLOCATION.— 
(1) IN
GENERAL.—The report required by subsection (a) 
shall also address the role of the committee described in para-
graph (2) in the resource allocation process for major defense 
acquisition programs. 
(2) COMMITTEE.—The committee described in this para-
graph is a committee (to be known as the ‘‘Tri-Chair Com-
mittee’’) composed of the following: 
(A) The Under Secretary of Defense for Acquisition, 
Technology, and Logistics, who is one of the chairs of 
the committee. 
(B) The Vice Chairman of the Joint Chiefs of Staff, 
who is one of the chairs of the committee. 
(C) The Director of Program Analysis and Evaluation, 
who is one of the chairs of the committee. 
(D) Any other appropriate officials of the Department 
of Defense, as jointly agreed upon by the Under Secretary 
and the Vice Chairman. 
(d) CHANGES IN LAW.—The report required by subsection (a) 
shall, to the maximum extent practicable, include a discussion 
of any changes in the budget, acquisition, and requirements proc-
esses of the Department of Defense undertaken as a result of 
changes in law pursuant to any section in this Act.
H. R. 1585—222 
(e) RECOMMENDATIONS.—The report required by subsection (a) 
shall include any recommendations, including recommendations for 
legislative action, that the Secretary considers appropriate to 
improve the organizations, policies, and procedures described in 
the report. 
SEC. 818. REPORT ON IMPLEMENTATION OF RECOMMENDATIONS ON 
TOTAL OWNERSHIP COST FOR MAJOR WEAPON SYSTEMS. 
(a) REPORT REQUIRED.—Not later than 180 days after the date 
of the enactment of this Act, the Secretary of Defense shall submit 
to the congressional defense committees a report on the extent 
of the implementation of the recommendations set forth in the 
February 2003 report of the Government Accountability Office enti-
tled ‘‘Setting Requirements Differently Could Reduce Weapon Sys-
tems’ Total Ownership Costs’’. 
(b) ELEMENTS.—The report required by subsection (a) shall 
include the following: 
(1) For each recommendation described in subsection (a) 
that has been implemented, or that the Secretary plans to 
implement— 
(A) a summary of all actions that have been taken 
to implement such recommendation; and 
(B) a schedule, with specific milestones, for completing 
the implementation of such recommendation. 
(2) For each recommendation that the Secretary has not 
implemented and does not plan to implement— 
(A) the reasons for the decision not to implement such 
recommendation; and 
(B) a summary of any alternative actions the Secretary 
plans to take to address the purposes underlying such 
recommendation. 
(3) A summary of any additional actions the Secretary 
has taken or plans to take to ensure that total ownership 
cost is appropriately considered in the requirements process 
for major weapon systems. 
Subtitle C—Amendments to General Con-
tracting Authorities, Procedures, and 
Limitations 
SEC. 821. PLAN FOR RESTRICTING GOVERNMENT-UNIQUE CONTRACT 
CLAUSES ON COMMERCIAL CONTRACTS. 
(a) PLAN.—The Under Secretary of Defense for Acquisition, 
Technology, and Logistics shall develop and implement a plan to 
minimize the number of government-unique contract clauses used 
in commercial contracts by restricting the clauses to the following: 
(1) Government-unique clauses authorized by law or regula-
tion. 
(2) Any additional clauses that are relevant and necessary 
to a specific contract. 
(b) COMMERCIAL CONTRACT.—In this section: 
(1) The term ‘‘commercial contract’’ means a contract 
awarded by the Federal Government for the procurement of 
a commercial item.
H. R. 1585—223 
(2) The term ‘‘commercial item’’ has the meaning provided 
by section 4(12) of the Office of Federal Procurement Policy 
Act (41 U.S.C. 403(12)). 
SEC. 822. EXTENSION OF AUTHORITY FOR USE OF SIMPLIFIED 
ACQUISITION PROCEDURES FOR CERTAIN COMMERCIAL 
ITEMS. 
(a) EXTENSION.—Section 4202(e) of the Clinger-Cohen Act of 
1996 (division D of Public Law 104–106; 110 Stat. 652; 10 U.S.C. 
2304 note) is amended by striking ‘‘January 1, 2008’’ and inserting 
‘‘January 1, 2010’’. 
(b) REPORT.—Not later than March 1, 2008, the Under Sec-
retary of Defense for Acquisition, Technology, and Logistics shall 
submit to the Committees on Armed Services of the Senate and 
the House of Representatives a report on the use by the Department 
of Defense of the authority provided by section 4202(e) of the 
Clinger-Cohen Act of 1996 (10 U.S.C. 2304 note). The report shall 
include, at a minimum, the following: 
(1) Summary data on the use of the authority. 
(2) Specific examples of the use of the authority. 
(3) An evaluation of potential benefits and costs of 
extending the authority after January 1, 2010. 
SEC. 823. FIVE-YEAR EXTENSION OF AUTHORITY TO CARRY OUT CER-
TAIN PROTOTYPE PROJECTS. 
Section 845(i) of the National Defense Authorization Act for 
Fiscal Year 1994 (10 U.S.C. 2371 note) is amended by striking 
‘‘September 30, 2008’’ and inserting ‘‘September 30, 2013’’. 
SEC. 824. EXEMPTION OF SPECIAL OPERATIONS COMMAND FROM CER-
TAIN 
REQUIREMENTS 
FOR 
CERTAIN 
CONTRACTS 
RELATING 
TO 
VESSELS, 
AIRCRAFT, 
AND 
COMBAT 
VEHICLES. 
Section 2401(b) of title 10, United States Code, is amended 
by adding at the end the following new paragraph: 
‘‘(5) In the case of a contract described in subsection (a)(1)(B), 
the commander of the special operations command may make a 
contract without regard to this subsection if— 
‘‘(A) funds are available and obligated for the full cost 
of the contract (including termination costs) on or before the 
date the contract is awarded; 
‘‘(B) the Secretary of Defense submits to the congressional 
defense committees a certification that there is no alternative 
for meeting urgent operational requirements other than making 
the contract; and 
‘‘(C) a period of 30 days of continuous session of Congress 
has expired following the date on which the certification was 
received by such committees.’’. 
SEC. 825. PROVISION OF AUTHORITY TO MAINTAIN EQUIPMENT TO 
UNIFIED 
COMBATANT 
COMMAND 
FOR 
JOINT 
WARFIGHTING. 
(a) AUTHORITY.—Section 167a of title 10, United States Code, 
is amended— 
(1) in subsection (a), by striking ‘‘and acquire’’ and inserting 
‘‘, acquire, and maintain’’; 
(2) by redesignating subsection (f) as subsection (g); and
H. R. 1585—224 
(3) by inserting after subsection (e) the following new sub-
section: 
‘‘(f) LIMITATION ON AUTHORITY TO MAINTAIN EQUIPMENT.—The 
authority delegated under subsection (a) to maintain equipment 
is subject to the availability of funds authorized and appropriated 
specifically for that purpose.’’. 
(b) TWO-YEAR EXTENSION.—Subsection (g) of such section, as 
so redesignated, is amended— 
(1) by striking ‘‘through 2008’’ and inserting ‘‘through 
2010’’; and 
(2) by striking ‘‘September 30, 2008’’ and inserting ‘‘Sep-
tember 30, 2010’’. 
SEC. 826. MARKET RESEARCH. 
(a) ADDITIONAL REQUIREMENTS.—Subsection (c) of section 2377 
of title 10, United States Code, is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘and’’ at the end of subparagraph (A); 
(B) by striking the period at the end of subparagraph 
(B) and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(C) before awarding a task order or delivery order 
in excess of the simplified acquisition threshold.’’; and 
(2) by adding at the end the following: 
‘‘(4) The head of an agency shall take appropriate steps to 
ensure that any prime contractor of a contract (or task order or 
delivery order) in an amount in excess of $5,000,000 for the procure-
ment of items other than commercial items engages in such market 
research as may be necessary to carry out the requirements of 
subsection (b)(2) before making purchases for or on behalf of the 
Department of Defense.’’. 
(b) REQUIREMENT TO DEVELOP TRAINING AND TOOLS.—The Sec-
retary of Defense shall develop training to assist contracting officers, 
and market research tools to assist such officers and prime contrac-
tors, in performing appropriate market research as required by 
subsection (c) of section 2377 of title 10, United States Code, as 
amended by this section. 
SEC. 827. MODIFICATION OF COMPETITION REQUIREMENTS FOR PUR-
CHASES FROM FEDERAL PRISON INDUSTRIES. 
(a) MODIFICATION OF COMPETITION REQUIREMENTS.— 
(1) IN GENERAL.—Section 2410n of title 10, United States 
Code, is amended by striking subsections (a) and (b) and 
inserting the following new subsections (a) and (b): 
‘‘(a) PRODUCTS FOR WHICH FEDERAL PRISON INDUSTRIES DOES 
NOT HAVE SIGNIFICANT MARKET SHARE.—(1) Before purchasing a 
product listed in the latest edition of the Federal Prison Industries 
catalog under section 4124(d) of title 18 for which Federal Prison 
Industries does not have a significant market share, the Secretary 
of Defense shall conduct market research to determine whether 
the product is comparable to products available from the private 
sector that best meet the needs of the Department in terms of 
price, quality, and time of delivery. 
‘‘(2) If the Secretary determines that a Federal Prison Industries 
product described in paragraph (1) is not comparable in price, 
quality, or time of delivery to products of the private sector that 
best meets the needs of the Department in terms of price, quality, 
and time of delivery, the Secretary shall use competitive procedures