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10 U.S.C. § 3801 (ARMED FORCES)
§ 3801. Authority of agency
(a) Payment Authority.—
The head of any agency may—
(1) make advance, partial, progress, or other payments under contracts for property or services made by the agency; and
(2) insert in solicitations for procurement of property or services a provision limiting to small business concerns advance or progress payments.
(b) Payment Dates for Contractors That Are Small Business Concerns.—
(1) Prime contractors.—
For a prime contractor (as defined in section 8701 of title 41) that is a small business concern (as defined in section 3 of the Small Business Act (15 U.S.C. 632)), the Secretary of Defense shall, to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due.
(2) Subcontractors.—
For a prime contractor that subcontracts with a small business concern, the Secretary of Defense shall, to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due if the prime contractor agrees or proposes to make payments to the subcontractor in accordance with the accelerated payment date, to the maximum extent practicable, without any further consideration from or fees charged to the subcontractor.1
10 U.S.C. § 3802 (ARMED FORCES)
§ 3802. Payment
(a) Preference for Performance-Based Payments.—
Whenever practicable, payments under section 3801 of this title shall be made using performance-based payments on any of the following bases:
(1) Performance measured by objective, quantifiable methods such as delivery of acceptable items, work measurement, or statistical process controls.
(2) Accomplishment of events defined in the program management plan.
(3) Other quantifiable measures of results.
(b) Basis for performance-based payments.—
Performance-based payments shall not be conditioned upon costs incurred in contract performance but on the achievement of performance outcomes listed in subsection (a).
(c) Contractor Accounting Systems.—
(1) In order to receive performance-based payments, a contractor’s accounting system shall be in compliance with Generally Accepted Accounting Principles, and there shall be no requirement for a contractor to develop Government-unique accounting systems or practices as a prerequisite for agreeing to receive performance-based payments.
(2) Nothing in this chapter shall be construed to grant the Defense Contract Audit Agency the authority to audit compliance with Generally Accepted Accounting Principles.
(d) Payment Amount.—
Payments made under section 3801 of this title may not exceed the unpaid contract price.
(e) Eligibility of Nontraditional Defense Contractors.—
The Secretary of Defense shall ensure that nontraditional defense contractors and other private sector companies are eligible for performance-based payments, consistent with best commercial practices.
10 U.S.C. § 3803 (ARMED FORCES)
§ 3803. Security for advance payments
Advance payments made under section 3801 of this title may be made only if the contractor gives adequate security and after a determination by the head of the agency that to do so would be in the public interest. Such security may be in the form of a lien in favor of the United States on the property contracted for, on the balance in an account in which such payments are deposited, and on such of the property acquired for performance of the contract as the parties may agree. This lien is paramount to any other liens and is effective immediately upon the first advancement of funds without filing, notice, or any other action by the United States.
10 U.S.C. § 3804 (ARMED FORCES)
§ 3804. Conditions for progress payments
(a) Payment Commensurate With Work.—
The Secretary of Defense shall ensure that any payment for work in progress (including materials, labor, and other items) under a defense contract that provides for such payments is commensurate with the work accomplished that meets standards established under the contract. The contractor shall provide such information and evidence as the Secretary of Defense determines necessary to permit the Secretary to carry out the preceding sentence.
(b) Limitation.—
The Secretary shall ensure that progress payments referred to in subsection (a) are not made for more than 80 percent of the work accomplished under a defense contract so long as the Secretary has not made the contractual terms, specifications, and price definite.
(c) Applicability.—
This section applies to any contract in an amount greater than $25,000.
10 U.S.C. § 3805 (ARMED FORCES)
§ 3805. Payments for commercial products and commercial services
(a) Terms and Conditions for Payments.—
Payments under section 3801 of this title for commercial products and commercial services may be made under such terms and conditions as the head of the agency determines are appropriate or customary in the commercial marketplace and are in the best interests of the United States.
(b) Security for Payments.—
The head of the agency shall obtain adequate security for such payments. If the security is in the form of a lien in favor of the United States, such lien is paramount to all other liens and is effective immediately upon the first payment, without filing, notice, or other action by the United States.
(c) Limitation on Advance Payments.—
Advance payments made under section 3801 of this title for commercial products and commercial services may include payments, in a total amount of not more than 15 percent of the contract price, in advance of any performance of work under the contract.
(d) Nonapplication of Certain Conditions.—
The conditions of sections 3803 and 3804 of this title need not be applied if they would be inconsistent, as determined by the head of the agency, with commercial terms and conditions pursuant to this section.
10 U.S.C. § 3807 (ARMED FORCES)
§ 3807. Vesting of title in the United States
If a contract paid by a method authorized under section 3801(1) of this title provides for title to property to vest in the United States, the title to the property shall vest in accordance with the terms of the contract, regardless of any security interest in the property that is asserted before or after the contract is entered into.
10 U.S.C. § 3845 (ARMED FORCES)
§ 3845. Contractor inventory accounting systems: standards
(a) The Secretary of Defense shall prescribe in regulations—
(1) standards for inventory accounting systems used by contractors under contract with the Department of Defense; and
(2) appropriate enforcement requirements with respect to such standards.
(b) The regulations prescribed pursuant to subsection (a) shall not apply to a contract that is for an amount not greater than the simplified acquisition threshold.
(c) The regulations prescribed pursuant to subsection (a) shall not apply to a contract for the purchase of commercial products.
10 U.S.C. § 3847 (ARMED FORCES)
§ 3847. Defense Contract Audit Agency: annual report
(a) Required Report.—
The Director of the Defense Contract Audit Agency shall prepare an annual report of the activities of the Agency during the previous fiscal year. The report shall include, at a minimum—
(1) a description of significant problems, abuses, and deficiencies encountered during the conduct of contractor audits;
(2) statistical tables showing—
(A) the total number and dollar value of audit reports completed and pending, set forth separately by type of audit;
(B) the priority given to each type of audit;
(C) the length of time taken for each type of audit, both from the date of receipt of a qualified incurred cost submission and from the date the audit begins;
(D) the sustained questioned costs, set forth separately by type of audit, both as a total value and as a percentage of the total questioned costs for the audit;
(E) the total number and dollar value of incurred cost audits completed, and the method by which such incurred cost audits were completed;
(F) the aggregate cost of performing audits, set forth separately by type of audit;
(G) the ratio of sustained questioned costs to the aggregate costs of performing audits, set forth separately by type of audit; and
(H) the total number and dollar value of audits that are pending for a period longer than one year as of the end of the fiscal year covered by the report, and the fiscal year in which the qualified submission was received, set forth separately by type of audit;
(3) a summary of any recommendations of actions or resources needed to improve the audit process;
(4) a summary, set forth separately by dollar amount and percentage, of indirect costs for independent research and development incurred by contractors in the previous fiscal year;
(5) a summary, set forth separately by dollar amount and percentage, of indirect costs for bid and proposal costs incurred by contractors in the previous fiscal year;
(6) a description of outreach actions toward industry to promote more effective use of audit resources; and
(7) any other matters the Director considers appropriate.
(b) Submission of Annual Report.—
Not later than March 30 of each year, the Director shall submit to the congressional defense committees the report required by subsection (a).
(c) Public Availability.—
Not later than 60 days after the submission of an annual report to the congressional defense committees under subsection (b), the Director shall make the report available on the publicly available website of the Agency or such other publicly available website as the Director considers appropriate.
(d) Definitions.—
(1) The terms “incurred cost audit” and “qualified incurred cost submission” have the meaning given those terms in section 3842 of this title.
(2) The term “sustained questioned costs” means questioned costs that were recovered by the Federal Government as a result of contract negotiations related to such questioned costs.
10 U.S.C. § 3848 (ARMED FORCES)
§ 3848. Defense audit agencies: Small Business Ombudsmen
(a) Small Business Ombudsman.—
The Secretary of Defense shall designate within each defense audit agency an official as the Small Business Ombudsman to have the duties described in subsection (b) and such other responsibilities as may be determined by the Secretary.
(b) Duties.—
The Small Business Ombudsman of a defense audit agency shall—
(1) advise the Director of the defense audit agency on policy issues related to small business concerns;
(2) serve as the defense audit agency’s primary point of contact and source of information for small business concerns;
(3) collect and monitor relevant data regarding the defense audit agency’s conduct of audits of small business concerns, including—
(A) data regarding the timeliness of audit closeouts for small business concerns; and
(B) data regarding the responsiveness of the defense audit agency to issues or other matters raised by small business concerns; and
(4) make recommendations to the Director regarding policies, processes, and procedures related to the timeliness of audits of small business concerns and the responsiveness of the defense audit agency to issues or other matters raised by small business concerns.
(c) Audit Independence.—
The Small Business Ombudsman of a defense audit agency shall be segregated from ongoing audits in the field and shall not engage in activities with regard to particular audits that could compromise the independence of the defense audit agency or undermine compliance with applicable audit standards.
(d) Defense Audit Agency Defined.—
In this section, the term “defense audit agency” means the Defense Contract Audit Agency and the Defense Contract Management Agency.
10 U.S.C. § 3861 (ARMED FORCES)
§ 3861. Research and development contracts: indemnification provisions
(a) With the approval of the Secretary of the military department concerned, any contract of a military department for research or development, or both, may provide that the United States will indemnify the contractor against either or both of the following, but only to the extent that they arise out of the direct performance of the contract and to the extent not compensated by insurance or otherwise:
(1) Claims (including reasonable expenses of litigation or settlement) by third persons, including employees of the contractor, for death, bodily injury, or loss of or damage to property, from a risk that the contract defines as unusually hazardous.
(2) Loss of or damage to property of the contractor from a risk that the contract defines as unusually hazardous.
(b) A contract, made under subsection (a), that provides for indemnification must also provide for—
(1) notice to the United States of any claim or suit against the contractor for the death, bodily injury, or loss of or damage to property; and
(2) control of or assistance in the defense by the United States, at its election, of that suit or claim.
(c) No payment may be made under subsection (a) unless the Secretary of the department concerned, or an officer or official of his department designated by him, certifies that the amount is just and reasonable.
(d) Upon approval by the Secretary concerned, payments under subsection (a) may be made from—
(1) funds obligated for the performance of the contract concerned;
(2) funds available for research or development, or both, and not otherwise obligated; or
(3) funds appropriated for those payments.
10 U.S.C. § 3862 (ARMED FORCES)
§ 3862. Requests for equitable adjustment or other relief: certification
(a) Certification Requirement.—
A request for equitable adjustment to contract terms or request for relief under Public Law 85–804 (50 U.S.C. 1431 et seq.) that exceeds the simplified acquisition threshold may not be paid unless a person authorized to certify the request on behalf of the contractor certifies, at the time the request is submitted, that—
(1) the request is made in good faith, and
(2) the supporting data are accurate and complete to the best of that person’s knowledge and belief.
(b) Restriction on Legislative Payment of Claims.—
In the case of a contract of an agency named in section 2303(a) 1 of this title, no provision of a law enacted after September 30, 1994, that directs the payment of a particular claim under such contract, a particular request for equitable adjustment to any term of such contract, or a particular request for relief under Public Law 85–804 (50 U.S.C. 1431 et seq.) regarding such contract may be implemented 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.
(c) Definition.—
In this section, the term “simplified acquisition threshold” has the meaning given that term in section 134 of title 41.
10 U.S.C. § 3863 (ARMED FORCES)
§ 3863. Retention of amounts collected from contractor during the pendency of contract dispute
(a) Retention of Funds.—
Notwithstanding sections 1552(a) and 3302(b) of title 31, any amount, including interest, collected from a contractor as a result of a claim made by a military department or Defense Agency under chapter 71 of title 41, shall remain available in accordance with this section to pay—
(1) any settlement of the claim by the parties;
(2) any judgment rendered in the contractor’s favor on an appeal of the decision on that claim to the Armed Services Board of Contract Appeals under section 7104(a) of title 41; or
(3) any judgment rendered in the contractor’s favor in an action on that claim in a court of the United States.
(b) Period of Availability.—
(1) The period of availability of an amount under subsection (a), in connection with a claim—
(A) expires 180 days after the expiration of the period for bringing an action on that claim in the United States Court of Federal Claims under section 7104(b) of title 41 if, within that 180-day period—
(i) no appeal on the claim is commenced at the Armed Services Board of Contract Appeals under section 7104(a) of such title; and
(ii) no action on the claim is commenced in a court of the United States; or
(B) if not expiring under subparagraph (A), expires—
(i) in the case of a settlement of the claim, 180 days after the date of the settlement; or
(ii) in the case of a judgment rendered on the claim in an appeal to the Armed Services Board of Contract Appeals under section 7104(a) of title 41 or an action in a court of the United States, 180 days after the date on which the judgment becomes final and not appealable.
(2) While available under this section, an amount may be obligated or expended only for a purpose described in subsection (a).
(3) Upon the expiration of the period of availability of an amount under paragraph (1), the amount shall be covered into the Treasury as miscellaneous receipts.
10 U.S.C. § 3901 (ARMED FORCES)
§ 3901. Contracts: prohibition on competition between Department of Defense and small businesses
(a) Exclusion.—
In any case in which the Secretary of Defense plans to use competitive procedures for a procurement, if the procurement is to be conducted as described in subsection (b), then the Secretary shall exclude the Department of Defense from competing in the procurement.
(b) Procurement Description.—
The requirement to exclude the Department of Defense under subsection (a) applies in the case of a procurement to be conducted by excluding from competition entities in the private sector other than small business concerns in furtherance of section 8 or 15 of the Small Business Act (15 U.S.C. 637 or 644).
10 U.S.C. § 3903 (ARMED FORCES)
§ 3903. Subcontracting plans: credit for certain purchases
(a) Purchases Benefiting Severely Handicapped Persons.—
In the case of a business concern that has negotiated a small business subcontracting plan with a military department or a Defense Agency, purchases made by that business concern from qualified nonprofit agencies for the blind or other severely handicapped shall count toward meeting the subcontracting goal provided in that plan.
(b) Definitions.—
In this section:
(1) The term “small business subcontracting plan” means a plan negotiated pursuant to section 8(d) of the Small Business Act (15 U.S.C. 637(d)) that establishes a goal for the participation of small business concerns as subcontractors under a contract.
(2) The term “qualified nonprofit agency for the blind or other severely handicapped” means—
(A) a qualified nonprofit agency for the blind, as defined in section 8501(7) of title 41;
(B) a qualified nonprofit agency for other severely disabled, as defined in section 8501(6) of title 41; and
(C) a central nonprofit agency designated by the Committee for Purchase from People Who Are Blind or Severely Disabled under section 8503(c) of title 41.
10 U.S.C. § 4001 (ARMED FORCES)
§ 4001. Research and development projects
(a) Authority.—
The Secretary of Defense or the Secretary of a military department may engage in basic research, applied research, advanced research, and development projects that—
(1) are necessary to the responsibilities of such Secretary’s department in the field of research and development; and
(2) either—
(A) relate to weapon systems and other military needs; or
(B) are of potential interest to the Department of Defense.
(b) Authorized Means.—
The Secretary of Defense or the Secretary of a military department may perform research and development projects—
(1) by contract, cooperative agreement, or grant, in accordance with chapter 63 of title 31;
(2) through one or more military departments;
(3) by using employees and consultants of the Department of Defense;
(4) by mutual agreement with the head of any other department or agency of the Federal Government;
(5) by transactions (other than contracts, cooperative agreements, and grants) entered into pursuant to sections 1 4002 or 4003 2 of this title; or
(6) by purchases through procurement for experimental purposes pursuant to sections 1 4004 of this title.
(c) Requirement of Potential Department of Defense Interest.—
Funds appropriated to the Department of Defense or to a military department may not be used to finance any research project or study unless the project or study is, in the opinion of the Secretary of Defense or the Secretary of that military department, respectively, of potential interest to the Department of Defense or to such military department, respectively.
(d) Additional Provisions Applicable to Cooperative Agreements.—
Additional authorities, conditions, and requirements relating to certain cooperative agreements authorized by this section are provided in sections 4002 and 4143 of this title.
10 U.S.C. § 4004 (ARMED FORCES)
§ 4004. Procurement for experimental purposes
(a) Authority.—
The Secretary of Defense and the Secretaries of the military departments may each buy ordnance, signal, chemical activity, transportation, energy, medical, space-flight, telecommunications, and aeronautical supplies, including parts and accessories, and designs thereof, that the Secretary of Defense or the Secretary concerned considers necessary for experimental or test purposes in the development of the best supplies that are needed for the national defense.
(b) Procedures.—
Purchases under this section may be made inside or outside the United States and by contract or otherwise. Chapter 137 of this title applies only when such purchases are made in quantities greater than necessary for experimentation, technical evaluation, assessment of operational utility, or safety or to provide a residual operational capability.
10 U.S.C. § 4007 (ARMED FORCES)
§ 4007. Science and technology programs to be conducted so as to foster the transition of science and technology to higher levels of research, development, test, and evaluation
(a) Policy.—
Each official specified in subsection (b) shall ensure that the management and conduct of the science and technology programs under the authority of that official are carried out in a manner that will foster the transition of science and technology to higher levels of research, development, test, and evaluation.
(b) Covered Officials.—
Subsection (a) applies to the following officials of the Department of Defense:
(1) The Under Secretary of Defense for Research and Engineering.
(2) The Secretary of each military department.
(3) The Director of the Defense Advanced Research Projects Agency.
(4) The directors and heads of other offices and agencies of the Department of Defense with assigned research, development, test, and evaluation responsibilities.
10 U.S.C. § 4008 (ARMED FORCES)
§ 4008. Merit-based award of grants for research and development
(a) It is the policy of Congress that an agency named in section 2303(a) 1 of this title should not be required by legislation to award a new grant for research, development, test, or evaluation to a non-Federal Government entity. It is further the policy of Congress that any program, project, or technology identified in legislation be awarded through merit-based selection procedures.
(b) A provision of law may not be construed as requiring a new grant to be awarded to a specified non-Federal Government entity unless that provision of law—
(1) specifically refers to this subsection;
(2) specifically identifies the particular non-Federal Government entity involved; and
(3) specifically states that the award to that entity is required by such provision of law in contravention of the policy set forth in subsection (a).
(c) For purposes of this section, a grant is a new grant unless the work provided for in the grant is a continuation of the work performed by the specified entity under a preceding grant.
(d) This section shall not apply with respect to any grant that calls upon the National Academy of Sciences to investigate, examine, or experiment upon any subject of science or art of significance to an agency named in section 2303(a) 1 of this title and to report on such matters to the Congress or any agency of the Federal Government.