H. R. 1585—253 
(II) personnel performing private security 
functions in an area of combat operations are killed 
or injured; or 
(III) persons are killed or injured, or property 
is destroyed, as a result of conduct by contractor 
personnel; 
(B) ensure that all personnel performing private secu-
rity functions under such contract are briefed on and under-
stand their obligation to comply with— 
(i) qualification, training, screening (including, if 
practicable, through background checks), and security 
requirements established by the Secretary of Defense 
for personnel performing private security functions in 
an area of combat operations; 
(ii) applicable laws and regulations of the United 
States and the host country, and applicable treaties 
and international agreements, regarding the perform-
ance of the functions of the contractor; 
(iii) orders, directives, and instructions issued by 
the applicable commander of a combatant command 
relating to equipment, force protection, security, 
health, safety, or relations and interaction with locals; 
and 
(iv) rules on the use of force issued by the 
applicable commander of a combatant command for 
personnel performing private security functions in an 
area of combat operations; and 
(C) cooperate with any investigation conducted by the 
Department of Defense pursuant to subsection (a)(2)(E) 
by providing access to employees of the contractor and 
relevant information in the possession of the contractor 
regarding the incident concerned. 
(3) NONCOMPLIANCE OF PERSONNEL WITH CLAUSE.—The con-
tracting officer for a covered contract may direct the contractor, 
at its own expense, to remove or replace any personnel per-
forming private security functions in an area of combat oper-
ations who violate or fail to comply with applicable require-
ments of the clause required by this subsection. If the violation 
or failure to comply is a gross violation or failure or is repeated, 
the contract may be terminated for default. 
(4) APPLICABILITY.—The contract clause required by this 
subsection shall be included in all covered contracts awarded 
on or after the date that is 180 days after the date of the 
enactment of this Act. Federal agencies shall make best efforts 
to provide for the inclusion of the contract clause required 
by this subsection in covered contracts awarded before such 
date. 
(5) INSPECTOR
GENERAL
REPORT
ON
PILOT
PROGRAM
ON 
IMPOSITION OF FINES FOR NONCOMPLIANCE OF PERSONNEL WITH 
CLAUSE.—Not later than March 30, 2008, the Inspector General 
of the Department of Defense shall submit to Congress a report 
assessing the feasibility and advisability of carrying out a pilot 
program for the imposition of fines on contractors for personnel 
who violate or fail to comply with applicable requirements 
of the clause required by this section as a mechanism for 
enhancing the compliance of such personnel with the clause. 
The report shall include—
H. R. 1585—254 
(A) an assessment of the feasibility and advisability 
of carrying out the pilot program; and 
(B) if the Inspector General determines that carrying 
out the pilot program is feasible and advisable— 
(i) recommendations on the range of contracts and 
subcontracts to which the pilot program should apply; 
and 
(ii) a schedule of fines to be imposed under the 
pilot program for various types of personnel actions 
or failures. 
(c) AREAS OF COMBAT OPERATIONS.— 
(1) DESIGNATION.—The Secretary of Defense shall designate 
the areas constituting an area of combat operations for purposes 
of this section by not later than 120 days after the date of 
the enactment of this Act. 
(2) PARTICULAR
AREAS.—Iraq and Afghanistan shall be 
included in the areas designated as an area of combat oper-
ations under paragraph (1). 
(3) ADDITIONAL AREAS.—The Secretary may designate any 
additional area as an area constituting an area of combat 
operations for purposes of this section if the Secretary deter-
mines that the presence or potential of combat operations in 
such area warrants designation of such area as an area of 
combat operations for purposes of this section. 
(4) MODIFICATION OR ELIMINATION OF DESIGNATION.—The 
Secretary may modify or cease the designation of an area 
under this subsection as an area of combat operations if the 
Secretary determines that combat operations are no longer 
ongoing in such area. 
(d) EXCEPTION.—The requirements of this section shall not 
apply to contracts entered into by elements of the intelligence 
community in support of intelligence activities. 
SEC. 863. COMPTROLLER GENERAL REVIEWS AND REPORTS ON CON-
TRACTING IN IRAQ AND AFGHANISTAN. 
(a) REVIEWS AND REPORTS REQUIRED.— 
(1) IN GENERAL.—Every 12 months, the Comptroller Gen-
eral shall review contracts in Iraq or Afghanistan and submit 
to the relevant committees of Congress a report on such review. 
(2) MATTERS
COVERED.—A report under this subsection 
shall cover the following with respect to the contracts in Iraq 
or Afghanistan reviewed for the report: 
(A) Total number of contracts and task orders awarded 
during the period covered by the report. 
(B) Total number of active contracts and task orders. 
(C) Total value of all contracts and task orders awarded 
during the reporting period. 
(D) Total value of active contracts and task orders. 
(E) The extent to which such contracts have used 
competitive procedures. 
(F) Total number of contractor personnel working on 
contracts during the reporting period. 
(G) Total number of contractor personnel, on average, 
who are performing security functions during the reporting 
period. 
(H) The number of contractor personnel killed or 
wounded during the reporting period.
H. R. 1585—255 
(I) Information on any specific contract or class of 
contracts that the Comptroller General determines raises 
issues of significant concern. 
(3) SUBMISSION
OF
REPORTS.—The Comptroller General 
shall submit an initial report under this subsection not later 
than October 1, 2008, and shall submit an updated report 
every year thereafter until October 1, 2010. 
(b) ACCESS TO DATABASES ON CONTRACTS.—The Secretary of 
Defense and the Secretary of State shall provide full access to 
the databases described in section 861(b)(4) to the Comptroller 
General for purposes of the reviews carried out under this section. 
SEC. 864. DEFINITIONS AND OTHER GENERAL PROVISIONS. 
(a) DEFINITIONS.—In this subtitle: 
(1) MATTERS RELATING TO CONTRACTING.—The term ‘‘mat-
ters relating to contracting’’, with respect to contracts in Iraq 
and Afghanistan, means all matters relating to awarding, 
funding, managing, tracking, monitoring, and providing over-
sight to contracts and contractor personnel. 
(2) CONTRACT IN IRAQ OR AFGHANISTAN.—The term ‘‘con-
tract in Iraq or Afghanistan’’ means a contract with the Depart-
ment of Defense, the Department of State, or the United States 
Agency for International Development, a subcontract at any 
tier issued under such a contract, or a task order or delivery 
order at any tier issued under such a contract (including a 
contract, subcontract, or task order or delivery order issued 
by another Government agency for the Department of Defense, 
the Department of State, or the United States Agency for 
International Development), if the contract, subcontract, or task 
order or delivery order involves worked performed in Iraq or 
Afghanistan for a period longer than 14 days. 
(3) COVERED
CONTRACT.—The term ‘‘covered contract’’ 
means— 
(A) a contract of a Federal agency for the performance 
of services in an area of combat operations, as designated 
by the Secretary of Defense under subsection (c) of section 
862; 
(B) a subcontract at any tier under such a contract; 
or 
(C) a task order or delivery order issued under such 
a contract or subcontract. 
(4) CONTRACTOR.—The term ‘‘contractor’’, with respect to 
a covered contract, means the contractor or subcontractor car-
rying out the covered contract. 
(5) PRIVATE SECURITY FUNCTIONS.—The term ‘‘private secu-
rity functions’’ means activities engaged in by a contractor 
under a covered contract as follows: 
(A) Guarding of personnel, facilities, or property of 
a Federal agency, the contractor or subcontractor, or a 
third party. 
(B) Any other activity for which personnel are required 
to carry weapons in the performance of their duties. 
(6) RELEVANT COMMITTEES OF CONGRESS.—The term ‘‘rel-
evant committees of Congress’’ means each of the following 
committees: 
(A) The Committees on Armed Services of the Senate 
and the House of Representatives.
H. R. 1585—256 
(B) The Committee on Homeland Security and Govern-
mental Affairs of the Senate and the Committee on Over-
sight and Government Reform of the House of Representa-
tives. 
(C) The Committee on Foreign Relations of the Senate 
and the Committee on Foreign Affairs of the House of 
Representatives. 
(D) For purposes of contracts relating to the National 
Foreign Intelligence Program, the Select Committee on 
Intelligence of the Senate and the Permanent Select Com-
mittee on Intelligence of the House of Representatives. 
(b) CLASSIFIED INFORMATION.—Nothing in this subtitle shall 
be interpreted to require the handling of classified information 
or information relating to intelligence sources and methods in a 
manner inconsistent with any law, regulation, executive order, or 
rule of the House of Representatives or of the Senate relating 
to the handling or protection of such information. 
Subtitle G—Defense Materiel Readiness 
Board 
SEC. 871. ESTABLISHMENT OF DEFENSE MATERIEL READINESS 
BOARD. 
(a) ESTABLISHMENT.—Not later than 6 months after the date 
of the enactment of this Act, the Secretary of Defense shall establish 
a Defense Materiel Readiness Board (in this subtitle referred to 
as the ‘‘Board’’) within the Office of the Secretary of Defense. 
(b) MEMBERSHIP.—The Secretary shall appoint the chairman 
and the members of the Board from among officers of the Armed 
Forces with expertise in matters relevant to the function of the 
Board to assess materiel readiness and evaluate plans and policies 
relating to materiel readiness. At a minimum, the Board shall 
include representatives of the Joint Chiefs of Staff, each of the 
Armed Forces, and each of the reserve components of the Armed 
Forces. 
(c) STAFF.—The Secretary of Defense shall assign staff, and 
request the Secretaries of the military departments to assign staff, 
as necessary to assist the Board in carrying out its duties. 
(d) FUNCTIONS.—The Board shall provide independent assess-
ments of materiel readiness, materiel readiness shortfalls, and 
materiel readiness plans to the Secretary of Defense and the Con-
gress. To carry out such functions, the Board shall— 
(1) monitor and assess the materiel readiness of the Armed 
Forces; 
(2) assist the Secretary of Defense in the identification 
of deficiencies in the materiel readiness of the Armed Forces 
caused by shortfalls in weapons systems, equipment, and sup-
plies; 
(3) identify shortfalls in materiel readiness, including crit-
ical materiel readiness shortfalls, for purposes of the Secretary’s 
designations under section 872 and the funding needed to 
address such shortfalls; 
(4) assess the adequacy of current Department of Defense 
plans, policies, and programs to address shortfalls in materiel 
readiness, including critical materiel readiness shortfalls (as
H. R. 1585—257 
designated by the Secretary under section 872), and to sustain 
and improve materiel readiness; 
(5) assist the Secretary of Defense in determining whether 
the industrial capacity of the Department of Defense and of 
the defense industrial base is being best utilized to support 
the materiel readiness needs of the Armed Forces; 
(6) review and assess Department of Defense systems for 
measuring the status of current materiel readiness of the 
Armed Forces; and 
(7) make recommendations with respect to materiel readi-
ness funding, measurement techniques, plans, policies, and pro-
grams. 
(e) REPORTS.—The Board shall submit to the Secretary of 
Defense a report summarizing its findings and recommendations 
not less than once every six months. Within 30 days after receiving 
a report from the Board, the Secretary shall forward the report 
in its entirety, together with his comments, to the congressional 
defense committees. The report shall be submitted in unclassified 
form. To the extent necessary, the report may be accompanied 
by a classified annex. 
SEC. 872. CRITICAL MATERIEL READINESS SHORTFALLS. 
(a) DESIGNATION
OF CRITICAL MATERIEL READINESS SHORT-
FALLS.— 
(1) DESIGNATION.—The Secretary of Defense may designate 
any requirement of the Armed Forces for equipment or supplies 
as a critical materiel readiness shortfall if there is a shortfall 
in the required equipment or supplies that materially reduces 
readiness of the Armed Forces and that— 
(A) cannot be adequately addressed by identifying 
acceptable substitute capabilities or cross leveling of equip-
ment that does not unacceptably reduce the readiness of 
other Armed Forces; and 
(B) that is likely to persist for more than two years 
based on currently projected budgets and schedules for 
deliveries of equipment and supplies. 
(2) CONSIDERATION OF BOARD FINDINGS AND RECOMMENDA-
TIONS.—In making any such designation, the Secretary shall 
take into consideration the findings and recommendations of 
the Defense Materiel Readiness Board. 
(b) MEASURES
TO ADDRESS CRITICAL MATERIEL READINESS 
SHORTFALLS.—The Secretary of Defense shall ensure that critical 
materiel readiness shortfalls designated pursuant to subsection 
(a)(1) are transmitted to the relevant officials of the Department 
of Defense responsible for requirements, budgets, and acquisition, 
and that such officials prioritize and address such shortfalls in 
the shortest time frame practicable. 
(c) TRANSFER AUTHORITY.— 
(1) IN GENERAL.—The amounts of authorizations that the 
Secretary may transfer under the authority of section 1001 
of this Act is hereby increased by $2,000,000,000. 
(2) LIMITATIONS.—The additional transfer authority pro-
vided by this section— 
(A) may be made only from authorizations to the 
Department of Defense for fiscal year 2008;
H. R. 1585—258 
(B) may be exercised solely for the purpose of 
addressing critical materiel readiness shortfalls as des-
ignated by the Secretary of Defense under subsection (a); 
and 
(C) is subject to the same terms, conditions, and proce-
dures as other transfer authority under section 1001 of 
this Act. 
(d) STRATEGIC READINESS FUND.— 
(1) ESTABLISHMENT.—There is established on the books 
of the Treasury a fund to be known as the Department of 
Defense Strategic Readiness Fund (in this subsection referred 
to as the ‘‘Fund’’), which shall be administered by the Secretary 
of the Treasury. 
(2) PURPOSES.—The Fund shall be used to address critical 
materiel readiness shortfalls as designated by the Secretary 
of Defense under subsection (a). 
(3) ASSETS OF FUND.—There shall be deposited into the 
Fund any amount appropriated to the Fund, which shall con-
stitute the assets of the Fund. 
(4) LIMITATION.—The procurement unit cost (as defined 
in section 2432(a) of title 10, United States Code) of any item 
purchased using assets of the Fund, whether such assets are 
in the Fund or after such assets have been transferred from 
the Fund using the authority provided in subsection (c), shall 
not exceed $30,000,000. 
(e) MULTIYEAR CONTRACT NOTIFICATION.— 
(1) NOTIFICATION.—If the Secretary of a military depart-
ment makes the determination described in paragraph (2) with 
respect to the use of a multiyear contract, the Secretary shall 
notify the congressional defense committees within 30 days 
of the determination and provide a detailed description of the 
proposed multiyear contract. 
(2) DETERMINATION.—The determination referred to in 
paragraph (1) is a determination by the Secretary of a military 
department that the use of a multiyear contract to procure 
an item to address a critical materiel readiness shortfall— 
(A) will significantly accelerate efforts to address a 
critical materiel readiness shortfall; 
(B) will provide savings compared to the total antici-
pated costs of carrying out the contract through annual 
contracts; and 
(C) will serve the interest of national security. 
(f) DEFINITION.—In this section, the term ‘‘critical materiel 
readiness shortfall’’ means a critical materiel readiness shortfall 
designated by the Secretary of Defense under this section. 
Subtitle H—Other Matters 
SEC. 881. CLEARINGHOUSE FOR RAPID IDENTIFICATION AND DISSEMI-
NATION OF COMMERCIAL INFORMATION TECHNOLOGIES. 
(a) REQUIREMENT TO ESTABLISH CLEARINGHOUSE.—Not later 
than 180 days after the date of the enactment of this Act, the 
Secretary of Defense, acting through the Assistant Secretary of 
Defense for Networks and Information Integration, shall establish 
a clearinghouse for identifying, assessing, and disseminating knowl-
edge about readily available information technologies (with an