II 113th CONGRESS 2d Session S. 2286 IN THE SENATE OF THE UNITED STATES May 1, 2014 Mr. Walsh introduced the following bill; which was read twice and referred to the Committee on Armed Services A BILL To provide for greater oversight of Department of Defense service contracts.

1. Short title This Act may be cited as the Cutting Contractor Use and Taxpayer Savings Act of 2014 . 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. 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. 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. 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). 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. 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. 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). 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.