H. R. 1585—204 
(1) LEAD SYSTEMS INTEGRATOR.—The term ‘‘lead systems 
integrator’’ means— 
(A) a prime contractor for the development or produc-
tion of a major system, if the prime contractor is not 
expected at the time of award to perform a substantial 
portion of the work on the system and the major sub-
systems; or 
(B) a prime contractor under a contract for the procure-
ment of services the primary purpose of which is to perform 
acquisition functions closely associated with inherently 
governmental functions with respect to the development 
or production of a major system. 
(2) MAJOR
SYSTEM.—The term ‘‘major system’’ has the 
meaning given such term in section 2302d of title 10, United 
States Code. 
(3) LOW-RATE INITIAL PRODUCTION.—The term ‘‘low-rate ini-
tial production’’ has the meaning given such term in section 
2400 of title 10, United States Code. 
SEC. 803. REINVESTMENT IN DOMESTIC SOURCES OF STRATEGIC 
MATERIALS. 
(a) ASSESSMENT REQUIRED.—Not later than 180 days after the 
date of the enactment of this Act, the Strategic Materials Protection 
Board established pursuant to section 187 of title 10, United States 
Code, shall perform an assessment of the extent to which domestic 
producers of strategic materials are investing and planning to invest 
on a sustained basis in the processes, infrastructure, workforce 
training, and facilities required for the continued domestic produc-
tion of such materials to meet national defense requirements. 
(b) COOPERATION OF DOMESTIC PRODUCERS.—The Department 
of Defense may take into consideration the degree of cooperation 
of any domestic producer of strategic materials with the assessment 
conducted under subsection (a) when determining how much weight 
to accord any comments provided by such domestic producer 
regarding a proposed waiver of domestic source limitations pursuant 
to section 2533b of title 10, United States Code. 
(c) REPORT
TO CONGRESSIONAL DEFENSE COMMITTEES.—The 
Board shall include the findings and recommendations of the assess-
ment required by subsection (a) in the first report submitted to 
Congress pursuant to section 187(d) of title 10, United States Code, 
after the completion of such assessment. 
(d) DEFINITION.—The term ‘‘strategic material’’ means— 
(1) a material designated as critical to national security 
by the Strategic Materials Protection Board in accordance with 
section 187 of title 10, United States Code; or 
(2) a specialty metal as defined by section 2533b of title 
10, United States Code. 
SEC. 804. CLARIFICATION OF THE PROTECTION OF STRATEGIC MATE-
RIALS CRITICAL TO NATIONAL SECURITY. 
(a) PROHIBITION.—Subsection (a) of section 2533b of title 10, 
United States Code, is amended— 
(1) by striking ‘‘Except as provided in subsections (b) 
through (j), funds appropriated or otherwise available to the 
Department of Defense may not be used for the procurement 
of—’’ and inserting ‘‘Except as provided in subsections (b) 
through (m), the acquisition by the Department of Defense 
of the following items is prohibited:’’;
H. R. 1585—205 
(2) in paragraph (1)— 
(A) by striking ‘‘the following’’ and inserting ‘‘The fol-
lowing’’; and 
(B) by striking ‘‘; or’’ and inserting a period; and 
(3) in paragraph (2), by striking ‘‘a speciality’’ and inserting 
‘‘A specialty’’. 
(b) APPLICABILITY TO ACQUISITION OF COMMERCIAL ITEMS.— 
Subsection (h) of such section is amended to read as follows: 
‘‘(h) APPLICABILITY TO ACQUISITIONS OF COMMERCIAL ITEMS.— 
(1) Except as provided in paragraphs (2) and (3), this section applies 
to acquisitions of commercial items, notwithstanding sections 34 
and 35 of the Office of Federal Procurement Policy Act (41 U.S.C. 
430 and 431). 
‘‘(2) This section does not apply to contracts or subcontracts 
for the acquisition of commercially available off-the-shelf items, 
as defined in section 35(c) of the Office of Federal Procurement 
Policy Act (41 U.S.C. 431(c)), other than— 
‘‘(A) contracts or subcontracts for the acquisition of spe-
cialty metals, including mill products, such as bar, billet, slab, 
wire, plate and sheet, that have not been incorporated into 
end items, subsystems, assemblies, or components; 
‘‘(B) contracts or subcontracts for the acquisition of forgings 
or castings of specialty metals, unless such forgings or castings 
are incorporated into commercially available off-the-shelf end 
items, subsystems, or assemblies; 
‘‘(C) contracts or subcontracts for commercially available 
high performance magnets unless such high performance 
magnets are incorporated into commercially available off-the- 
shelf-end items or subsystems; and 
‘‘(D) contracts or subcontracts for commercially available 
off-the-shelf fasteners, unless such fasteners are— 
‘‘(i) incorporated into commercially available off-the- 
shelf end items, subsystems, assemblies, or components; 
or 
‘‘(ii) purchased as provided in paragraph (3). 
‘‘(3) This section does not apply to fasteners that are commercial 
items that are purchased under a contract or subcontract with 
a manufacturer of such fasteners, if the manufacturer has certified 
that it will purchase, during the relevant calendar year, an amount 
of domestically melted specialty metal, in the required form, for 
use in the production of such fasteners for sale to the Department 
of Defense and other customers, that is not less than 50 percent 
of the total amount of the specialty metal that it will purchase 
to carry out the production of such fasteners.’’. 
(c) ELECTRONIC COMPONENTS.—Subsection (g) of such section 
is amended by striking ‘‘commercially available’’ and all that follows 
through the end of the subsection and inserting ‘‘electronic compo-
nents, unless the Secretary of Defense, upon the recommendation 
of the Strategic Materials Protection Board pursuant to section 
187 of this title, determines that the domestic availability of a 
particular electronic component is critical to national security.’’. 
(d) ADDITIONAL EXCEPTIONS.—Section 2533b of title 10, United 
States Code, as amended by subsections (a), (b), and (c), is further 
amended— 
(1) by redesignating subsections (i) and (j) as subsections 
(l) and (m), respectively; and
H. R. 1585—206 
(2) by inserting after subsection (h) the following new sub-
sections: 
‘‘(i) EXCEPTIONS FOR PURCHASES OF SPECIALTY METALS BELOW 
MINIMUM THRESHOLD.—(1) Notwithstanding subsection (a), the Sec-
retary of Defense or the Secretary of a military department may 
accept delivery of an item containing specialty metals that were 
not melted in the United States if the total amount of noncompliant 
specialty metals in the item does not exceed 2 percent of the 
total weight of specialty metals in the item. 
‘‘(2) This subsection does not apply to high performance 
magnets. 
‘‘(j) STREAMLINED COMPLIANCE FOR COMMERCIAL DERIVATIVE 
MILITARY ARTICLES.—(1) Subsection (a) shall not apply to an item 
acquired under a prime contract if the Secretary of Defense or 
the Secretary of a military department determines that— 
‘‘(A) the item is a commercial derivative military article; 
and 
‘‘(B) the contractor certifies that the contractor and its 
subcontractors have entered into a contractual agreement, or 
agreements, to purchase an amount of domestically melted 
specialty metal in the required form, for use during the period 
of contract performance in the production of the commercial 
derivative military article and the related commercial article, 
that is not less than the greater of— 
‘‘(i) an amount equivalent to 120 percent of the amount 
of specialty metal that is required to carry out the produc-
tion of the commercial derivative military article (including 
the work performed under each subcontract); or 
‘‘(ii) an amount equivalent to 50 percent of the amount 
of specialty metal that is purchased by the contractor and 
its subcontractors for use during such period in the produc-
tion of the commercial derivative military article and the 
related commercial article. 
‘‘(2) For the purposes of this subsection, the amount of specialty 
metal that is required to carry out the production of the commercial 
derivative military article includes specialty metal contained in 
any item, including commercially available off-the-shelf items, incor-
porated into such commercial derivative military article. 
‘‘(k) NATIONAL SECURITY WAIVER.—(1) Notwithstanding sub-
section (a), the Secretary of Defense may accept the delivery of 
an end item containing noncompliant materials if the Secretary 
determines in writing that acceptance of such end item is necessary 
to the national security interests of the United States. 
‘‘(2) A written determination under paragraph (1)— 
‘‘(A) may not be delegated below the level of the Deputy 
Secretary of Defense or the Under Secretary of Defense for 
Acquisition, Technology, and Logistics; 
‘‘(B) shall specify the quantity of end items to which the 
waiver applies and the time period over which the waiver 
applies; and 
‘‘(C) shall be provided to the congressional defense commit-
tees prior to making such a determination (except that in 
the case of an urgent national security requirement, such cer-
tification may be provided to the defense committees up to 
7 days after it is made).
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‘‘(3)(A) In any case in which the Secretary makes a determina-
tion under paragraph (1), the Secretary shall determine whether 
or not the noncompliance was knowing and willful. 
‘‘(B) If the Secretary determines that the noncompliance was 
not knowing or willful, the Secretary shall ensure that the con-
tractor or subcontractor responsible for the noncompliance develops 
and implements an effective plan to ensure future compliance. 
‘‘(C) If the Secretary determines that the noncompliance was 
knowing or willful, the Secretary shall— 
‘‘(i) require the development and implementation of a plan 
to ensure future compliance; and 
‘‘(ii) consider suspending or debarring the contractor or 
subcontractor until such time as the contractor or subcontractor 
has effectively addressed the issues that lead to such noncompli-
ance.’’. 
(e) ADDITIONAL DEFINITIONS.—Subsection (m) of section 2533b 
of title 10, United States Code, as redesignated by subsection (c), 
is further amended by adding at the end the following: 
‘‘(3) The term ‘acquisition’ has the meaning provided in 
section 4 of the Office of Federal Procurement Policy Act (41 
U.S.C. 403). 
‘‘(4) The term ‘required form’ shall not apply to end items 
or to their components at any tier. The term ‘required form’ 
means in the form of mill product, such as bar, billet, wire, 
slab, plate or sheet, and in the grade appropriate for the produc-
tion of— 
‘‘(A) a finished end item delivered to the Department 
of Defense; or 
‘‘(B) a finished component assembled into an end item 
delivered to the Department of Defense. 
‘‘(5) The term ‘commercially available off-the-shelf’, has 
the meaning provided in section 35(c) of the Office of Federal 
Procurement Policy Act (41 U.S.C. 431(c)). 
‘‘(6) The term ‘assemblies’ means items forming a portion 
of a system or subsystem that can be provisioned and replaced 
as an entity and which incorporates multiple, replaceable parts. 
‘‘(7) The term ‘commercial derivative military article’ means 
an item procured by the Department of Defense that is or 
will be produced using the same production facilities, a common 
supply chain, and the same or similar production processes 
that are used for the production of articles predominantly used 
by the general public or by nongovernmental entities for pur-
poses other than governmental purposes. 
‘‘(8) The term ‘subsystem’ means a functional grouping 
of items that combine to perform a major function within an 
end item, such as electrical power, attitude control, and propul-
sion. 
‘‘(9) The term ‘end item’ means the final production product 
when assembled or completed, and ready for issue, delivery, 
or deployment. 
‘‘(10) The term ‘subcontract’ includes a subcontract at any 
tier.’’. 
(f) CONFORMING AMENDMENTS.—Section 2533b of title 10, 
United States Code, is further amended— 
(1) in subsection (c)— 
(A) in the heading, by striking ‘‘PROCUREMENTS’’ and 
inserting ‘‘ACQUISITIONS’’; and
H. R. 1585—208 
(B) in paragraphs (1) and (2), by striking ‘‘Procure-
ments’’ and inserting ‘‘Acquisitions’’; 
(2) in subsection (d), by striking ‘‘procurement’’ each place 
it appears and inserting ‘‘acquisition’’; and 
(3) in subsections (f) and (g), by striking ‘‘procurements’’ 
each place it appears and inserting ‘‘acquisitions’’. 
(g) IMPLEMENTATION.—Not later than 120 days after the date 
of the enactment of this Act, the Secretary of Defense shall prescribe 
regulations on the implementation of this section and the amend-
ments made by this section, including specific guidance on how 
thresholds established in subsections (h)(3), (i) and (j) of section 
2533b of title 10, United States Code, as amended by this section, 
should be implemented. 
(h) REVISION OF DOMESTIC NONAVAILABILITY DETERMINATIONS 
AND RULES.—No later than 180 days after the date of the enactment 
of this Act, any domestic nonavailability determination under sec-
tion 2533b of title 10, United States Code, including a class devi-
ation, or rules made by the Department of Defense between 
December 6, 2006, and the date of the enactment of this Act, 
shall be reviewed and amended, as necessary, to comply with the 
amendments made by this section. This requirement shall not apply 
to a domestic nonavailability determination that applies to— 
(1) an individual contract that was entered into before 
the date of the enactment of this Act; or 
(2) an individual Department of Defense program, except 
to the extent that such domestic nonavailability determination 
applies to contracts entered into after the date of the enactment 
of this Act. 
(i) TRANSPARENCY REQUIREMENT
FOR COMMERCIALLY AVAIL-
ABLE OFF-THE-SHELF ITEM EXCEPTION.—The Secretary of Defense 
shall submit to the Committees on Armed Services of the Senate 
and House of Representatives, not later than December 30, 2008, 
a report on the use of authority provided under subsection (h) 
of section 2533b of title 10, United States Code, as amended by 
this section. Such report shall include, at a minimum, a description 
of types of items being procured as commercially available off- 
the-shelf items under such subsection and incorporated into non-
commercial items. The Secretary shall submit an update of such 
report to such committees not later than December 30, 2009. 
SEC. 805. PROCUREMENT OF COMMERCIAL SERVICES. 
(a) REGULATIONS REQUIRED.—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 for 
the procurement of commercial services for or on behalf of the 
Department of Defense. 
(b) APPLICABILITY OF COMMERCIAL PROCEDURES.— 
(1) SERVICES OF A TYPE SOLD IN MARKETPLACE.—The regula-
tions modified pursuant to subsection (a) shall ensure that 
services that are not offered and sold competitively in substan-
tial quantities in the commercial marketplace, but are of a 
type offered and sold competitively in substantial quantities 
in the commercial marketplace, may be treated as commercial 
items for purposes of section 2306a of title 10, United States 
Code (relating to truth in negotiations), only if the contracting 
officer determines in writing that the offeror has submitted
H. R. 1585—209 
sufficient information to evaluate, through price analysis, the 
reasonableness of the price for such services. 
(2) INFORMATION SUBMITTED.—To the extent necessary to 
make a determination under paragraph (1), the contracting 
officer may request the offeror to submit— 
(A) prices paid for the same or similar commercial 
items under comparable terms and conditions by both 
government and commercial customers; and 
(B) if the contracting officer determines that the 
information described in subparagraph (A) 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. 
(c) TIME-AND-MATERIALS CONTRACTS.— 
(1) COMMERCIAL
ITEM
ACQUISITIONS.—The regulations 
modified pursuant to subsection (a) shall ensure that procedures 
applicable to time-and-materials contracts and labor-hour con-
tracts for commercial item acquisitions may be used only for 
the following: 
(A) Services procured for support of a commercial item, 
as described in section 4(12)(E) of the Office of Federal 
Procurement Policy Act (41 U.S.C. 403(12)(E)). 
(B) Emergency repair services. 
(C) Any other commercial services only to the extent 
that the head of the agency concerned approves a deter-
mination in writing by the contracting officer that— 
(i) the services to be acquired are commercial serv-
ices as defined in section 4(12)(F) of the Office of Fed-
eral Procurement Policy Act (41 U.S.C. 403(12)(F)); 
(ii) if the services to be acquired are subject to 
subsection (b), the offeror of the services has submitted 
sufficient information in accordance with that sub-
section; 
(iii) such services are commonly sold to the general 
public through use of time-and-materials or labor-hour 
contracts; and 
(iv) the use of a time-and-materials or labor-hour 
contract type is in the best interest of the Government. 
(2) NON-COMMERCIAL ITEM ACQUISITIONS.—Nothing in this 
subsection shall be construed to preclude the use of procedures 
applicable to time-and-materials contracts and labor-hour con-
tracts for non-commercial item acquisitions for the acquisition 
of any category of services. 
SEC. 806. SPECIFICATION OF AMOUNTS REQUESTED FOR PROCURE-
MENT OF CONTRACT SERVICES. 
(a) SPECIFICATION OF AMOUNTS REQUESTED.—The budget jus-
tification materials submitted to Congress in support of the budget 
of the Department of Defense for any fiscal year after fiscal year 
2009 shall identify clearly and separately the amounts requested 
in each budget account for the procurement of contract services. 
(b) INFORMATION PROVIDED.—For each budget account, the 
materials submitted shall clearly identify— 
(1) the amount requested for each Department of Defense 
component, installation, or activity; and