185
‘‘(c) WAIVER OF PENALTY.—The Federal Acquisition
Regulation shall provide for a penalty under subsection (b)
to be waived in the case of a contractor’s proposal for settle-
ment of indirect costs when—
‘‘(1) the contractor withdraws the proposal before
the formal initiation of an audit of the proposal by
the Federal Government and resubmits a revised pro-
posal;
‘‘(2) the amount of unallowable costs subject to
the penalty is insignificant; or
‘‘(3) the contractor demonstrates, to the contract-
ing officer’s satisfaction, that—
‘‘(A) it has established appropriate policies
and personnel training and an internal control
and review system that provide assurances that
unallowable costs subject to penalties are pre-
cluded from being included in the contractor’s
proposal for settlement of indirect costs; and
‘‘(B) the unallowable costs subject to the
penalty were inadvertently incorporated into the
proposal.
‘‘(d) APPLICABILITY OF CONTRACT DISPUTES PROCE-
DURE TO DISALLOWANCE OF COST AND ASSESSMENT OF
PENALTY.—An action of an agency head under subsection
(a) or (b)—
186
‘‘(1) shall be considered a final decision for the
purposes of section 6 of the Contract Disputes Act of
1978 (41 U.S.C. 605); and
‘‘(2) is appealable in the manner provided in
section 7 of such Act.
‘‘(e) SPECIFIC COSTS NOT ALLOWABLE.—(1) The fol-
lowing costs are not allowable under a covered contract:
‘‘(A) Costs of entertainment, including amuse-
ment, diversion, and social activities, and any costs
directly associated with such costs (such as tickets to
shows or sports events, meals, lodging, rentals, trans-
portation, and gratuities).
‘‘(B) Costs incurred to influence (directly or in-
directly) legislative action on any matter pending be-
fore Congress or a State legislature.
‘‘(C) Costs incurred in defense of any civil or
criminal fraud proceeding or similar proceeding (in-
cluding filing of any false certification) brought by
the United States where the contractor is found liable
or had pleaded nolo contendere to a charge of fraud
or similar proceeding (including filing of a false cer-
tification).
‘‘(D) Payments of fines and penalties resulting
from violations of, or failure to comply with, Federal,
State, local, or foreign laws and regulations, except
187
when incurred as a result of compliance with specific
terms and conditions of the contract or specific writ-
ten instructions from the contracting officer authoriz-
ing in advance such payments in accordance with ap-
plicable provisions of the Federal Acquisition Regula-
tion.
‘‘(E) Costs of membership in any social, dining,
or country club or organization.
‘‘(F) Costs of alcoholic beverages.
‘‘(G) Contributions or donations, regardless of
the recipient.
‘‘(H) Costs of advertising designed to promote
the contractor or its products.
‘‘(I) Costs of promotional items and memora-
bilia, including models, gifts, and souvenirs.
‘‘(J) Costs for travel by commercial aircraft
which exceed the amount of the standard commercial
fare.
‘‘(K) Costs incurred in making any payment
(commonly known as a ‘golden parachute payment’)
which is—
‘‘(i) in an amount in excess of the normal
severance pay paid by the contractor to an em-
ployee upon termination of employment; and
188
‘‘(ii) is paid to the employee contingent
upon, and following, a change in management
control over, or ownership of, the contractor or a
substantial portion of the contractor’s assets.
‘‘(L) Costs of commercial insurance that protects
against the costs of the contractor for correction of the
contractor’s own defects in materials or workmanship.
‘‘(M) Costs of severance pay paid by the contrac-
tor to foreign nationals employed by the contractor
under a service contract performed outside the United
States, to the extent that the amount of severance pay
paid in any case exceeds the amount paid in the in-
dustry involved under the customary or prevailing
practice for firms in that industry providing similar
services in the United States, as determined under the
Federal Acquisition Regulation.
‘‘(N) Costs of severance pay paid by the contrac-
tor to a foreign national employed by the contractor
under a service contract performed in a foreign coun-
try if the termination of the employment of the for-
eign national is the result of the closing of, or the cur-
tailment of activities at, a United States facility in
that country at the request of the government of that
country.
189
‘‘(O) Costs incurred by a contractor in connec-
tion with any criminal, civil, or administrative pro-
ceeding commenced by the United States or a State,
to the extent provided in subsection (k).
‘‘(2)(A) Pursuant to the Federal Acquisition Regula-
tion and subject to the availability of appropriations, the
agency head, in awarding a covered contract, may waive
the application of the provisions of paragraphs (1)(M) and
(1)(N) to that contract if the agency head determines that—
‘‘(i) the application of such provisions to the
contract would adversely affect the continuation of a
program, project, or activity that provides significant
support services for employees of the executive agency
posted outside the United States;
‘‘(ii) the contractor has taken (or has established
plans to take) appropriate actions within the contrac-
tor’s control to minimize the amount and number of
incidents of the payment of severance pay by the con-
tractor to employees under the contract who are for-
eign nationals; and
‘‘(iii) the payment of severance pay is necessary
in order to comply with a law that is generally appli-
cable to a significant number of businesses in the
country in which the foreign national receiving the
payment performed services under the contract or is
190
necessary to comply with a collective bargaining
agreement.
‘‘(B) The head of the executive agency concerned shall
include in the solicitation for a covered contract a statement
indicating—
‘‘(i) that a waiver has been granted under sub-
paragraph (A) for the contract; or
‘‘(ii) whether the agency head will consider
granting such a waiver, and, if the agency head will
consider granting a waiver, the criteria to be used in
granting the waiver.
‘‘(C) The agency head shall make the final determina-
tion regarding whether to grant a waiver under subpara-
graph (A) with respect to a covered contract before award
of the contract.
‘‘(3) The provisions of the Federal Acquisition Regula-
tion implementing this section may establish appropriate
definitions, exclusions, limitations, and qualifications.
‘‘(f) REQUIRED REGULATIONS.—(1) The Federal Ac-
quisition Regulation shall contain provisions on the allow-
ability of contractor costs. Such provisions shall define in
detail and in specific terms those costs which are unallow-
able, in whole or in part, under covered contracts. The regu-
lations shall, at a minimum, clarify the cost principles ap-
plicable to contractor costs of the following:
191
‘‘(A) Air shows.
‘‘(B) Membership in civic, community, and pro-
fessional organizations.
‘‘(C) Recruitment.
‘‘(D) Employee morale and welfare.
‘‘(E) Actions to influence (directly or indirectly)
executive branch action on regulatory and contract
matters (other than costs incurred in regard to con-
tract proposals pursuant to solicited or unsolicited
bids).
‘‘(F) Community relations.
‘‘(G) Dining facilities.
‘‘(H) Professional and consulting services, in-
cluding legal services.
‘‘(I) Compensation.
‘‘(J) Selling and marketing.
‘‘(K) Travel.
‘‘(L) Public relations.
‘‘(M) Hotel and meal expenses.
‘‘(N) Expense of corporate aircraft.
‘‘(O) Company-furnished automobiles.
‘‘(P) Advertising.
‘‘(2) The Federal Acquisition Regulation shall require
that a contracting officer not resolve any questioned costs
until the contracting officer has obtained—
192
‘‘(A) adequate documentation with respect to
such costs; and
‘‘(B) the opinion of the executive agency’s con-
tract auditor on the allowability of such costs.
‘‘(3) The Federal Acquisition Regulation shall provide
that, to the maximum extent practicable, an executive agen-
cy’s contract auditor be present at any negotiation or meet-
ing with the contractor regarding a determination of the
allowability of indirect costs of the contractor.
‘‘(4) The Federal Acquisition Regulation shall require
that all categories of costs designated in the report of an
executive agency’s contract auditor as questioned with re-
spect to a proposal for settlement be resolved in such a man-
ner that the amount of the individual questioned costs that
are paid will be reflected in the settlement.
‘‘(g) APPLICABILITY
OF
REGULATIONS
TO
SUB-
CONTRACTORS.—The regulations referred to in subsections
(e) and (f)(1) shall require, to the maximum extent prac-
ticable, that such regulations apply to all subcontractors of
a covered contract.
‘‘(h) CONTRACTOR CERTIFICATION REQUIRED.—(1) A
proposal for settlement of indirect costs applicable to a cov-
ered contract shall include a certification by an official of
the contractor that, to the best of the certifying official’s
knowledge and belief, all indirect costs included in the pro-
193
posal are allowable. Any such certification shall be in a
form prescribed in the Federal Acquisition Regulation.
‘‘(2) The agency head concerned may, in an excep-
tional case, waive the requirement for certification under
paragraph (1) in the case of any contract if the agency
head—
‘‘(A) determines in such case that it would be in
the interest of the United States to waive such certifi-
cation; and
‘‘(B) states in writing the reasons for that deter-
mination and makes such determination available to
the public.
‘‘(i) PENALTIES FOR SUBMISSION OF COST KNOWN AS
NOT ALLOWABLE.—The submission to an executive agency
of a proposal for settlement of costs for any period after
such costs have been accrued that includes a cost that is
expressly specified by statute or regulation as being unal-
lowable, with the knowledge that such cost is unallowable,
shall be subject to the provisions of section 287 of title 18,
United States Code, and section 3729 of title 31, United
States Code.
‘‘(j) CONTRACTOR TO HAVE BURDEN OF PROOF.—In
a proceeding before a board of contract appeals, the United
States Court of Federal Claims, or any other Federal court
in which the reasonableness of indirect costs for which a
194
contractor seeks reimbursement from the United States is
in issue, the burden of proof shall be upon the contractor
to establish that those costs are reasonable.
‘‘(k) PROCEEDING COSTS NOT ALLOWABLE.—(1) Ex-
cept as otherwise provided in this subsection, costs incurred
by a contractor in connection with any criminal, civil, or
administrative proceeding commenced by the United States
or a State are not allowable as reimbursable costs under
a covered contract if the proceeding (A) relates to a viola-
tion of, or failure to comply with, a Federal or State statute
or regulation, and (B) results in a disposition described in
paragraph (2).
‘‘(2) A disposition referred to in paragraph (1)(B) is
any of the following:
‘‘(A) In the case of a criminal proceeding, a con-
viction (including a conviction pursuant to a plea of
nolo contendere) by reason of the violation or failure
referred to in paragraph (1).
‘‘(B) In the case of a civil or administrative pro-
ceeding involving an allegation of fraud or similar
misconduct, a determination of contractor liability on
the basis of the violation or failure referred to in
paragraph (1).
‘‘(C) In the case of any civil or administrative
proceeding, the imposition of a monetary penalty by
195
reason of the violation or failure referred to in para-
graph (1).
‘‘(D) A final decision—
‘‘(i) to debar or suspend the contractor,
‘‘(ii) to rescind or void the contract, or
‘‘(iii) to terminate the contract for default,
by reason of the violation or failure referred to in
paragraph (1).
‘‘(E) A disposition of the proceeding by consent
or compromise if such action could have resulted in
a disposition described in subparagraph (A), (B), (C),
or (D).
‘‘(3) In the case of a proceeding referred to in para-
graph (1) that is commenced by the United States and is
resolved by consent or compromise pursuant to an agree-
ment entered into by a contractor and the United States,
the costs incurred by the contractor in connection with such
proceeding that are otherwise not allowable as reimbursable
costs under such paragraph may be allowed to the extent
specifically provided in such agreement.
‘‘(4) In the case of a proceeding referred to in para-
graph (1) that is commenced by a State, the agency head
that awarded the covered contract involved in the proceed-
ing may allow the costs incurred by the contractor in con-
nection with such proceeding as reimbursable costs if the
196
agency head determines, in accordance with the Federal Ac-
quisition Regulation, that the costs were incurred as a re-
sult of (A) a specific term or condition of the contract, or
(B) specific written instructions of the agency.
‘‘(5)(A) Except as provided in subparagraph (C), costs
incurred by a contractor in connection with a criminal,
civil, or administrative proceeding commenced by the Unit-
ed States or a State in connection with a covered contract
may be allowed as reimbursable costs under the contract
if such costs are not disallowable under paragraph (1), but
only to the extent provided in subparagraph (B).
‘‘(B)(i) The amount of the costs allowable under sub-
paragraph (A) in any case may not exceed the amount
equal to 80 percent of the amount of the costs incurred, to
the extent that such costs are determined to be otherwise
allowable and allocable under the Federal Acquisition Regu-
lation.
‘‘(ii) Regulations issued for the purpose of clause (i)
shall provide for appropriate consideration of the complex-
ity of procurement litigation, generally accepted principles
governing the award of legal fees in civil actions involving
the United States as a party, and such other factors as may
be appropriate.
‘‘(C) In the case of a proceeding referred to in subpara-
graph (A), contractor costs otherwise allowable as reimburs-
197
able costs under this paragraph are not allowable if (i) such
proceeding involves the same contractor misconduct alleged
as the basis of another criminal, civil, or administrative
proceeding, and (ii) the costs of such other proceeding are
not allowable under paragraph (1).
‘‘(6) In this subsection:
‘‘(A) The term ‘proceeding’ includes an inves-
tigation.
‘‘(B) The term ‘costs’, with respect to a proceed-
ing—
‘‘(i) means all costs incurred by a contrac-
tor, whether before or after the commencement of
any such proceeding; and
‘‘(ii) includes—
‘‘(I) administrative and clerical ex-
penses;
‘‘(II) the cost of legal services, includ-
ing legal services performed by an employee
of the contractor;
‘‘(III) the cost of the services of ac-
countants and consultants retained by the
contractor; and
‘‘(IV) the pay of directors, officers, and
employees of the contractor for time devoted
198
by such directors, officers, and employees to
such proceeding.
‘‘(C) The term ‘penalty’ does not include restitu-
tion, reimbursement, or compensatory damages.
‘‘(l) PERIODIC EVALUATION OF IMPLEMENTATION.—
(1) The Comptroller General shall periodically evaluate the
implementation of this section by the heads of executive
agencies. Such evaluation shall consider the extent to
which—
‘‘(A) the implementation is consistent with con-
gressional intent;
‘‘(B) the implementation achieves the objective of
eliminating unallowable costs charged to covered con-
tracts; and
‘‘(C) the implementation (as well as the provi-
sions of this section and the regulations prescribed
under this section) could be improved or strengthened.
‘‘(2) The Comptroller General shall submit to the Com-
mittees on Governmental Affairs and on Appropriations of
the Senate and the Committees on Government Operation
and on Appropriations of the House of Representatives a
report on such evaluation not later than 180 days after pub-
lication in the Federal Register of revisions to the Federal
Acquisition Regulation that make substantive changes in
199
provisions of the Federal Acquisition Regulation pertaining
to allowable costs under covered contracts.
‘‘(m) COVERED CONTRACT DEFINED.—In this section,
the term ‘covered contract’ means a contract for an amount
in excess of $500,000 that is entered into by an executive
agency, except that such term does not include a fixed-price
contract without cost incentives or any contract for the pur-
chase of commercial items (as defined in section 315 of this
title).’’.
PART III—ACQUISITIONS GENERALLY
SEC. 2161. TRAVEL EXPENSES OF GOVERNMENT CONTRAC-
TORS.
Section 24(a) of the Office of Federal Procurement Pol-
icy Act (41 U.S.C. 420) is amended by inserting after
‘‘Under any contract’’ the following: ‘‘requiring submission
of cost or pricing data or the negotiation of final indirect
costs’’.
Subtitle C—Audit and Access to
Records
PART I—ARMED SERVICES ACQUISITIONS
SEC. 2201. CONSOLIDATION AND REVISION OF AUTHORITY
TO EXAMINE RECORDS OF CONTRACTORS.
(a) AUTHORITY.—
(1) IN GENERAL.—Section 2313 of title 10, Unit-
ed States Code, is amended to read as follows:
200
‘‘§ 2313. Examination of records of contractor
‘‘(a) AGENCY AUTHORITY.—The head of an agency,
acting through an authorized representative—
‘‘(1) is entitled to inspect the plant and audit
the records of—
‘‘(A) a contractor performing a cost-reim-
bursement, incentive, time-and-materials, labor-
hour, or price-redeterminable contract, or any
combination of such contracts, made by that
agency under this chapter; and
‘‘(B) a subcontractor performing any sub-
contract under such a contract or combination of
contracts; and
‘‘(2) shall, for the purpose of evaluating the accu-
racy, completeness, and currency of cost or pricing
data required to be submitted pursuant to section
2306a of this title with respect to a contract or sub-
contract, have the right to examine all records of the
contractor or subcontractor related to—
‘‘(A) the proposal for the contract or sub-
contract;
‘‘(B) the discussions conducted on the pro-
posal;
‘‘(C) pricing of the contract or subcontract;
or
201
‘‘(D) performance of the contract or sub-
contract.
‘‘(b) SUBPOENA POWER.—(1) The Director of the De-
fense Contract Audit Agency (or any successor agency) may
require by subpoena the production of any records of a con-
tractor that the Secretary of Defense is authorized to audit
or examine under subsection (a).
‘‘(2) Any such subpoena, in the case of contumacy or
refusal to obey, shall be enforceable by order of an appro-
priate United States district court.
‘‘(3) The authority provided by paragraph (1) may not
be redelegated.
‘‘(4) The Director (or any successor official) shall sub-
mit an annual report to the Secretary of Defense on the
exercise of such authority during the preceding year and
the reasons why such authority was exercised in any in-
stance. The Secretary shall forward a copy of each such re-
port to the Committees on Armed Services of the Senate
and House of Representatives.
‘‘(c) COMPTROLLER GENERAL AUTHORITY.—(1) Ex-
cept as provided in paragraph (2), each contract awarded
after using procedures other than sealed bid procedures shall
provide that the Comptroller General and his representa-
tives are entitled to examine any records of the contractor,
202
or any of its subcontractors, that directly pertain to, and
involve transactions relating to, the contract or subcontract.
‘‘(2) Paragraph (1) does not apply to a contract or
subcontract with a foreign contractor or foreign subcontrac-
tor if the head of the agency concerned determines, with the
concurrence of the Comptroller General or his designee, that
the application of that paragraph to the contract or sub-
contract would not be in the public interest. However, the
concurrence of the Comptroller General or his designee is
not required—
‘‘(A) where the contractor or subcontractor is a
foreign government or agency thereof or is precluded
by the laws of the country involved from making its
records available for examination; and
‘‘(B) where the head of the agency determines,
after taking into account the price and availability of
the property and services from United States sources,
that the public interest would be best served by not
applying paragraph (1).
‘‘(d) AUTHORITY TO USE OTHER AGENCY AUDIT FOR
PRE-AWARD AUDIT.—In any case in which the head of an
agency proposes to examine the records of a contractor or
subcontractor related to a proposal for a contract or sub-
contract (as authorized by subsection (a)(2)(A)), the head
of the agency may use the results of an audit conducted
203
by a Federal Government audit agency within the previous
year if the contracting officer determines that the objectives
of the proposed pre-award audit reasonably can be met by
the other audit.
‘‘(e) LIMITATION.—The right of the head of an agency
under subsection (a), and the right of the Comptroller Gen-
eral under subsection (c), with respect to a contract or sub-
contract shall expire three years after final payment under
such contract or subcontract.
‘‘(f) INAPPLICABILITY TO CERTAIN CONTRACTS.—This
section does not apply to the following contracts:
‘‘(1) Contracts for utility services at rates not ex-
ceeding those established to apply uniformly to the
public, plus any applicable reasonable connection
charge.
‘‘(g) FORMS OF ORIGINAL RECORD STORAGE.—Noth-
ing in this section shall be construed to preclude a contrac-
tor from duplicating or storing original records in elec-
tronic form.
‘‘(h) USE OF IMAGES OF ORIGINAL RECORDS.—The
head of an agency shall not require a contractor or sub-
contractor to provide original records in an audit carried
out pursuant to this section if the contractor or subcontrac-
tor provides photographic or electronic images of the origi-
nal records and meets the following requirements:
204
‘‘(1) The contractor or subcontractor has estab-
lished procedures to ensure that the imaging process
preserves the integrity, reliability, and security of the
original records.
‘‘(2) The contractor or subcontractor maintains
an effective indexing system to permit timely and
convenient access to the imaged records.
‘‘(3) The contractor or subcontractor retains the
original records for a minimum of one year after im-
aging to permit periodic validation of the imaging
systems.
‘‘(i) RECORDS DEFINED.—In this section, the term
‘records’ includes books, documents, accounting procedures
and practices, and other data, regardless of type and re-
gardless of whether such items are in written form, in the
form of computer data, or in any other form.’’.
(2) CLERICAL AMENDMENT.—The item relating
to such section in the table of sections at the begin-
ning of chapter 137 of title 10, United States Code,
is amended to read as follows:
‘‘2313. Examination of records of contractor.’’.
(b) REPEAL OF SUPERSEDED PROVISION.—
(1) REPEAL.—Section 2406 of title 10, United
States Code, is repealed.
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 141 of such title is
205
amended by striking out the item relating to section
2406.
PART II—CIVILIAN AGENCY ACQUISITIONS
SEC. 2251. AUTHORITY TO EXAMINE RECORDS OF CONTRAC-
TORS.
(a) AUTHORITY.—Title III of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 251
et seq.), as amended by section 1251(2), is further amended
by inserting after section 304B the following new section:
‘‘SEC. 304C. EXAMINATION OF RECORDS OF CONTRACTOR.
‘‘(a) AGENCY AUTHORITY.—The head of an executive
agency, acting through an authorized representative—
‘‘(1) is entitled to inspect the plant and audit
the records of—
‘‘(A) a contractor performing a cost-reim-
bursement, incentive, time-and-materials, labor-
hour, or price-redeterminable contract, or any
combination of such contracts, made by that ex-
ecutive agency under this title; and
‘‘(B) a subcontractor performing any sub-
contract under such a contract or combination of
contracts; and
‘‘(2) shall, for the purpose of evaluating the accu-
racy, completeness, and currency of cost or pricing
data required to be submitted pursuant to section
206
304B with respect to a contract or subcontract, have
the right to examine all records of the contractor or
subcontractor related to—
‘‘(A) the proposal for the contract or sub-
contract;
‘‘(B) the discussions conducted on the pro-
posal;
‘‘(C) pricing of the contract or subcontract;
or
‘‘(D) performance of the contract or sub-
contract.
‘‘(b) COMPTROLLER GENERAL AUTHORITY.—(1) Ex-
cept as provided in paragraph (2), each contract awarded
after using procedures other than sealed bid procedures shall
provide that the Comptroller General and his representa-
tives are entitled to examine any records of the contractor,
or any of its subcontractors, that directly pertain to, and
involve transactions relating to, the contract or subcontract.
‘‘(2) Paragraph (1) does not apply to a contract or
subcontract with a foreign contractor or foreign subcontrac-
tor if the agency head concerned determines, with the con-
currence of the Comptroller General or his designee, that
the application of that paragraph to the contract or sub-
contract would not be in the public interest. However, the
207
concurrence of the Comptroller General or his designee is
not required—
‘‘(A) where the contractor or subcontractor is a
foreign government or agency thereof or is precluded
by the laws of the country involved from making its
records available for examination; and
‘‘(B) where the agency head determines, after
taking into account the price and availability of the
property and services from United States sources, that
the public interest would be best served by not apply-
ing paragraph (1).
‘‘(c) AUTHORITY TO USE OTHER AGENCY AUDIT FOR
PRE-AWARD AUDIT.—In any case in which the head of an
agency proposes to examine the records of a contractor or
subcontractor related to a proposal for a contract or sub-
contract (as authorized by subsection (a)(2)(A)), the head
of the agency may use the results of an audit conducted
by a Federal Government audit agency within the previous
year if the contracting officer determines that the objectives
of the proposed pre-award audit reasonably can be met by
the other audit.
‘‘(d) LIMITATION.—The right of an agency head under
subsection (a), and the right of the Comptroller General
under subsection (b), with respect to a contract or sub-
208
contract shall expire three years after final payment under
such contract or subcontract.
‘‘(e) INAPPLICABILITY TO CERTAIN CONTRACTS.—This
section does not apply to the following contracts:
‘‘(1) Contracts for utility services at rates not ex-
ceeding those established to apply uniformly to the
public, plus any applicable reasonable connection
charge.
‘‘(f) FORM OF ORIGINAL RECORD STORAGE.—Nothing
in this section shall be construed to preclude a contractor
from duplicating or storing original records in electronic
form.
‘‘(g) USE OF IMAGES OF ORIGINAL RECORDS.—The
head of an agency shall not require a contractor or sub-
contractor to provide original records in an audit carried
out pursuant to this section if the contractor or subcontrac-
tor provides photographic or electronic images of the origi-
nal records and meets the following requirements:
‘‘(1) The contractor or subcontractor has estab-
lished procedures to ensure that the imaging process
preserves the integrity, reliability, and security of the
original records.
‘‘(2) The contractor or subcontractor maintains
an effective indexing system to permit timely and
convenient access to the imaged records.
209
‘‘(3) The contractor or subcontractor retains the
original records for a minimum of one year after im-
aging to permit periodic validation of the imaging
systems.
‘‘(h) RECORDS DEFINED.—In this section, the term
‘records’ includes books, documents, accounting procedures
and practices, and other data, regardless of type and re-
gardless of whether such items are in written form, in the
form of computer data, or in any other form.’’.
(b) REPEAL
OF SUPERSEDED PROVISION.—Section
304 of the Federal Property and Administrative Services
Act of 1949 (41 U.S.C. 254) is amended by striking out
subsection (c).
Subtitle D—Cost Accounting
Standards
SEC. 2301. REPEAL OF OBSOLETE DEADLINE REGARDING
PROCEDURAL REGULATIONS FOR THE COST
ACCOUNTING STANDARDS BOARD.
Section 26(f)(3) of the Office of Federal Procurement
Policy Act (41 U.S.C. 422(f)(3)) is amended in the first
sentence by striking out ‘‘Not later than 180 days after the
date of enactment of this section, the Administrator’’ and
inserting in lieu thereof ‘‘The Administrator’’.
210
Subtitle E—Administration of Con-
tract 
Provisions 
Relating 
to
Price, 
Delivery, 
and 
Product
Quality
SEC. 2401. CLARIFICATION OF PROVISION RELATING TO
QUALITY 
CONTROL 
OF 
CERTAIN 
SPARE
PARTS.
The second sentence of subsection (a) of section 2383
of title 10, United States Code, is amended to read as fol-
lows: ‘‘In establishing the appropriate qualification require-
ments, the Secretary of Defense shall use the Department
of Defense qualification requirements that were used to
qualify the original production part, unless the Secretary
determines in writing—
‘‘(1) that there are other requirements suffi-
ciently similar to those requirements that should be
used instead; or
‘‘(2) that any or all such requirements are un-
necessary.’’.
SEC. 2402. CONTRACTOR GUARANTEES REGARDING WEAP-
ON SYSTEMS.
(a) REPEAL OF REQUIREMENT FOR REPORT ON WAIV-
ERS.—Subsection (e) of section 2403 of title 10, United
States Code, is amended—
(1) by striking out ‘‘(1)’’; and
211
(2) by striking out paragraph (2).
(b) PROVISIONS TO BE ADDRESSED
BY REGULA-
TIONS.—Subsection (h) of such section is amended—
(1) by redesignating paragraph (2) as para-
graph (3); and
(2) by inserting after paragraph (1) the follow-
ing new paragraph (2):
‘‘(2) The regulations shall include the following:
‘‘(A) Guidelines for negotiating contractor guar-
antees that are reasonable and cost effective, as deter-
mined on the basis of the likelihood of defects and the
estimated cost of correcting such defects.
‘‘(B) Procedures for administering contractor
guarantees.
‘‘(C) Guidelines for determining the cases in
which it may be appropriate to waive the require-
ments of this section.’’.
Subtitle F—Claims and Disputes
SEC. 2501. CERTIFICATION OF CONTRACT CLAIMS.
(a) DOD CERTIFICATION REQUIREMENT IN CONFLICT
WITH GOVERNMENT-WIDE REQUIREMENT.—
(1) REPEAL.—Section 2410 of title 10, United
States Code, is repealed.
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 141 of such title is
212
amended by striking out the item relating to section
2410.
(b) REPEAL
OF SUPERSEDED PROVISION.—Section
813(b) of the National Defense Authorization Act for Fiscal
Year 1993 (Public Law 102–484; 106 Stat. 2453), is re-
pealed.
(c) RESTRICTION
ON
LEGISLATIVE
PAYMENT
OF
CLAIMS.—Section 2410e of title 10, United States Code, is
amended by adding at the end the following new subsection:
‘‘(d) RESTRICTION
ON LEGISLATIVE PAYMENT
OF
CLAIMS.—In the case of a contract of an agency named in
section 2303(a) of this title, no provision of a law enacted
after the date of the enactment of the Federal Acquisition
Improvement Act of 1994 that directs the payment of a par-
ticular claim under such contract, a particular request for
equitable adjustment to any term of such contract, or a par-
ticular request for relief under Public Law 85–804 (50
U.S.C. 1431 et seq.) regarding such contract may be imple-
mented unless such provision of law—
‘‘(1) specifically refers to this subsection; and
‘‘(2) specifically states that this subsection does
not apply with respect to the payment directed by
that provision of law.’’.
213
TITLE III—MAJOR SYSTEMS AND
SERVICE SPECIFIC STATUTES
Subtitle A—Major Systems Statutes
SEC. 3001. WEAPON DEVELOPMENT AND PROCUREMENT
SCHEDULES.
(a) DEADLINE AND PURPOSE.—Subsection (a) of sec-
tion 2431 of title 10, United States Code, is amended—
(1) in the first sentence—
(A) by striking out ‘‘at the same time’’ and
inserting in lieu thereof ‘‘not later than 45 days
after’’; and
(B) by striking out ‘‘a written report’’ and
inserting in lieu thereof ‘‘budget justification
documents’’; and
(2) in the second and third sentences, by striking
out ‘‘report’’ and inserting in lieu thereof ‘‘docu-
ments’’.
(b) ADDITIONAL MATTERS TO BE INCLUDED.—Sub-
section (b) of such section is amended—
(1) by striking out ‘‘include—’’ and inserting in
lieu thereof ‘‘include each of the following:’’;
(2) by capitalizing the first word in each of
paragraphs (1), (2), and (3);
214
(3) by striking out the semicolon at the end of
paragraphs (1) and (2) and inserting in lieu thereof
a period;
(4) by striking out ‘‘; and’’ at the end of para-
graph (3) and inserting in lieu thereof a period; and
(5) by amending paragraph (4) to read as fol-
lows:
‘‘(4)(A) The most efficient production rate, the
most efficient acquisition rate, and the minimum sus-
taining rate, consistent with the program priority es-
tablished for such weapon system by the Secretary
concerned.
‘‘(B) In this paragraph:
‘‘(i) The term ‘most efficient production
rate’ means the maximum rate for each budget
year at which the weapon system can be pro-
duced with existing or planned plant capacity
and tooling, with one shift a day running for
eight hours a day and five days a week.
‘‘(ii) The term ‘minimum sustaining rate’
means the production rate for each budget year
that is necessary to keep production lines open
while maintaining a base of responsive vendors
and suppliers.’’.
215
SEC. 3002. SELECTED ACQUISITION REPORT REQUIREMENT.
(a) DEFINITION OF PROCUREMENT UNIT COST.—
(1) DEFINITION.—Paragraph (2) of section
2432(a) of title 10, United States Code, is amended—
(A) in clause (A), by striking out ‘‘for a fis-
cal year’’ and all that follows through ‘‘such pro-
gram in such fiscal year’’;
(B) in clause (B), by striking out ‘‘with
such funds during such fiscal year.’’ and insert-
ing in lieu thereof a period; and
(C) by striking out the last sentence.
(2) CONFORMING
AMENDMENTS.—Section 2433
of such title is amended—
(A) in subparagraph (B) of subsection
(c)(1), by striking out ‘‘current’’ before ‘‘procure-
ment unit cost’’;
(B) in subsection (d), by striking out ‘‘cur-
rent’’ before ‘‘procurement unit cost’’ each place
it appears; and
(C) in subsection (e), by striking out ‘‘cur-
rent’’ before ‘‘procurement unit cost’’ both places
it appears.
(b) EXCLUSION OF FIRM, FIXED-PRICE CONTRACTS.—
Subsection (a) of section 2432 of such title is amended in
paragraph (3) by inserting before the period at the end the
following: ‘‘and that is not a firm, fixed price contract’’.
216
(c) DEFINITION OF FULL LIFE-CYCLE COST.—Such
subsection is further amended in paragraph (4) by striking
out ‘‘has the meaning’’ and all that follows through the end
of the paragraph and inserting in lieu thereof the following:
‘‘means all costs of development, procurement, military con-
struction, and operations and support, without regard to
funding source or management control.’’.
(d) NOTICE OF PROPOSED CHANGES IN SAR.—Sub-
section (c) of such section is amended in paragraph (2) by
striking out the second sentence and inserting in lieu thereof
the following: ‘‘Whenever the Secretary of Defense proposes
to make changes in the content of a Selected Acquisition
Report, the Secretary shall submit a notice of the proposed
changes to such committees. The changes shall be considered
approved by the Secretary, and may be incorporated into
the report, only after the end of the 60-day period beginning
on the date on which the notice is received by those commit-
tees.’’.
(e) ELIMINATION OF CERTAIN SAR REQUIREMENTS.—
Such subsection is further amended in paragraph (3) by
striking out subparagraph (C).
(f) UNIFORM IMPLEMENTATION OF LIFE-CYCLE COST
ANALYSIS.—Such subsection is further amended—
(1) by striking out paragraph (5); and
218
(1) REVISION.—Section 2433(a) of title 10,
United States Code, is amended—
(A) in paragraph (2)—
(i) by striking out ‘‘Baseline Selected
Acquisition Report’’ and inserting in lieu
thereof ‘‘Baseline Estimate’’; and
(ii) by striking out ‘‘Selected Acquisi-
tion Report in which’’ and all that follows
through the end of the paragraph and in-
serting in lieu thereof ‘‘cost estimate in-
cluded in the baseline description for the
program under section 2435 of this title.’’;
and
(B) by striking out paragraph (4).
(2) CONFORMING
AMENDMENTS.—Section 2433
of such title is further amended—
(A) in subsection (c)(1), by striking out
‘‘Baseline Report’’ in subparagraphs (A) and
(B) and inserting in lieu thereof ‘‘Baseline Esti-
mate’’; and
(B) in subsection (d), by striking out ‘‘Base-
line Report’’ in paragraphs (1) and (2) and in-
serting in lieu thereof ‘‘Baseline Estimate’’.
(b) CONTENTS
OF UNIT COST REPORT.—Section
2433(b) of such title is amended in paragraph (3) by strik-
219
ing out ‘‘Baseline Report was submitted.’’ and inserting in
lieu thereof ‘‘contract was entered into.’’.
(c) ELIMINATION OF CERTAIN UNIT COST REPORT RE-
QUIREMENT.—Section 2433(c) of such title, as amended by
subsection (a), is further amended—
(1) by striking out paragraph (2);
(2) by striking out ‘‘(1)’’ after ‘‘(c)’’; and
(3) by redesignating subparagraphs (A), (B),
and (C) as paragraphs (1), (2), and (3), respectively.
(d) CONSTANT BASE YEAR DOLLARS.—Section 2433(f)
of such title is amended by striking out ‘‘include expected
inflation’’ and inserting in lieu thereof ‘‘be stated in terms
of constant base year dollars (as described in section 2430
of this title)’’.
(e) CONTENTS OF SAR.—Subparagraph (I) of section
2433(g)(1) of such title is amended to read as follows:
‘‘(I) The type of the Baseline Estimate that was
included in the baseline description under section
2435 of this title and the date of the Baseline Esti-
mate.’’.
SEC. 3004. REQUIREMENT FOR INDEPENDENT COST ESTI-
MATES AND MANPOWER ESTIMATES BEFORE
DEVELOPMENT OR PRODUCTION.
(a) CONTENT AND SUBMISSION OF ESTIMATES.—Sec-
tion 2434 of title 10, United States Code, is amended by
220
striking out subsection (b) and inserting in lieu thereof the
following:
‘‘(b) REGULATIONS.—The Secretary of Defense shall
prescribe regulations governing the content and submission
of the estimates required by subsection (a). The regulations
shall require—
‘‘(1) that the independent estimate of the full
life-cycle cost of a program—
‘‘(A) be prepared by an office or other en-
tity that is not directly responsible for carrying
out the development or acquisition of the pro-
gram; and
‘‘(B) include all costs of development, pro-
curement, military construction, and operations
and support, without regard to funding source or
management control; and
‘‘(2) that the manpower estimate include the
total personnel required—
‘‘(A) to operate, maintain, and support the
program upon full operational deployment; and
‘‘(B) to train personnel to carry out the ac-
tivities referred to in subparagraph (A).’’.
(b) TERMINOLOGY CORRECTION AND OTHER AMEND-
MENT.—Subsection (a) of such section is amended—
221
(1) by striking out ‘‘full-scale engineering devel-
opment’’ and inserting in lieu thereof ‘‘engineering
and manufacturing development’’; and
(2) by striking out ‘‘cost of the program, together
with’’ and inserting in lieu thereof ‘‘full life-cycle cost
of the program, and’’.
SEC. 3005. BASELINE DESCRIPTION.
(a) IN GENERAL.—Section 2435 of title 10, United
States Code, is amended to read as follows:
‘‘§ 2435. Baseline description
‘‘(a) BASELINE
DESCRIPTION
REQUIREMENT.—(1)
The Secretary of a military department shall establish a
baseline description for each major defense acquisition pro-
gram under the jurisdiction of such Secretary.
‘‘(2) The baseline shall include sufficient parameters
to describe the cost estimate (referred to as the ‘Baseline
Estimate’ in section 2433 of this title), schedule, and per-
formance of such major defense acquisition program.
‘‘(3) No amount appropriated or otherwise made
available to the Department of Defense for carrying out a
major defense acquisition program may be obligated with-
out an approved baseline description unless such obligation
is specifically approved by the Under Secretary of Defense
for Acquisition and Technology.
222
‘‘(4) A baseline description for a major defense acquisi-
tion program shall be established—
‘‘(A) before the program enters engineering and
manufacturing development; and
‘‘(B) before the program enters production and
deployment.
‘‘(b) REGULATIONS.—The Secretary of Defense shall
prescribe regulations governing—
‘‘(1) the content of baseline descriptions;
‘‘(2) the submission of reports on deviations of a
program from the baseline description by the program
manager to the Secretary of the military department
concerned and the Under Secretary of Defense for Ac-
quisition and Technology;
‘‘(3) procedures for review of such deviation re-
ports within the Department of Defense; and
‘‘(4) procedures for submission to, and approval
by, the Secretary of Defense of revised baseline de-
scriptions.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 144 of such title is amended by
amending the item relating to section 2435 to read as fol-
lows:
‘‘2435. Baseline description.’’.
223
SEC. 3006. REPEAL OF REQUIREMENT FOR COMPETITIVE
PROTOTYPING IN MAJOR PROGRAMS.
(a) REPEAL.—Section 2438 of title 10, United States
Code, is repealed.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 144 of such title is amended by
striking out the item relating to section 2438.
SEC. 3007. REPEAL OF REQUIREMENT FOR COMPETITIVE
ALTERNATIVE 
SOURCES 
IN 
MAJOR 
PRO-
GRAMS.
(a) REPEAL.—Section 2439 of title 10, United States
Code, is repealed.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 144 of such title is amended by
striking out the item relating to section 2439.
Subtitle B—Testing Statutes
SEC. 3011. AUTHORIZATION OF LESS THAN FULL-UP TEST-
ING.
Section 2366(c) of title 10, United States Code, is
amended—
(1) by redesignating paragraph (2) as para-
graph (4);
(2) by designating the second sentence of para-
graph (1) as paragraph (3) and in that paragraph by
striking out ‘‘such certification’’ and inserting in lieu
224
thereof ‘‘certification under paragraph (1) or (2)’’;
and
(3) by inserting before paragraph (3) (as so des-
ignated) the following new paragraph:
‘‘(2) In the case of a covered system (or covered product
improvement program for a covered system), the Secretary
may waive the application of the survivability and lethality
tests of this section to such system or program and instead
allow testing of the system or program in combat by firing
munitions likely to be encountered in combat at compo-
nents, subsystems, and subassemblies, together with per-
forming design analyses, modeling and simulation, and
analysis of combat data, if the Secretary certifies to Con-
gress that the survivability and lethality testing of such sys-
tem or program otherwise required by this section would
be unreasonably expensive and impracticable.’’.
SEC. 3012. LIMITATION ON QUANTITIES TO BE PROCURED
FOR LOW-RATE INITIAL PRODUCTION.
Section 2400(a) of title 10, United States Code, is
amended—
(1) in paragraph (2)—
(A) by striking out ‘‘paragraph (1)’’ and
inserting in lieu thereof ‘‘this section’’; and
225
(B) by striking out ‘‘full-scale engineering
development’’ and inserting in lieu thereof ‘‘engi-
neering and manufacturing development’’;
(2) by redesignating paragraph (4) as para-
graph (5) and in that paragraph by inserting after
the first sentence the following: ‘‘If the quantity ex-
ceeds 10 percent of the total number of articles to be
produced, as determined at the milestone II decision
with respect to that system, the Secretary shall in-
clude in the statement the reasons for such quantity.’’;
and
(3) by inserting after paragraph (3) the follow-
ing new paragraph (4):
‘‘(4) The quantity of articles of a major system that
may be procured for low-rate initial production may not
be less than one operationally configured production unit
unless another quantity is established at the milestone II
decision.’’.
SEC. 3013. OPERATIONAL TEST AND EVALUATION OF DE-
FENSE ACQUISITION PROGRAMS.
(a) AUTHORITY TO USE DIFFERENT PROCEDURES.—
Section 2399(b) of title 10, United States Code, is amend-
ed—
(1) by redesignating paragraph (5) as para-
graph (6); and
226
(2) by inserting after paragraph (4) the follow-
ing new paragraph (5):
‘‘(5) The Secretary of Defense may, for a particular
major defense acquisition program, prescribe and apply
operational test and evaluation procedures other than those
provided under subsection (a) and paragraphs (1) through
(3) of this subsection if the Secretary transmits to Congress,
before the Milestone II decision is made with respect to that
program—
‘‘(A) a certification that such testing would be
unreasonably expensive and impracticable; and
‘‘(B) a description of the actions taken to ensure
that the system will be operationally effective and
suitable when the system meets initial operational ca-
pability requirements.’’.
(b) CROSS REFERENCE CORRECTIONS.—Section 2399
of such title is further amended—
(1) in subsection (b)(6) (as redesignated by sub-
section (a)(1)) and subsection (c)(1), by striking out
‘‘section 138(a)(2)(B)’’ and inserting in lieu thereof
‘‘section 139(a)(2)(B)’’; and
(2) in subsection (h)(1), by striking out ‘‘section
138(a)(2)(A)’’ and inserting in lieu thereof ‘‘section
139(a)(2)(A)’’.
227
Subtitle C—Civil Reserve Air Fleet
SEC. 3021. DEFINITION OF CONTRACTOR.
Section 9511(8) of title 10, United States Code, is
amended—
(1) by striking out ‘‘or’’ at the end of clause (A);
and
(2) by inserting before the period at the end the
following: ‘‘, or (C) who owns or controls, or will own
or control, new or existing aircraft and who, by con-
tract, commits some or all of such aircraft to the Civil
Reserve Air Fleet’’.
SEC. 3022. CONSOLIDATION OF PROVISIONS RELATING TO
CONTRACTUAL COMMITMENT OF AIRCRAFT.
Chapter 931 of title 10, United States Code, is amend-
ed—
(1) in subsection (a) of section 9512, by inserting
‘‘AUTHORITY TO CONTRACT.—’’ after ‘‘(a)’’;
(2) in subsection (c) of section 9512, by striking
out ‘‘(c)’’ and inserting in lieu thereof ‘‘(d) AUTHOR-
ITY TO CONTRACT AND PAY DIRECTLY.—’’;
(3) in subsection (b) of section 9512, by striking
out ‘‘(b)’’ and inserting in lieu thereof ‘‘(c) TERMS
AND REQUIRED REPAYMENT.—’’;
(4) by redesignating subsection (a) of section
9513 as subsection (b) and transferring such sub-
228
section (as so redesignated) to section 9512 and in-
serting such subsection after subsection (a);
(5) by redesignating subsection (b) of section
9513 as subsection (e) and transferring such sub-
section (as so redesignated) to the end of section 9512;
(6) in subsection (b) of section 9512, as redesig-
nated and transferred to such section by paragraph
(4)—
(A) by striking out ‘‘under section 9512 of
this title’’ and inserting in lieu thereof ‘‘entered
into under this section’’, and
(B) by inserting ‘‘CONTRACT
REQUIRE-
MENTS.—’’ after ‘‘(b)’’;
(7) in subsection (c) of section 9512, as redesig-
nated by paragraph (3), by striking out ‘‘the terms
required by section 9513 of this title and’’;
(8) in subsection (e) of section 9512, as redesig-
nated and transferred to such section by paragraph
(5)—
(A) by striking out ‘‘under section 9512 of
this title’’ and inserting in lieu thereof ‘‘entered
into under this section’’, and
(B) by inserting ‘‘COMMITMENT TO CIVIL
RESERVE AIR FLEET.—’’ after ‘‘(e)’’; and
(9) by striking out the heading of section 9513.
230
volving the enplaning or deplaning of passengers or cargo,
or, in the case of an installation within the United States,
for other commercial purposes. Notwithstanding any other
provision of the law, the Secretary may establish different
levels and types of uses for different installations and may
provide in contracts under subsection (a) for different levels
and types of uses by different contractors.
‘‘(c) HOLD HARMLESS REQUIREMENT.—A contract
entered into under subsection (a) shall provide that the con-
tractor agrees to indemnify and hold harmless the Air Force
(and any other armed force having jurisdiction over any
installation covered by the contract) from all actions, suits,
or claims of any sort resulting from, relating to, or arising
out of any activities conducted, or services or supplies fur-
nished, in connection with the contract.
‘‘(d) RESERVATION OF RIGHT TO EXCLUDE CONTRAC-
TOR.—A contract entered into under subsection (a) shall
provide that the Secretary concerned may, without provid-
ing prior notice, deny access to an installation designated
under the contract when the Secretary determines that it
is necessary to do so in order to meet military exigencies.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of such chapter is amended by striking out
the item relating to section 9513 and inserting in lieu there-
of the following:
‘‘9513. Use of military installations by Civil Reserve Air Fleet contractors.’’.
231
Subtitle D—Miscellaneous
SEC. 3051. EXTENSION TO DEPARTMENT OF DEFENSE GEN-
ERALLY OF PROVISION RELATING TO MANU-
FACTURE AT FACTORIES AND ARSENALS.
(a) CONSOLIDATION, REVISION, AND EXTENSION TO
DEPARTMENT
OF DEFENSE
OF AUTHORITY.—(1) Sub-
chapter V of chapter 148 of title 10, United States Code,
is amended by adding at the end the following new section:
‘‘§ 2542. Factories and arsenals: manufacture at
‘‘(a) The Secretary of Defense or the Secretary of a
military department may have supplies needed for the De-
partment of Defense or such military department, as the
case may be, made in factories or arsenals owned by the
United States.
‘‘(b) The Secretary of Defense or the Secretary of the
military department concerned may abolish any United
States arsenal that such Secretary considers unnecessary.’’.
(2) The table of sections at the beginning of subchapter
V of such chapter is amended by adding at the end the fol-
lowing new item:
‘‘2542. Factories and arsenals: manufacture at.’’.
(b) REPEAL OF SUPERSEDED AUTHORITY.—
(1) ARMY AUTHORITY.—
(A) REPEAL.—Section 4532 of title 10,
United States Code, is repealed.
232
(B) CLERICAL AMENDMENT.—The table of
sections at the beginning of chapter 433 of such
title is amended by striking out the item relating
to section 4532.
(2) AIR FORCE AUTHORITY.—
(A) REPEAL.—Section 9532 of title 10,
United States Code, is repealed.
(B) CLERICAL AMENDMENT.—The table of
sections at the beginning of chapter 933 of such
title is amended by striking out the item relating
to section 9532.
SEC. 3052. CODIFICATION OF ACCOUNTING REQUIREMENT
FOR CONTRACTED ADVISORY AND ASSIST-
ANCE SERVICES.
(a) FUNDING TO BE IDENTIFIED IN BUDGET.—Sec-
tion 1105 of title 31, United States Code, is amended by
adding at the end the following new subsection:
‘‘(g)(1) The Director of the Office of Management and
Budget shall establish the funding for consulting services
for each department and agency as a separate object class
in each budget annually submitted to the Congress under
this section.
‘‘(2) In this subsection, consulting services include—
‘‘(A) management and professional support serv-
ices;
233
‘‘(B) studies, analyses, and evaluations;
‘‘(C) engineering and technical services (exclud-
ing routine engineering services such as automated
data processing and architect and engineering con-
tracts); and
‘‘(D) research and development.’’.
(b) REPEAL OF SOURCE LAW.—Section 512 of Public
Law 102–394 (106 Stat. 1826) is repealed.
(c) REPEAL OF SUPERSEDED PROVISIONS.—
(1) DOD SPECIFIC LAW.—Section 2212 of title
10, United States Code, is repealed.
(2) GOVERNMENT-WIDE LAW.—Section 1114 of
title 31, United States Code, is repealed.
(3) CLERICAL AMENDMENTS.—The table of sec-
tions at the beginning of chapter 131 of title 10, Unit-
ed States Code, is amended by striking out the item
relating to section 2212. The table of sections at the
beginning of chapter 11 of title 31, United States
Code, is amended by striking out the item relating to
section 1114.
SEC. 3053. REGULATIONS ON PROCUREMENT, PRODUCTION,
WAREHOUSING, AND SUPPLY DISTRIBUTION
FUNCTIONS.
(a) IN GENERAL.—Section 2202 of title 10, United
States Code, is amended to read as follows:
234
‘‘§ 2202. Regulations on procurement, production,
warehousing, 
and 
supply 
distribution
functions
‘‘The Secretary of Defense shall prescribe regulations
governing the performance within the Department of De-
fense of the procurement, production, warehousing, and
supply distribution functions, and related functions, of the
Department of Defense.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 131 of such title is amended by
striking out the item related to section 2202 and inserting
in lieu thereof the following:
‘‘2202. Regulations on procurement, production, warehousing, and supply dis-
tribution functions.’’.
SEC. 3054. REPEAL OF REQUIREMENTS REGARDING PROD-
UCT EVALUATION ACTIVITIES.
(a) REPEAL.—Section 2369 of title 10, United States
Code, is repealed.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 139 of such title is amended by
striking out the item related to section 2369.
235
SEC. 3055. CODIFICATION AND REVISION OF LIMITATION
ON LEASE OF VESSELS, AIRCRAFT, AND VEHI-
CLES.
(a) LIMITATION.—(1) Chapter 141 of title 10, United
States Code, is amended by inserting after section 2401 the
following new section:
‘‘§ 2401a. Lease of vessels, aircraft, and vehicles
‘‘The Secretary of Defense or the Secretary of a mili-
tary department may not enter into any contract with a
term of 18 months or more, or extend or renew any contract
for a term of 18 months or more, for any vessel, aircraft,
or vehicle, through a lease, charter, or similar agreement,
unless the Secretary has considered all costs of such contract
(including estimated termination liability) and has deter-
mined in writing that the contract is in the best interest
of the Government.’’.
(2) The table of sections at the beginning of such chap-
ter is amended by inserting after the item relating to section
2401 the following new item:
‘‘2401a. Lease of vessels, aircraft, and vehicles.’’.
(b) REPEAL
OF SUPERSEDED PROVISION.—Section
9081 of Public Law 101–165 (103 Stat. 1147; 10 U.S.C.
2401 note) is repealed.
236
SEC. 3056. REPEAL OF APPLICATION OF PUBLIC CON-
TRACTS ACT TO CERTAIN NAVAL VESSEL
CONTRACTS.
(a) REPEAL.—Section 7299 of title 10, United States
Code, is repealed.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 633 of such title is amended by
striking out the item relating to section 7299.
TITLE IV—SIMPLIFIED ACQUISI-
TION THRESHOLD AND SO-
CIOECONOMIC, SMALL BUSI-
NESS, AND MISCELLANEOUS
LAWS
Subtitle A—Simplified Acquisition
Threshold
PART I—ESTABLISHMENT OF THRESHOLD
SEC. 4001. ESTABLISHMENT OF SIMPLIFIED ACQUISITION
THRESHOLD.
The Office of Federal Procurement Policy Act (41
U.S.C. 401 et seq.) is amended by inserting after section
4 the following new section:
‘‘SEC. 4A. SIMPLIFIED ACQUISITION THRESHOLD.
‘‘(a) IN GENERAL.—The simplified acquisition thresh-
old for purposes of Federal acquisitions is (except as pro-
237
vided in subsection (b)) the amount of $25,000, as adjusted
pursuant to subsection (c).
‘‘(b) AGENCIES WITH FACNET CAPABILITY.—In the
case of an agency for which there is in effect a certification
under section 2302b(c) of title 10, United States Code, or
section 302B(c) of the Federal Property and Administrative
Services Act of 1949 with respect to implementation of a
FACNET capability, the simplified acquisition threshold is
the amount of $100,000, as adjusted pursuant to subsection
(c).
‘‘(c) PERIODIC ADJUSTMENT
FOR INFLATION.—The
dollar amount in effect under subsection (a) shall be ad-
justed on October 1 of each year divisible by 5 to the equiva-
lent amount in constant fiscal year 1990 dollars (rounded
to the nearest $1,000). The dollar amount in effect under
subsection (b) shall be adjusted on October 1 of each year
divisible by 5 to the equivalent amount in constant fiscal
year 1993 dollars (rounded to the nearest $1,000).
‘‘(d) SPECIAL
RULE
FOR
CONTINGENCY
OPER-
ATIONS.—In the case of a contract to be awarded and per-
formed, or a purchase to be made, outside the United States
in support of a contingency operation (as defined in section
101(a)(13) of title 10, United States Code), the amounts
in effect under subsections (a) and (b) shall be two times
the amounts otherwise applicable.’’.
238
SEC. 4002. FEDERAL ACQUISITION COMPUTER NETWORK.
(a) FEDERAL ACQUISITION COMPUTER NETWORK.—
The Office of Federal Procurement Policy Act (41 U.S.C.
401 et seq.) is amended by adding after section 28 the fol-
lowing new section:
‘‘SEC. 29. FEDERAL ACQUISITION COMPUTER NETWORK
(FACNET).
‘‘(a) IN GENERAL.—(1) The Administrator shall estab-
lish a program for the development and implementation of
a Federal acquisition computer network (hereinafter in this
section referred to as the ‘FACNET’). The Administrator
shall assign a program manager for the FACNET and shall
provide for overall direction of policy and leadership in the
development, coordination, installation, operation, and
completion of implementation of the FACNET by executive
agencies.
‘‘(2) In carrying out paragraph (1), the Administrator
shall consult with appropriate Federal agencies with appli-
cable technical and functional expertise, including the Na-
tional Institute of Standards and Technology, the General
Services Administration, and the Department of Defense.
‘‘(3) The Administrator shall carry out paragraph (1)
not later than the date that is 5 years after the date of
enactment of the Federal Acquisition Improvement Act of
1994.
239
‘‘(b) FUNCTIONS OF FACNET.—The FACNET shall
have the capacity to carry out the following functions:
‘‘(1) GOVERNMENT FUNCTIONS.—
‘‘(A) Provide widespread public notice of so-
licitations for contract opportunities issued by
an executive agency and of orders to be made by
the agency.
‘‘(B) Allow responses to solicitations and re-
quests for information to be submitted to the con-
tracting activity through such system.
‘‘(C) Allow public notice of contract awards
to be provided through such system.
‘‘(D) In cases in which it is practicable,
allow questions regarding solicitations to be an-
swered through such system.
‘‘(E) Allow orders to be made through such
system.
‘‘(F) In cases in which it is practicable,
make payments to contractors by bank card, elec-
tronic funds transfer, or other automated meth-
ods.
‘‘(G) Archive data relating to each procure-
ment action made using such system.
‘‘(2) USER FUNCTIONS.—Allow private users to
electronically—
240
‘‘(A) access notice of solicitations for con-
tract opportunities issued by an agency and of
orders to be made by the agency;
‘‘(B) selectively access and review solicita-
tions and orders issued by the agency;
‘‘(C) respond to solicitations and notices of
orders issued by the agency;
‘‘(D) receive orders from the agency;
‘‘(E) access information on contract awards
made by the agency; and
‘‘(F) in cases in which it is practicable, re-
ceive payment by bank card, electronic funds
transfer, or other automated means.
‘‘(3) GENERAL FUNCTIONS.—
‘‘(A) Allow the electronic exchange of pro-
curement information between the private sector
and the Federal Government.
‘‘(B) Employ nationally and internation-
ally recognized data formats that serve to broad-
en and ease the electronic interchange of data.
‘‘(C) Allow convenient and universal user
access through a single point of entry.
‘‘(c) ANNUAL REPORTS TO CONGRESS.—The Adminis-
trator shall evaluate progress by executive agencies in im-
plementing the FACNET under this section. The Adminis-
241
trator shall submit to the Congress, on the date that is one
year after the date of the enactment of the Federal Acquisi-
tion Improvement Act of 1994 and on that date in each
of the 5 years thereafter, a report on the overall progress
by the executive branch and by each executive agency in
implementing this section.’’.
(b) TECHNICAL AMENDMENTS.—Section 18 of the Of-
fice of Federal Procurement Policy Act (41 U.S.C. 416) is
amended—
(1) in subsection (a)(1)(A), by striking out ‘‘no-
tice’’ in the matter following clause (ii) and inserting
in lieu thereof ‘‘notice of solicitation’’; and
(2) in subsection (d), by striking out ‘‘a notice
under subsection (e)’’ in the first sentence and insert-
ing in lieu thereof ‘‘a notice of solicitation under sub-
section (a)’’.
SEC. 4003. IMPLEMENTATION IN ARMED SERVICES.
(a) ESTABLISHMENT IN TITLE 10.—Chapter 137 of
title 10, United States Code, is amended by inserting after
section 2302 the following new sections:
‘‘§ 2302a. Simplified acquisition threshold
‘‘(a) SIMPLIFIED
ACQUISITION
THRESHOLD.—For
purposes of acquisitions by agencies named in section 2303
of this title, the simplified acquisition threshold is as speci-
fied in section 4A of the Office of Federal Procurement Pol-
242
icy Act, as in effect on the effective date of section 4001
of the Federal Acquisition Improvement Act of 1994.
‘‘§ 2302b. Implementation of FACNET capability
‘‘(a) IMPLEMENTATION OF FACNET CAPABILITY.—(1)
The head of each agency named in section 2303 of this title
shall implement the Federal acquisition computer network
(‘FACNET’) capability required by section 29 of the Office
of Federal Procurement Policy Act. In the case of the De-
partment of Defense, the implementation shall be by the
Secretary of Defense for the Department of Defense as a
whole. For purposes of this section, the term ‘head of an
agency’ does not include the Secretaries of the military de-
partments.
‘‘(2) In implementing the FACNET capability pursu-
ant to paragraph (1), the head of an agency shall consult
with the Administrator for Federal Procurement Policy.
‘‘(b) DESIGNATION OF AGENCY OFFICIAL.—The Sec-
retary of Defense shall designate the Under Secretary of De-
fense for Acquisition and Technology to have responsibility
for implementation of FACNET capability throughout the
Department of Defense. The head of each agency named in
paragraph (5) or (6) of section 2303 of this title shall des-
ignate a program manager to have responsibility for imple-
mentation of FACNET capability for that agency and oth-
erwise to implement this section.
243
‘‘(c) CERTIFICATION OF FACNET CAPABILITY.—(1)
When the head of an agency, with the concurrence of the
Administrator for Federal Procurement Policy, determines
that the agency has implemented an interim FACNET ca-
pability (as defined in subsection (f)), the head of the agen-
cy shall certify to Congress that the agency has implemented
an interim FACNET capability.
‘‘(2) When the head of an agency, with the concurrence
of the Administrator for Federal Procurement Policy, deter-
mines that the agency has implemented a full FACNET ca-
pability (as defined in subsection (g)), the head of the agen-
cy shall certify to Congress that the agency has implemented
a full FACNET capability.
‘‘(3) The head of each agency shall provide for imple-
mentation of both interim FACNET capability and full
FACNET capability, with priority on providing convenient
and universal user access as required by section 29(b)(3)(C)
of the Office of Federal Procurement Policy Act, in that
agency as soon as practicable after the date of the enactment
of the Federal Acquisition Improvement Act of 1994.
‘‘(d) HIGHER SIMPLIFIED ACQUISITION THRESHOLD
WHEN FACNET CAPABILITY CERTIFIED.—A certification
to Congress under subsection (c) shall be considered to be
a certification for purposes of the higher simplified acquisi-
tion threshold under section 4A(b) of the Office of Federal
244
Procurement Policy Act, except that a certification under
paragraph (1) of subsection (c) shall not constitute such a
certification in the case of solicitations issued after the end
of the five-year period beginning on the date of the enact-
ment of the Federal Acquisition Improvement Act of 1994.
‘‘(e) EXEMPTION FROM NOTICE PROVISIONS.—An
agency is exempt from the requirements of section 18(a)(1)
of the Office of Federal Procurement Policy Act (41 U.S.C.
416(a)(1)) if the head of the agency makes the certification
described in subsection (c)(1).
‘‘(f) IMPLEMENTATION OF INTERIM FACNET CAPA-
BILITY.—An agency shall be considered to have imple-
mented an interim FACNET capability if (except in the
case of contracting activities (or portions thereof) of the
agency for which the head of the agency determines that
implementation is not cost effective or practicable)—
‘‘(1) with respect to each procurement expected to
be in an amount greater than $25,000, the agency has
implemented the FACNET functions described in
paragraphs (1)(A) and (2)(A) of section 29(b) of the
Office of Federal Procurement Policy Act, as in effect
on the effective date of section 4002 of the Federal Ac-
quisition Improvement Act of 1994; and
‘‘(2) with respect to each procurement expected to
be in an amount greater than $25,000, the agency is-
248
‘‘(b) DESIGNATION OF AGENCY OFFICIAL.—The head
of each executive agency shall designate a program manager
to have responsibility for implementation of FACNET ca-
pability for that agency and otherwise to implement this
section.
‘‘(c) CERTIFICATION OF FACNET CAPABILITY.—(1)
When the head of an executive agency, with the concurrence
of the Administrator for Federal Procurement Policy, deter-
mines that the agency has implemented an interim
FACNET capability (as defined in subsection (f)), the head
of the agency shall certify to Congress that the agency has
implemented an interim FACNET capability.
‘‘(2) When the head of an executive agency, with the
concurrence of the Administrator for Federal Procurement
Policy, determines that the agency has implemented a full
FACNET capability (as defined in subsection (g)), the head
of the agency shall certify to Congress that the agency has
implemented a full FACNET capability.
‘‘(3) The head of each executive agency shall provide
for implementation of both interim FACNET capability
and full FACNET capability, with priority on providing
convenient and universal user access as required by section
29(b)(3)(C) of the Office of Federal Procurement Policy Act,
in that agency as soon as practicable after the date of the
249
enactment of the Federal Acquisition Improvement Act of
1994.
‘‘(d) HIGHER SIMPLIFIED ACQUISITION THRESHOLD
WHEN FACNET CAPABILITY CERTIFIED.—A certification
to Congress under subsection (c) shall be considered to be
a certification for purposes of the higher simplified acquisi-
tion threshold under section 4A(b) of the Office of Federal
Procurement Policy Act, except that a certification under
paragraph (1) of subsection (c) shall not constitute such a
certification in the case of solicitations issued after the end
of the five-year period beginning on the date of the enact-
ment of the Federal Acquisition Improvement Act of 1994.
‘‘(e) EXEMPTION FROM NOTICE PROVISIONS.—An ex-
ecutive agency is exempt from the requirements of section
18(a)(1) of the Office of Federal Procurement Policy Act
(41 U.S.C. 416(a)(1)) if the head of the agency makes the
certification described in subsection (c)(1).
‘‘(f) IMPLEMENTATION OF INTERIM FACNET CAPA-
BILITY.—An executive agency shall be considered to have
implemented an interim FACNET capability if (except in
the case of contracting activities (or portions thereof) of the
agency for which the head of the agency determines that
implementation is not cost effective or practicable)—
‘‘(1) with respect to each procurement expected to
be in an amount greater than $25,000, the executive
250
agency has implemented the FACNET functions de-
scribed in paragraphs (1)(A) and (2)(A) of section
29(b) of the Office of Federal Procurement Policy Act,
as in effect on the effective date of section 4002 of the
Federal Acquisition Improvement Act of 1994; and
‘‘(2) with respect to each procurement expected to
be in an amount greater than $25,000, the executive
agency issues notices of solicitations through a system
with those functions for all contracting opportunities
other than in cases covered by section 18(c) of the Of-
fice of Federal Procurement Policy Act (41 U.S.C.
416(c)).
‘‘(g) IMPLEMENTATION OF FULL FACNET CAPABIL-
ITY.—(1) An executive agency shall be considered to have
implemented a full FACNET capability if (except in the
case of contracting activities (or portions thereof) of the
agency for which the head of the agency determines that
implementation is not cost effective or practicable) the exec-
utive agency has implemented all of the FACNET functions
described in section 29(b) of the Office of Federal Procure-
ment Policy Act, as in effect on the effective date of section
4002 of the Federal Acquisition Improvement Act of 1994.
‘‘(2) For purposes of paragraph (1), an executive agen-
cy may not be considered to have implemented a full
FACNET capability if—
251
‘‘(A) the head of the agency has determined that
implementation of FACNET capability is not cost ef-
fective or practicable in the case of certain contract-
ing activities (or portions thereof) of the agency; and
‘‘(B) the percentage of the procurement actions
executed by those contracting activities (or portions
thereof) for the preceding fiscal year is greater than
25 percent of the total number of procurement actions
executed by the agency for that year.
‘‘(h) CONTRACTING
ACTIVITIES
ORIGINALLY
EX-
CLUDED IN CERTIFICATION.—(1) If the head of an executive
agency, in certifying under subsection (c) that the agency
has implemented an interim or a full FACNET capability,
determines that such implementation is not cost effective
or practicable in the case of any contracting activity (or
portion thereof) of that agency, then that certification shall
not apply under section 4A(b) of the Office of Federal Pro-
curement Policy Act to any procurement action by that con-
tracting activity (or portion thereof).
‘‘(2) If the head of an executive agency determines that
an interim or a full FACNET capability has subsequently
been implemented for that contracting activity (or portion
thereof), the head of the agency shall make a certification
to Administrator for Federal Procurement Policy in the
same manner as a certification under paragraph (1) or (2)
252
of subsection (c), as applicable, and such certification shall
have the same effect with respect to that contracting activity
(or portion thereof) as if made under such paragraph of
subsection (c).’’.
PART II—SIMPLIFICATION OF PROCEDURES
SEC. 4011. SMALL BUSINESS PROVISIONS.
(a) INTERIM
REPORTING
RULE.—Notwithstanding
section 4A of the Office of Federal Procurement Policy Act,
as added by section 4001, during the 5-year period begin-
ning on the date of the issuance in final form of revisions
to the Federal Acquisition Regulation under section 4B of
the Office of Federal Procurement Policy Act, as added by
section 4012, contracting activities shall continue to report,
pursuant to section 19(d) of the Office of Federal Procure-
ment Policy Act (41 U.S.C. 417(d)), procurement awards
with a dollar value of at least $25,000, but less than
$100,000, in conformity with the procedures for the report-
ing of a contract award in excess of $25,000 in effect on
November 18, 1993.
(b) FUNCTIONS
OF ADMINISTRATOR
FOR FEDERAL
PROCUREMENT POLICY.—Section 6(d) of the Office of Fed-
eral Procurement Policy Act (41 U.S.C. 405(d)) is amend-
ed—
(1) in paragraph (7), by striking out ‘‘and’’
after the semicolon at the end; and
253
(2) by redesignating paragraph (8) as para-
graph (10) and inserting after paragraph (7) the fol-
lowing:
‘‘(8) developing policies, in consultation with the
Administrator of the Small Business Administration,
that ensure that small businesses and small businesses
owned and controlled by socially and economically
disadvantaged persons are provided with the maxi-
mum practicable opportunities to participate in pro-
curements that are conducted for amounts below the
simplified acquisition threshold;
‘‘(9) developing policies that will promote
achievement of goals for participation by small busi-
nesses and small businesses owned and controlled by
socially and economically disadvantaged individ-
uals;’’.
SEC. 4012. PROCEDURES FOR PURCHASES BELOW MICRO-
PURCHASE THRESHOLD.
The Office of Federal Procurement Policy Act (41
U.S.C. 401 et seq.) is amended by inserting after section
4A, as added by section 4001, the following new section:
‘‘SEC. 
4B. 
PROCEDURES 
APPLICABLE 
TO 
PURCHASES
BELOW MICRO-PURCHASE THRESHOLD.
‘‘(a) REQUIREMENTS.—(1) The head of each executive
agency shall ensure that contracting activities of that agen-
254
cy, in awarding a contract with a price exceeding the
micro-purchase threshold, comply with the requirements of
section 8(a) of the Small Business Act (15 U.S.C. 637(a))
and section 2323 of title 10, United States Code, or section
316 of the Federal Property and Administrative Services
Act of 1949, as applicable to that agency.
‘‘(2) The authority under part 13.106(a)(1) of the Fed-
eral Acquisition Regulation (48 C.F.R. 13.106(a)(1)), as in
effect on November 18, 1993, to make purchases without se-
curing competitive quotations does not apply to any pur-
chases with a price exceeding the micro-purchase threshold.
‘‘(3) The head of each executive agency shall ensure
that contracting activities of that agency comply with the
requirements of section 15(j) of the Small Business Act (15
U.S.C. 644(j)), relating to the small business reserve.
‘‘(b) EXCLUSIONS FOR MICRO-PURCHASES.—A pur-
chase by an executive agency with an anticipated value of
the micro-purchase threshold or less is not subject to the
Act of March 3, 1933, commonly referred to as the ‘Buy
American Act’ (41 U.S.C. 10a–10c).
‘‘(c) CERTAIN CONTRACTING OFFICIALS NOT TO BE
CONSIDERED PROCUREMENT OFFICIALS.—Any civilian of-
ficer or employee, and any member of the Armed Forces,
who has authority to enter into contracts but whose con-
tracting authority is limited to the amount of the micro-
255
purchase threshold or less is not a procurement official as
defined in paragraph (3)(A) of section 27(p) of the Office
of Federal Procurement Policy Act (41 U.S.C. 423(p)).
‘‘(d) IMPLEMENTATION THROUGH FAR.—The provi-
sions of subsections (a), (b), and (c) shall be implemented
through the Federal Acquisition Regulation.
‘‘(e) MICRO-PURCHASE THRESHOLD DEFINED.—For
purposes of this subsection, the micro-purchase threshold is
the amount of $2,500, adjusted on October 1 of each year
divisible by 5 to the equivalent amount in constant fiscal
year 1993 dollars (rounded to the nearest $100).’’.
SEC. 4013. PROCUREMENT NOTICE.
(a) CONTINUATION OF EXISTING NOTICE THRESH-
OLDS.—Subsection (a) of section 18 of the Office of Federal
Procurement Policy Act (41 U.S.C. 416) is amended as fol-
lows:
(1) Paragraph (1) is amended—
(A) by striking out ‘‘the small purchase
threshold’’ each place it appears and inserting in
lieu thereof ‘‘the simplified acquisition thresh-
old’’;
(B) by striking out ‘‘(c)—’’ in the matter
preceding subparagraph (A) and inserting in
lieu thereof ‘‘(c):’’;
256
(C) by striking out ‘‘an executive’’ at the be-
ginning of subparagraphs (A) and (C) and in-
serting in lieu thereof ‘‘An executive’’;
(D) by striking out the semicolon at the end
of subparagraph (A) and inserting in lieu thereof
a period; and
(E) by amending subparagraph (B) to read
as follows:
‘‘(B) An executive agency intending to solicit
bids or proposals for a contract for property or serv-
ices for a price expected to exceed $10,000 but not to
exceed the simplified acquisition threshold shall post
a notice of solicitation described in subsection (b).
The notice shall be posted at the contracting office is-
suing the solicitation or shall be made available
through an electronic system with a FACNET capa-
bility that at least meets the requirements of para-
graphs (1)(A) and (2)(A) of section 29(b). The notice
shall be posted for a period of not less than 10 days,
except that in the case of a posting made through an
electronic system with such a FACNET capability,
the posting may be for a period of less than 10 days
as prescribed in the Federal Acquisition Regulation.’’.
(2) Paragraph (3)(B) is amended by inserting
after ‘‘(B)’’ the following: ‘‘in the case of a contract
257
or order for an amount expected to exceed the sim-
plified acquisition threshold,’’.
(b) OPPORTUNITY FOR ALL RESPONSIBLE POTENTIAL
OFFERORS.—Such subsection is further amended by adding
at the end the following:
‘‘(4) An executive agency intending to solicit offers for
a contract for which a notice of solicitation is required to
be posted under paragraph (1)(B) shall ensure that all po-
tential offerors are permitted to respond to the solicitation
for the contract within the period of time specified in the
solicitation for the submission of offers.’’.
(c) ESTABLISHMENT OF DEADLINE FOR SUBMISSION
OF OFFERS.—Such subsection is further amended by insert-
ing after paragraph (4), as added by subsection (b), the fol-
lowing new paragraph:
‘‘(5) An executive agency shall establish a deadline for
the submission of all bids or proposals in response to a no-
tice of solicitation with respect to which no such deadline
is provided by statute.’’.
(d) EXCEPTIONS.—Subsection (c) of such section is
amended by adding at the end the following new paragraph:
‘‘(4)(A) The requirements of subsection (a)(1) shall not
apply in the case of an acquisition accomplished through
the use of an electronic system with a FACNET capability,
as described in section 29 and certified under section 2302a
258
of title 10, United States Code, or section 302A of the Fed-
eral Property and Administrative Services Act of 1949.
‘‘(B) The Federal Acquisition Regulation shall provide
for minimum periods of time for submission of offers for
acquisitions described in subparagraph (A). Such periods
shall provide offerors a reasonable opportunity to respond.
‘‘(C) A notice of solicitation of bids or proposals for
an acquisition described in subparagraph (A) shall include
the matter described in under subsection (b).’’.
SEC. 4014. GAO TEST AND REPORT ON PERFORMANCE OF
SIMPLIFIED ACQUISITION THRESHOLD.
(a) PERFORMANCE TEST.—The Comptroller General of
the United States shall collect data and assess the effects
of the simplified acquisition threshold, as established in sec-
tion 4A of the Office of Federal Procurement Policy Act,
on the participation of small business concerns (including
small business concerns owned and controlled by socially
and economically disadvantaged individuals) in procure-
ment awards of less than $100,000 and the benefits and
detriments, if any, to the buying activities of the various
Executive agencies.
(b) DATA TO BE COLLECTED.—Data collected under
subsection (a) shall include data regarding whether the es-
tablishment of the simplified acquisition threshold has im-
proved the acquisition process in terms of reduced paper-
259
work, financial or other savings to the Federal Government,
and any increase in the number of contractors participat-
ing in the contracting process.
(c) PERIOD.—Data shall be collected for purposes of
subsection (a) during the period beginning with the first
full fiscal year quarter after the effective date of the amend-
ments made by section 4001 and ending on September 30,
1997.
(d) REPORT.—By March 1, 1998, the Comptroller
General shall submit to Congress a report on the effects of
the establishment of the simplified acquisition threshold by
the amendments made by section 4001.
PART III—INAPPLICABILITY OF LAWS TO ACQUI-
SITIONS NOT IN EXCESS OF SIMPLIFIED AC-
QUISITION THRESHOLD
Subpart A—Generally
SEC. 4021. INAPPLICABILITY OF FUTURE ENACTED PRO-
CUREMENT LAWS TO CONTRACTS NOT EX-
CEEDING 
THE 
SIMPLIFIED 
ACQUISITION
THRESHOLD.
(a) ARMED SERVICES.—Section 2302a of title 10,
United States Code, as added by section 4003(a), is amend-
ed by adding at the end the following new subsection:
‘‘(b) CONSTRUCTION WITH FUTURE ENACTMENTS.—A
provision of law enacted after the date of the enactment of
260
the Federal Acquisition Improvement Act of 1994 shall not
be construed as applicable to purchases of property or serv-
ices by an agency named in section 2303 of this title for
an amount not in excess of the simplified acquisition
threshold unless that provision of law specifically refers to
this section and specifically states that such provision of
law modifies or supersedes this section.’’.
(b) AGENCIES.—Section 302A of the Federal Property
and Administrative Services Act of 1949, as added by sec-
tion 4004(a), is amended by adding at the end the following
new subsection:
‘‘(b) CONSTRUCTION WITH FUTURE ENACTMENTS.—A
provision of law enacted after the date of the enactment of
the Federal Acquisition Improvement Act of 1994 shall not
be construed as applicable to purchases of property or serv-
ices by an executive agency for an amount not in excess
of the simplified acquisition threshold unless that provision
of law specifically refers to this section and specifically
states that such provision of law modifies or supersedes this
section.’’.
261
Subpart B—Armed Services Acquisitions
SEC. 4031. INAPPLICABILITY OF CERTAIN PROVISIONS OF
LAW.
Section 2302a of title 10, United States Code, as
amended by section 4021, is further amended by adding at
the end the following new subsection:
‘‘(c) INAPPLICABILITY
OF CERTAIN PROVISIONS
OF
LAW.—The following provisions of law (and regulations
prescribed under such provisions) shall not apply to any
contract entered into by the Department of Defense in an
amount not greater than the simplified acquisition thresh-
old:
‘‘(1) Section 2306(b) of this title (relating to pro-
hibition on contingent fees).
‘‘(2) Section 2313 of this title (relating to exam-
ination of books and records of contractor).
‘‘(3) Section 2384(b) of this title (relating to re-
quirement to identify suppliers and sources of sup-
plies).
‘‘(4) Section 2393(d) of this title (relating to
prohibition against doing business with certain
offerors of contractors).
‘‘(5) Section 2402 of this title (relating to prohi-
bition on limitation of subcontractor direct sales).
262
‘‘(6) Section 2408(a) of this title (relating to
prohibition on persons convicted of defense-contract
related felonies).
‘‘(7) Section 2410b of this title (relating to con-
tractor inventory accounting system standards).
‘‘(8) Section 2534 of this title (relating to mis-
cellaneous limitations on procurement of goods other
than American goods).
‘‘(9) Section 27(e) of the Office of Federal Pro-
curement Policy Act (41 U.S.C. 423(e)).
‘‘(10) The Drug-Free Workplace Act of 1988
(subtitle D of title V of Public Law 100–690; 41
U.S.C. 701 et seq.).’’.
SEC. 4032. CONFORMING AMENDMENTS RELATING TO INAP-
PLICABILITY OF CERTAIN PROVISIONS OF
LAW.
(a) INAPPLICABILITY
OF REQUIREMENT
FOR CON-
TRACT CLAUSE REGARDING CONTINGENT FEES.—Section
2306(b) of title 10, United States Code, is amended by add-
ing at the end the following: ‘‘This subsection does not apply
to a contract that is for an amount not in excess of the
simplified acquisition threshold.’’.
(b) INAPPLICABILITY
OF AUTHORITY TO EXAMINE
BOOKS AND RECORDS OF CONTRACTORS.—Section 2313 of
title 10, United States Code, as amended by section 2201,
263
is further amended by adding at the end of subsection (f)
the following:
‘‘(2) A contract that is for an amount not in ex-
cess of the simplified acquisition threshold.’’.
(c) INAPPLICABILITY OF REQUIREMENT TO IDENTIFY
SUPPLIERS AND SOURCES OF SUPPLIES.—Section 2384(b)
of title 10, United States Code, is amended by adding at
the end the following new paragraph:
‘‘(3) The regulations prescribed pursuant to paragraph
(1) do not apply to a contract for an amount that does
not exceed the simplified acquisition threshold.’’.
(d) INAPPLICABILITY OF PROHIBITION AGAINST DOING
BUSINESS WITH CERTAIN OFFERORS OR CONTRACTORS.—
Section 2393(d) of title 10, United States Code, is amended
in the second sentence by striking out ‘‘above’’ and all that
follows and inserting in lieu thereof ‘‘in excess of the sim-
plified acquisition threshold.’’.
(e) INAPPLICABILITY OF PROHIBITION ON LIMITING
SUBCONTRACTOR
DIRECT
SALES
TO
THE
UNITED
STATES.—Section 2402 of title 10, United States Code, is
amended by adding at the end the following new subsection:
‘‘(c) This section does not apply to a contract that is
for an amount not in excess of the simplified acquisition
threshold.’’.
264
(f) INAPPLICABILITY OF PROHIBITION ON PERSONS
CONVICTED
OF DEFENSE-RELATED FELONIES.—Section
2408(a) of title 10, United States Code, is amended by add-
ing at the end the following new paragraph:
‘‘(4) In this subsection, the term ‘defense contract’
means a contract in an amount in excess of the simplified
acquisition threshold.’’.
(g) INAPPLICABILITY OF CONTRACTOR INVENTORY AC-
COUNTING SYSTEM STANDARDS.—Section 2410b of title 10,
United States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘The Secretary’’;
and
(2) by adding at the end the following:
‘‘(b) The regulations prescribed pursuant to subsection
(a) shall not apply to a contract that is for an amount
not in excess of the simplified acquisition threshold.’’.
(h) INAPPLICABILITY OF MISCELLANEOUS PROCURE-
MENT LIMITATIONS.—Section 2534 of title 10, United
States Code, is amended by adding at the end the following:
‘‘(g) INAPPLICABILITY
TO CONTRACTS
UNDER SIM-
PLIFIED ACQUISITION THRESHOLD.—This section does not
apply to a contract for an amount that does not exceed the
simplified acquisition threshold.’’.
265
Subpart C—Civilian Agency Acquisitions
SEC. 4041. INAPPLICABILITY OF CERTAIN PROVISIONS OF
LAW.
Section 302A of the Federal Property and Administra-
tive Services Act of 1949, as amended by section 4021(b),
is further amended by adding at the end the following new
subsection:
‘‘(c) INAPPLICABILITY
OF CERTAIN PROVISIONS
OF
LAW.—The following provisions of law (and regulations
prescribed under such provisions) shall not apply to any
contract entered into by an executive agency in an amount
not greater than the simplified acquisition threshold:
‘‘(1) Sections 303G, 304(a), and 304C of this
Act.
‘‘(2) Section 27(e) of the Office of Federal Pro-
curement Policy Act (41 U.S.C. 423(e)).
‘‘(3) The Drug-Free Workplace Act of 1988 (sub-
title D of title V of Public Law 100–690; 41 U.S.C.
701 et seq.).’’.
SEC. 4042. CONFORMING AMENDMENTS RELATING TO INAP-
PLICABILITY OF CERTAIN PROVISIONS OF
LAW.
(a) INAPPLICABILITY OF PROHIBITION ON LIMITING
SUBCONTRACTOR
DIRECT
SALES
TO
THE
UNITED
STATES.—Section 303G of the Federal Property and Ad-
266
ministrative Services Act of 1949 (41 U.S.C. 253g) is
amended by adding at the end the following new subsection:
‘‘(c) This section does not apply to a contract for an
amount that is not in excess of the simplified acquisition
threshold.’’.
(b) INAPPLICABILITY
OF REQUIREMENT
FOR CON-
TRACT CLAUSE REGARDING CONTINGENT FEES.—Section
304(a) of the Federal Property and Administrative Services
Act of 1949 (41 U.S.C. 254(a)) is amended by adding at
the end the following: ‘‘The preceding sentence does not
apply to a contract for an amount that is not in excess
of the simplified acquisition threshold.’’.
(c) INAPPLICABILITY
OF AUTHORITY TO EXAMINE
BOOKS AND RECORDS OF CONTRACTORS.—Section 304C of
the Federal Property and Administrative Services Act of
1949, as added by section 2251(a), is amended by adding
at the end of subsection (e) the following:
‘‘(2) A contract that is for an amount not in ex-
cess of the simplified acquisition threshold.’’.
Subpart D—Acquisitions Generally
SEC. 4051. CONFORMANCE OF CERTAIN PROCUREMENT IN-
TEGRITY REQUIREMENTS.
Subsection (e)(7)(A) of section 27 of the Office of Fed-
eral Procurement Policy Act (41 U.S.C. 423) is amended
267
by inserting after ‘‘$100,000’’ the following: ‘‘or the sim-
plified acquisition threshold, whichever is greater’’.
SEC. 4052. INAPPLICABILITY OF THE DRUG-FREE WORK-
PLACE ACT OF 1988.
Section 5152(a)(1) of the Drug-Free Workplace Act of
1988 (subtitle D of title V of the Anti-Drug Abuse Act of
1988; Public Law 100–690; 41 U.S.C. 701(a)(1)) is amend-
ed by striking out ‘‘of $25,000 or more from any Federal
agency’’ and inserting in lieu thereof ‘‘in excess of the sim-
plified acquisition threshold (as defined in section 4A of
such Act) by any Federal agency’’.
PART IV—CONFORMING AMENDMENTS
SEC. 4071. ARMED SERVICES ACQUISITIONS.
(a) SIMPLIFIED ACQUISITION PROCEDURES.—Section
2304(g) of title 10, United States Code, is amended—
(1) in paragraph (1), by striking out ‘‘small
purchases of property and services’’ and inserting in
lieu thereof ‘‘purchases of property and services for
amounts not in excess of the simplified acquisition
threshold’’;
(2) by striking out paragraph (2);
(3) by redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively;
(4) in paragraph (2), as so redesignated—
268
(A) by striking out ‘‘small purchase thresh-
old’’ and inserting in lieu thereof ‘‘simplified ac-
quisition threshold’’; and
(B) by striking out ‘‘small purchase proce-
dures’’ and inserting in lieu thereof ‘‘simplified
procedures’’; and
(5) in paragraph (3), as so redesignated, by
striking out ‘‘small purchase procedures’’ and insert-
ing in lieu thereof ‘‘simplified procedures’’.
(b) SOLICITATION CONTENT REQUIREMENT.—Section
2305(a)(2) of such title is amended by striking out ‘‘small
purchases)’’ in the matter preceding subparagraph (A) and
inserting in lieu thereof ‘‘a purchase for an amount not in
excess of the simplified acquisition threshold)’’.
(c) COST TYPE CONTRACTS.—Section 2306(e)(2)(A) of
such title is amended by striking out ‘‘small purchase
threshold’’ and inserting in lieu thereof ‘‘simplified acquisi-
tion threshold’’.
SEC. 4072. CIVILIAN AGENCY ACQUISITIONS.
(a) SIMPLIFIED ACQUISITION PROCEDURES.—Section
303(g) of the Federal Property and Administrative Services
Act of 1949 (41 U.S.C. 253(g)) is amended—
(1) in paragraph (1), by striking out ‘‘small
purchases of property and services’’ and inserting in
lieu thereof ‘‘purchases of property and services for
269
amounts not in excess of the simplified acquisition
threshold’’;
(2) by striking out paragraph (2);
(3) by redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively;
(4) in paragraph (2), as so redesignated—
(A) by striking out ‘‘small purchase thresh-
old’’ and inserting in lieu thereof ‘‘simplified ac-
quisition threshold’’; and
(B) by striking out ‘‘small purchase proce-
dures’’ and inserting in lieu thereof ‘‘simplified
procedures’’;
(5) in paragraph (3), as so redesignated, by
striking out ‘‘small purchase procedures’’ and insert-
ing in lieu thereof ‘‘the simplified procedures’’; and
(6) by striking out paragraph (5) and inserting
in lieu thereof the following:
‘‘(4) In this subsection, the term ‘simplified acquisition
threshold’ has the meaning given such term in section 4A
of the Office of Federal Procurement Policy Act.’’.
(b) SOLICITATION CONTENT REQUIREMENT.—Section
303A(b) of such Act (41 U.S.C. 253a(b)) is amended by
striking out ‘‘small purchases)’’ in the matter preceding
paragraph (1) and inserting in lieu thereof ‘‘a purchase for
270
an amount not in excess of the simplified acquisition
threshold)’’.
(c) COST TYPE CONTRACTS.—Section 304(b) of such
Act (41 U.S.C. 254(b)) is amended in the third sentence
by striking out ‘‘either $25,000’’ and inserting in lieu there-
of ‘‘either the simplified acquisition threshold’’.
SEC. 4073. OFFICE OF FEDERAL PROCUREMENT POLICY
ACT.
Section 19(a) of the Office of Federal Procurement Pol-
icy Act (41 U.S.C. 417(a)) is amended by striking out ‘‘pro-
curements, other than small purchases,’’ and inserting in
lieu thereof ‘‘procurements for amounts in excess of the sim-
plified acquisition threshold’’.
PART V—REVISION OF REGULATIONS
SEC. 4081. REVISION REQUIRED.
(a) FEDERAL ACQUISITION REGULATION.—(1) Not
later than one year after the date of the enactment of this
Act, the Federal Acquisition Regulatory Council established
by section 25(a) of the Office of Federal Procurement Policy
Act (41 U.S.C. 421(a)) shall—
(A) review the Federal Acquisition Regulation to
identify regulations that are applicable to acquisi-
tions in excess of a specified amount that is less than
$100,000; and
271
(B) amend the regulations so identified as nec-
essary to provide that such regulations do not apply
to acquisitions that are not in excess of the simplified
acquisition threshold.
(2) Paragraph (1) does not apply in the case of a regu-
lation for which such an amendment would not be in the
national interest, as determined by the Council.
(b) SUPPLEMENTAL REGULATIONS.—Not later than 90
days after the date on which the review required by sub-
section (a) is completed, the head of each Federal agency
that has issued regulations, policies, or procedures referred
to in section 25(c)(2) of the Office of Federal Procurement
Policy Act (41 U.S.C. 421(c)(2)) shall—
(1) identify any such regulation, policy, or pro-
cedure that is applicable to acquisitions in excess of
a specified amount that is less than $100,000; and
(2) pursuant to section 22 of such Act (41 U.S.C.
418b), publish amendments to the regulations so iden-
tified as necessary to provide that such regulations,
policies, and procedures do not apply to acquisitions
that are not in excess of the simplified acquisition
threshold.
(c) DEFINITIONS.—In this section:
(1) The term ‘‘simplified acquisition threshold’’
has the meaning given such term in section 4A of the