Title: Stop Price Gouging the Military Act
Policy area: Armed Forces and National Security

Summary:
Stop Price Gouging the Military Act
This bill modifies Department of Defense acquisitions and negotiation processes to address transparency and pricing, including by requiring certain annual disclosures from large defense contractors.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4374 Introduced in Senate (IS)]

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117th CONGRESS
  2d Session
                                S. 4374

         To prevent price gouging at the Department of Defense.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              June 9, 2022

  Ms. Warren introduced the following bill; which was read twice and 
              referred to the Committee on Armed Services

_______________________________________________________________________

                                 A BILL


 
         To prevent price gouging at the Department of Defense.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stop Price Gouging the Military 
Act''.

SEC. 2. STRENGTHENING TRUTH IN NEGOTIATIONS ACT PROVISIONS.

    (a) Required Cost or Pricing Data and Certification.--Section 
3702(a)(1) of title 10, United States Code, is amended by striking 
``only expected to receive one bid shall be required'' and replacing 
with ``only expected to have one offeror, or for which award of a cost-
reimbursement contract is contemplated regardless of the number of 
offers received, shall be required''.
    (b) Exceptions.--Section 3703(a) of title 10, United States Code, 
is amended--
            (1) in paragraph (1)(A), by striking ``adequate 
        competition'' and all that follows through ``bids'' and 
        inserting ``adequate price competition, except for the award of 
        a cost-reimbursement contract, that results in at least two 
        responsive and viable competing offerors''; and
            (2) in paragraph (2), by inserting ``based on adequate 
        price competition that results in at least two responsive and 
        responsible offers'' after ``commercial service''.
    (c) Conforming Amendment Related to Civilian Contracts.--Section 
3503(a)(2) of title 41, United States Code is by inserting after 
``commercial service'' the following: ``based on adequate price 
competition that results in at least two responsive and responsible 
offers''.

SEC. 3. REVISION OF DEFINITION OF TERM ``COMMERCIAL ITEM'' FOR PURPOSES 
              OF FEDERAL PROCUREMENT STATUTES PROVIDING PROCEDURES FOR 
              PROCUREMENT OF COMMERCIAL ITEMS.

    (a) Elimination of ``of a Type'' Criterion.--Section 103 of title 
41, United States Code, is amended by striking ``of a type'' each place 
it appears.
    (b) Elimination of Items and Services Merely Offered for Sale, 
Lease, or License.--
            (1) Items.--Section 103(1)(B) of title 41, United States 
        Code, is amended by striking ``, or offered for sale, lease, or 
        license,''.
            (2) Services.--Section 103a(2) of title 41, United States 
        Code, is amended by striking ``offered and''.

SEC. 4. PROGRESS PAYMENT INCENTIVE PILOT.

    (a) Pilot Program.--The Secretary of Defense, acting through the 
Under Secretary of Defense for Acquisition and Sustainment, shall 
establish and implement a pilot program, to be known as the ``Progress 
Payment Incentive Pilot Program'', to make accelerated progress 
payments contingent upon responsiveness to Department of Defense goals 
for effectiveness, efficiency, and increasing small business contract 
opportunities.
    (b) Purpose.--The purpose of the pilot program is to reward 
Department of Defense contractors who meet contract delivery dates, 
respond to Department solicitations for required certified cost or 
pricing data, meet small business contracting goals, and provide 
subcontracting opportunities for AbilityOne contracts.
    (c) Progress Payments.--
            (1) Limitations for large contractors.--Except as provided 
        under paragraph (2), under the pilot program, the Department of 
        Defense may not award to large business contractors progress 
        payments in excess of 50 percent.
            (2) Exceptions.--The Department of Defense may increase the 
        rate of progress payments, up to a total of 95 percent, by the 
        following percentages:
                    (A) 10 percent if the relevant division of the 
                contractor met contract delivery dates for contract end 
                items and contract data requirement lists or 
                performance milestone schedule, as the case may be, at 
                least 95 percent of the time during the preceding 
                Government fiscal year.
                    (B) 10 percent if the division does not have open 
                level III or IV corrective action requests.
                    (C) 7.5 percent if all applicable contractor 
                business systems are acceptable, without significant 
                deficiencies.
                    (D) 10 percent if at least 95 percent of the time 
                during the preceding Government fiscal year, when 
                responding to solicitations that required submission of 
                certified cost or pricing data, the division met the 
                due date in the request for proposal.
                    (E) 5 percent if the contractor discloses first 
                tier subcontractor data, the prime contractor's 
                beneficial owners, and total compensation for recipient 
                executives.
                    (F) 5 percent if the contractor has met its small 
                business subcontracting goals during the preceding 
                Government fiscal year.
                    (G) 3 percent if the contractor has provided 
                subcontracting opportunities for the blind and severely 
                disabled.
    (d) Definitions.--In this section:
            (1) Beneficial owners.--The term ``beneficial owner'' has 
        the meaning given the term in section 847 of the National 
        Defense Authorization Act for Fiscal Year 2020 (Public Law 116-
        92; 133 Stat. 1505; 10 U.S.C. 2509 note).
            (2) Compensation for recipient executives.--The term 
        ``compensation for recipient executives'' refers to the names 
        and total compensation of the five most highly compensated 
        officers of the entity pursuant to section 2(b)(1) of the 
        Federal Funding Accountability and Transparency Act of 2006 
        (Public Law 109-282; 31 U.S.C. 6101 note).
            (3) First tier subcontractor.--The term ``first tier 
        subcontractor'' means a subcontractor who has a subcontract 
        directly with the prime contractor.
            (4) Large defense contractor.--The term ``large defense 
        contractor'' means a contractor (other than an institute of 
        higher education or a federally funded research and development 
        center) that received more than $10,000,000 in annual revenue 
        from the Department of Defense contracts or licenses in any of 
        the previous three years.
            (5) Progress payments.--The term ``progress payments'' 
        means payments provided for under section 3804 of title 10, 
        United States Code.

SEC. 5. DISCLOSURE BY LARGE DEFENSE CONTRACTORS.

    (a) Annual Reporting.--Not later than 60 days after the date of the 
enactment of this Act, the Secretary of Defense shall amend the 
Department of Defense Supplement to the Federal Acquisition Regulation 
to provide that large defense contractors shall be required to annually 
report to the Under Secretary of Defense for Acquisition and 
Sustainment the following information with regard to the covered year, 
as compared with the year preceding that covered year:
            (1) The percentage change in the volume of goods or 
        services sold and the percentage change in the average sales 
        price of those goods or services, which shall be broken down by 
        material product categories, when relevant, and presented in a 
        tabular format.
            (2) The gross margins of the large defense contractor, 
        which shall be broken down by material product categories, when 
        relevant, and presented in a tabular format.
            (3) Presented in tabular format, the share of the increase 
        in revenue of the large defense contractor that is attributable 
        to--
                    (A) a change in the cost of goods or services sold 
                by the large defense contractor; and
                    (B) a change in the volume of goods or services 
                sold by the large defense contractor.
            (4) The percentage change in the costs of the large defense 
        contractor, which shall be broken down by category and 
        presented in tabular format.
            (5) In dollars, the change in the costs of the large 
        defense contractor, which shall be presented in tabular format.
            (6) A detailed narrative disclosure of the pricing strategy 
        of the large defense contractor, which shall include--
                    (A) an explanation for any increase in the gross 
                margins of material product categories, including--
                            (i) all material causes for such an 
                        increase;
                             (ii) an explanation of how each such 
                        material cause affected such an increase; and
                            (iii) a description of the relative 
                        importance of each such material cause with 
                        respect to such an increase;
                    (B) an explanation for the decisions made by the 
                large defense contractor with respect to the prices of 
                goods and services sold by the large defense 
                contractor;
                    (C) if the large defense contractor increased 
                prices at a rate that was greater than the rate at 
                which the costs incurred by the large defense 
                contractor increased, the rationale and objectives for 
                increasing prices in such a manner; and
                    (D) a description of conditions under which the 
                large defense contractor plans to modify pricing after 
                the date on which the large defense contractor submits 
                the report.
    (b) Publication.--The Under Secretary of Defense for Acquisition 
and Sustainment shall annually publish on a publicly available internet 
website the previous year's reports received under subsection (a).
    (c) Penalties.--A knowing failure to disclose or update information 
in accordance with subsection (a) may result in--
            (1) entry of the violation in the database for Federal 
        agency contract and grant officers and suspension and debarment 
        officials defined in section 2313 of title 41, United States 
        Code;
            (2) imprisonment for not more than 5 years or a fine under 
        title 18, United States Code, or both;
            (3) a civil fine of not more than $200,000, depending on 
        the extent and gravity of the violation;
            (4) liability pursuant to section 3729 of title 31, United 
        States Code; or
            (5) suspension or debarment.
    (d) Large Defense Contractor Defined.--In this section, the term 
``large defense contractor'' means a contractor (other than an 
institute of higher education or a federally funded research and 
development center) that--
            (1) received more than $10,000,000 in annual revenue from 
        the Department of Defense contracts or licenses in any of the 
        previous three years; and
            (2) earned more than 20 percent of its total annual revenue 
        from Department of Defense contracts or licenses in any of the 
        previous three fiscal years.
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