Cutting Contractor Use and Taxpayer Savings Act of 2014

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Cutting Contractor Use and Taxpayer 
Savings Act of 2014''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) Since 2002, the Department of Defense has spent more 
        than $2,000,000,000,000 on service contractors.
            (2) The decade-long trend of outsourcing work has created a 
        shadow government of service contractors that are largely 
        dependent on the taxpayers as their sole source of revenue.
            (3) Studies show that service contractors can cost 
        taxpayers up to twice what it costs for members of the Armed 
        Forces to perform the work.
            (4) In 2013, the Department of Defense spent nearly 
        $180,000,000,000 on service contractors, making it the largest 
        buyer of services in the Federal Government.
            (5) Approximately 30 percent of the intelligence community 
        workforce is made up of service contractors, employees that 
        work for companies whose primary goal is to make a profit and 
        have never sworn an oath to defend and protect the United 
        States.
            (6) Since 2002, Congress has repeatedly enacted legislation 
        to improve the Department of Defense's management of service 
        contractors. However, in 2013 the Government Accountability 
        Office (GAO) found that, while the Department has taken action 
        to address such legislative requirements, there are no metrics 
        in place to determine the effects of those actions.

SEC. 3. INSPECTOR GENERAL ANALYSIS OF SERVICE CONTRACTOR INVENTORY.

    (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, and annually thereafter, the Inspector General 
of the Department of Defense shall submit to the congressional defense 
committees a comprehensive analysis of the global inventory Department 
of Defense service contractors.
    (b) Elements.--The analysis required under subsection (a) shall 
include the following elements:
            (1) A comprehensive inventory of Department of Defense 
        service contractors.
            (2) An analysis of the types of service contracts that were 
        significantly expanded after fiscal year 2002.
            (3) Identification of redundancies in the inventory.
    (c) Public Availability.--The analysis required under subsection 
(a) shall be made publically available.

SEC. 4. DEFENSE CONTRACT AUDIT AGENCY REPORTING ON SERVICE CONTRACTS.

    (a) Audits.--The Defense Contract Audit Agency, in conducting 
audits of defense contracts, shall distinguish service contracts in its 
analysis, including by distinguishing the percentage of payment awarded 
for service elements on contracts containing both manufacturing and 
service elements.
    (b) Reporting.--Not later than 180 days after the date of the 
enactment of this Act, and annually thereafter, the Defense Contract 
Audit Agency shall submit to the congressional defense committees a 
report containing its findings pursuant to subsection (a). The report 
shall be made publically available.

SEC. 5. SERVICE ACQUISITION IMPROVEMENT PLAN.

    (a) Plan Required.--Not later than 180 days after the date of the 
enactment of this Act, the Under Secretary of Defense for Acquisition, 
Technology and Logistics shall, in consultation with the senior 
services managers of the military departments, submit to the 
congressional defense committees a plan to improve the acquisition of 
services by the Department of Defense.
    (b) Elements.--The plan required under subsection (a) shall include 
the following elements:
            (1) Baseline data on the status of service acquisition, 
        including budget and spending data on services by volume, type, 
        and location.
            (2) Specific goals for improving service acquisition.
            (3) Metrics to assess progress in meeting the goals 
        outlined under paragraph (2).

SEC. 6. REPORTING ON USE OF SERVICE CONTRACTS BY INTELLIGENCE 
              COMMUNITY.

    (a) Annual Report.--Not later than 180 days after the date of the 
enactment of this Act, and annually thereafter, the Director of 
National Intelligence shall submit to the congressional defense 
committees and the Select Committee on Intelligence of the Senate and 
the Permanent Select Committee on Intelligence of the House of 
Representatives a report with an inventory of service contractors used 
by each element of the intelligence community (as defined in section 3 
of the National Security Act of 1947 (50 U.S.C. 3003)).
    (b) Form.--The report required under subsection (a) may be 
submitted in classified form, but shall contain an unclassified summary 
including the total amount expended by each element of the intelligence 
community on service contracts.

SEC. 7. LIMITATION ON ALLOWABLE GOVERNMENT CONTRACTOR COMPENSATION 
              COSTS.

    (a) Limitation.--
            (1) Civilian contracts.--Paragraph (16) of section 4304(a) 
        of title 41, United States Code, is amended to read as follows:
            ``(16) Costs of compensation of contractor and 
        subcontractor employees for a fiscal year, regardless of the 
        contract funding source, to the extent that such compensation 
        exceeds the annual salary of the President as determined under 
        section 102 of title 3, except that the head of an executive 
        agency may establish one or more narrowly targeted exceptions 
        for scientists, engineers, or other specialists upon a 
        determination that such exceptions are needed to ensure that 
        the executive agency has continued access to needed skills and 
        capabilities.''.
            (2) Defense contracts.--Subparagraph (P) of section 
        2324(e)(1) of title 10, United States Code, is amended to read 
        as follows:
            ``(P) Costs of compensation of contractor and subcontractor 
        employees for a fiscal year, regardless of the contract funding 
        source, to the extent that such compensation exceeds the annual 
        salary of the President as determined under section 102 of 
        title 3, except that the head of an executive agency may 
        establish one or more narrowly targeted exceptions for 
        scientists, engineers, or other specialists upon a 
        determination that such exceptions are needed to ensure that 
        the executive agency has continued access to needed skills and 
        capabilities.''.
    (b) Conforming Amendments.--
            (1) Repeal.--Section 1127 of title 41, United States Code, 
        is repealed.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 11 of such title is amended by striking 
        the item relating to section 1127.
    (c) Applicability.--This section and the amendments made by this 
section shall apply only with respect to costs of compensation incurred 
under contracts entered into on or after the date that is 180 days 
after the date of the enactment of this Act.
    (d) Reports.--
            (1) In general.--Not later than 60 days after the end of 
        each fiscal year, the Director of the Office of Management and 
        Budget shall submit a report on contractor compensation to--
                    (A) the Committee on Armed Services of the Senate;
                    (B) the Committee on Armed Services of the House of 
                Representatives;
                    (C) the Committee on Homeland Security and 
                Governmental Affairs of the Senate;
                    (D) the Committee on Oversight and Government 
                Reform of the House of Representatives;
                    (E) the Committee on Appropriations of the Senate; 
                and
                    (F) the Committee on Appropriations of the House of 
                Representatives.
            (2) Elements.--The report required under paragraph (1) 
        shall include--
                    (A) the total number of contractor employees, by 
                executive agency, in the narrowly targeted exception 
                positions described in section 4304(a)(16) of title 41, 
                United States Code (as amended by subsection (a)(1)), 
                and section 2324(e)(1)(P) of title 10, United States 
                Code (as amended by subsection (a)(2)), during the 
                preceding fiscal year;
                    (B) the taxpayer-funded compensation amounts 
                received by each contractor employee in a narrowly 
                targeted exception position during such fiscal year; 
                and
                    (C) the duties and services performed by contractor 
                employees in the narrowly targeted exception positions 
                during such fiscal year.

SEC. 8. REDUCTION IN SERVICE CONTRACT SPENDING.

    (a) Three-Year Requirement.--
            (1) Limitation.--The aggregate amount obligated and 
        expended by the Department of Defense for service contracts in 
        fiscal years beginning after September 30, 2017, may not exceed 
        the lesser of--
                    (A) the amount equal to 67 percent of the aggregate 
                amount expended for service contracts in fiscal year 
                2014; or
                    (B) the amount equal to 67 percent of the amount 
                appropriated for the Department of Defense for the 
                current fiscal year and available for service 
                contracts.
            (2) Inapplicability of limitation.--The limitation in 
        paragraph (1)(B) shall not apply if the Secretary of Defense 
        certifies to Congress in writing that the aggregate amount to 
        be obligated and expended by the Department of Defense in such 
        fiscal year for service contracts will not exceed the amount 
        specified in paragraph (1)(A).
    (b) Ten-Year Requirement.--The amount obligated and expended by the 
Department of Defense on service contracts in fiscal years beginning 
after September 30, 2024, may not exceed the amount obligated or 
expended by the Department of Defense on service contracts in fiscal 
year 2002 (adjusted for inflation).

SEC. 9. CONGRESSIONAL DEFENSE COMMITTEES DEFINED.

    In this Act, the term ``congressional defense committees'' has the 
meaning given the term in section 101(a)(16) of title 10, United States 
Code.

Summary: Cutting Contractor Use and Taxpayer Savings Act of 2014 - Directs the Inspector General of the Department of Defense (DOD) to submit to the congressional defense committees, and make publicly available, an annual comprehensive analysis of the global inventory of DOD service contractors. Requires the Defense Contract Audit Agency, in conducting audits of defense contracts, to distinguish service contracts in its analysis, including by distinguishing the percentage of payment awarded for service elements on contracts containing both manufacturing and service elements. Directs the Agency to submit to the congressional defense committees, and make publicly available, an annual report on its findings. Directs the Under Secretary of Defense for Acquisition, Technology and Logistics to submit a plan to the congressional defense committees to improve the acquisition of services by DOD. Requires the Director of National Intelligence to submit to the congressional defense and intelligence committees an annual inventory of the service contractors used by each element of the intelligence community. Prohibits civilian or defense contracts from allowing compensation of contractor and subcontractor employees for a fiscal year to exceed the annual salary of the President (currently, $400,000). Allows an exception to such limitation for scientists, engineers, or other specialists who are needed to ensure that an executive agency has continued access to needed skills and capabilities.  Requires the Director of the Office of Management and Budget (OMB) to submit an annual report to specified congressional committees on contractor compensation, including the number of contractor employees who were exempt in the preceding fiscal year from this Act's compensation limits.  Prohibits the aggregate amount obligated and expended by DOD for service contracts in each fiscal year through FY2024 from exceeding the lesser of: (1) 67% of the aggregate amount expended for service contracts in FY2014, or (2) 67% of the amount appropriated for DOD for the current fiscal year that is available for service contracts. Makes the latter limitation inapplicable if the Secretary certifies to Congress in writing that DOD will not exceed the prior limitation. Prohibits the aggregate amount obligated and expended by DOD for service contracts in each fiscal year after FY2023 from exceeding the amount obligated or expended by DOD on service contracts in FY2002 (adjusted for inflation).