276 
(4) AVAILABILITY.—The training program shall 
be made available on the Internet to ensure the widest 
dissemination possible. 
(b) APPLICABILITY.—Effective on and after September 
30, 2007, a member of the Armed Forces or an employee 
of the Department of Defense with authority to generate re-
quirements for a major defense acquisition program may 
not continue to participate in the requirements generation 
process unless the member or employee successfully com-
pletes the certification training program developed under 
this section. 
SEC. 802. ADDITIONAL REQUIREMENTS RELATING TO TECH-
NICAL DATA RIGHTS. 
(a) ADDITIONAL REQUIREMENTS RELATING TO TECH-
NICAL DATA RIGHTS .—Section 2320 of title 10, United 
States Code, is amended by adding at the end the following 
new subsection: 
‘‘(e) ADDITIONAL
REGULATIONS.—(1) Regulations 
prescribed under subsection (a) shall ensure, at a minimum, 
that— 
‘‘(A) in the case of a major system that is devel-
oped exclusively with Federal funds, in part with 
Federal funds and in part at private expense, or ex-
clusively at private expense, rights are acquired in 
full by the United States to technical data necessary 
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to support competition for contracts required for 
sustainment of the system; and 
‘‘(B) any contract for a major system includes 
price and delivery options for acquiring, at any point 
during the life cycle of the system, major elements of 
technical data not acquired at the time of initial con-
tract award. 
‘‘(2) Regulations prescribed under subsection (a) also 
shall establish a standard for acquiring rights in technical 
data that supports the purchase of data rights appropriate 
to minimize life cycle costs. 
‘‘(3) The Under Secretary of Defense for Acquisition, 
Technology, and Logistics shall ensure that members of the 
acquisition workforce working with any contract in an 
amount greater than $5,000,000 and involving the acquisi-
tion of rights in technical data be provided information and 
formal training sufficient to carry out the regulations pre-
scribed under subsection (a) to implement this subsection.’’. 
(b) REGULATIONS.—Not later than 180 days after the 
date of the enactment of this Act, the Secretary of Defense 
shall revise regulations under section 2320 of title 10, 
United States Code, to implement subsection (e) of such sec-
tion (as added by this section). 
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278 
SEC. 803. STUDY AND REPORT ON REVISIONS TO SELECTED 
ACQUISITION REPORT REQUIREMENTS. 
(a) STUDY REQUIREMENT.—The Secretary of Defense, 
acting through the Under Secretary of Defense for Acquisi-
tion, Technology, and Logistics in coordination with the 
service acquisition executives of each military department, 
shall conduct a study on revisions to requirements relating 
to Selected Acquisition Reports, as set forth in section 2432 
of title 10, United States Code. 
(b) MATTERS COVERED.—The study required under 
subsection (a) shall— 
(1) focus on incorporating into the Selected Ac-
quisition Report those elements of program progress 
that the Department of Defense considers most rel-
evant to evaluating the performance and progress of 
major defense acquisition programs, with particular 
reference to the cost estimates and program schedule 
established when a major defense acquisition program 
receives Milestone B approval; and 
(2) include any recommendations to eliminate 
elements of the Selected Acquisition Report that the 
Department believes are no longer needed (other than 
the elimination of any unit cost information). 
(c) REPORT.—Not later than March 1, 2007, the Sec-
retary shall submit to the Committees on Armed Services 
of the Senate and the House of Representatives a report on 
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the results of the study, including such recommendations 
as the Secretary considers appropriate. 
SEC. 804. QUARTERLY UPDATES ON IMPLEMENTATION OF 
ACQUISITION REFORM IN THE DEPARTMENT 
OF DEFENSE. 
(a) QUARTERLY UPDATES REQUIREMENT.—Not later 
than 45 days after the date of the enactment of this Act, 
and on the first day of each calendar quarter thereafter, 
the Secretary of Defense shall provide an update to the 
Committees on Armed Services of the Senate and the House 
of Representatives on the implementation of plans to reform 
the acquisition system in the Department of Defense. 
(b) MATTERS COVERED.—Each update provided under 
subsection (a) shall cover the implementation of reforms of 
the processes for acquisition, including generation of re-
quirements, award of contracts, and financial management. 
At a minimum, the updates shall take into account the rec-
ommendations made by the following: 
(1) The Defense Acquisition Performance Assess-
ment Panel. 
(2) The Defense Science Board Summer Study 
on Transformation, issued in February 2006. 
(3) The Beyond Goldwater-Nichols Study of the 
Center for Strategic and International Studies. 
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(4) The Quadrennial Defense Review, issued Feb-
ruary 6, 2006. 
(5) The Committee Defense Review of the Com-
mittee on Armed Services of the House of Representa-
tives (when available). 
(c) 
RECOMMENDATIONS.—Each 
report 
submitted 
under subsection (a) shall include such recommendations as 
the Secretary considers appropriate, and implementation 
plans for the recommendations. 
(d) TERMINATION OF REPORT REQUIREMENT.—The 
requirement to submit reports under subsection (a) shall 
terminate on the first day of the calendar quarter following 
the first calendar quarter in which the Selected Acquisition 
Report submitted to Congress under section 2432 of title 
10, United States Code, does not indicate that there has 
been an increase by a percentage equal to or greater than 
the significant cost growth threshold or the critical cost 
growth threshold in any major defense acquisition program 
(as such thresholds are defined in section 2433(a) of such 
title). 
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281 
SEC. 805. ESTABLISHMENT OF DEFENSE CHALLENGE PROC-
ESS FOR CRITICAL COST GROWTH THRESH-
OLD BREACHES IN MAJOR DEFENSE ACQUISI-
TION PROGRAMS. 
(a) PRELIMINARY EVALUATION OF CHALLENGE PRO-
POSALS FOR CRITICAL COST BREACHES.— 
(1) SUBMISSION OF CHALLENGE PROPOSALS.— 
Section 2359b(c)) of title 10, United States Code, is 
amended— 
(A) in paragraph (1), by striking ‘‘Panel,’’ 
and all that follows through the end and insert-
ing the following: ‘‘Panel— 
‘‘(A) through the unsolicited proposal process; 
‘‘(B) in response to a broad agency announce-
ment; or 
‘‘(C) in response to a solicitation issued as a re-
sult of a critical cost growth threshold breach (as de-
fined in paragraph (4)).’’; 
(B) by redesignating paragraphs (4), (5), 
and (6) as paragraphs (5), (7), and (8), respec-
tively; 
(C) by inserting after paragraph (3) the fol-
lowing new paragraph (4): 
‘‘(4)(A) If the program acquisition unit cost or 
procurement unit cost of a major defense acquisition 
program increases by a percentage equal to or greater 
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than the critical cost growth threshold for the pro-
gram, as determined by the Secretary concerned 
under section 2433(d) of this title (in this section re-
ferred to as a ‘critical cost growth threshold breach’), 
the Under Secretary shall issue a solicitation for chal-
lenge proposals that would result in improvements in 
affordability of the program. The solicitation shall 
specifically identify (i) the cost and schedule 
variances, and (ii) the design, engineering, manufac-
turing, or technology integration issues, contributing 
to the breach. 
‘‘(B) A solicitation referred to in subparagraph 
(A) shall be made public before the end of the 14-day 
period beginning on the day the Selected Acquisition 
Report containing the information described in sec-
tion 2433(g) of this title is required to be submitted 
under section 2432(f) of this title. 
‘‘(C) A solicitation referred to in subparagraph 
(A) shall require any challenge proposals responding 
to the solicitation to be submitted within 30 days 
after the date of issuance of the solicitation.’’; 
(D) in paragraph (5) (as so redesignated) 
in the matter preceding subparagraph (A)— 
(i) by striking ‘‘or submitted’’ and in-
serting ‘‘submitted’’; and 
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(ii) by inserting after ‘‘paragraph 
(2),’’ the following: ‘‘or submitted in re-
sponse to a solicitation issued as a result of 
a critical cost growth threshold breach’’; and 
(E) by inserting after paragraph (5) (as so 
redesignated) the following new paragraph (6): 
‘‘(6) A panel shall complete a preliminary eval-
uation of challenge proposals submitted in response to 
a solicitation issued as a result of a critical cost 
growth threshold breach before the end of the 60-day 
period beginning on the day the Selected Acquisition 
Report referred to in paragraph (4)(B) is submitted 
to Congress and shall inform the Secretary of Defense 
of the results of the evaluation to aid in the comple-
tion of the Secretary’s certification under section 
2433(e)(2)(B) of this title.’’. 
(b) ACTION UPON FAVORABLE FULL REVIEW
AND 
EVALUATION OF CHALLENGE PROPOSALS FOR CRITICAL 
COST BREACHES.—Section 2359b(e) of such title is amend-
ed by adding at the end the following new paragraph: 
‘‘(3) In the case of a challenge proposal referred 
to in paragraph (1) that was submitted in response 
to a solicitation issued as a result of a critical cost 
growth threshold breach, the costs of the proposal shall 
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be borne by the major defense acquisition program 
with respect to which the breach occurred.’’. 
(c) ACTION UPON UNFAVORABLE FULL REVIEW AND 
EVALUATION OF CHALLENGE PROPOSALS FOR CRITICAL 
COST BREACHES.—Section 2359b of such title, as amended 
by section 213, is further amended— 
(1) by redesignating subsections (f), (g), (h), and 
(i) as subsections (g), (h), (i), and (j), respectively; 
and 
(2) by inserting after subsection (e) the following 
new subsection (f): 
‘‘(f) ACTION UPON UNFAVORABLE FULL REVIEW AND 
EVALUATION
OF
CRITICAL
COST
BREACH
SOLICITA-
TIONS.—In the case of a challenge proposal that was sub-
mitted in response to a solicitation issued as a result of 
a critical cost growth threshold breach and that is not deter-
mined under a full review and evaluation to satisfy each 
of the criteria specified in subsection (c)(5), the following 
provisions apply: 
‘‘(1) The office carrying out the full review and 
evaluation shall provide to the Panel that conducted 
the preliminary evaluation a statement containing a 
summary of the rationale for the unfavorable evalua-
tion. 
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‘‘(2) If the Panel disagrees with the rationale 
provided under paragraph (1), the Panel may return 
the challenge proposal to the office for further consid-
eration. 
‘‘(3) The full review and evaluation, including a 
further consideration of the review and evaluation 
under paragraph (2), shall be completed not later 
than the expiration of the 60-day period beginning on 
the date of completion of the preliminary evaluation 
of the proposal by a Panel under subsection (c). 
‘‘(4) After a full review and evaluation of all 
such challenge proposals submitted for such review 
and evaluation are completed, including further con-
sideration under paragraph (2), the Under Secretary 
shall submit to the congressional defense committees a 
report containing a list of each challenge proposal 
with an unfavorable evaluation, including an identi-
fication of each such challenge proposal returned to 
an office for further consideration, and a detailed ra-
tionale for the unfavorable evaluations upon both ini-
tial and further consideration (if any). Such report 
shall be submitted not later than the expiration of the 
60-day period beginning on the date of completion of 
the last preliminary evaluation of the proposals by a 
Panel under subsection (c).’’. 
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(d) AMENDMENTS TO UNIT COST REPORTS PROVI-
SIONS.— 
(1) ADDITIONAL ASSESSMENT REQUIRED UPON 
BREACH OF CRITICAL COST GROWTH THRESHOLD.— 
Section 2433(e)(2)(A) of title 10, United States Code, 
is amended— 
(A) by striking ‘‘and’’ at the end of clause 
(ii); 
(B) by inserting ‘‘and’’ at the end of clause 
(iii); and 
(C) by adding at the end the following new 
clause: 
‘‘(iv) the availability of components, sub-
systems, or systems that may result in near-term 
improvements in affordability of the program, as 
identified under the Defense Acquisition Chal-
lenge Program through a solicitation issued pur-
suant to section 2359b(c)(1)(C) of this title;’’. 
(2) ADDITIONAL CERTIFICATION REQUIRED UPON 
BREACH OF CRITICAL COST GROWTH THRESHOLD.— 
Section 2433(e)(2)(B) of such title is amended— 
(A) by redesignating clauses (iii) and (iv) 
as clauses (iv) and (v), respectively; and 
(B) by inserting after clause (ii) the fol-
lowing new clause (iii): 
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‘‘(iii) the Panel conducting preliminary 
evaluation of challenge proposals submitted in 
response to the solicitation issued under the De-
fense Acquisition Challenge Program pursuant to 
section 2359b(c)(1)(C) of this title has identified 
no promising proposals meriting full review and 
evaluation;’’. 
(3) ADDITIONAL INFORMATION IN CERTAIN RE-
PORT REQUIRED.—Section 2433(g)(1)(P)(vi) of such 
title is amended by inserting after ‘‘of the program’’ 
the following: ‘‘and design, engineering, manufac-
turing, or technology integration issues’’. 
(e) ADDITIONAL CONFORMING AMENDMENTS.—Section 
2359b of such title is further amended— 
(1) in subsection (c)(8), as redesignated by sub-
section (a), by striking ‘‘paragraph (4)’’ and insert-
ing ‘‘paragraph (5)’’; 
(2) in subsection (d)(1), by striking ‘‘subsection 
(c)(6)’’ and inserting ‘‘subsection (c)(8)’’; 
(3) in subsection (d)(2), by striking ‘‘subsection 
(c)(4)’’ and inserting ‘‘subsection (c)(5)’’; and 
(4) in subsection (e)(1), by striking ‘‘subsection 
(c)(4)’’ and inserting ‘‘subsection (c)(5)’’. 
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288 
SEC. 806. MARKET RESEARCH REQUIRED FOR MAJOR DE-
FENSE 
ACQUISITION 
PROGRAMS 
BEFORE 
PROCEEDING TO MILESTONE B. 
Section 2366a(a) of title 10, United States Code, is 
amended— 
(1) by redesignating paragraphs (1) through (7) 
as paragraphs (2) through (8), respectively; and 
(2) by inserting before paragraph (2) (as so re-
designated) the following new paragraph (1): 
‘‘(1) market research has been conducted prior to 
technology development to reduce duplication of exist-
ing technology and products;’’. 
Subtitle B—Acquisition Policy and 
Management 
SEC. 811. APPLICABILITY OF STATUTORY EXECUTIVE COM-
PENSATION CAP MADE PROSPECTIVE. 
(a) PROSPECTIVE APPLICABILITY OF EXECUTIVE COM-
PENSATION CAP.—Section 808(e)(2) of Public Law 105–85 
(41 U.S.C. 435 note; 111 Stat. 1838) is amended by striking 
‘‘before, on,’’ and inserting ‘‘on’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply as if included in Public Law 105– 
85 as enacted. 
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289 
SEC. 812. PROHIBITION ON PROCUREMENT FROM BENE-
FICIARIES OF FOREIGN SUBSIDIES. 
(a) PROHIBITION.—The Secretary of Defense may not 
enter into a contract for the procurement of goods or services 
from any foreign person to which the government of a for-
eign country that is a member of the World Trade Organi-
zation has provided a subsidy if— 
(1) the United States has requested consultations 
with that foreign country under the Agreement on 
Subsidies and Countervailing Measures on the basis 
that the subsidy is a prohibited subsidy under that 
Agreement; and 
(2) either— 
(A) the issue before the World Trade Orga-
nization has not been resolved; or 
(B) the World Trade Organization has 
ruled that the subsidy provided by the foreign 
country is a prohibited subsidy under the Agree-
ment on Subsidies and Countervailing Measures. 
(b) JOINT VENTURES.—The prohibition under sub-
section (a) with respect to a foreign person also applies to 
any joint venture, cooperative organization, partnership, or 
contracting team of which that foreign person is a member. 
(c) SUBCONTRACTS AND TASK ORDERS.—The prohibi-
tion under subsection (a) with respect to a contract also 
applies to any subcontracts at any tier entered into under 
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the contract and any task orders at any tier issued under 
the contract. 
(d) DEFINITIONS.—In this section: 
(1) The term ‘‘Agreement on Subsidies and 
Countervailing Measures’’ means the agreement de-
scribed in section 101(d)(12) of the Uruguay Round 
Agreements Act (19 U.S.C. 3501(d)(12)). 
(2) The term ‘‘foreign person’’ means— 
(A) an individual who is not a United 
States person or an alien lawfully admitted for 
permanent residence into the United States; or 
(B) a corporation, partnership, or other 
nongovernmental entity which is not a United 
States person. 
(3) The term ‘‘United States person’’ means— 
(A) a natural person who is a citizen of the 
United States or who owes permanent allegiance 
to the United States; and 
(B) a corporation or other legal entity 
which is organized under the laws of the United 
States, any State or territory thereof, or the Dis-
trict of Columbia, if natural persons described in 
subparagraph (A) own, directly or indirectly, 
more than 50 percent of the outstanding capital 
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stock or other beneficial interest in such legal en-
tity. 
(e) APPLICABILITY.— 
(1) PROGRAMS
WITH
MILESTONE
B
APPROVAL 
NOT COVERED.—The prohibition under subsection (a) 
shall not apply to any contract under a major defense 
acquisition program that has received Milestone B 
approval as of the date of the enactment of this Act. 
(2) DEFINITIONS.—In this subsection: 
(A) The term ‘‘major defense acquisition 
program’’ means a Department of Defense acqui-
sition program that is a major defense acquisi-
tion program for purposes of section 2430 of title 
10, United States Code. 
(B) The term ‘‘Milestone B approval’’ has 
the meaning provided that term in section 
2366(e)(7) of such title. 
SEC. 813. TIME-CERTAIN DEVELOPMENT FOR DEPARTMENT 
OF DEFENSE INFORMATION TECHNOLOGY 
BUSINESS SYSTEMS. 
(a) MILESTONE A LIMITATION.—The Department of 
Defense executive or entity that is the milestone decision 
authority for an information system described in subsection 
(c) may not provide Milestone A approval for the system 
unless, as part of the decision process for such approval, 
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292 
that authority determines that the system will achieve ini-
tial operational capability within five years of such ap-
proval. 
(b) INITIAL OPERATIONAL CAPABILITY LIMITATION.— 
Funds appropriated or otherwise available to the Depart-
ment of Defense may not be obligated or expended for an 
information system described in subsection (c) if the system, 
having received Milestone A approval, has not achieved ini-
tial operational capability within five years of the date of 
such approval. 
(c) COVERED SYSTEMS.—An information system de-
scribed in this subsection is any Department of Defense in-
formation technology business system that is not a national 
security system, as defined in 3542(b)(2) of title 44, United 
States Code. 
(d) APPLICABILITY TO EXISTING PROGRAMS.— 
(1) WAIVER
AUTHORITY
FOR
EXISTING
PRO-
GRAMS IN DEVELOPMENT.—The Secretary of Defense 
may waive the applicability of subsection (b) in the 
case of a program described in subsection (c) that as 
of the date of the enactment of this Act has received 
Milestone A approval but has not as of such date 
achieved initial operational capability. 
(2) INAPPLICABILITY
TO
PROGRAMS
THROUGH 
DEVELOPMENT.—This section does not apply to an 
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293 
information system that achieved initial operational 
capability before the date of the enactment of this Act. 
(e) DEFINITIONS.—In this section: 
(1) MILESTONE
DECISION
AUTHORITY.—The 
term ‘‘milestone decision authority’’ has the meaning 
given that term in Department of Defense Instruction 
5000.2, dated May 12, 2003. 
(2) MILESTONE A.—The term ‘‘Milestone A’’ has 
the meaning given that term in Department of De-
fense Instruction 5000.2, dated May 12, 2003. 
SEC. 814. ESTABLISHMENT OF PANEL ON CONTRACTING IN-
TEGRITY. 
(a) ESTABLISHMENT.— 
(1) IN GENERAL.—The Secretary of Defense shall 
establish a panel to be known as the ‘‘Panel on Con-
tracting Integrity’’. 
(2) COMPOSITION.—The panel shall be composed 
of the following: 
(A) The Deputy Secretary of Defense, who 
shall be the chairman of the panel. 
(B) The service acquisition executive of each 
military department. 
(C) The Inspector General of the Depart-
ment of Defense. 
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(D) The Director of the Defense Logistics 
Agency. 
(E) The Director of the Defense Contract 
Management Agency. 
(F) The Director of the Defense Contract 
Audit Agency. 
(G) Such other members as determined ap-
propriate by the Secretary of Defense. 
(b) DUTIES.—In addition to other matters assigned to 
it by the Secretary of Defense, the panel shall— 
(1) conduct reviews of progress made by the De-
partment of Defense to eliminate areas of vulner-
ability of the defense contracting system that allow 
fraud, waste, and abuse to occur; 
(2) review the report by the Comptroller General 
required by section 841 of the National Defense Au-
thorization Act for Fiscal Year 2006 (Public Law 
109–163; 119 Stat. 3389), relating to areas of vulner-
ability of Department of Defense contracts to fraud, 
waste, and abuse; and 
(3) recommend changes in law, regulations, and 
policy that it determines necessary to eliminate such 
areas of vulnerability. 
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(c) MEETINGS.—The panel shall meet as determined 
necessary by the Secretary of Defense but not less often than 
once every six months. 
(d) REPORT.— 
(1) REQUIREMENT.—The panel shall prepare 
and submit to the congressional defense committees an 
annual report on its activities. The report shall con-
tain a summary of its findings and recommendations 
for the year covered by the report. 
(2) FIRST REPORT.—The first report under this 
subsection shall be submitted not later than 180 days 
after the date of the enactment of this Act and shall 
contain an examination of the current structure in 
the Department of Defense for personnel account-
ability relating to the contracting system and rec-
ommendations for any changes needed to the system 
of administrative safeguards and disciplinary actions 
to ensure accountability at the appropriate level for 
any violations of appropriate standards of behavior 
in contracting. 
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Subtitle C—Amendments to General 
Contracting Authorities, Proce-
dures, and Limitations 
SEC. 821. EXTENSION OF SPECIAL TEMPORARY CONTRACT 
CLOSEOUT AUTHORITY. 
Section 804 of the National Defense Authorization Act 
for Fiscal Year 2004 (Public Law 108–136; 117 Stat. 1541) 
is amended in subsection (d) by striking ‘‘September 30, 
2006’’ and inserting ‘‘September 30, 2007’’. 
SEC. 822. LIMITATION ON CONTRACTS FOR THE ACQUISI-
TION OF CERTAIN SERVICES. 
(a) LIMITATION.—Except as provided in subsection 
(b), the Secretary of Defense may not enter into a contract 
for covered services if the amount of the contract— 
(1) exceeds 75 percent of the estimated value of 
any asset required for the provision of services under 
the contract, as of the date on which contract per-
formance begins; or 
(2) exceeds $150,000,000 in payments over the 
life of the contract assuming all options to extend the 
contract are exercised. 
(b) WAIVER.—The Secretary of Defense may waive 
subsection (a) with respect to a contract for covered services 
if the Secretary— 
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(1) determines that a waiver is necessary for na-
tional security purposes; and 
(2) provides to the congressional defense commit-
tees an economic analysis as described in subsection 
(c) at least 30 days before the waiver takes effect. 
(c) ECONOMIC ANALYSIS.—The economic analysis pro-
vided under subsection (b) shall include, at a minimum, 
the following: 
(1) A clear explanation of the need for the con-
tract for covered services. 
(2) An examination of at least two alternatives 
for fulfilling the requirements that the contract is 
meant to fulfill, including the following with respect 
to each alternative: 
(A) A rationale for including the alter-
native. 
(B) A cost estimate of the alternative and 
an analysis of the quality of each cost estimate. 
(C) A discussion of the benefits to be real-
ized from the alternative. 
(D) A best value determination of each al-
ternative and a detailed explanation of the life- 
cycle cost calculations used in the determination. 
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298 
(d) COVERED SERVICES.—The limitation in sub-
section (a) applies to any contract for the following types 
of services: 
(1) Operation, maintenance, or support of facili-
ties or installations, or construction of facilities need-
ed for performing the contract. 
(2) Maintenance or modification of aircraft, 
ships, vehicles, or other highly complex military 
equipment, or the provision of aircraft, ships, vehicles, 
or other highly complex military equipment needed 
for performing the contract. 
(3) Specialized training necessitating high qual-
ity instructor skills (for example, pilot and air crew 
members; foreign language training). 
(4) Base services (for example, ground mainte-
nance, in-plane refueling; bus transportation; refuse 
collection and disposal). 
SEC. 823. USE OF FEDERAL SUPPLY SCHEDULES BY STATE 
AND LOCAL GOVERNMENTS FOR GOODS AND 
SERVICES FOR RECOVERY FROM NATURAL 
DISASTERS, TERRORISM, OR NUCLEAR, BIO-
LOGICAL, CHEMICAL, OR RADIOLOGICAL AT-
TACK. 
(a) AUTHORITY TO USE SUPPLY SCHEDULES FOR 
CERTAIN GOODS AND SERVICES.—Section 502 of title 40, 
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299 
United States Code, is amended by adding at the end the 
following new subsection: 
‘‘(d) USE
OF SUPPLY SCHEDULES
FOR CERTAIN 
GOODS AND SERVICES.— 
‘‘(1) IN GENERAL.—The Administrator may pro-
vide for the use by State or local governments of Fed-
eral supply schedules of the General Services Admin-
istration for goods or services that are to be used to 
facilitate recovery from a major disaster declared by 
the President under the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5121 
et seq.) or to facilitate recovery from terrorism or nu-
clear, biological, chemical, or radiological attack. 
‘‘(2) DETERMINATION BY SECRETARY OF HOME-
LAND SECURITY.—The Secretary of Homeland Secu-
rity shall determine which goods and services qualify 
as goods and services described in paragraph (1) be-
fore the Administrator provides for the use of the Fed-
eral supply schedule relating to such goods and serv-
ices. 
‘‘(3) VOLUNTARY USE.—In the case of the use by 
a State or local government of a Federal supply 
schedule pursuant to paragraph (1), participation by 
a firm that sells to the Federal Government through 
the supply schedule shall be voluntary with respect to 
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a sale to the State or local government through such 
supply schedule. 
‘‘(4) DEFINITIONS.—The definitions in sub-
section (c)(3) shall apply for purposes of this sub-
section.’’. 
(b) PROCEDURES.—Not later than 30 days after the 
date of the enactment of this Act, the Administrator of Gen-
eral Services shall establish procedures to implement section 
502(d) of title 40, United States Code (as added by sub-
section (a)). 
SEC. 824. WAIVERS TO EXTEND TASK ORDER CONTRACTS 
FOR ADVISORY AND ASSISTANCE SERVICES. 
(a) DEFENSE CONTRACTS.—Section 2304b(b) of title 
10, United States Code, is amended— 
(1) by inserting ‘‘(1)’’ before ‘‘The period’’; 
(2) by inserting before the period the following: 
‘‘or a waiver is issued under paragraph (2)’’; and 
(3) by adding at the end the following new para-
graph: 
‘‘(2) The head of an agency may issue a waiver 
to extend a task order contract entered into under this 
section for a period not exceeding 10 years, through 
five one-year options, if the head of the agency deter-
mines in writing— 
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301 
‘‘(A) that the contract provides engineering 
or technical services of such a unique and sub-
stantial technical nature that award of a new 
contract would be harmful to the continuity of 
the program for which the services are per-
formed; 
‘‘(B) that award of a new contract would 
create a large disruption in services provided to 
the Department of Defense; and 
‘‘(C) the Department of Defense would en-
dure program risk during critical program 
stages due to loss of program corporate knowl-
edge of ongoing program activities.’’. 
(b) CIVILIAN AGENCY CONTRACTS.—Section 303I(b) of 
the Federal Property and Administrative Services Act of 
1949 (41 U.S.C. 253i) is amended— 
(1) by inserting ‘‘(1)’’ before ‘‘The period’’; 
(2) by inserting before the period the following: 
‘‘or a waiver is issued under paragraph (2)’’; and 
(3) by adding at the end the following new para-
graph: 
‘‘(2) An executive agency may issue a waiver to extend 
a task order contract entered into under this section for a 
period not exceeding 10 years, through five one-year op-
tions, if the head of the agency determines in writing— 
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302 
‘‘(A) that the contract provides engineering or 
technical services of such a unique and substantial 
technical nature that award of a new contract would 
be harmful to the continuity of the program for which 
the services are performed; 
‘‘(B) that award of a new contract would create 
a large disruption in services provided to the execu-
tive agency; and 
‘‘(C) the executive agency would endure program 
risk during critical program stages due to loss of pro-
gram corporate knowledge of ongoing program activi-
ties.’’. 
(c) REPORT.—Not later than April 1, 2007, the Sec-
retary of Defense shall submit to the Committees on Armed 
Services of the Senate and the House of Representatives a 
report on advisory and assistance services. The report shall 
include the following information: 
(1) The methods used by the Department of De-
fense to identify a contract as an advisory and assist-
ance services contract, as defined in section 2304b of 
title 10, United States Code. 
(2) The number of such contracts awarded by the 
Department during the five-year period preceding the 
date of enactment of this Act. 
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303 
(3) The average annual expenditures by the De-
partment for such contracts. 
(4) The average length of such contracts. 
(5) The number of such contracts recompeted and 
awarded to the previous award winner. 
(6) The number of contractors performing such 
contracts that previously qualified as a small business 
but no longer qualify as a small business for a recom-
petition. 
(7) The number of such contracts required for a 
period of greater than five years and a justification 
of why those services are required for greater than five 
years, including the rationale for not performing the 
services inside the Department of Defense. 
(8) The percentage of such contracts awarded by 
the Department during the five-year period preceding 
the date of the enactment of this Act for assistance in 
the introduction and transfer of engineering and tech-
nical knowledge for fielded systems, equipment, and 
components. 
(9) The actions taken by the Department to pre-
vent organizational conflicts of interest in the use of 
such contracts. 
(d) PROHIBITION ON USE OF AUTHORITY BY DEPART-
MENT OF DEFENSE IF REPORT NOT SUBMITTED.—The 
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304 
head of an agency may not issue a waiver under 
2304b(b)(2) of title 10, United States Code, as added by 
subsection (a), if the report required by subsection (c) is 
not submitted by the date set forth in that subsection. 
SEC. 825. ENHANCED ACCESS FOR SMALL BUSINESS. 
Section 9(a) of the Contract Disputes Act of 1978 (41 
U.S.C. 608) is amended by striking the period at the end 
of the first sentence and inserting the following: ‘‘or, in the 
case of a small business concern (as defined in the Small 
Business Act and regulations under that Act), $150,000 or 
less.’’. 
SEC. 826. PROCUREMENT GOAL FOR HISPANIC-SERVING IN-
STITUTIONS. 
Section 2323 of title 10, United States Code, is amend-
ed— 
(1) in subsection (a)(1)— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (B); 
(B) by striking the period at the end of sub-
paragraph (C) and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(D) Hispanic-serving institutions, as des-
ignated by the Department of Education.’’; 
(2) in subsection (a)(2)— 
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(A) by inserting after ‘‘historically Black 
colleges and universities’’ the following: ‘‘, His-
panic-serving institutions,’’; and 
(B) by inserting after ‘‘such colleges and 
universities’’ the following: ‘‘and institutions’’; 
(3) in subsection (c)(1), by inserting after ‘‘his-
torically Black colleges and universities’’ the fol-
lowing: ‘‘, Hispanic-serving institutions,’’; and 
(4) in subsection (c)(3), by inserting after ‘‘his-
torically Black colleges and universities’’ the fol-
lowing: ‘‘, to Hispanic-serving institutions,’’. 
SEC. 827. PROHIBITION ON DEFENSE CONTRACTORS RE-
QUIRING LICENSES OR FEES FOR USE OF 
MILITARY LIKENESSES AND DESIGNATIONS. 
The Secretary of Defense shall require that any con-
tract entered into or renewed by the Department of Defense 
include a provision prohibiting the contractor from requir-
ing toy and hobby manufacturers, distributors, or mer-
chants to obtain licenses from or pay fees to the contractor 
for the use of military likenesses or designations on items 
provided under the contract. 
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306 
Subtitle D—United States Defense 
Industrial Base Provisions 
SEC. 831. PROTECTION OF STRATEGIC MATERIALS CRIT-
ICAL TO NATIONAL SECURITY. 
(a) 
REQUIREMENT
TO
BUY
FROM
AMERICAN 
SOURCES.— 
(1) IN
GENERAL.—Chapter 148 of title 10, 
United States Code, is amended by inserting after sec-
tion 2533a the following new section: 
‘‘§ 2533b. Requirement to buy strategic materials crit-
ical to national security from American 
sources; exceptions 
‘‘(a) REQUIREMENT.—Except as provided in sub-
sections (c) through (h), funds appropriated or otherwise 
available to the Department of Defense may not be used 
for the procurement of an item described in subsection (b) 
if the item is not reprocessed, reused, or produced in the 
United States. 
‘‘(b) COVERED ITEMS.—An item referred to in sub-
section (a) is any of the following: 
‘‘(1) A specialty metal. 
‘‘(2) An item critical to national security, as de-
termined by the Strategic Materials Protection Board. 
‘‘(c) AVAILABILITY EXCEPTION.—Subsection (a) does 
not apply to the extent that the Secretary of Defense or the 
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Secretary of the military department concerned determines 
that satisfactory quality and sufficient quantity of any 
item described in subsection (b) cannot be procured as and 
when needed. 
‘‘(d) EXCEPTION
FOR CERTAIN PROCUREMENTS.— 
Subsection (a) does not apply to the following: 
‘‘(1) Procurements outside the United States in 
support of combat operations or in support of contin-
gency operations. 
‘‘(2) Procurements by vessels in foreign waters 
for use of the item. 
‘‘(3) Procurements for which the use of proce-
dures other than competitive procedures has been ap-
proved on the basis of section 2304(c)(2) of this title, 
relating to unusual and compelling urgency of need. 
‘‘(e) EXCEPTION RELATING TO AGREEMENTS WITH 
FOREIGN GOVERNMENTS.—Subsection (a) does not preclude 
the procurement of an item described in subsection (b) if— 
‘‘(1) the procurement is necessary— 
‘‘(A) to comply with agreements with for-
eign governments requiring the United States to 
purchase supplies from foreign sources for the 
purposes of offsetting sales made by the United 
States Government or United States firms under 
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308 
approved programs serving defense requirements; 
or 
‘‘(B) in furtherance of agreements with for-
eign governments in which both such govern-
ments agree to remove barriers to purchases of 
supplies produced in the other country or serv-
ices performed by sources of the other country; 
‘‘(2) any such agreement with a foreign govern-
ment complies, where applicable, with the require-
ments of section 36 of the Arms Export Control Act 
(22 U.S.C. 2776) and with section 2457 of this title; 
and 
‘‘(3) the item is grown, produced, or manufac-
tured in the United States or in the country from 
which it is procured. 
‘‘(f) EXCEPTION
FOR COMMISSARIES, EXCHANGES, 
AND OTHER NONAPPROPRIATED FUND INSTRUMENTAL-
ITIES.—Subsection (a) does not apply to items purchased 
for resale purposes in commissaries, exchanges, and non-
appropriated fund instrumentalities operated by the De-
partment of Defense. 
‘‘(g) EXCEPTION FOR SMALL PURCHASES.—Subsection 
(a) does not apply to procurements in amounts not greater 
than the simplified acquisition threshold referred to in sec-
tion 2304(g) of this title. 
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