[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5013 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 5013

   To amend title 10, United States Code, to provide for performance 
 management of the defense acquisition system, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 14, 2010

  Mr. Andrews (for himself, Mr. Conaway, Mr. Skelton, Mr. McKeon, Mr. 
  Ellsworth, Mr. Coffman of Colorado, and Mr. Hunter) introduced the 
following bill; which was referred to the Committee on Armed Services, 
 and in addition to the Committee on Oversight and Government Reform, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of 
                        the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To amend title 10, United States Code, to provide for performance 
 management of the defense acquisition system, and for other purposes.

    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 ``Implementing Management for 
Performance and Related Reforms to Obtain Value in Every Acquisition 
Act of 2010''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definition of congressional defense committees.
                  TITLE I--DEFENSE ACQUISITION SYSTEM

Sec. 101. Performance management of the defense acquisition system.
Sec. 102. Meaningful consideration by Joint Requirements Oversight 
                            Council of input from certain officials.
Sec. 103. Performance management for the Joint Capabilities Integration 
                            and Development System.
Sec. 104. Establishment of a requirements process for the acquisition 
                            of services.
Sec. 105. Joint evaluation task forces.
Sec. 106. Review of defense acquisition guidance.
Sec. 107. Requirement to include references to services contracting 
                            throughout the Federal Acquisition 
                            Regulation.
                TITLE II--DEFENSE ACQUISITION WORKFORCE

Sec. 201. Acquisition workforce excellence.
Sec. 202. Amendments to the acquisition workforce demonstration 
                            project.
Sec. 203. Incentive programs for civilian and military personnel in the 
                            acquisition workforce.
Sec. 204. Career development for civilian and military personnel in the 
                            acquisition workforce.
Sec. 205. Recertification and training requirements.
Sec. 206. Information technology acquisition workforce.
Sec. 207. Definition of acquisition workforce.
                    TITLE III--FINANCIAL MANAGEMENT

Sec. 301. Incentives for achieving auditability.
Sec. 302. Measures required after failure to achieve auditability.
Sec. 303. Review of obligation and expenditure thresholds.
                       TITLE IV--INDUSTRIAL BASE

Sec. 401. Expansion of the industrial base.
Sec. 402. Commercial pricing analysis.
Sec. 403. Contractor and grantee disclosure of delinquent Federal tax 
                            debts.
Sec. 404. Independence of contractor business system reviews; risk-
                            based reviews.

SEC. 3. DEFINITION OF CONGRESSIONAL DEFENSE COMMITTEES.

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

                  TITLE I--DEFENSE ACQUISITION SYSTEM

SEC. 101. PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM.

    (a) In General.--Part IV of title 10, United States Code, is 
amended by inserting after chapter 148 the following new chapter:

``CHAPTER 149--PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM

``2545. Performance assessment of the defense acquisition system.
``2546. Audits of performance assessment.
``2547. Use of performance assessments for managing performance.
``2548. Acquisition-related functions of the Chiefs of Staff of the 
                            Armed Forces.
``Sec. 2545. Performance assessment of the defense acquisition system
    ``(a) Performance Assessments Required.--(1) The Secretary of 
Defense shall ensure that all elements of the defense acquisition 
system are subject to regular performance assessments--
            ``(A) to determine the extent to which such elements 
        deliver appropriate value to the Department of Defense; and
            ``(B) to enable senior officials of the Department of 
        Defense to manage the elements of the defense acquisition 
        system to maximize their value to the Department.
    ``(2) The performance of each element of the defense acquisition 
system shall be assessed as needed, but not less often than annually.
    ``(3) The Secretary shall ensure that the performance assessments 
required by this subsection are appropriately tailored to reflect the 
diverse nature of defense acquisition so that the performance 
assessment of each element of the defense acquisition system accurately 
reflects the work performed by such element.
    ``(b) Systemwide Categories.--(1) The Secretary of Defense shall 
establish categories of metrics for the defense acquisition system, 
including, at a minimum, categories relating to cost, quality, 
delivery, workforce, and policy implementation that apply to all 
elements of the defense acquisition system.
    ``(2) The Secretary of Defense shall issue guidance for service 
acquisition executives within the Department of Defense on the 
establishment of metrics, and goals and standards relating to such 
metrics, within the categories established by the Secretary under 
paragraph (1) to ensure that there is sufficient uniformity in 
performance assessments across the defense acquisition system so that 
elements of the defense acquisition system can be meaningfully 
compared.
    ``(c) Metrics, Goals, and Standards.--(1) Each service acquisition 
executive of the Department of Defense shall establish metrics to be 
used in the performance assessments required by subsection (a) for each 
element of the defense acquisition system for which such executive is 
responsible within the categories established by the Secretary under 
subsection (b). Such metrics shall be appropriately tailored pursuant 
to subsection (a)(3) and may include measures of--
            ``(A) cost, quality, and delivery;
            ``(B) contractor performance;
            ``(C) workforce quality and program manager tenure (where 
        applicable);
            ``(D) the quality of market research;
            ``(E) appropriate use of integrated testing; and
            ``(F) appropriate consideration of long-term sustainment.
    ``(2) Each service acquisition executive within the Department of 
Defense shall establish goals and standards (including, at a minimum, a 
threshold standard and an objective goal) for each metric established 
under paragraph (1) by the executive. In establishing the goals and 
standards for an element of the defense acquisition system, a service 
acquisition executive shall consult with the element to the maximum 
extent practicable, but the service acquisition executive shall retain 
the final authority to determine the goals and standards established. 
The service acquisition executive shall update the goals and standards 
as necessary and appropriate consistent with the guidance issued under 
subsection (b)(2).
    ``(3) The Under Secretary of Defense for Acquisition, Technology, 
and Logistics shall periodically review the metrics, goals, and 
standards established by service acquisition executives under this 
subsection to ensure that they are consistent with the guidance issued 
under subsection (b)(2).
    ``(d) Responsibility for Oversight and Direction of Performance 
Assessments.--(1) Performance assessments required by subsection (a) 
shall either be carried out by, or shall be subject to the oversight 
of, the Director of the Office of Performance Assessment and Root Cause 
Analysis. The authority and responsibility granted by this subsection 
is in addition to any other authority or responsibility granted to the 
Director of the Office of Performance Assessment and Root Cause 
Analysis by the Secretary of Defense or by any other provision of law. 
In the performance of duties pursuant to this section, the Director of 
the Office of Performance Assessment and Root Cause analysis shall 
coordinate with the Deputy Chief Management Officer to ensure that 
performance assessments carried out pursuant to this section are 
consistent with the performance management initiatives of the 
Department of Defense.
    ``(2) A performance assessment may be carried out by an 
organization under the control of the service acquisition executive of 
a military department if--
            ``(A) the assessment fulfills the requirements of 
        subsection (a);
            ``(B) the organization is approved to carry out the 
        assessment by the Director of the Office of Performance 
        Assessment and Root Cause Analysis; and
            ``(C) the assessment is subject to the oversight of the 
        Director of the Office of Performance Assessment and Root Cause 
        Analysis in accordance with paragraph (1).
    ``(e) Retention and Access to Records of Performance Assessments 
Within the Military Departments and Defense Agencies.--The Secretary of 
Defense shall ensure that information from performance assessments of 
all elements of the defense acquisition system are retained 
electronically and that the Director of the Office of Performance 
Assessment and Root Cause Analysis--
            ``(1) promptly receives the results of all performance 
        assessments conducted by an organization under the control of 
        the service acquisition executive of a military department; and
            ``(2) has timely access to any records and data in the 
        Department of Defense (including the records and data of each 
        military department and Defense Agency and including classified 
        and proprietary information) that the Director considers 
        necessary to review in order to perform or oversee performance 
        assessments pursuant to this section.
    ``(f) Definitions.--In this section:
            ``(1) The term `defense acquisition system' means the 
        acquisition workforce; the process by which the Department of 
        Defense manages the acquisition of goods and services, 
        including weapon systems, commodities, commercial and military 
        unique services, and information technology; and the management 
        structure for carrying out the acquisition function within the 
        Department of Defense.
            ``(2) The term `element of the defense acquisition system' 
        means an organization that operates within the defense 
        acquisition system and that focuses primarily on acquisition.
            ``(3) The term `metric' means a specific measure that 
        serves as a basis for comparison.
            ``(4) The term `threshold performance standard' means the 
        minimum acceptable level of performance in relation to a 
        metric.
            ``(5) The term `objective performance goal' means the most 
        desired level of performance in relation to a metric.
            ``(6) The term `Office of Performance Assessment and Root 
        Cause Analysis' means the office reporting to the senior 
        official designated by the Secretary of Defense under section 
        103(a) of the Weapon Systems Acquisition Reform Act of 2009 
        (Public Law 111-23, 10 U.S.C. 2430 note).
``Sec. 2546. Audits of performance assessment
    ``(a) Audits Required.--The Secretary of Defense shall ensure that 
the performance assessments of the defense acquisition system required 
by section 2545 of this title are subject to periodic audits to 
determine the accuracy, reliability, and completeness of such 
assessments.
    ``(b) Standards and Approach.--In performing the audits required by 
subsection (a), the Secretary shall ensure that such audits--
            ``(1) comply with generally accepted government auditing 
        standards issued by the Comptroller General;
            ``(2) use a risk-based approach to audit planning; and
            ``(3) appropriately account for issues associated with 
        auditing assessments of activities occurring in a contingency 
        operation.
``Sec. 2547. Use of performance assessments for managing performance
    ``(a) In General.--The Secretary of Defense shall ensure that the 
results of performance assessments are used in the management of 
elements of the defense acquisition system through direct linkages 
between the results of a performance assessment and the following:
            ``(1) The size of the bonus pool available to the workforce 
        of an element of the defense acquisition system.
            ``(2) Rates of promotion in the workforce of an element of 
        the defense acquisition system.
            ``(3) Awards for acquisition excellence.
            ``(4) The scope of work assigned to an element of the 
        defense acquisition system.
    ``(b) Additional Requirements.--The Secretary of Defense shall 
ensure that actions taken to manage the acquisition workforce pursuant 
to subsection (a) are undertaken in accordance with the requirements of 
subsections (c) and (d) of section 1701a of this title.
``Sec. 2548. Acquisition-related functions of the Chiefs of Staff of 
              the Armed Forces
    ``The Secretary of Defense shall ensure, notwithstanding section 
3014(c)(1)(A), section 5014(c)(1)(A), and section 8014(c)(1)(A) of this 
title, that the Chief of Staff of the Army, the Chief of Naval 
Operations, the Chief of Staff of the Air Force, and the Commandant of 
the Marine Corps assist the Secretary of the military department 
concerned in the performance of the following acquisition-related 
functions of such department:
            ``(1) The development of requirements relating to the 
        defense acquisition system.
            ``(2) The development of measures to control requirements 
        creep in the defense acquisition system.
            ``(3) The development of career paths in acquisition for 
        military personnel (as required by section 1722a of this 
        title).
            ``(4) The assignment and training of contracting officer 
        representatives when such representatives are required to be 
        members of the armed forces because of the nature of the 
        contract concerned.''.
    (b) Phased Implementation of Performance Assessments.--The 
Secretary of Defense shall implement the requirements of chapter 149 of 
title 10, United States Code, as added by subsection (a), in a phased 
manner while guidance is issued, and categories, metrics, goals, and 
standards are established. Implementation shall begin with a cross 
section of elements of the defense acquisition system representative of 
the entire system and shall be completed for all elements not later 
than two years after the date of the enactment of this Act.

SEC. 102. MEANINGFUL CONSIDERATION BY JOINT REQUIREMENTS OVERSIGHT 
              COUNCIL OF INPUT FROM CERTAIN OFFICIALS.

    Paragraph (2) of section 105(e) of the Weapon System Acquisition 
Reform Act of 2009 (Public Law 111-23) is amended to read as follows:
            ``(2) Matters covered.--The report shall include, at a 
        minimum, an assessment of--
                    ``(A) the extent to which the Council has 
                effectively sought, and the commanders of the combatant 
                commands have provided, meaningful input on proposed 
                joint military requirements;
                    ``(B) the extent to which the Council has 
                meaningfully considered the input and expertise of the 
                Under Secretary of Defense for Acquisition, Technology, 
                and Logistics in its discussions;
                    ``(C) the extent to which the Council has 
                meaningfully considered the input and expertise of the 
                Director of Cost Assessment and Program Evaluation in 
                its discussions;
                    ``(D) the quality and effectiveness of efforts to 
                estimate the level of resources needed to fulfill joint 
                military requirements; and
                    ``(E) the extent to which the Council has 
                considered trade-offs among cost, schedule, and 
                performance objectives.''.

SEC. 103. PERFORMANCE MANAGEMENT FOR THE JOINT CAPABILITIES INTEGRATION 
              AND DEVELOPMENT SYSTEM.

    (a) Requirement for Program.--The Secretary of Defense shall ensure 
that the Department of Defense develops and implements a program to 
manage performance in establishing joint military requirements pursuant 
to section 181 of title 10, United States Code.
    (b) Leaders.--The Secretary of Defense shall designate an officer 
identified or designated as a joint qualified officer to serve as 
leader of a joint effort to develop the performance management program 
required by subsection (a). The Secretary shall also designate an 
officer from each Armed Force to serve as leader of the effort within 
the Armed Force concerned. Officers designated pursuant to this section 
shall have the seniority and authority necessary to oversee and direct 
all personnel engaged in establishing joint military requirements 
within the Joint Staff or within the Armed Force concerned.
    (c) Matters Covered.--The program developed pursuant to subsection 
(a) shall:
            (1) Measure the following in relation to each joint 
        military requirement:
                    (A) The time a requirements document takes to 
                receive validation through the requirements process.
                    (B) The quality of cost information associated with 
                the requirement and the extent to which cost 
                information was considered during the requirements 
                process.
                    (C) The extent to which the requirements process 
                established a meaningful level of priority for the 
                requirement.
                    (D) The extent to which the requirements process 
                considered trade-offs between cost, schedule, and 
                performance objectives.
                    (E) The quality of information on sustainment 
                associated with the requirement and the extent to which 
                sustainment information was considered during the 
                requirements process.
                    (F) Such other matters as the Secretary shall 
                determine appropriate.
            (2) Achieve, to the maximum extent practicable, the 
        following outcomes in the requirements process:
                    (A) Timeliness in delivering capability to the 
                warfighter.
                    (B) Mechanisms for controlling requirements creep.
                    (C) Responsiveness to fact-of-life changes 
                occurring after the approval of a requirements 
                document, including changes to the threat environment, 
                the emergence of new capabilities, or changes in the 
                resources estimated to procure or sustain a capability.
                    (D) The development of the personnel skills, 
                capacity, and training needed for an effective and 
                efficient requirements process.
                    (E) Such other outcomes as the Secretary shall 
                determine appropriate.
    (d) Implementation.--The program required by subsection (a) shall 
be developed and initially implemented not later than one year after 
the date of the enactment of this Act and shall apply to joint military 
requirements entering the requirements process after the date of 
initial implementation.
    (e) Initial Report.--Not later than 90 days after the initial 
implementation of the program required by subsection (a), the Secretary 
shall submit to the congressional defense committees a report on the 
steps taken to develop and implement the performance management program 
for joint military requirements. The report shall address the measures 
specified in subsection (c)(1).
    (f) Final Report.--Not later than four years after the initial 
implementation of the program required by subsection (a), the Secretary 
shall submit to the congressional defense committees a report on the 
effectiveness of the program for joint military requirements in 
achieving the outcomes specified in subsection (c)(2).
    (g) Definitions.--In this section:
            (1) Requirements process.--The term ``requirements 
        process'' means the Joint Capabilities Integration and 
        Development System (JCIDS) process or any successor to such 
        process established by the Chairman of the Joint Chiefs of 
        Staff to support the statutory responsibility of the Joint 
        Requirements Oversight Council in advising the Chairman and the 
        Secretary of Defense in identifying, assessing, and validating 
        joint military capability needs, with their associated 
        operational performance criteria, in order to successfully 
        execute missions.
            (2) Requirements document.--The term ``requirements 
        document'' means a document produced in the requirements 
        process that is provided for an acquisition program to guide 
        the subsequent development, production, and testing of the 
        program and that--
                    (A) justifies the need for a materiel approach, or 
                an approach that is a combination of materiel and non-
                materiel, to satisfy one or more specific capability 
                gaps;
                    (B) details the information necessary to develop an 
                increment of militarily useful, logistically 
                supportable, and technically mature capability, 
                including key performance parameters; or
                    (C) identifies production attributes required for a 
                single increment of a program.
            (3) Requirements creep.--The term ``requirements creep'' 
        means the addition of new technical or operational 
        specifications after a requirements document is approved.
    (h) Discretionary Implementation After 5 Years.--After the date 
that is five years after the initial implementation of the performance 
management program under this section, the requirement to implement a 
program under this section shall be at the discretion of the Secretary 
of Defense.

SEC. 104. ESTABLISHMENT OF A REQUIREMENTS PROCESS FOR THE ACQUISITION 
              OF SERVICES.

    (a) Requirements Process Required.--The Secretary of Defense shall 
ensure that each military department establishes a process for 
identifying, assessing, and approving requirements for the acquisition 
of services, and that commanders of unified combatant commands and 
other officers identified or designated as joint qualified officers 
have an opportunity to participate in the process of each military 
department to provide input on joint requirements for the acquisition 
of services.
    (b) Guidance and Plan Required.--The Chief of Staff of the Army, 
the Chief of Naval Operations, the Chief of Staff of the Air Force, and 
the Commandant of the Marine Corps shall--
            (1) issue and maintain guidance relating to the 
        requirements process required by subsection (a); and
            (2) develop a plan to implement the requirements process 
        required by subsection (a).
    (c) Matters Required in Guidance.--The guidance required under 
subsection (b) shall establish, in relation to the requirements process 
for the acquisition of services, the following:
            (1) Organization of the requirements process.
            (2) The level of command responsibility required for 
        identifying and validating requirements in accordance with the 
        categories established under section 2330(a)(1)(C) of title 10, 
        United States Code.
            (3) The composition of billets necessary to operate the 
        requirements process.
            (4) The training required for personnel engaged in the 
        requirements process.
            (5) The relationship between doctrine and the requirements 
        process.
            (6) Methods of obtaining input on joint requirements.
            (7) Procedures for coordinating with the acquisition 
        process.
            (8) Considerations relating to opportunities for strategic 
        sourcing.
    (d) Matters Required in Implementation Plan.--The plan required 
under subsection (b) shall provide for initial implementation of a 
requirements process not later than 180 days after the date of the 
enactment of this Act and shall provide for full implementation of the 
process at the earliest date practicable.
    (e) Consistency With Joint Guidance.--Whenever, at any time, 
guidance is issued by the Joint Staff relating to the acquisition of 
services, each requirements process established pursuant to subsection 
(a) shall be revised in accordance with the requirements of such joint 
guidance.

SEC. 105. JOINT EVALUATION TASK FORCES.

    (a) Task Forces Required.--For each joint military requirement 
involving a materiel solution for which the Chairman of the Joint 
Requirements Oversight Council is the validation authority, the 
Chairman shall designate a commander of a unified combatant command to 
provide a joint evaluation task force to assist in the acquisition of 
the materiel solution. Such task force shall--
            (1) come from a military unit or units designated by the 
        combatant commander concerned;
            (2) be selected based on the relevance of the materiel 
        solution to the mission of the unit; and
            (3) participate consistent with its operational 
        obligations.
    (b) Responsibilities.--A task force provided pursuant to subsection 
(a) shall participate in all stages of the development and low rate 
initial production of the materiel solution, including--
            (1) providing input to the analysis of alternatives;
            (2) participating in testing (including limited user tests 
        and prototype testing);
            (3) providing input on a concept of operations and 
        doctrine;
            (4) providing end user feedback to the resource sponsor; 
        and
            (5) participating in any alteration of the requirement for 
        such solution.
    (c) Administrative Support.--The resource sponsor for the joint 
military requirement shall provide administrative support to the joint 
evaluation task force for purposes of carrying out this section.
    (d) Definitions.--In this section:
            (1) Resource sponsor.--The term ``resource sponsor'' means 
        the organization responsible for all common documentation, 
        periodic reporting, and funding actions required to support the 
        capabilities development and acquisition process for the 
        materiel solution.
            (2) Materiel solution.--The term ``materiel solution'' 
        means the development, acquisition, procurement, or fielding of 
        a new item, or of a modification to an existing item, necessary 
        to equip, operate, maintain, and support military activities.

SEC. 106. REVIEW OF DEFENSE ACQUISITION GUIDANCE.

    (a) Review of Guidance.--The Secretary of Defense shall review the 
acquisition guidance of the Department of Defense, including, at a 
minimum, the guidance contained in Department of Defense Instruction 
5000.02 entitled ``Operation of the Defense Acquisition System''.
    (b) Matters Considered.--The review performed under subsection (a) 
shall consider--
            (1) the extent to which it is appropriate to apply guidance 
        relating to the acquisition of weapon systems to acquisitions 
        not involving weapon systems (including the acquisition of 
        commercial goods and commodities, commercial and military 
        unique services, and information technology);
            (2) whether long-term sustainment of weapon systems is 
        appropriately emphasized;
            (3) whether appropriate mechanisms exist to communicate 
        information relating to the mission needs of the Department of 
        Defense to the industrial base in a way that allows the 
        industrial base to make appropriate investments in 
        infrastructure, capacity, and technology development to help 
        meet such needs;
            (4) the extent to which earned value management should be 
        required on acquisitions not involving the acquisition of 
        weapon systems;
            (5) the extent to which it is appropriate to apply 
        processes primarily relating to the acquisition of weapon 
        systems to the acquisition of information technology systems, 
        consistent with the requirement to develop an alternative 
        process for such systems contained in section 804 of the 
        National Defense Authorization Act for Fiscal Year 2010 (Public 
        Law 111-84; 123 Stat. 2401; 10 U.S.C. 2225 note); and
            (6) such other matters as the Secretary considers 
        appropriate.
    (c) Report.--Not later than 270 days after the date of the 
enactment of this Act, the Secretary of Defense shall submit to the 
Committees on Armed Services of the Senate and of the House of 
Representatives a report detailing any changes in the acquisition 
guidance of the Department of Defense identified during the review 
required by subsection (a), and any actions taken, or planned to be 
taken, to implement such changes.

SEC. 107. REQUIREMENT TO INCLUDE REFERENCES TO SERVICES CONTRACTING 
              THROUGHOUT THE FEDERAL ACQUISITION REGULATION.

    (a) Findings.--Congress finds the following:
            (1) The acquisition of services can be extremely complex, 
        and program management skills, tools, and processes need to be 
        applied to services acquisitions.
            (2) An emphasis on the concept of ``services'' throughout 
        the Federal Acquisition Regulation would enhance and support 
        the procurement and project management community in all aspects 
        of the acquisition planning process, including requirements 
        development, assessment of reasonableness, and post-award 
        management and oversight.
    (b) Requirement for Changes to FAR.--The Federal Acquisition 
Regulation shall be revised to provide, throughout the Regulation, 
appropriate references to services contracting that are in addition to 
references provided in part 37 (which relates specifically to services 
contracting).
    (c) Deadline.--This section shall be carried out within 270 days 
after the date of the enactment of this Act.

                TITLE II--DEFENSE ACQUISITION WORKFORCE

SEC. 201. ACQUISITION WORKFORCE EXCELLENCE.

    (a) In General.--
            (1) Acquisition workforce excellence.--Subchapter I of 
        chapter 87 of title 10, United States Code, is amended by 
        inserting after section 1701 the following new section:
``Sec. 1701a. Management for acquisition workforce excellence
    ``(a) Purpose.--The purpose of this chapter is to require the 
Department of Defense to develop and manage a highly skilled 
professional acquisition workforce--
            ``(1) in which excellence and contribution to mission is 
        rewarded;
            ``(2) which has the technical expertise and business skills 
        to ensure the Department receives the best value for the 
        expenditure of public resources;
            ``(3) which serves as a model for performance management of 
        employees of the Department; and
            ``(4) which is managed in a manner that complements and 
        reinforces the performance management of the defense 
        acquisition system pursuant to chapter 149 of this title.
    ``(b) Performance Management.--In order to achieve the purpose set 
forth in subsection (a), the Secretary of Defense shall--
            ``(1) use the full authorities provided in subsections (a) 
        through (d) of section 9902 of title 5, including flexibilities 
        related to performance management and hiring and to training of 
        managers;
            ``(2) require managers to develop performance plans for 
        individual members of the acquisition workforce in order to 
        give members an understanding of how their performance 
        contributes to their organization's mission and the success of 
        the defense acquisition system (as defined in section 2545 of 
        this title);
            ``(3) to the extent appropriate, use the lessons learned 
        from the acquisition demonstration project carried out under 
        section 1762 of this title related to contribution-based 
        compensation and appraisal, and how those lessons may be 
        applied within the General Schedule system;
            ``(4) develop attractive career paths;
            ``(5) encourage continuing education and training;
            ``(6) develop appropriate procedures for warnings during 
        performance evaluations and due process for members of the 
        acquisition workforce who consistently fail to meet performance 
        standards;
            ``(7) take full advantage of the Defense Civilian 
        Leadership Program established under section 1112 of the 
        National Defense Authorization Act for Fiscal Year 2010, 
        (Public Law 111-84; 123 Stat. 2496; 10 U.S.C. 1580 note prec.);
            ``(8) use the authorities for highly qualified experts 
        under section 9903 of title 5, United States Code, to hire 
        experts who are skilled acquisition professionals to--
                    ``(A) serve in leadership positions within the 
                acquisition workforce to strengthen management and 
                oversight;
                    ``(B) provide mentors to advise individuals within 
                the acquisition workforce on their career paths and 
                opportunities to advance and excel within the 
                acquisition workforce; and
                    ``(C) assist with the design of education and 
                training courses and the training of individuals in the 
                acquisition workforce; and
            ``(9) use the authorities for expedited security clearance 
        processing pursuant to section 1564 of title 10, United States 
        Code.
    ``(c) Negotiations.--Any action taken by the Secretary under this 
section, or to implement this section, shall be subject to the 
requirements of chapter 71 of title 5.
    ``(d) Regulations.--Any rules or regulations prescribed pursuant to 
this section shall be deemed an agency rule or regulation under section 
7117(a)(2) of title 5, and shall not be deemed a Government-wide rule 
or regulation under section 7117(a)(1) of such title.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of such subchapter is amended by inserting after the 
        item relating to section 1701 the following new item:

``1701a. Management for acquisition workforce excellence.''.
    (b) Authority To Appoint Highly Qualified Experts on Part-Time 
Basis.--Section 9903(b)(1) of title 5, United States Code, is amended 
by inserting ``, on a full-time or part-time basis,'' after ``positions 
in the Department of Defense''.

SEC. 202. AMENDMENTS TO THE ACQUISITION WORKFORCE DEMONSTRATION 
              PROJECT.

    (a) Codification Into Title 10.--
            (1) In general.--Chapter 87 of title 10, United States 
        Code, is amended by inserting after section 1761 the following 
        new section:
``Sec. 1762. Demonstration project relating to certain acquisition 
              personnel management policies and procedures
    ``(a) Commencement.--The Secretary of Defense is encouraged to 
carry out a demonstration project, the purpose of which is to determine 
the feasibility or desirability of one or more proposals for improving 
the personnel management policies or procedures that apply with respect 
to the acquisition workforce of the Department of Defense and 
supporting personnel assigned to work directly with the acquisition 
workforce.
    ``(b) Terms and Conditions.--(1) Except as otherwise provided in 
this subsection, any demonstration project described in subsection (a) 
shall be subject to section 4703 of title 5 and all other provisions of 
such title that apply with respect to any demonstration project under 
such section.
    ``(2) Subject to paragraph (3), in applying section 4703 of title 5 
with respect to a demonstration project described in subsection (a)--
            ``(A) `180 days' in subsection (b)(4) of such section shall 
        be deemed to read `120 days';
            ``(B) `90 days' in subsection (b)(6) of such section shall 
        be deemed to read `30 days'; and
            ``(C) subsection (d)(1) of such section shall be 
        disregarded.
    ``(3) Paragraph (2) shall not apply with respect to a demonstration 
project unless--
            ``(A) for each organization or team participating in the 
        demonstration project--
                    ``(i) at least one-third of the workforce 
                participating in the demonstration project consists of 
                members of the acquisition workforce; and
                    ``(ii) at least two-thirds of the workforce 
                participating in the demonstration project consists of 
                members of the acquisition workforce and supporting 
                personnel assigned to work directly with the 
                acquisition workforce; and
            ``(B) the demonstration project commences before October 1, 
        2007.
    ``(c) Limitation on Number of Participants.--The total number of 
persons who may participate in the demonstration project under this 
section may not exceed 120,000.
    ``(d) Effect of Reorganizations.--The applicability of paragraph 
(2) of subsection (b) to an organization or team shall not terminate by 
reason that the organization or team, after having satisfied the 
conditions in paragraph (3) of such subsection when it began to 
participate in a demonstration project under this section, ceases to 
meet one or both of the conditions set forth in subparagraph (A) of 
such paragraph (3) as a result of a reorganization, restructuring, 
realignment, consolidation, or other organizational change.
    ``(e) Assessment.--(1) The Secretary of Defense shall designate an 
independent organization to review the acquisition workforce 
demonstration project described in subsection (a).
    ``(2) Such assessment shall include:
            ``(A) A description of the workforce included in the 
        project.
            ``(B) An explanation of the flexibilities used in the 
        project to appoint individuals to the acquisition workforce and 
        whether those appointments are based on competitive procedures 
        and recognize veteran's preferences.
            ``(C) An explanation of the flexibilities used in the 
        project to develop a performance appraisal system that 
        recognizes excellence in performance and offers opportunities 
        for improvement.
            ``(D) The steps taken to ensure that such system is fair 
        and transparent for all employees in the project.
            ``(E) How the project allows the organization to better 
        meet mission needs.
            ``(F) An analysis of how the flexibilities in subparagraphs 
        (B) and (C) are used, and what barriers have been encountered 
        that inhibit their use.
            ``(G) Whether there is a process for (i) ensuring ongoing 
        performance feedback and dialogue among supervisors, managers, 
        and employees throughout the performance appraisal period, and 
        (ii) setting timetables for performance appraisals.
            ``(H) The project's impact on career progression.
            ``(I) The project's appropriateness or inappropriateness in 
        light of the complexities of the workforce affected.
            ``(J) The project's sufficiency in terms of providing 
        protections for diversity in promotion and retention of 
        personnel.
            ``(K) The adequacy of the training, policy guidelines, and 
        other preparations afforded in connection with using the 
        project.
            ``(L) Whether there is a process for ensuring employee 
        involvement in the development and improvement of the project.
    ``(3) The first such assessment under this subsection shall be 
completed not later than September 30, 2011, and subsequent assessments 
shall be completed every two years thereafter until the termination of 
the project. The Secretary shall submit to the covered congressional 
committees a copy of the assessment within 30 days after receipt by the 
Secretary of the assessment.
    ``(f) Covered Congressional Committees.--In this section, the term 
`covered congressional committees' means--
            ``(1) the Committees on Armed Services of the Senate and 
        the House of Representatives;
            ``(2) the Committee on Homeland Security and Governmental 
        Affairs of the Senate; and
            ``(3) the Committee on Oversight and Government Reform of 
        the House of Representatives.
    ``(g) Termination of Authority.--The authority to conduct a 
demonstration program under this section shall terminate on September 
30, 2017.
    ``(h) Conversion.--Within six months after the authority to conduct 
a demonstration project under this section is terminated as provided in 
subsection (i), employees in the project shall convert to the civilian 
personnel system created pursuant to section 9902 of title 5, United 
States Code.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of subchapter V of chapter 87 of title 10, United 
        States Code, is amended by inserting after the item relating to 
        section 1761 the following new item:

``1762. Demonstration project relating to certain acquisition personnel 
                            management policies and procedures.''.
    (b) Conforming Repeal.--Section 4308 of the National Defense 
Authorization Act for Fiscal Year 1996 (Public Law 104-106; 10 U.S.C. 
1701 note) is repealed.

SEC. 203. INCENTIVE PROGRAMS FOR CIVILIAN AND MILITARY PERSONNEL IN THE 
              ACQUISITION WORKFORCE.

    (a) In General.--Chapter 87 of title 10, United States Code, is 
amended by inserting after section 1762, as added by section 202, the 
following new section:
``Sec. 1763. Incentive programs for civilian and military personnel in 
              the acquisition workforce
    ``(a) Civilian Acquisition Workforce Incentives.--The Secretary of 
Defense, acting through the Under Secretary of Defense for Acquisition, 
Technology, and Logistics, shall provide for an enhanced system of 
incentives for the encouragement of excellence in the acquisition 
workforce by providing rewards for employees who contribute to 
achieving the agency's performance goals. The system of incentives 
shall include provisions that--
            ``(1) relate salary increases, bonuses, and awards to 
        performance and contribution to the agency mission (including 
        the extent to which the performance of personnel in such 
        workforce contributes to achieving the goals and standards 
        established for acquisition programs pursuant to section 2545 
        of this title;
            ``(2) provide for consideration, in personnel evaluations 
        and promotion decisions, of the extent to which the performance 
        of personnel in such workforce contributes to achieving such 
        goals and standards;
            ``(3) use the Department of Defense Civilian Workforce 
        Incentives Fund established pursuant to section 9902(a) of 
        title 5; and
            ``(4) provide opportunities for career broadening 
        experiences for high performers.
    ``(b) Military Acquisition Workforce Incentives.--The Secretaries 
of the military departments shall fully use and enhance incentive 
programs that reward individuals, through recognition certificates or 
cash awards, for suggestions of process improvements that contribute to 
improvements in efficiency and economy and a better way of doing 
business.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
subchapter V of chapter 87 of title 10, United States Code, is amended 
by inserting after the item relating to section 1762, as added by 
section 202, the following new item:

``1763. Incentive programs for civilian and military personnel in the 
                            acquisition workforce.''.

SEC. 204. CAREER DEVELOPMENT FOR CIVILIAN AND MILITARY PERSONNEL IN THE 
              ACQUISITION WORKFORCE.

    (a) Career Paths.--
            (1) Amendment.--Chapter 87 of title 10, United States Code, 
        is amended by inserting after section 1722a the following new 
        section:
``Sec. 1722b. Special requirements for civilian employees in the 
              acquisition field
    ``(a) Requirement for Policy and Guidance Regarding Civilian 
Personnel in Acquisition.--The Secretary of Defense, acting through the 
Under Secretary of Defense for Acquisition, Technology, and Logistics, 
shall establish policies and issue guidance to ensure the proper 
development, assignment, and employment of civilian members of the 
acquisition workforce to achieve the objectives specified in subsection 
(b).
    ``(b) Objectives.--Policies established and guidance issued 
pursuant to subsection (a) shall ensure, at a minimum, the following:
            ``(1) A career path in the acquisition field that attracts 
        the highest quality civilian personnel, from either within or 
        outside the Federal Government.
            ``(2) A deliberate workforce development strategy that 
        increases attainment of key experiences that contribute to a 
        highly qualified acquisition workforce.
            ``(3) Sufficient opportunities for promotion and 
        advancement in the acquisition field.
            ``(4) A sufficient number of qualified, trained members 
        eligible for and active in the acquisition field to ensure 
        adequate capacity, capability, and effective succession for 
        acquisition functions, including contingency contracting, of 
        the Department of Defense.
    ``(c) Inclusion of Information in Annual Report.--The Secretary of 
Defense shall include in the report to Congress required under section 
115b(d) of this title the following information related to the 
acquisition workforce for the period covered by the report (which shall 
be shown for the Department of Defense as a whole and separately for 
the Army, Navy, Air Force, Marine Corps, Defense Agencies, and Office 
of the Secretary of Defense):
            ``(1) The total number of persons serving in the 
        Acquisition Corps, set forth separately for members of the 
        Armed Forces and civilian employees, by grade level and by 
        functional specialty.
            ``(2) The total number of critical acquisition positions 
        held, set forth separately for members of the armed forces and 
        civilian employees, by grade level and by other appropriate 
        categories (including by program manager, deputy program 
        manager, and division head positions). For each such category, 
        the report shall specify the number of civilians holding such 
        positions compared to the total number of positions filled.
            ``(3) The number of employees to whom the requirements of 
        subsections (b)(2)(A) and (b)(2)(B) of section 1732 of this 
        title did not apply because of the exceptions provided in 
        paragraphs (1) and (2) of section 1732(c) of this title, set 
        forth separately by type of exception.
            ``(4) The number of program managers and deputy program 
        managers who were reassigned after completion of a major 
        milestone occurring closest in time to the date on which the 
        person has served in the position for four years (as required 
        under section 1734(b) of this title), and the proportion of 
        those reassignments to the total number of reassignments of 
        program managers and deputy program managers, set forth 
        separately for program managers and deputy program managers. 
        The Secretary also shall include the average length of 
        assignment served by program managers and deputy program 
        managers so reassigned.
            ``(5) The number of persons, excluding those reported under 
        paragraph (4), in critical acquisition positions who were 
        reassigned after a period of three years or longer (as required 
        under section 1734(a) of this title), and the proportion of 
        those reassignments to the total number of reassignments of 
        persons, excluding those reported under paragraph (4), in 
        critical acquisition positions.
            ``(6) The number of times a waiver authority was exercised 
        under section 1724(d), 1732(d), 1734(d), or 1736(c) of this 
        title or any other provision of this chapter (or other 
        provision of law) which permits the waiver of any requirement 
        relating to the acquisition workforce, and in the case of each 
        such authority, the reasons for exercising the authority. The 
        Secretary may present the information provided under this 
        paragraph by category or grouping of types of waivers and 
        reasons.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of subchapter II of chapter 87 of title 10, United 
        States Code, is amended by inserting after the item relating to 
        section 1722a the following new item:

``1722b. Special requirements for civilian employees in the acquisition 
                            field.''.
    (b) Career Education and Training.--Chapter 87 of title 10, United 
States Code, is amended in section 1723 by redesignating subsection (b) 
as (c) and inserting after subsection (a) the following new subsection:
    ``(b) Career Path Requirements.--For each career path, the 
Secretary of Defense, acting through the Under Secretary of Defense for 
Acquisition, Technology, and Logistics shall establish requirements for 
the completion of course work and related on-the-job training and 
demonstration of qualifications in the critical acquisition-related 
duties and tasks of the career path. The Secretary of Defense, acting 
through the Under Secretary, shall also--
            ``(1) encourage individuals in the acquisition workforce to 
        maintain the currency of their acquisition knowledge and 
        generally enhance their knowledge of related acquisition 
        management disciplines through academic programs and other 
        self-developmental activities; and
            ``(2) develop key work experiences for individuals in the 
        acquisition workforce so that the individuals may gain in-depth 
        knowledge and experience in the acquisition process and become 
        seasoned, well-qualified members of the acquisition 
        workforce.''.

SEC. 205. RECERTIFICATION AND TRAINING REQUIREMENTS.

    (a) Continuing Education.--Section 1723 of title 10, United States 
Code, as amended by section 204, is further amended by amending 
subsection (a) to read as follows:
    ``(a) Qualification Requirements.--(1) The Secretary of Defense 
shall establish education, training and experience requirements for 
each acquisition position, based on the level of complexity of duties 
carried out in the position. In establishing such requirements, the 
Secretary shall ensure the availability and sufficiency of training in 
all areas of acquisition, including additional training courses with an 
emphasis on services contracting, information technology, and rapid 
acquisition.
    ``(2) In establishing such requirements for positions other than 
critical acquisition positions designated pursuant to section 1733 of 
this title, the Secretary may state the requirements by categories of 
positions.
    ``(3) The Secretary of Defense, acting through the Under Secretary 
of Defense for Acquisition, Technology, and Logistics, shall establish 
requirements for continuing education and periodic renewal of an 
individual's certification. Any requirement for a certification renewal 
shall not require a renewal more often than once every five years.''.
    (b) Standards for Training.--
            (1) In general.--Subchapter IV of Chapter 87 of title 10, 
        United States Code, is amended by adding at the end the 
        following new section:
``Sec. 1748. Guidance and standards for acquisition workforce training
    ``(a) Fulfillment Standards.--The Secretary of Defense, acting 
through the Under Secretary of Defense for Acquisition, Technology, and 
Logistics, shall develop fulfillment standards, and implement and 
maintain a program, for purposes of the training requirements of 
sections 1723, 1724, and 1735 of this title. Such fulfillment standards 
shall consist of criteria for determining whether an individual has 
demonstrated competence in the areas that would be taught in the 
training courses required under those sections. If an individual meets 
the appropriate fulfillment standard, the applicable training 
requirement is fulfilled.
    ``(b) Guidance and Standards Relating to Contracts for Training.--
The Secretary of Defense shall develop appropriate guidance and 
standards to ensure that the Department of Defense will continue, where 
appropriate and cost-effective, to enter into contracts for the 
training requirements of sections 1723, 1724, and 1735 of this title, 
while maintaining appropriate control over the content and quality of 
such training.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of such subchapter is amended by adding at the end 
        the following new item:

``1748. Guidance and standards for acquisition workforce training.''.
            (3) Deadline for fulfillment standards.--The fulfillment 
        standards required under section 1748(a) of title 10, United 
        States Code, as added by paragraph (1), shall be developed not 
        later than 90 days after the date of the enactment of this Act.
            (4) Conforming repeal.--Section 853 of Public Law 105-85 
        (111 Stat. 1851) is repealed.

SEC. 206. INFORMATION TECHNOLOGY ACQUISITION WORKFORCE.

    (a) In General.--
            (1) Information technology.--Subchapter II of chapter 87 of 
        title 10, United States Code, is amended by adding at the end 
        the following new section:
``Sec. 1725. Information technology acquisition positions
    ``(a) Plan Required.--The Secretary of Defense shall develop and 
carry out a plan to strengthen the part of the acquisition workforce 
that specializes in information technology. The plan shall include the 
following:
            ``(1) Defined targets for billets devoted to information 
        technology acquisition.
            ``(2) Specific certification requirements for individuals 
        in the acquisition workforce who specialize in information 
        technology acquisition.
            ``(3) Defined career paths for individuals in the 
        acquisition workforce who specialize in information technology 
        acquisitions.
    ``(b) Definitions.--In this section:
            ``(1) The term `information technology' has the meaning 
        provided such term in section 11101 of title 40 and includes 
        information technology incorporated into a major weapon system.
            ``(2) The term `major weapon system' has the meaning 
        provided such term in section 2379(f) of this title.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of such subchapter is amended by adding at the end 
        the following new item:

``1725. Information technology acquisition positions.''.
    (b) Deadline.--The Secretary of Defense shall develop the plan 
required under section 1725 of title 10, United States Code, as added 
by subsection (a), not later than 180 days after the date of the 
enactment of this Act.

SEC. 207. DEFINITION OF ACQUISITION WORKFORCE.

    Section 101(a) of title 10, United States Code, is amended by 
inserting after paragraph (17) the following new paragraph:
            ``(18) The term `acquisition workforce' means the persons 
        serving in acquisition positions within the Department of 
        Defense, as designated pursuant to section 1721(a) of this 
        title.''.

                    TITLE III--FINANCIAL MANAGEMENT

SEC. 301. INCENTIVES FOR ACHIEVING AUDITABILITY.

    (a) Preferential Treatment Authorized.--The Under Secretary of 
Defense (Comptroller) shall ensure that any component of the Department 
of Defense that the Under Secretary determines has financial statements 
validated as ready for audit earlier than September 30, 2017, shall 
receive preferential treatment, as the Under Secretary determines 
appropriate--
            (1) in financial matter matters, including--
                    (A) consistent with the need to fund urgent 
                warfighter requirements and operational needs, priority 
                in the release of appropriated funds to such component;
                    (B) relief from the frequency of financial 
                reporting of such component in cases in which such 
                reporting is not required by law;
                    (C) relief from departmental obligation and 
                expenditure thresholds to the extent that such 
                thresholds establish requirements more restrictive than 
                those required by law; or
                    (D) such other measures as the Under Secretary 
                considers appropriate; and
            (2) in the availability of personnel management incentives, 
        including--
                    (A) the size of the bonus pool available to the 
                financial and business management workforce of the 
                component;
                    (B) the rates of promotion within the financial and 
                business management workforce of the component;
                    (C) awards for excellence in financial and business 
                management; or
                    (D) the scope of work assigned to the financial and 
                business management workforce of the component.
    (b) Inclusion of Information in Report.--The Under Secretary shall 
include information on any measure initiated pursuant to this section 
in the next semiannual report pursuant to section 1003(b) of the 
National Defense Authorization Act for Fiscal Year 2010 (Public Law 
111-84; 123 Stat. 2439; 10 U.S.C. 2222 note) after such measure is 
initiated.
    (c) Expiration.--This section shall expire on September 30, 2017.
    (d) Definition.--In this section, the term ``component of the 
Department of Defense'' means any organization within the Department of 
Defense that is required to submit an auditable financial statement to 
the Secretary of Defense.

SEC. 302. MEASURES REQUIRED AFTER FAILURE TO ACHIEVE AUDITABILITY.

    (a) In General.--The Secretary of Defense shall ensure that 
corrective measures are immediately taken to address the failure of a 
component of the Department of Defense to achieve a financial statement 
validated as ready for audit by September 30, 2017.
    (b) Measures Required.--Not later than 180 days after the date of 
the enactment of this Act, the Secretary shall develop and issue 
guidance detailing measures to be taken in accordance with subsection 
(a). Such measures shall include--
            (1) the development of a remediation plan to ensure the 
        component can achieve a financial statement validated as ready 
        for audit within one year;
            (2) additional reporting requirements that may be necessary 
        to mitigate financial risk to the component;
            (3) delaying the release of appropriated funds to such 
        component, consistent with the need to fund urgent warfighter 
        requirements and operational needs, until such time as the 
        Secretary is assured that the component will achieve a 
        financial statement validated as ready for audit within one 
        year;
            (4) specific consequences for key personnel in order to 
        ensure accountability within the leadership of the component; 
        and
            (5) such other measures as the Secretary considers 
        appropriate.
    (c) Definition.--The term ``component'' of the Department of 
Defense means any organization within the Department of Defense that is 
required to submit an auditable financial statement to the Secretary of 
Defense.

SEC. 303. REVIEW OF OBLIGATION AND EXPENDITURE THRESHOLDS.

    (a) Sense of Congress.--It is the sense of Congress that--
            (1) Department of Defense program managers should be 
        encouraged to place a higher priority on seeking the best value 
        for the Government than on meeting arbitrary benchmarks for 
        spending; and
            (2) actions to carry out paragraph (1) should be supported 
        by the Department's leadership at every level.
    (b) Policy Review.--Not later than 180 days after the date of the 
enactment of this Act, the Chief Management Officer of the Department 
of Defense, in coordination with the Chief Management Officer of each 
military department, shall review and update as necessary all relevant 
policy and instruction regarding obligation and expenditure benchmarks 
to ensure that such guidance does not inadvertantly prevent achieving 
the best value for the Government in the obligation and expenditure of 
funds.
    (c) Guidance.--Not later than one year after the date of the 
enactment of this Act, the Chief Management Officer, in coordination 
with the Chief Management Officer of each military department, the 
Director of the Office of Performance Assessment and Root Cause 
Analysis, the Under Secretary of Defense (Comptroller), and the 
Comptrollers of the military departments, should conduct a 
comprehensive review of the use and value of obligation and expenditure 
benchmarks and propose new benchmarks or processes for tracking 
financial performance, including, as appropriate--
            (1) increased reliance on individual obligation and 
        expenditure plans for measuring program financial performance;
            (2) mechanisms to improve funding stability and to increase 
        the predictability of the release of funding for obligation and 
        expenditure; and
            (3) streamlined mechanisms for a program manager to submit 
        an appeal for funding changes and to have such appeal evaluated 
        promptly.
    (d) Training.--The Under Secretary of Defense for Acquisition, 
Technology, and Logistics and the Under Secretary of Defense 
(Comptroller) shall ensure that as part of the training required for 
program managers and business managers, an emphasis is placed on 
obligating and expending appropriated funds in a manner that achieves 
the best value for the Government and that the purpose and limitations 
of obligation and expenditure benchmarks is made clear.

                       TITLE IV--INDUSTRIAL BASE

SEC. 401. EXPANSION OF THE INDUSTRIAL BASE.

    (a) Program To Expand Industrial Base Required.--The Secretary of 
Defense shall establish a program to expand the industrial base of the 
Department of Defense to increase the Department's access to innovation 
and the benefits of competition.
    (b) Identifying and Communicating With Nontraditional Suppliers.--
The program established under subsection (a) shall use tools and 
resources available within the Federal Government and available from 
the private sector, to provide a capability for identifying and 
communicating with nontraditional suppliers, including commercial firms 
and firms of all business sizes, that are engaged in markets of 
importance to the Department of Defense.
    (c) Industrial Base Review.--The program required by subsection (a) 
shall include a continuous effort to review the industrial base 
supporting the Department of Defense, including the identification of 
markets of importance to the Department of Defense.
    (d) Definition.--In this section:
            (1) Nontraditional suppliers.--The term ``nontraditional 
        suppliers'' means firms that have received contracts from the 
        Department of Defense with a total value of not more than 
        $100,000 in the previous 5 years.
            (2) Markets of importance to the department of defense.--
        The term ``markets of importance to the Department of Defense'' 
        means industrial sectors in which the Department of Defense 
        spends more than $500,000,000 annually.

SEC. 402. COMMERCIAL PRICING ANALYSIS.

    Section 803(c) of the Strom Thurmond National Defense Authorization 
Act for Fiscal Year 1999 Public Law 105-261; 10 U.S.C. 2306a note) is 
amended to read as follows:
    ``(c) Commercial Price Trend Analysis.--
            ``(1) The Secretary of Defense shall develop and implement 
        procedures that, to the maximum extent practicable, provide for 
        the collection and analysis of information on price trends for 
        categories of exempt commercial items described in paragraph 
        (2).
            ``(2) A category of exempt commercial items referred to in 
        paragraph (1) consists of exempt commercial items that are in a 
        single Federal Supply Group or Federal Supply Class, are 
        provided by a single contractor, or are otherwise logically 
        grouped for the purpose of analyzing information on price 
        trends.
            ``(3) The analysis of information on price trends under 
        paragraph (1) shall include, in any category in which 
        significant escalation in prices is identified, a more detailed 
        examination of the causes of escalation for such prices within 
        the category and whether such price escalation is consistent 
        across the Department of Defense.
            ``(4) The head of a Department of Defense agency or the 
        Secretary of a military department shall take appropriate 
        action to address any unjustified escalation in prices being 
        paid for items procured by that agency or military department 
        as identified in an analysis conducted pursuant to paragraph 
        (1).
            ``(5) Not later than April 1 of each of year, the Secretary 
        of Defense shall submit to the Committee on Armed Services of 
        the Senate and the Committee on Armed Services of the House of 
        Representatives a report on the analyses of price trends that 
        were conducted for categories of exempt commercial items during 
        the preceding fiscal year under the procedures prescribed 
        pursuant to paragraph (1). The report shall include a 
        description of the actions taken to identify and address any 
        unjustified price escalation for the categories of items.
            ``(6) Termination.--This subsection shall not be in effect 
        on and after April 1, 2013.''.

SEC. 403. CONTRACTOR AND GRANTEE DISCLOSURE OF DELINQUENT FEDERAL TAX 
              DEBTS.

    (a) Requirement.--
            (1) In general.--Chapter 37 of title 31, United States 
        Code, is amended by adding at the end of subchapter II the 
        following new section:
``Sec. 3720F. Contractor and grantee disclosure of delinquent Federal 
              tax debts
    ``(a) Requirement Relating to Contracts.--The head of any executive 
agency that issues an invitation for bids or a request for proposals 
for a contract in an amount greater than the simplified acquisition 
threshold shall require each person that submits a bid or proposal to 
submit with the bid or proposal a form--
            ``(1) certifying that the person does not have a seriously 
        delinquent tax debt; and
            ``(2) authorizing the Secretary of the Treasury to disclose 
        to the head of the agency information strictly limited to 
        verifying whether the person has a seriously delinquent tax 
        debt.
    ``(b) Requirement Relating to Grants.--The head of any executive 
agency that offers a grant in excess of an amount equal to the 
simplified acquisition threshold may not award such grant to any person 
unless such person submits with the application for such grant a form--
            ``(1) certifying that the person does not have a seriously 
        delinquent tax debt; and
            ``(2) authorizing the Secretary of the Treasury to disclose 
        to the head of the executive agency information strictly 
        limited to verifying whether the person has a seriously 
        delinquent tax debt.
    ``(c) Form for Release of Information.--The Secretary of the 
Treasury shall make available to all executive agencies a standard form 
for the certification and authorization described in subsections (a) 
and (b).
    ``(d) Definitions.--In this section:
            ``(1) Contract.--The term `contract' means a binding 
        agreement entered into by an executive agency for the purpose 
        of obtaining property or services, but does not include--
                    ``(A) a contract for property or services that is 
                intended to be entered into through the use of 
                procedures other than competitive procedures by reason 
                of section 2304(c)(2) of this title; or
                    ``(B) a contract designated by the head of the 
                agency as necessary to the national security of the 
                United States.
            ``(2) Executive agency.--The term `executive agency' has 
        the meaning given that term in section 4(1) of the Office of 
        Federal Procurement Policy Act (41 U.S.C. 403(1)).
            ``(3) Person.--The term `person' includes--
                    ``(A) an individual;
                    ``(B) a partnership;
                    ``(C) a corporation; and
                    ``(D) a joint venture.
            ``(4) Seriously delinquent tax debt.--The term `seriously 
        delinquent tax debt' means any Federal tax liability--
                    ``(A) that exceeds $3,000;
                    ``(B) that has been assessed by the Secretary of 
                the Treasury;
                    ``(C) with respect to which all judicial and 
                administrative remedies have been exhausted, or have 
                lapsed; and
                    ``(D) with respect to which levy may be made by 
                such Secretary under section 6331 of the Internal 
                Revenue Code of 1986.
            ``(5) Simplified acquisition threshold.--The term 
        `simplified acquisition threshold' has the meaning given that 
        term in section 4(11) of the Office of Federal Procurement 
        Policy Act (41 U.S.C. 403(11)).
    ``(e) Special Rules Relating to Partners and Shareholders.--For 
purposes of this section--
            ``(1) a partnership shall be treated as a person with a 
        seriously delinquent tax debt if such partnership has a 
        partner--
                    ``(A) who holds an ownership interest of 50 percent 
                or more in that partnership; and
                    ``(B) who has a seriously delinquent tax debt; and
            ``(2) a corporation shall be treated as a person with a 
        seriously delinquent tax debt if--
                    ``(A) another corporation or a joint venture holds 
                50 percent or more of the outstanding shares of 
                corporate stock in that corporation and the other 
                corporation or joint venture has a seriously delinquent 
                tax debt; or
                    ``(B) another corporation or joint venture holds a 
                controlling interest that is less than 50 percent of 
                the outstanding shares of corporate stock in that 
                corporation and the other corporation or joint venture 
                has a seriously delinquent tax debt.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 37 of such title is amended by adding 
        after the item relating to section 3720E the following new 
        item:

``3720F. Contractor and grantee disclosure of delinquent Federal tax 
                            debts.''.
    (b) Revision of FAR.--Not later than 270 days after the date of 
enactment of this section, the Federal Acquisition Regulation shall be 
revised to incorporate the requirements of section 3720F of title 31, 
United States Code, as added by this section.

SEC. 404. INDEPENDENCE OF CONTRACTOR BUSINESS SYSTEM REVIEWS; RISK-
              BASED REVIEWS.

    (a) In General.--
            (1) Amendment.--Chapter 131 of title 10, United States 
        Code, is amended by inserting after section 2222 the following 
        new section:
``Sec. 2222a. Criteria for business system reviews
    ``(a) Criteria for Business System Reviews.--The Secretary of 
Defense shall ensure that any contractor business system review carried 
out by a military department, a Defense Agency, or a Department of 
Defense Field Activity--
            ``(1) complies with generally accepted government auditing 
        standards issued by the Comptroller General;
            ``(2) is performed by an audit team that does not engage in 
        any other official activity (audit-related or otherwise) 
        involving the contractor concerned; and
            ``(3) is performed in a time and manner consistent with a 
        documented assessment of the risk to the Federal Government.
    ``(b) Contractor Business System Review Defined.--In this section, 
the term `contractor business system review' means an audit of 
policies, procedures, and internal controls relating to accounting and 
management systems of a contractor.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of such chapter is amended by inserting after the 
        item relating to section 2222 the following new item:

``2222a. Criteria for business system reviews.''.
    (b) Effective Date.--Section 2222a of title 10, United States Code, 
as added by subsection (a), shall take effect 180 days after the date 
of the enactment of this Act.
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