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‘‘(2) Funds described in paragraph (1) may be used 
in accordance with that paragraph for a commercial or 
industrial type function performed as part of a public-pri-
vate partnership at the Center of Industrial and Technical 
Excellence designated under section 2474 of this title. 
‘‘(3) Each report submitted under subsection (q) for 
a working-capital fund shall include a description of any 
use of funds described in paragraph (1) that is financed 
by that working-capital fund and a description of the an-
ticipated product improvement under subparagraph (C) of 
that paragraph.’’. 
SEC. 323. AUTHORIZATION OF USE OF WORKING-CAPITAL 
FUNDS 
FOR 
ACQUISITION 
OF 
CERTAIN 
ITEMS. 
Section 2208 of title 10, United States Code, as 
amended by section 332, is further amended by adding 
at the end the following new subsection: 
‘‘(t) ACQUISITION THRESHOLD FOR WEAPONS SYS-
TEM MODIFICATION, IMPROVEMENT AND LIFECYCLE EX-
TENSION.—(1) Any of the following items may be provided 
through working-capital funds, if the item has a unit cost 
of not more than $500,000: 
‘‘(A) An item that is materiel for supplies or 
supply chain management, assemblies, spare or re-
pair parts, modification kits, or any other item of
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equipment to provide maintenance, repair, or over-
haul and rework. 
‘‘(B) An item for continuous technology refresh-
ment to provide newer technologies that improve re-
liability and maintainability, extend the useful life, 
enhance safety, lower maintenance costs, provide 
performance enhancement, or expand the perform-
ance capability of a weapons system platform. 
‘‘(2) With respect to an item described in paragraph 
(1), the Secretary of each military department may in-
crease the acquisition threshold under paragraph (1) to 
an amount that does not exceed $1,000,000, if the Sec-
retary— 
‘‘(A) determines the increase is necessary to 
maintain core logistics capabilities required by sec-
tion 2464 of this title; and 
‘‘(B) not later than 30 days after such an in-
crease, notifies Congress of the increase and the rea-
sons for the increase. 
‘‘(3) An item described in paragraph (1) may be an 
item used for a commercial- or industrial-type function 
performed at a Center of Industrial and Technical Excel-
lence designated under section 2474 of this title.’’.
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SEC. 324. MODIFICATION TO PUBLIC-PRIVATE COMPETI-
TION REQUIREMENTS BEFORE CONVERSION 
TO CONTRACTOR PERFORMANCE. 
(a) COMPARISON OF RETIREMENT SYSTEM COSTS.— 
Section 2461(a)(1) of title 10, United States Code, is 
amended— 
(1) in subparagraph (F), by striking ‘‘and’’ at 
the end; 
(2) by redesignating subparagraph (G) as sub-
paragraph (H); and 
(3) by inserting after subparagraph (F) the fol-
lowing new subparagraph (G): 
‘‘(G) requires that the contractor shall not re-
ceive an advantage for a proposal that would reduce 
costs for the Department of Defense by— 
‘‘(i) not making an employer-sponsored 
health insurance plan (or payment that could be 
used in lieu of such a plan), health savings ac-
count, or medical savings account, available to 
the workers who are to be employed to perform 
the function under the contract; 
‘‘(ii) offering to such workers an employer- 
sponsored health benefits plan that requires the 
employer to contribute less towards the pre-
mium or subscription share than the amount 
that is paid by the Department of Defense for
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health benefits for civilian employees of the De-
partment under chapter 89 of title 5; or 
‘‘(iii) offering to such workers a retirement 
benefit that, in any year, costs less than the an-
nual retirement cost factor applicable to civilian 
employees of the Department of Defense under 
chapter 84 of title 5; and’’. 
(b) CONFORMING AMENDMENTS.—Such title is fur-
ther amended— 
(1) by striking section 2467; and 
(2) in section 2461— 
(A) 
by 
redesignating 
subsections 
(b) 
through (d) as subsections (c) through (e); and 
(B) by inserting after subsection (a) the 
following new subsection (b): 
‘‘(b) REQUIREMENT
TO CONSULT DOD EMPLOY-
EES.—(1) Each officer or employee of the Department of 
Defense responsible for determining under Office of Man-
agement and Budget Circular A–76 whether to convert to 
contractor performance any function of the Department 
of Defense— 
‘‘(A) shall, at least monthly during the develop-
ment and preparation of the performance work 
statement and the management efficiency study used 
in making that determination, consult with civilian
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employees who will be affected by that determination 
and consider the views of such employees on the de-
velopment and preparation of that statement and 
that study; and 
‘‘(B) may consult with such employees on other 
matters relating to that determination. 
‘‘(2)(A) In the case of employees represented by a 
labor organization accorded exclusive recognition under 
section 7111 of title 5, consultation with representatives 
of that labor organization shall satisfy the consultation re-
quirement in paragraph (1). 
‘‘(B) In the case of employees other than employees 
referred to in subparagraph (A), consultation with appro-
priate representatives of those employees shall satisfy the 
consultation requirement in paragraph (1). 
‘‘(C) The Secretary of Defense shall prescribe regula-
tions to carry out this subsection. The regulations shall 
include provisions for the selection or designation of ap-
propriate representatives of employees referred to in para-
graph (2)(B) for purposes of consultation required by 
paragraph (1)’’. 
(c) TECHNICAL AMENDMENTS.—Section 2461 of 
such title, as amended by subsection (a) is further amend-
ed— 
(1) in subsection (a)(1)—