I
107TH CONGRESS
2D SESSION
H. R. 3832
To make improvements with respect to the procurement of services for the
Federal Government, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 4, 2002
Mr. TOM DAVIS of Virginia introduced the following bill; which was referred
to the Committee on Government Reform, and in addition to the Com-
mittee on Armed Services, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned
A BILL
To make improvements with respect to the procurement of
services for the Federal Government, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Services Acquisition
Reform Act of 2002’’.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I—ACQUISITION WORKFORCE TRAINING
Sec. 101. Definition of acquisition.
Sec. 102. Acquisition workforce training fund.
Sec. 103. Government-industry exchange program.
Sec. 104. Reimbursement of costs.
Sec. 105. Conforming amendments.
Sec. 106. Acquisition workforce recruitment and retention pilot program.
Sec. 107. Authorization of telecommuting for Federal contractors.
Sec. 108. Architectural and engineering acquisition workforce.
TITLE II—ADAPTATION OF BUSINESS ACQUISITION PRACTICES
Subtitle A—Adaptation of Business Management Practices
Sec. 201. Chief Acquisition Officers.
Sec. 202. Increased role for Defense Contract Management Agency.
Sec. 203. Study on horizontal acquisition.
Sec. 204. Statutory and regulatory review.
Subtitle B—Payment Terms
Sec. 211. Payment terms.
Subtitle C—Acquisitions Generally
Sec. 221. Increase in authorization levels of Federal purchase cards.
Sec. 222. Reauthorization of franchise funds.
Sec. 223. Acquisition protests.
Sec. 224. Architectural and engineering services.
TITLE III—CONTRACT INCENTIVES
Sec. 301. Revisions to share-in-savings initiatives.
Sec. 302. Incentives for contract efficiency.
TITLE IV—ACQUISITIONS OF COMMERCIAL ITEMS
Sec. 401. Preference for performance-based contracting.
Sec. 402. Authorization of additional contract types in FAR part 12.
Sec. 403. Clarification of commercial services definition.
Sec. 404. Designation of commercial business entities.
Sec. 405. Continuation of eligibility of contractor for award of information
technology contract after providing design and engineering
services.
Sec. 406. Commercial liability.
TITLE V—TECHNOLOGY ACCESS IN A COMMERCIAL
ENVIRONMENT
Sec. 501. Trade Agreements Act of 1979 exemption for information technology
commercial items.
Sec. 502. Authorization for acquisition of information technology by State and
local governments through Federal supply schedules.
Sec. 503. Certain research and development by civilian agencies.
TITLE VI—INFLATIONARY ADJUSTMENTS
Sec. 601. Simplified acquisition threshold inflation adjustment.
TITLE I—ACQUISITION
WORKFORCE TRAINING
SEC. 101. DEFINITION OF ACQUISITION.
Section 4 of the Office of Federal Procurement Policy
Act (41 U.S.C. 403) is amended by adding at the end the
following:
‘‘(16) The term ‘acquisition’—
‘‘(A) means acquiring, by contract with ap-
propriated funds, property or services (includ-
ing construction) by and for the use of the Fed-
eral Government through purchase or lease,
from the point at which executive agency needs
are established by the chief acquisition officer
of the executive agency; and
‘‘(B) includes—
‘‘(i) acquiring property or services
that are already in existence, or that must
be created, developed, demonstrated, and
evaluated;
‘‘(ii) the description of requirements
to satisfy agency needs;
‘‘(iii) solicitation and selection of
sources;
‘‘(iv) award of contracts;
‘‘(v) contract performance;
‘‘(vi) contract administration; and
‘‘(vii) technical and management func-
tions directly related to the process of ful-
filling agency needs by contract.’’.
SEC. 102. ACQUISITION WORKFORCE TRAINING FUND.
(a) PURPOSES.—The purposes of this section are to
ensure that the Federal acquisition workforce—
(1) adapts to fundamental changes in the na-
ture of Federal Government acquisition of property
and services associated with the changing role of the
Federal Government; and
(2) acquires new skills and a new mindset to
enable it to contribute effectively in the changing en-
vironment of the 21st century.
(b) AMENDMENT OF OFFICE OF FEDERAL PROCURE-
MENT POLICY ACT.—Section 37 of the Office of Federal
Procurement Policy Act (41 U.S.C. 433) is amended—
(1) by striking subsection (a) and inserting the
following:
‘‘(a) APPLICABILITY.—Subsections (b) through (g)
do not apply to an executive agency that is subject to
chapter 87 of title 10, United States Code. Subsection (h)
applies to all executive agencies, the United States Postal
Service, and mixed-ownership Government corporations
(as defined in section 9101 of title 31, United States
Code).’’; and
(2) by adding at the end of subsection (h) the
following new paragraph:
‘‘(3) 
ACQUISITION
WORKFORCE
TRAINING
FUND.—(A) The Administrator of General Services
shall establish an acquisition workforce training
fund, which shall be managed by the Federal Acqui-
sition Institute in support of acquisition workforce
training across executive agencies other than the De-
partment of Defense.
‘‘(B) The training fund described in subpara-
graph (A) shall be funded by depositing into the
fund 5 percent of the fees collected by executive
agencies under Governmentwide task-and-delivery-
order contracts authorized under sections 2304a
through 2304d of title 10, United States Code, sec-
tions 303H through 303K of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C.
253h–253k), Governmentwide acquisition contracts
described in section 5112(e) of the Clinger-Cohen
Act of 1996 (40 U.S.C. 1412(e)), multiagency acqui-
sition contracts authorized under section 5124 of the
Clinger-Cohen Act of 1996 (40 U.S.C. 1424), or
multiple-award schedule contracts awarded by the
General Services Administration.
‘‘(C) The head of an executive agency that ad-
ministers a contract described in subparagraph (B)
shall remit the amount specified to the General
Services Administration at the end of each quarter
of the fiscal year.
‘‘(D) The Administrator of General Services
and the Office of Federal Acquisition Policy shall
ensure that funds collected for training under this
section are not used for any purpose other than the
purpose specified in subparagraph (A). Amounts de-
posited into the fund shall remain available until ex-
pended.’’.
SEC. 103. GOVERNMENT-INDUSTRY EXCHANGE PROGRAM.
(a) IN GENERAL.—Subpart B of part III of title 5,
United States Code, is amended by adding at the end the
following new chapter:
‘‘CHAPTER 37—ACQUISITION
PROFESSIONAL EXCHANGE PROGRAM
‘‘Sec.
‘‘3701. Definitions.
‘‘3702. Detail authority.
‘‘3703. Detail of employees to private sector organizations.
‘‘3704. Transfer and detail of employees from private sector organizations.
‘‘3705. Authority of the Office of Personnel Management.
‘‘§ 3701. Definitions
‘‘For purposes of this chapter—
‘‘(1) the term ‘agency’—
‘‘(A) subject to subparagraph (B), means
an executive agency; and
‘‘(B) does not include—
‘‘(i) the General Accounting Office;
‘‘(ii) an Office of Inspector General of
an establishment or a designated Federal
entity established under the Inspector Gen-
eral Act of 1978; and
‘‘(iii) the Defense Contract Audit
Agency referred to in section 2313(b) of
title 10; and
‘‘(2) the term ‘detail’ means—
‘‘(A) the assignment or loan of an em-
ployee to a private sector organization without
a change of position in the agency at which the
individual is employed; or
‘‘(B) the assignment or loan of an em-
ployee of a private sector organization to an
agency without a change of position in the pri-
vate sector organization.
‘‘§ 3702. Detail authority
‘‘(a) At the request of, or with the agreement of, a
private sector organization, and with the consent of the
employee concerned, the head of an agency may arrange
for the detail of an eligible employee of the agency to a
private sector organization or an eligible individual em-
ployed by a private sector organization to the agency. For
purposes of this section, an eligible employee or individual
employed is an individual employed at the GS–11 level or
above (or the equivalent) who—
‘‘(1) works in the field of Federal acquisition or
acquisition management;
‘‘(2) is considered an exceptional performer by
the individual’s employer; and
‘‘(3) is expected to assume increased acquisition
management responsibilities.
An employee of an agency shall be eligible to participate
under this section only if the employee is serving under
a career or career-conditional appointment or an appoint-
ment of equivalent tenure in the excepted service.
‘‘(b) Each agency that exercises the authority pro-
vided by this section shall establish a plan for imple-
menting such authority. The plan shall provide for a writ-
ten agreement between the agency and the employee con-
cerned regarding the terms and conditions of the employ-
ee’s detail. In the case of an employee of the agency, the
agreement shall—
‘‘(1) require the employee to serve in the civil
service, upon completion of the assignment, for a pe-
riod equal to the length of the detail; and
‘‘(2) provide that, in the event the employee
fails to carry out the agreement (except for good and
sufficient reason, as determined by the head of the
detailing agency), the employee shall be liable to the
United States for payment of all expenses (excluding
salary) of the detail. The amount shall be treated as
a debt due to the United States.
‘‘(c) A detail under this chapter may be terminated
by the agency or private sector organization concerned for
any reason at any time.
‘‘(d) A detail under this chapter shall be for a period
of between 6 months and 1 year and may be extended
in three-month increments for a total of not more than
1 year.
‘‘(e) The Procurement Executives Council, by agree-
ment with the Office of Personnel Management, may as-
sist in the administration of this chapter, including by
maintaining lists of potential candidates for detail under
this chapter, establishing mentoring relationships for the
benefit of individuals who are given a detail under this
chapter, and publicizing the program carried out under
this chapter.
‘‘§ 3703. Detail of employees to private sector organi-
zations
‘‘(a) An employee of an agency may be assigned to
a private sector organization under this chapter as a detail
to a regular work assignment.
‘‘(b) Notwithstanding any other provision of law, an
employee assigned under subsection (a) is entitled—
‘‘(1) to receive supplemental pay from the agen-
cy in the amount equal to the difference between the
rate paid by the organization to which detailed and
the rate of basic pay (including locality pay, where
applicable, subject to regulations of the Office of
Personnel Management) payable for the employee’s
Federal position, if the latter is greater;
‘‘(2) in the case of an employee who is detailed
under subsection (a), to credit for the period of as-
signment under this chapter toward periodic step in-
creases, retention, and leave accrual;
‘‘(3) to retain coverage, rights, and benefits
under chapters 87 and 89, if necessary employee de-
ductions and agency contributions for the period of
the assignment are deposited in the Employees’ Life
Insurance Fund and the Employees Health Benefits
Fund, respectively, and the period of the assignment
is service as an employee under chapters 87 and 89;
‘‘(4) to retain coverage, rights, and benefits
under any system established by law for the retire-
ment of employees, if necessary employee deductions
and agency contributions in payment for the cov-
erage, rights, and benefits for the period of assign-
ment are deposited in the system’s fund and the pe-
riod of the assignment is creditable under the sys-
tem, except that such service shall not be considered
creditable service for the purpose of any retirement
system for Federal employees if such service forms
the basis, in whole or in part, for an annuity or pen-
sion under the retirement system of the private sec-
tor organization; and
‘‘(5) to retain coverage, rights, and benefits
under subchapter I of chapter 81, and employment
during the assignment is deemed employment by the
United States, but if the employee or the employee’s
dependents receive from the private sector organiza-
tion any payment under an insurance policy for
which the premium is wholly paid by the private sec-
tor organization, or other benefit of any kind on ac-
count of the same injury or death, the amount of
such payment or benefit shall be credited against
any compensation otherwise payable under sub-
chapter I of chapter 81.
During the employee’s assignment to the private sector or-
ganization, the agency from which the employee is detailed
shall make contributions for retirement and insurance
purposes from the appropriations or funds of that agency
so long as contributions are made by the employee.
‘‘(c) The detail of an employee of an agency under
subsection (a) may be made with or without reimburse-
ment by the private sector organization for the travel and
transportation expenses to or from the place of assign-
ment, subject to the same terms and conditions that apply
with respect to an employee of a Federal agency or a State
or local government under section 3375, and for the pay,
or supplemental pay, or any part thereof of the employee
during assignment. Any reimbursements shall be credited
to the appropriation of the agency used for paying the
travel and transportation expenses or pay.
‘‘(d) An employee assigned on detail under subsection
(a) remains an employee of the agency from which de-
tailed. The Federal Tort Claims Act and any other Fed-
eral tort liability law apply to the employee. The super-
vision of the duties of an employee on detail may be gov-
erned by an agreement between the agency and the organi-
zation to which detailed.
‘‘(e) Notwithstanding any other provision of law, an
employee detailed under subsection (a) is entitled to ac-
crue annual and sick leave to the same extent as if the
employee had continued working in the position from
which detailed.
‘‘§ 3704. Transfer and detail of employees from pri-
vate sector organizations
‘‘(a) Notwithstanding any other provision of law, an
individual employed by a private sector organization who
is assigned to an agency under section 3702(a) may be—
‘‘(1) transferred to the agency and appointed
without regard to the provisions of this title gov-
erning appointment in the competitive service for the
period of assignment; or
‘‘(2) detailed to the agency.
‘‘(b) An individual appointed under subsection (a)(1)
is entitled to pay in accordance with chapter 51 and sub-
chapter III of chapter 53 or other applicable law, and is
deemed an employee of the agency for all purposes
except—
‘‘(1) subchapter III of chapter 83, chapter 84,
or other applicable retirement system;
‘‘(2) chapter 87; and
‘‘(3) chapter 89 or other applicable health bene-
fits system unless the appointment results in the
employee’s loss of coverage in a group health bene-
fits plan the premium of which has been paid in
whole or in part by the private sector organization.
The exceptions set forth in paragraphs (1) through (3)
shall not apply to non-Federal employees who are covered
by chapters 83, 84, 87, and 89 by virtue of their non-
Federal employment immediately before appointment
under subsection (a)(1).
‘‘(c) An employee of a private sector organization who
is detailed to an agency under subsection (a)(2)—
‘‘(1) is not entitled to pay from the agency, ex-
cept to the extent that the pay for the position to
which detailed (including locality pay, where applica-
ble) exceeds the pay the individual was receiving
from the private sector organization immediately be-
fore the detail;
‘‘(2) may continue to receive pay and benefits
from the private sector organization from which he
is detailed;
‘‘(3) is deemed an employee of the agency for
the purposes of—
‘‘(A) chapter 73, except for section
7353(a)(1);
‘‘(B) sections 203, 205, 207, 208, 603,
606, 607, 643, 654, 1905, and 1913 of title 18;
‘‘(C) sections 1343, 1344, and 1349(b) of
title 31;
‘‘(D) the Federal Tort Claims Act and any
other Federal tort liability law;
‘‘(E) the Ethics in Government Act of
1978;
‘‘(F) section 1043 of the Internal Revenue
Code of 1986; and
‘‘(G) section 27(b) of the Office of Federal
Procurement Policy Act; and
‘‘(4) is subject to such regulations as the Presi-
dent may prescribe.
The supervision of an employee who is detailed under sub-
section (a)(2) may be governed by agreement between the
agency and the private sector organization concerned. A
detail under subsection (a)(2) may be made with or with-
out reimbursement by the agency for the pay, or a part
thereof, of the employee during the period of assignment,
or for any contribution of the private sector organization
to employee benefit systems.
‘‘(d) If a private sector organization fails to continue
the employer’s contribution to private sector retirement,
life insurance, and health benefit plans for an individual
who is appointed in an agency under this section, the em-
ployer’s contributions covering the period of the assign-
ment may be made from the appropriations of the agency
concerned.
‘‘(e) A private sector employee who is given an as-
signment in an agency under subsection (a) and who suf-
fers disability or dies as a result of personal injury sus-
tained while performing duties during the assignment
shall be treated, for the purpose of subchapter I of chapter
81, as an employee as defined by section 8101 who had
sustained the injury in the performance of duty, except
that if the employee or the employee’s dependents receive
from the private sector organization any payment under
an insurance policy for which the premium is wholly paid
by the private sector organization, or other benefit of any
kind on account of the same injury or death, the amount
of such payment or benefit shall be credited against any
compensation otherwise payable under subchapter I of
chapter 81.
‘‘§ 3705. Authority of the Office of Personnel Manage-
ment
‘‘The Director of the Office of Personnel Manage-
ment shall prescribe regulations for the administration of
this chapter.’’.
(b) CLERICAL AMENDMENT.—The table of contents
for part III of title 5, United States Code, is amended
by inserting after the item relating to chapter 35 the fol-
lowing:
‘‘37. Acquisition Professional Exchange Program.’’.
SEC. 104. REIMBURSEMENT OF COSTS.
Not later than 120 days after the date of the enact-
ment of this Act, the Federal Acquisition Regulation shall
be amended to provide for reimbursement of costs associ-
ated with an employee’s participation in the program au-
thorized by chapter 37 of title 5, United States Code (as
added by section 103) as allowable training and education
costs. Such costs—
(1) include—
(A) the employee’s salary and fringe bene-
fits for a period not to exceed the period of the
employee’s assignment under such program;
and
(B) moving and travel expenses; and
(2) may be treated, for accounting purposes—
(A) as an indirect cost and accounted for
in—
(i) an established overhead account; or
(ii) an overhead account established
specifically for such program and allocated
exclusively to the contractor’s Federal Gov-
ernment contracts; or
(B) as a direct cost chargeable to fixed
price or time and material contracts.
SEC. 105. CONFORMING AMENDMENTS.
(a) TITLE 5, U.S.C.—Title 5, United States Code,
is amended—
(1) in section 3111, by adding at the end the
following:
‘‘(d) Notwithstanding section 1342 of title 31, the
head of an agency may accept voluntary service for the
United States under chapter 37 of this title and regula-
tions of the Office of Personnel Management.’’; and
(2) in section 4108, by striking subsection (d).
(b) OTHER LAWS.—Section 125(c)(1) of Public Law
100–238 (5 U.S.C. 8432 note) is amended—
(1) in subparagraph (B), by striking ‘‘or’’ at
the end;
(2) in subparagraph (C), by striking ‘‘and’’ at
the end and inserting ‘‘or’’; and
(3) by adding at the end the following:
‘‘(D) an individual assigned from a Fed-
eral agency to a private sector organization
under chapter 37 of title 5, United States Code;
and’’.
SEC. 106. ACQUISITION WORKFORCE RECRUITMENT AND
RETENTION PILOT PROGRAM.
(a) IN GENERAL.—For purposes of sections 3304,
5333, and 5753 of title 5, United States Code, the head
of an agency (including the Secretary of Defense) may de-
termine that certain Federal acquisition positions are
‘‘shortage category’’ positions in order to recruit and di-
rectly hire employees with high qualifications, such as em-
ployees who—
(1) hold a bachelor’s degree from an accredited
institution of higher learning, earned with a grade
point average of 3.2 or higher (or the equivalent);
(2) hold a law or masters or equivalent degree
from an accredited institution of higher education in
business administration, public administration, or
systems engineering; or
(3) have had outstanding experience with com-
mercial acquisition practices, terms, and conditions.
(b) REQUIREMENTS.—Personnel actions under this
paragraph shall be subject to policies prescribed by the
Office of Personnel Management for direct recruitment,
including the appointment of a preference eligible as long
as preference eligibles are available who satisfy the stipu-
lated high level of qualifications.
(c) PERIOD OF AUTHORITY.—Authority under this
section shall expire on September 30, 2006. The Adminis-
trator of the Office of Federal Procurement Policy shall
submit a report to Congress 180 days prior to the expira-
tion of this authority describing the efficacy of this pro-
gram in attracting employees with unusually high quali-
fications to the acquisition workforce and providing a rec-
ommendation on whether the authority should be ex-
tended.
SEC. 107. AUTHORIZATION OF TELECOMMUTING FOR FED-
ERAL CONTRACTORS.
(a) AMENDMENT
TO
THE FEDERAL ACQUISITION
REGULATION.—Not later than 180 days after the date of
the enactment of this Act, the Federal Acquisition Regula-
tion issued in accordance with sections 6 and 25 of the
Office of Federal Procurement Policy Act (41 U.S.C. 405
and 421) shall be amended to permit the use of telecom-
muting by employees of Federal contractors in the per-
formance of contracts with executive agencies.
(b) CONTENT
OF AMENDMENT.—The amendment
issued pursuant to subsection (a) shall, at a minimum,
provide that solicitations for the acquisition of goods or
services shall not set forth any requirement or evaluation
criteria that would—
(1) render an offeror ineligible to receive a con-
tract award based on the offeror’s plan to allow its
employees to telecommute; or
(2) reduce the scoring of an offeror’s proposal
based upon the contractor’s plan to allow its employ-
ees to telecommute, unless the contracting officer
first—
(A) determines that the needs of the agen-
cy, including the security needs of the agency,
cannot be met without any such requirement;
and
(B) explains in writing the basis for that
determination.
(c) GAO REPORT.—Not later than one year after the
date on which the amendment required by subsection (a)
is published in the Federal Register, the Comptroller Gen-
eral shall submit to Congress an evaluation of—
(1) compliance by executive agencies with the
regulations; and
(2) conformance of the regulations with existing
law, together with any recommendations that the
Comptroller General considers appropriate.
(d) DEFINITION.—In this section, the term ‘‘execu-
tive agency’’ has the meaning given that term in section
105 of title 5, United States Code.
SEC. 108. ARCHITECTURAL AND ENGINEERING ACQUISI-
TION WORKFORCE.
The Administrator of the Office of Federal Procure-
ment Policy, in consultation with the Secretary of Defense
and the Director of the Office of Personnel Management,
shall develop and implement a plan to assure that the Fed-
eral Government maintains a core in-house architectural
and engineering capability to—
(1) ensure expertise to determine each agency’s
need for services;
(2) establish priorities and programs (including
acquisition plans);
(3) establish professional standards;
(4) develop scopes of work; and
(5) manage and award contracts for such serv-
ices.
TITLE II—ADAPTATION OF BUSI-
NESS 
ACQUISITION 
PRAC-
TICES
Subtitle A—Adaptation of Business
Management Practices
SEC. 201. CHIEF ACQUISITION OFFICERS.
(a) APPOINTMENT
OF CHIEF ACQUISITION OFFI-
CERS.—(1) Section 16 of the Office of Federal Procure-
ment Policy Act (41 U.S.C. 414) is amended to read as
follows:
‘‘SEC. 16. APPOINTMENT OF CHIEF ACQUISITION OFFICERS.
‘‘(a) To further achieve effective, efficient, and eco-
nomic administration of the Federal acquisition system,
the head of each executive agency shall appoint a Chief
Acquisition Officer for the agency.
‘‘(b) A Chief Acquisition Officer appointed under sub-
section (a), in accordance with applicable laws, Govern-
mentwide policies and regulations, and good business
practices, shall be responsible for—
‘‘(1) providing advice and other assistance to
the head of the executive agency and other senior
management personnel of the executive agency to
ensure that the agency’s mission goals are achieved
through the management of the agency’s acquisition
activities and acquisitions in a manner that imple-
ments the policies and procedures of this division,
consistent with chapter 11 of title 31, United States
Code, and the priorities established by the head of
the executive agency;
‘‘(2) increasing the use of full and open com-
petition in the acquisition of property or services by
the executive agency by establishing policies, proce-
dures, and practices that assure that the executive
agency receives a sufficient number of sealed bids or
competitive proposals from responsible sources to
fulfill the Government’s requirements (including per-
formance and delivery schedules) at the best value
considering the nature of the property or service
procured;
‘‘(3) making acquisition decisions consistent
with all applicable law and establishing clear lines of
authority, accountability, and responsibility for ac-
quisition decisionmaking within the executive agen-
cy;
‘‘(4) managing the direction of acquisition pol-
icy for the executive agency, including implementa-
tion of the unique acquisition policies, regulations,
and standards of the executive agency; and
‘‘(5) developing and maintaining an acquisition
career management program in the executive agency
to assure an adequate professional workforce.
‘‘(c) The Chief Acquisition Officer of an executive
agency shall—
‘‘(1) have acquisition management as that offi-
cial’s primary duty;
‘‘(2) monitor the performance of acquisition ac-
tivities and acquisition programs of the agency,
evaluate the performance of those programs on the
basis of the applicable performance measurements,
and advise the head of the agency regarding the ap-
propriate business strategy to achieve the agency
mission; and
‘‘(3) annually, as part of the strategic planning
and performance evaluation process required (sub-
ject to section 1117 of title 31, United States Code)
under section 306 of title 5, United States Code,
and sections 1105(a)(29), 1115, 1116, 1117, and
9703 of title 31, United States Code—
‘‘(A) assess the requirements established
for agency personnel regarding knowledge and
skill in acquisition resources management and
the adequacy of such requirements for facili-
tating the achievement of the performance goals
established for acquisition management;
‘‘(B) in order to rectify any deficiency in
meeting those requirements, develop strategies
and specific plans for hiring, training, and pro-
fessional development; and
‘‘(C) report to the head of the agency on
the progress made in improving acquisition
management capability.’’.
(2) The item relating to section 16 in the table of
contents of such Act is amended to read as follows:
‘‘Sec. 16. Chief Acquisition Officers.’’.
(b) CONFORMING
AMENDMENTS.—The Office of
Federal Procurement Policy Act (41 U.S.C. 403 et seq.),
the Federal Property and Administrative Services Act of
1949, and title 10, United States Code, are each amended
by striking ‘‘senior procurement executive’’ each place
such term appears and inserting ‘‘Chief Acquisition Offi-
cer’’.
SEC. 202. INCREASED ROLE FOR DEFENSE CONTRACT MAN-
AGEMENT AGENCY.
The Under Secretary of Defense for Acquisition,
Technology, and Logistics shall review the feasibility of
establishing the Defense Contract Management Agency as
the primary organization responsible for performing con-
tract management services on Department of Defense
base operating service contracts in excess of $5,000,000.
SEC. 203. STUDY ON HORIZONTAL ACQUISITION.
Not later than 9 months after the date of the enact-
ment of this Act, the Administrator of the Office of Fed-
eral Procurement Policy shall submit to the Committee on
Government Reform of the House of Representatives and
the Committee on Governmental Affairs of the Senate a
study on the laws, executive orders, and regulations that
hinder the performance of acquisition functions across de-
partment or agency lines and otherwise impact the use of
Governmentwide contracts.
SEC. 204. STATUTORY AND REGULATORY REVIEW.
(a) ESTABLISHMENT.—Not later than 60 days after
the date of the enactment of this Act, the Administrator
of the Office of Federal Procurement Policy shall establish
an advisory panel to review laws and regulations that
hinder the use of commercial practices and performance-
based contracting.
(b) MEMBERSHIP.—The panel shall be composed of
at least nine individuals who are recognized experts in ac-
quisition law and Government acquisition policy. In mak-
ing appointments to the panel, the Administrator shall en-
sure that the members of the panel reflect the diverse ex-
periences in the public and private sectors.
(c) DUTIES.—The panel shall—
(1) review all Federal acquisition laws and reg-
ulations with a view toward ensuring the use of
greater commercial practices and performance-based
contracting; and
(2) make any recommendations for the repeal
or amendment of such laws or regulations considered
necessary as a result of such review to—
(A) eliminate any such laws or regulations
that are unnecessary for the establishment and
administration of buyer and seller relationships
in acquisition;
(B) ensure the continuing financial and
ethical integrity of Government acquisition pro-
grams; and
(C) protect the best interests of the Gov-
ernment.
(d) REPORT.—(1) Not later than one year after the
establishment of the panel, a report shall be transmitted
to the Administrator and to the Committees on Govern-
ment Reform and Armed Services of the House of Rep-
resentatives and the Committees on Governmental Affairs
and Armed Services of the Senate.
(2) The report shall contain a detailed statement of
the findings and conclusions of the panel, the proposed
codification of acquisition laws or proposed regulations
prepared pursuant to subsection (c), and such additional
recommendations for such legislation or regulations as the
panel considers appropriate.
Subtitle B—Payment Terms
SEC. 211. PAYMENT TERMS.
Not later than 180 days after the date of the enact-
ment of this Act, the Federal Acquisition Regulation shall
be revised to provide that—
(1) service contractors may submit invoices for
payment either biweekly or monthly, provided that
any biweekly invoicing must be through electronic
means;
(2) for an electronic invoice, the date of the in-
voice shall be the date the invoice is electronically
delivered to the Federal Government;
(3) the Federal Government shall accept or re-
ject an electronically delivered invoice within 5 work-
ing days of the date of the invoice;
(4) all accepted invoices shall be paid as soon
as possible, but in no event shall an accepted invoice
be paid later than 30 days after the date of the in-
voice; and
(5) payment of an invoice does not prohibit ei-
ther the Government or the contractor from making
corrections or adjustments to the invoice at a later
date.
Subtitle C—Acquisitions Generally
SEC. 221. INCREASE IN AUTHORIZATION LEVELS OF FED-
ERAL PURCHASE CARDS.
Section 32 of the Office of Federal Procurement Pol-
icy Act (41 U.S.C. 428) is amended by striking ‘‘$2,500’’
in subsections (c), (d), and (f), and inserting ‘‘$25,000’’.
SEC. 222. REAUTHORIZATION OF FRANCHISE FUNDS.
Section 403(f) of the Federal Financial Management
Act of 1994 (31 U.S.C. 501 note) is amended by striking
‘‘October 1, 2001’’ and inserting ‘‘October 1, 2005’’.
SEC. 223. ACQUISITION PROTESTS.
(a) DEFENSE CONTRACTS.—(1) Chapter 137 of title
10, United States Code, is amended by inserting after sec-
tion 2305a the following new section:
‘‘§ 2305b. Protests
‘‘(a) IN GENERAL.—A protest of an acquisition of
supplies or services by an agency concerning an alleged
violation of an acquisition law or regulation submitted to
the agency by an interested party shall be decided by the
agency if submitted in accordance with this section.
‘‘(b) RESTRICTIONS PENDING DECISION.—(1) A con-
tract may not be awarded in an acquisition after a protest
concerning the acquisition has been submitted and while
the protest is pending except that the head of the acquisi-
tion activity responsible for the award of the contract may
authorize the award of the contract, notwithstanding the
pending protest, upon a written finding that urgent and
compelling circumstances do not allow for waiting for a
decision.
‘‘(2) Performance of a contract shall not be author-
ized (and performance of the contract shall cease if per-
formance has already begun) in any case in which a pro-
test of the contract award is submitted not later than 10
days after the date of contract award or 5 days after an
agency debriefing, whichever is later, except that the head
of the acquisition activity responsible for the award of the
contract may authorize performance of the contract not-
withstanding the pending protest upon a written finding
that urgent and compelling circumstances do not allow for
waiting for a decision.
‘‘(c) DEADLINE FOR DECISION.—The head of the
agency shall issue a decision not later than the date that
is 10 working days after the date that the protest is sub-
mitted to the agency.
‘‘(d) CONSTRUCTION.—Nothing contained in this sec-
tion shall affect the right of an interested party to file
a protest with the General Accounting Office under sub-
chapter V of chapter 35 of title 31 or in the United States
Court of Federal Claims.
‘‘(e) DEFINITIONS.—In this section:
‘‘(1) The term ‘interested party’, with respect
to a contract or a solicitation or other request for of-
fers described in paragraph (2), means an actual or
prospective bidder or offeror whose direct economic
interest would be affected by the award of the con-
tract or by failure to award the contract.
‘‘(2) The term ‘protest’ means a written objec-
tion by an interested party to any of the following:
‘‘(A) A solicitation or other request by an
agency for offers for a contract for the acquisi-
tion of property or services.
‘‘(B) The cancellation of such a solicitation
or other request.
‘‘(C) An award or proposed award of such
a contract.
‘‘(D) A termination or cancellation of an
award of such a contract, if the written objec-
tion contains an allegation that the termination
or cancellation is based in whole or in part on
improprieties concerning the award of the con-
tract.’’.
(2) The table of sections at the beginning of such
chapter is amended by inserting after the item relating
to section 2305a the following new item:
‘‘2305b. Protests.’’.
(b) OTHER AGENCIES.—(1) The Federal Property
and Administrative Services Act of 1949 is amended by
inserting after section 303M the following new section:
‘‘SEC. 303L. PROTESTS.
‘‘(a) IN GENERAL.—A protest of an acquisition of
supplies or services by an executive agency concerning an
alleged violation of an acquisition law or regulation sub-
mitted to the agency by an interested party shall be de-
cided by the agency if submitted in accordance with this
section.
‘‘(b) RESTRICTIONS PENDING DECISION.—(1) A con-
tract may not be awarded in an acquisition after a protest
concerning the acquisition has been submitted and while
the protest is pending except that the head of the acquisi-
tion activity responsible for the award of the contract may
authorize the award of the contract, notwithstanding the
pending protest, upon a written finding that urgent and
compelling circumstances do not allow for waiting for a
decision.
‘‘(2) Performance of a contract shall not be author-
ized (and performance of the contract shall cease if per-
formance has already begun) in any case in which a pro-
test of the contract award is submitted not later than 10
days after the date of contract award or 5 days after an
agency debriefing, whichever is later, except that the head
of the acquisition activity responsible for the award of the
contract may authorize performance of the contract not-
withstanding the pending protest upon a written finding
that urgent and compelling circumstances do not allow for
waiting for a decision.
‘‘(c) DEADLINE FOR DECISION.—The head of the
agency shall issue a decision not later than the date that
is 10 working days after the date that the protest is sub-
mitted to the agency.
‘‘(d) CONSTRUCTION.—Nothing contained in this sec-
tion shall affect the right of an interested party to file
a protest with the General Accounting Office under sub-
chapter V of chapter 35 of title 31, United States Code,
or in the United States Court of Federal Claims.
‘‘(e) DEFINITIONS.—In this section:
‘‘(1) The term ‘interested party’, with respect
to a contract or a solicitation or other request for of-
fers described in paragraph (2), means an actual or
prospective bidder or offeror whose direct economic
interest would be affected by the award of the con-
tract or by failure to award the contract.
‘‘(2) The term ‘protest’ means a written objec-
tion by an interested party to any of the following:
‘‘(A) A solicitation or other request by an
agency for offers for a contract for the acquisi-
tion of property or services.
‘‘(B) The cancellation of such a solicitation
or other request.
‘‘(C) An award or proposed award of such
a contract.
‘‘(D) A termination or cancellation of an
award of such a contract, if the written objec-
tion contains an allegation that the termination
or cancellation is based in whole or in part on
improprieties concerning the award of the con-
tract.’’.
(2) The table of contents in section 1(b) of such Act
is amended by inserting after the item relating to section
303M the following new item:
‘‘303L. Protests.’’.
(c) CONFORMING AMENDMENT.—Section 3553(d)(4)
of title 31, United States Code, is amended—
(1) in subparagraph (A), by striking ‘‘or’’ at
the end;
(2) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘; or’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(C) the date that is 5 days after the date that
the agency issues its decision under section 2305b of
title 10 or section 303L of the Federal Property and
Administrative Services Act of 1949.’’.
SEC. 224. ARCHITECTURAL AND ENGINEERING SERVICES.
(a) FEDERAL
PROPERTY
AND
ADMINISTRATIVE
SERVICES ACT.—Section 901 of the Federal Property and
Administrative Services Act of 1949 (40 U.S.C. 541) is
amended by adding at the end the following new para-
graph:
‘‘(4) The term ‘surveying and mapping’ means
contracts and subcontracts for services utilizing Fed-
eral funds for collecting, storing, retrieving, or dis-
seminating graphical or digital data depicting nat-
ural or manmade physical features, phenomena, or
boundaries of the earth and any information related
thereto, including but not limited to surveys, maps,
charts, geographic information systems, remote sens-
ing data and images, and aerial photographic serv-
ices performed by professionals such as surveyors,
photogrammetrists, hydrographers, geodesists, or
cartographers.
‘‘(5) The term ‘contract’ means a contract or
subcontract awarded by an agency head, prime con-
tractor, or grantee.’’.
(b) AMENDMENT OF FAR.—The Federal Acquisition
Regulation shall be revised to include the definitions added
by subsection (a) of this section.
(c) TITLE 10.—Section 2855(b) of title 10, United
States Code, is amended—
(1) in paragraph (2), by striking ‘‘$85,000’’
and inserting ‘‘$300,000’’; and
(2) by adding at the end the following new
paragraph:
‘‘(3) The selection and competition require-
ments of this section shall apply to any contract for
architectural and engineering services (including sur-
veying and mapping services) by all military depart-
ments and defense agencies.’’.
(d) PROFESSIONAL ENGINEERING SERVICES.—Not-
withstanding any other provision of law, no executive
agency shall establish or carry out a program to offer serv-
ices or to offer contracts for professional engineering serv-
ices unless—
(1) such services are performed under the direct
supervision of a professional engineer licensed in a
State; and
(2) such services are awarded in accordance
with the selection procedures set forth in title IX of
the Federal Property and Administrative Services
Act of 1949 (40 U.S.C. 541).
TITLE III—CONTRACT
INCENTIVES
SEC. 301. REVISIONS TO SHARE-IN-SAVINGS INITIATIVES.
(a) DEFENSE CONTRACTS.—(1) Chapter 137 of title
10, United States Code, is amended by adding at the end
the following new section:
‘‘§ 2332. Share-in-savings contracts
‘‘(a) AUTHORITY TO ENTER INTO SHARE-IN-SAV-
INGS CONTRACTS.—(1) The head of an agency may enter
into a share-in-savings contract for a period of not more
than ten years.
‘‘(2) An agency may retain savings realized through
the use of a share-in-savings contract under this section
that are in excess of the total amount of savings paid to
the contractor under the contract. Amounts retained by
the agency under this subsection shall, without further ap-
propriation, remain available until expended.
‘‘(3)(A) If funds are not made available for the con-
tinuation of a share-in-savings contract entered into under
this section in a subsequent fiscal year, the contract shall
be canceled or terminated. The costs of cancellation or ter-
mination may be paid out of—
‘‘(i) appropriations available for the perform-
ance of the contract;
‘‘(ii) appropriations available for acquisition of
the type of property or services procured under the
contract, and not otherwise obligated; or
‘‘(iii) funds appropriated for payments of costs
of cancellation or termination.
‘‘(B) The amount payable in the event of cancellation
or termination of a share-in-savings contract shall be ne-
gotiated with the contractor at the time the contract is
entered into.
‘‘(C) An agency may enter into a share-in-savings
contract under this section even if funds are not made spe-
cifically available for the costs of cancellation or termi-
nation of the contract if funds are available and sufficient
to make payments with respect to the first fiscal year of
the contract.
‘‘(b) DEFINITIONS.—In this section:
‘‘(1) The term ‘contractor’ means a private en-
tity that enters into a contract with an agency.
‘‘(2) The term ‘savings’ means—
‘‘(A) monetary savings to an agency; or
‘‘(B) savings in time or other benefits real-
ized by the agency, including enhanced reve-
nues.
‘‘(3) The term ‘share-in-savings contract’ means
a contract under which—
‘‘(A) a contractor provides solutions for—
‘‘(i) improving the agency’s mission-
related or administrative processes; or
‘‘(ii) accelerating the achievement of
agency missions; and
‘‘(B) the agency pays the contractor an
amount equal to a portion of the savings de-
rived by the agency from—
‘‘(i) any improvements in mission-re-
lated or administrative processes that re-
sult from implementation of the solution;
or
‘‘(ii) acceleration of achievement of
agency missions.’’.
(2) The table of sections at the beginning of such
chapter is amended by adding at the end the following
new item:
‘‘2332. Share-in-savings contracts.’’.
(b) OTHER CONTRACTS.—(1) Title III of the Federal
Property and Administrative Services Act of 1949 is
amended by adding at the end the following:
‘‘SEC. 317. SHARE-IN-SAVINGS CONTRACTS.
‘‘(a) AUTHORITY TO ENTER INTO SHARE-IN-SAV-
INGS CONTRACTS.—(1) An executive agency may enter
into a share-in-savings contract for a period of not more
than ten years.
‘‘(2) An executive agency may retain savings realized
through the use of a share-in-savings contract under this
section that are in excess of the total amount of savings
paid to the contractor under the contract. Amounts re-
tained by the executive agency under this subsection shall,
without further appropriation, remain available until ex-
pended.
‘‘(3)(A) If funds are not made available for the con-
tinuation of a share-in-savings contract entered into under
this section in a subsequent fiscal year, the contract shall
be canceled or terminated. The costs of cancellation or ter-
mination may be paid out of—
‘‘(i) appropriations available for the perform-
ance of the contract;
‘‘(ii) appropriations available for acquisition of
the type of property or services procured under the
contract, and not otherwise obligated; or
‘‘(iii) funds appropriated for payments of costs
of cancellation or termination.
‘‘(B) The amount payable in the event of cancellation
or termination of a share-in-savings contract shall be ne-
gotiated with the contractor at the time the contract is
entered into.
‘‘(C) An executive agency may enter into a share-in-
savings contract under this section even if funds are not
made specifically available for the costs of cancellation or
termination of the contract if funds are available and suf-
ficient to make payments with respect to the first fiscal
year of the contract.
‘‘(b) DEFINITIONS.—In this section:
‘‘(1) The term ‘contractor’ means a private en-
tity that enters into a contract with an executive
agency.
‘‘(2) The term ‘savings’ means—
‘‘(A) monetary savings to an executive
agency; or
‘‘(B) savings in time or other benefits real-
ized by the executive agency, including en-
hanced revenues.
‘‘(3) The term ‘share-in-savings contract’ means
a contract under which—
‘‘(A) a contractor provides solutions for—
‘‘(i) improving the executive agency’s
mission-related or administrative processes;
or
‘‘(ii) accelerating the achievement of
agency missions; and
‘‘(B) the executive agency pays the con-
tractor an amount equal to a portion of the sav-
ings derived by the agency from—
‘‘(i) any improvements in mission-re-
lated or administrative processes that re-
sult from implementation of the solution;
or
‘‘(ii) acceleration of achievement of
agency missions.’’.
(2) The table of contents in section 1(b) of such Act
is amended by adding at the end the following new item:
‘‘Sec. 317. Share-in-savings contracts.’’.
(c) DEVELOPMENT OF INCENTIVES.—The Director
of the Office of Management and Budget shall—
(1) in consultation with executive agencies—
(A) identify potential opportunities for the
use of share-in-savings contracts; and
(B) encourage the use of share-in-savings
contracts for projects for which significant sav-
ings are expected; and
(2) in consultation with Congress and executive
agencies, develop techniques—
(A) to provide incentives for the use of
share-in-savings contracts; and
(B) to permit an executive agency to retain
a portion of the savings (after payment of the
contractor’s share of the savings) derived from
such contracts as funds are appropriated to the
agency in future years.
(d) GUIDANCE AND REGULATIONS.—(1) Not later
than 180 days after the date of the enactment of this sec-
tion, the Federal Acquisition Regulation shall be revised
to implement the provisions enacted by this section.
(2) Not later than 180 days after the enactment of
this section, the Director of the Office of Management and
Budget shall issue guidance on the use by executive agen-
cies of share-in-savings contracts. Such guidance shall—
(A) provide for the use of competitive proce-
dures for the selection and award of share-in-savings
contracts;
(B) allow maximum regulatory flexibility to fa-
cilitate the use of share-in-savings contracts by exec-
utive agencies, including the use of nonstandard
Federal Acquisition Regulation contract clauses; and
(C) provide guidance to executive agencies for
determining mutually beneficial savings share ratios
and baselines from which savings may be measured.
(e) REPORT TO CONGRESS.—In consultation with ex-
ecutive agencies, the Director of the Office of Management
and Budget shall, not later than 2 years after the date
of the enactment of this section, submit to Congress a re-
port describing—
(1) the number of share-in-savings contracts
entered into by each executive agency under the pro-
visions enacted by this section; and
(2) any recommendations regarding additional
changes in law necessary to encourage increased use
of share-in-savings contracts by executive agencies.
(f) DEFINITIONS.—In this section, the terms ‘‘con-
tractor’’, ‘‘savings’’, and ‘‘share-in-savings contract’’ have
the meanings given those terms under section 317 of the
Federal Property and Administrative Services Act of 1949
(as added by subsection (b)).
SEC. 302. INCENTIVES FOR CONTRACT EFFICIENCY.
(a) DEFENSE CONTRACTS.—(1) Chapter 137 of title
10, United States Code, is further amended by adding at
the end the following new section:
‘‘§ 2333. Incentives for contract efficiency
‘‘(a) AUTHORITY TO ENTER INTO 10-YEAR SERVICE
CONTRACTS.—An agency may enter into contracts for the
performance of services to the government for periods of
not more than ten years if such contracts are perform-
ance-based.
‘‘(b) EXTENSIONS.—An agency may enter into con-
tracts for the performance of services to the government
that provide for the contract to be extended by additional
performance periods in instances of exceptional perform-
ance by the contractor. A contract that provides for such
extensions shall be performance-based, and must include
performance parameters that can be used to measure per-
formance under the contract. The entire term of the con-
tract, including the additional performance periods, may
not exceed ten years.
‘‘(c) OTHER CONTRACTS.—An agency may enter into
a level-of-effort contract that provides for savings realized
through cost efficiencies to be shared with the contractor
in an amount sufficient to encourage the contractor to in-
vest in methods of performance that are likely to reduce
the overall cost of contract performance.’’.
(2) The table of contents at the beginning of such
chapter is amended by adding at the end the following
new item:
‘‘Sec. 2333. Incentives for contract efficiency.’’.
(b) OTHER CONTRACTS.—(1) Title III of the Federal
Property and Administrative Services Act of 1949 is fur-
ther amended by adding at the end the following new sec-
tion:
‘‘SEC. 318. INCENTIVES FOR CONTRACT EFFICIENCY.
‘‘(a) AUTHORITY TO ENTER INTO 10-YEAR SERVICE
CONTRACTS.—An executive agency may enter into con-
tracts for the performance of services for the Government
for periods of not more than ten years if such contracts
are performance-based.
‘‘(b) EXTENSIONS.—An executive agency may enter
into contracts for the performance of services to the Gov-
ernment that provide for the contract to be extended by
additional performance periods in instances of exceptional
performance by the contractor. A contract that provides
for such extensions shall be performance-based, and must
include performance parameters that can be used to meas-
ure performance under the contract. The entire term of
the contract, including the additional performance periods,
may not exceed ten years.
‘‘(c) OTHER CONTRACTS.—An executive agency may
enter into a level-of-effort type contract that provides for
savings realized through cost efficiencies to be shared with
the contractor in an amount sufficient to encourage the
contractor to invest in methods of performance that are
likely to reduce the overall cost of contract performance.’’.
(2) The table of contents in section 1(b) of such Act
is further amended by adding at the end the following new
item:
‘‘Sec. 318. Incentives for contract efficiency.’’.
TITLE IV—ACQUISITIONS OF
COMMERCIAL ITEMS
SEC. 401. PREFERENCE FOR PERFORMANCE-BASED CON-
TRACTING.
(a) IN GENERAL.—In the administration of the pref-
erences established by the Federal Acquisition Regulation
under section 821(a) of the Floyd D. Spence National De-
fense Authorization Act for Fiscal Year 2001 (as enacted
into law by Public Law 106–398; 114 Stat. 1654A–218),
a performance-based service contract or performance-
based task order may be treated as a contract for the ac-
quisition of commercial items if—
(1) the contract or task order sets forth specifi-
cally each task to be performed and, for each task—
(A) defines the task in measurable, mis-
sion-related terms; and
(B) identifies the specific end products or
output to be achieved; and
(2) the source of the services provides similar
services to the general public under terms and condi-
tions similar to those offered to the Federal Govern-
ment.
(b) INCENTIVE FOR USE OF PERFORMANCE-BASED
SERVICE CONTRACTS.—(1) A performance-based service
contract or performance-based task order of a covered
agency may be treated as a contract for the acquisition
of commercial items if—
(A) the contract or task order is valued at
$5,000,000 or less;
(B) the contract or task order sets forth specifi-
cally each task to be performed and, for each task—
(i) defines the task in measurable, mission-
related terms; and
(ii) identifies the specific end products or
output to be achieved; and
(C) the source of the services provides similar
services to the general public under terms and condi-
tions similar to those offered to the Federal Govern-
ment.
(2) The special simplified procedures provided in the
Federal Acquisition Regulation pursuant to section
2304(g)(1)(B) of title 10, United States Code, and section
303(g)(1)(B) of the Federal Property and Administrative
Services Act of 1949 (41 U.S.C. 253(g)(1)(B)) shall not
apply to a performance-based service contract or perform-
ance-based task order that is treated as a contract for the
acquisition of commercial items under subsection (a).
(3) Not later than 2 years after the date of the enact-
ment of this Act, the Comptroller General shall submit
a report on the implementation of this subsection to the
congressional defense committees, the Committee on Gov-
ernment Reform of the House of Representatives, and the
Committee on Governmental Affairs of the Senate.
(4) The authority under this subsection shall not
apply to contracts entered into or task orders issued more
than 3 years after the date of the enactment of this Act.
(c) CENTER
OF EXCELLENCE
IN SERVICE CON-
TRACTING.—Not later than 180 days after the date of the
enactment of this Act, the Administrator of the Office of
Federal Procurement Policy shall establish a center of ex-
cellence in contracting for services. The center of excel-
lence shall assist the acquisition community by identifying,
and serving as a clearinghouse for, best practices in con-
tracting for services in the public and private sectors.
(d) DEFINITIONS.—In this section:
(1) The term ‘‘performance-based’’, with re-
spect to a contract, a task order, or contracting,
means that the contract, task order, or contracting,
respectively, includes the use of performance work
statements that set forth contract requirements in
clear, specific, and objective terms with measurable
outcomes.
(2) The term ‘‘commercial item’’ has the mean-
ing given the term in section 4(12) of the Office of
Federal 
Procurement 
Policy 
Act 
(41 
U.S.C.
403(12)).
(3) The term ‘‘covered agency’’ means an exec-
utive agency to which title III of the Federal Prop-
erty and Administrative Services Act of 1949 applies
under section 302(a) of that Act (41 U.S.C. 252(a)).
SEC. 402. AUTHORIZATION OF ADDITIONAL CONTRACT
TYPES IN FAR PART 12.
Section 8002(d) of the Federal Acquisition and
Streamlining Act of 1994 (Public Law 103–355; 41
U.S.C. 264 note) is amended—
(1) in paragraph (1), by striking ‘‘and’’;
(2) by redesignating paragraph (2) as para-
graph (3); and
(3) by inserting after paragraph (1) the fol-
lowing new paragraph (2):
‘‘(2) a provision which allows use of time and
material, labor-hour or similar contract types, for
services in appropriate circumstances;’’.
SEC. 403. CLARIFICATION OF COMMERCIAL SERVICES DEF-
INITION.
Paragraph 12 of section 4 of the Office of Federal
Procurement Policy Act (41 U.S.C. 403) is amended—
(1) in subparagraphs (A), (B), and (C), by in-
serting ‘‘or service’’ after ‘‘item’’;
(2) in subparagraph (D), by inserting ‘‘or serv-
ices’’ after ‘‘items’’; and
(3) by striking subparagraph (F) and redesig-
nating the subsequent subparagraphs accordingly.
SEC. 404. DESIGNATION OF COMMERCIAL BUSINESS ENTI-
TIES.
(a) IN GENERAL.—Section 4 of the Office of Federal
Procurement Policy Act (41 U.S.C. 403) is amended—
(1) by adding at the end of paragraph (12) the
following new subparagraph:
‘‘(H) Products or services produced or pro-
vided by a commercial entity.’’; and
(2) by adding at the end the following new
paragraph:
‘‘(16) The term ‘commercial entity’ means any
enterprise whose primary customers are other than
the United States Federal Government. In order to
qualify as a commercial entity, at least 85 percent
(in dollars) of the sales of the enterprise over the
past three business years must have been made to
nongovernment entities or under part 12 of the Fed-
eral Acquisition Regulation.’’.
(b) COMPTROLLER GENERAL REVIEW.—The Comp-
troller General shall review the implementation of the
amendments made by subsection (a) to determine the suc-
cess of such implementation.
SEC. 405. CONTINUATION OF ELIGIBILITY OF CONTRACTOR
FOR AWARD OF INFORMATION TECHNOLOGY
CONTRACT AFTER PROVIDING DESIGN AND
ENGINEERING SERVICES.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, a contractor that provides architectural design
and engineering services for an information system under
an information technology program of an executive agency
is not, solely by reason of having provided services, ineli-
gible for award of a contract for acquisition of information
technology under that program or for a subcontract under
such a contract.
(b) DEFINITIONS.—In this section:
(1) The term ‘‘architectural design and engi-
neering services’’ includes, but is not limited to,
business process reengineering, determining speci-
fications, developing work statements, determining
parameters, identifying and resolving interface prob-
lems, developing test requirements, evaluating test
data, designing, and supervising design activities.
(2) The term ‘‘information system’’ has the
meaning given that term in section 5002 of the
Clinger-Cohen Act of 1996 (40 U.S.C. 1401).
SEC. 406. COMMERCIAL LIABILITY.
(a) LIMITATION.—The Office of Federal Procure-
ment Policy Act (41 U.S.C. 403 et seq.) is further amend-
ed by inserting after section 29 the following new section:
‘‘SEC. 29A. LIMITATION OF CONTRACTOR LIABILITY.
‘‘The Federal Acquisition Regulation shall provide
that an executive agency shall include in all contracts and
solicitations for contracts for the acquisition of property
or services a provision that—
‘‘(1) bars payment of consequential damages in
cases of contractor liability with respect to the con-
tract; and
‘‘(2) places a cap on payment of direct damages
in cases of contractor liability with respect to the
contract that does not exceed the cost of the service
that was not performed or of the product that was
not delivered.’’.
(b) CONFORMING AMENDMENT.—The table of con-
tents of such Act is amended by inserting after the item
relating to section 29 the following new item:
‘‘Sec. 29A. Limitation of contractor liability.’’.
TITLE V—TECHNOLOGY ACCESS
IN A COMMERCIAL ENVIRON-
MENT
SEC. 501. TRADE AGREEMENTS ACT OF 1979 EXEMPTION
FOR INFORMATION TECHNOLOGY COMMER-
CIAL ITEMS.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, in order to promote Government access to
commercial information technology, the restriction on pur-
chasing nondomestic products set forth in the Buy Amer-
ican Act (41 U.S.C. 10a) and the prohibition on acquiring
noneligible foreign products under section 302(a)(1) of the
Trade Agreements Act of 1979 (Public Law 96–39; 19
U.S.C. 2512(a)(1)), shall not apply to the Federal Govern-
ment’s acquisition of commercial item information tech-
nology (as those terms are defined in section 5002 of the
Clinger-Cohen Act of 1996 (40 U.S.C. 1401)).
(b) DEFINITION.—Section 5002(3)(B) of the Clinger-
Cohen Act of 1996 (40 U.S.C. 1401(3)(B)) is amended
by inserting ‘‘(including imaging peripherals, input, out-
put, and storage devices necessary for security and surveil-
lance)’’ after ‘‘ancillary equipment’’.
SEC. 502. AUTHORIZATION FOR ACQUISITION OF INFORMA-
TION TECHNOLOGY BY STATE AND LOCAL
GOVERNMENTS THROUGH FEDERAL SUPPLY
SCHEDULES.
(a) AUTHORITY TO USE CERTAIN SUPPLY SCHED-
ULES.—Section 201(b) of the Federal Property and Ad-
ministrative Services Act of 1949 (40 U.S.C. 481(b)) is
amended by adding at the end the following new para-
graph:
‘‘(4)(A) The Administrator may provide for the use
by State or local governments of Federal supply schedules
of the General Services Administration for automated data
processing equipment (including firmware), software, sup-
plies, support equipment, and services (as contained in
Federal supply classification code group 70).
‘‘(B) In any case of the use by a State or local gov-
ernment of a Federal supply schedule pursuant to sub-
paragraph (A), participation by a firm that sells to the
Federal Government through the supply schedule shall be
voluntary with respect to a sale to the State or local gov-
ernment through such supply schedule.
‘‘(C) As used in this paragraph, the term ‘State or
local government’ includes any State, local, regional, or
tribal government, or any instrumentality thereof (includ-
ing any accredited public school district or public edu-
cational institution).’’.
(b) PROCEDURES.—Not later than 30 days after the
date of the enactment of this Act, the Administrator of
General Services shall establish procedures to implement
section 201(b)(4) of the Federal Property and Administra-
tive Services Act of 1949 (as added by subsection (a)).
(c) REPORT.—Not later than December 31, 2004, the
Administrator shall submit to the Committee on Govern-
ment Reform of the House of Representatives and the
Committee on Governmental Affairs of the Senate a report
on the implementation and effects of the amendment made
by subsection (a).
SEC. 503. CERTAIN RESEARCH AND DEVELOPMENT BY CI-
VILIAN AGENCIES.
(a) AUTHORITY.—Title III of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 251
et seq.) is further amended by adding at the end the fol-
lowing new section:
‘‘SEC. 319. RESEARCH AND DEVELOPMENT TO FACILITATE
DEFENSE AGAINST, OR RECOVERY FROM,
TERRORISM 
OR 
NUCLEAR, 
BIOLOGICAL,
CHEMICAL, 
RADIOLOGICAL, 
OR 
TECHNO-
LOGICAL ATTACK.
‘‘(a) AUTHORITY.—(1) The head of an executive
agency may engage in basic research, applied research, ad-
vanced research, and development projects that—
‘‘(A) are necessary to the responsibilities of
such official’s executive agency in the field of re-
search and development; and
‘‘(B) have the potential to facilitate defense
against, or recovery from, terrorism or nuclear, bio-
logical, chemical, radiological, or technological at-
tack.
‘‘(2) To engage in projects authorized under para-
graph (1), the head of an executive agency may exercise
the same authority (subject to the same restrictions and
conditions) as the Secretary of Defense may exercise
under sections 2358 and 2371 of title 10, United States
Code, except for subsections (b), (f), and (g) of such sec-
tion 2371.
‘‘(3) The head of an executive agency may exercise
authority under this subsection only if authorized by the
Director of the Office of Management and Budget to do
so.