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‘‘(B) a contract designated by the head of 
the agency as necessary to the national security 
of the United States. 
‘‘(2) EXECUTIVE AGENCY.—The term ‘executive 
agency’ has the meaning given that term in section 
4(1) of the Office of Federal Procurement Policy 
Act (41 U.S.C. 403(1)). 
‘‘(3) PERSON.—The term ‘person’ includes— 
‘‘(A) an individual; 
‘‘(B) a partnership; and 
‘‘(C) a corporation. 
‘‘(4) SERIOUSLY DELINQUENT TAX DEBT.—The 
term ‘seriously delinquent tax debt’— 
‘‘(A) means any Federal tax liability— 
‘‘(i) that exceeds $3,000; 
‘‘(ii) that has been assessed by the 
Secretary of the Treasury and not paid; 
and 
‘‘(iii) for which a notice of lien has 
been filed in public records; and 
‘‘(B) does not include any Federal tax li-
ability— 
‘‘(i) being paid in a timely manner 
under an offer-in-compromise or install-
ment agreement;
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‘‘(ii) with respect to which collection 
due process proceedings are not completed; 
or 
‘‘(iii) with respect to which collection 
due process proceedings are completed and 
no further payment is required. 
‘‘(5) SIMPLIFIED ACQUISITION THRESHOLD.— 
The term ‘simplified acquisition threshold’ has the 
meaning given that term in section 4(11) of the Of-
fice of Federal Procurement Policy Act (41 U.S.C. 
403(11)). 
‘‘(e) REGULATIONS.—The Administrator for Federal 
Procurement Policy, in consultation with the Secretary of 
the Treasury, shall promulgate regulations that— 
‘‘(1) treat corporations and partnerships as 
having a seriously delinquent tax debt if such cor-
poration or partnership is controlled (directly or in-
directly) by persons who have a seriously delinquent 
tax debt; 
‘‘(2) provide for the proper application of sub-
sections (a)(2) and (b)(2) in the case of corporations 
and partnerships; and 
‘‘(3) provide for the proper application of sub-
section (a) to first-tier subcontractors that are iden-
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tified in a bid or proposal and are a significant part 
of a bid or proposal team.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 37 of such title is 
amended by adding after the item relating to section 
3720E the following new item: 
‘‘3720F. Contractor and grantee disclosure of delinquent Federal tax debts.’’. 
(b) REVISION OF FEDERAL ACQUISITION REGULA-
TION.—Not later than 90 days after the final promulga-
tion of regulations under section 3720F(e) of title 31, 
United States Code, as added by subsection (a), the Fed-
eral Acquisition Regulation shall be revised to incorporate 
the requirements of section 3720F of such title. 
SEC. 404. INDEPENDENCE OF CONTRACT AUDITS AND BUSI-
NESS SYSTEM REVIEWS. 
(a) DEFENSE CONTRACT AUDIT AGENCY GENERAL 
COUNSEL.— 
(1) IN GENERAL.—Subchapter II of chapter 8 
of title 10, United States Code, is amended by add-
ing at the end the following new section: 
‘‘§ 204. Defense Contract Audit Agency general coun-
sel 
‘‘(a) GENERAL COUNSEL.—The Director of the De-
fense Contract Audit Agency shall appoint a General 
Counsel of the Defense Contract Audit Agency.
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‘‘(b) DUTIES.—(1) The General Counsel shall per-
form such functions as the Director may prescribe and 
shall serve at the discretion of the Director. 
‘‘(2) Notwithstanding section 140(b) of this title, the 
General Counsel shall be the chief legal officer of the De-
fense Contract Audit Agency. 
‘‘(3) The Defense Contract Audit Agency shall be the 
exclusive legal client of the General Counsel. 
‘‘(c) OFFICE OF THE GENERAL COUNSEL.—There is 
established an Office of the General Counsel within the 
Defense Contract Audit Agency. The Director may ap-
point to the Office to serve as staff of the General Counsel 
such legal counsel as the Director determines is appro-
priate.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of subchapter II of chapter 8 
of such title is amended by adding at the end the 
following new item: 
‘‘204. Defense Contract Audit Agency general counsel.’’. 
(b) CRITERIA FOR BUSINESS SYSTEM REVIEWS.— 
(1) IN
GENERAL.—Chapter 131 of title 10, 
United States Code, is amended by inserting after 
section 2222 the following new section: 
‘‘§ 2222a. Criteria for business system reviews 
‘‘(a) CRITERIA FOR BUSINESS SYSTEM REVIEWS.— 
The Secretary of Defense shall ensure that any contractor
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business system review carried out by a military depart-
ment, a Defense Agency, or a Department of Defense 
Field Activity— 
‘‘(1) complies with generally accepted govern-
ment auditing standards issued by the Comptroller 
General; 
‘‘(2) is performed by an audit team that does 
not engage in any other official activity (audit-re-
lated or otherwise) involving the contractor con-
cerned; 
‘‘(3) is performed in a time and manner con-
sistent with a documented assessment of risk to the 
Federal Government; and 
‘‘(4) involves testing on a representative sample 
of transactions sufficient to fully examine the integ-
rity of the contractor business system concerned. 
‘‘(b) CONTRACTOR BUSINESS SYSTEM REVIEW DE-
FINED.—In this section, the term ‘contractor business sys-
tem review’ means an audit of policies, procedures, and 
internal controls relating to accounting and management 
systems of a contractor.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 131 of such title 
is amended by inserting after the item relating to 
section 2222 the following new item: 
‘‘2222a. Criteria for business system reviews.’’.
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(c) CONTRACT AUDIT GUIDANCE.—Not later than 
180 days after the date of the enactment of this Act, the 
Secretary of Defense shall issue guidance relating to con-
tract audits carried out by a military department, a de-
fense agency, or a Department of Defense field activity 
that are not contractor business system reviews, as de-
scribed under section 2222a of title 10, United States 
Code, that— 
(1) requires that such audits comply with gen-
erally accepted government auditing standards 
issued by the Comptroller General and are per-
formed in a time and manner consistent with a doc-
umented assessment of risk to the Federal Govern-
ment; 
(2) establishes guidelines for discussions of the 
scope of the audit with the contractor concerned 
that ensure that such scope is not improperly influ-
enced by the contractor; 
(3) provides for withholding of contract pay-
ments when necessary to compel the submission of 
documentation from the contractor; and 
(4) requires that the results of contract audits 
performed on behalf of an agency of the Department 
of Defense be shared with other Federal agencies 
upon request, without reimbursement.