[Congressional Record Volume 141, Number 58 (Wednesday, March 29, 1995)]
[Senate]
[Pages S4806-S4820]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CAMPBELL (for himself, Mr. Brown, and Mr. Akaka):
  S. 644, A bill to amend title 38, United States Code, to reauthorize 
the establishment of research corporations in the Veterans Health 
Administration, and for other purposes; to the Committee on Veterans 
Affairs.


              nonprofit research corporations legislation

  Mr. CAMPBELL. Mr. President, today I am introducing a bill to 
reauthorize Department of Veterans Affairs Medical Centers [VAMC's] to 
establish nonprofit research corporations [NPRC's].
  In 1988, Congress passed a law, Public Law 100-322, allowing VAMC's 
to establish NPRC's as a means to provide a flexible funding mechanism 
for VA-approved research. The purpose of these foundations is to 
enhance ongoing federally-funded VA research by allowing them to accept 
private funds, contributions and grants. Between June 1993 and June 
1994, the 65 active corporations provided nearly $40 million in VA 
research support.
  These NPRC's have five overlapping functions which help VAMC's serve 
veteran patients and their families. First, these foundations help 
recruit and maintain qualified staff inside the VA health care system 
by insuring a strong research program. Not only do NPRC's fund research 
projects directly, they also help send VA researchers, nurses, 
pharmacists, and other staff to conferences and other research events. 
This both encourages physicians and other health professionals to work 
for VA and keeps the knowledge inside the VA system.
  Second, these foundations manage research donations and grants with 
Government oversight. NPRC researchers must abide by sunshine laws and 
conduct every project in the open. Unlike universities and private 
foundations, NPRC's must follow strict conflict of interest guidelines 
which protect integrity of the research and the interests of veteran 
patients.
  Third, these foundations insure that substantial overhead funds are 
retained by VAMC's. Most universities charge overhead costs from 30 to 
50 percent, while NPRC's charge only about 5 to 30 percent for 
overhead. Simply stated, foundations allow more money to be spent on 
research-related activities and insure that the money stays inside the 
VA system. Furthermore, some NPRC's provide funds for overheard costs. 
For example, the San Diego foundation contributes over $100,000 for 
overhead expenses, including paying one-quarter of the hospital's bill 
for hazardous waste disposal at the research facility. Before NPRC's 
were established, the medical centers were forced to carry all the 
administrative costs of research.
  Fourth, these foundations help provide resources for research-related 
personnel, equipment, supplies, and conferences. For example, in 
Seattle, WA, the foundation purchases approximately 75,000 dollars 
worth of new equipment for the medical center each year. In some 
instances, the staff supplied provide direct patient care. In 
Washington, DC, the foundation has 25 employees who work directly in 
patient care as doctors, nurses, or clinicians.
  Finally, NPRC's allow interested veterans to participate in the 
development of new drugs and treatments benefiting veterans. In 
Knoxville, TN, the foundation participated in a study which made a new 
blood pressure medication available to patients in a safe, controlled 
manner. In Indianapolis, IN the foundation conducted a drug study that 
gave veteran patients access to a new medication that benefits 
chronically ill heart patients.
  By helping to provide equipment, treatment, staff, and other 
resources, while defraying the costs of overhead, these foundations are 
serving veterans without requiring more money from the VA budget.
  This legislation would correct two problems in current law. First, it 
would extend the window of opportunity for the establishment of new 
NPRC's until December 31, 2000. To my knowledge, there are several 
VAMC's that would like to establish these important research 
corporations, including one in Colorado. If these VAMC's were allowed 
to establish NPRC's, it would pump much-needed supplemental funds into 
the VA research program.
  The second provision of this bill would delete the requirement that 
NPRC's be established as 501(c)(3) corporations. Realizing that the IRS 
has recognized several foundations under different classifications, 
this technical correction is needed to insure the legality of several 
NPRC's.
  I am happy to include Senators Brown and Akaka as original cosponsors 
of this bill. Mr. President, I hope the Committee on Veterans' Affairs 
will consider this legislation favorably so that interested VA Medical 
Center can once again establish new nonprofit research corporations.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 644

       Be is enacted by the Senate and House of Representatives of 
     the United States of American in Congress assembled,

     SECTION 1. AUTHORITY FOR RESEARCH CORPORATIONS.

       (a) Authority.--Subsection (a) of section 7361 of title 38, 
     United States Code, is amended by inserting after the first 
     sentence the following new sentence: ``Subject to the 
     provisions of section 7368 of this title, the Secretary may 
     exercise the authority set forth in the preceding sentence on 
     or after the date of the enactment of the Act entitled `An 
     Act to amend title 38, United States Code, to reauthorize the 
     establishment of research 
     [[Page S4807]] corporations in the Veterans Health 
     Administration, and for other purposes.'''.
       (b) Clarification of Tax-Exempt Status.--(1) Subsection (b) 
     of such section is amended by striking out ``section 
     501(c)(3) of''.
       (2) Section 7363(c) of such title is amended by striking 
     out ``section 501(c)(3) of''.
       (c) Termination of Authority.--Section 7368 of such title 
     is amended by striking out ``December 31, 1992'' and 
     inserting in lieu thereof ``December 31, 2000''.
                                 ______

      By Mr. FEINGOLD:
  S. 645. A bill to amend the Agriculture Adjustment Act to prohibit 
the Secretary of Agriculture from basing minimum prices for class I 
milk on the distance or transportation costs from any location that is 
not within a marketing area, except under certain circumstances, and 
for other purposes; to the Committee on Agriculture, Nutrition, and 
Forestry.


         the agricultural adjustment act amendment act of 1995

 Mr. FEINGOLD. Mr. President, today I rise to introduce a bill 
which will be a first step toward rectifying the inequities in the 
Federal milk marketing order system. The Federal milk marketing order 
system, created nearly 60 years ago, establishes minimum prices for 
milk paid to producers throughout various marketing areas in the United 
States.
  My legislation is very simple. It identifies the single most harmful 
flaw in the current system, and corrects it.
  That flaw is USDA's practice of basing prices for fluid milk in all 
marketing ares east of the Rocky Mountains on the distance from Eau 
Claire, WI, when there is no longer any economic justification for 
doing so.
  The price for fluid milk increases at a rate of 21 cents per hundred 
miles from Eau Claire, WI, even though most milk marketing orders do 
not receive any milk from Wisconsin. Fluid milk prices, as a result, 
are $2.98 cents higher in Florida than in Wisconsin and over $1.00 
higher in Texas.
  This method of pricing fluid milk is not only arbitrary, it is both 
out of date and out of sync with the market conditions of 1995. It is 
time for this method of pricing--known as single-based-point pricing--
to come to an end.
  The bill I am introducing today will prohibit the Secretary of 
Agriculture from using distance or transportation costs from any 
location as the basis for pricing milk, unless significant quantities 
of milk are actually transported from that location into the recipient 
market. The Secretary will have to comply with the statutory 
requirement that supply and demand factors be considered as specified 
in the Agricultural Marketing Agreement Act when setting milk prices in 
marketing orders. The fact remains that single-basing-point pricing 
simply cannot be justified based on supply and demand for milk both in 
local and national markets.
  This bill also requires the Secretary to report to Congress on 
specifically which criteria are used to set milk prices. Finally, he 
will have to certify to Congress that in no way do the criteria used by 
the Department attempt to circumvent the prohibition on using distance 
or transportation cost as basis for pricing milk.
  This one change is so crucial to Upper Midwest producers, because the 
current system has penalized them for many years. By providing 
disparate profits for producers in other parts of the country and 
creating artificial economic incentives for milk production, Wisconsin 
producers have seen national surpluses rise, and milk prices fall. 
Rather than providing adequate supplies of fluid milk in some parts of 
the country, the prices have led to excess production.
  The prices have provided production incentives beyond those needed to 
ensure a local supply of fluid milk in some regions, leading to an 
increase in manufactured products in those
 marketing orders. Those manufactured products directly compete with 
Wisconsin's processed products, eroding our markets and driving 
national prices down.

  In the past 4 years, markets far from Eau Claire, WI, sold most of 
the surplus manufactured dairy products to the Federal Government under 
the dairy price support program. The Minnesota-Wisconsin area--the 
supposed surplus area of the country--in reality accounts for only a 
small percentage of actual surplus sales.
  The perverse nature of this system is further illustrated by the fact 
that in 1995 some regions of the United States, notably the Central 
States and the Southwest, are now producing so much milk that they are 
actually shipping fluid milk north to the Upper Midwest. The high fluid 
milk prices have generated so much excess production, that these 
markets distant from Eau Claire are now taking not only our 
manufactured markets, but also our markets for fluid milk, further 
eroding prices in Wisconsin.
  Emphasizing the market distorting effects of the fluid price 
differentials in Federal orders is the Congressional Budget Office 
estimate that eliminating the orders would save $669 million over 5 
years. Government outlays would fall, CBO concludes, because production 
would fall in response to lower milk prices and there would be fewer 
Government purchases of surplus milk. The regions which would gain and 
lose in this scenario illustrate the discrimination inherent to the 
current system. Recent economic analyses show that farm revenues in the 
absence of Federal orders would actually increase in the Upper Midwest 
and fall in most other milk-producing regions.
  I am not advocating total elimination of the current system at this 
point, however, the data clearly show that Upper Midwest producers are 
hurt by distortions built into a single-basing-point system that 
prevent them from competing effectively in a national market.
  While this system has been around since 1937, the practice of basing 
fluid milk price differentials on the distance from Eau Claire was 
formalized in the 1960's, when arguably the Upper Midwest was the 
primary reserve for additional supplies of milk. The idea was to 
encourage local supplies of fluid milk in areas of the country that did 
not traditionally produce enough fluid milk to meet their own needs.
  Mr. President, that is no longer the case. The Upper Midwest is 
neither the lowest cost production area nor a primary source of reserve 
supplies of milk. Milk is produced efficiently, and in some cases, at 
lower cost than the Upper Midwest, in many of the markets with higher 
fluid milk differentials. Unfortunately, the prices didn't adjust with 
changing economic conditions, most notably the shift of the dairy 
industry away from the Upper Midwest and toward the Southwest.
  Fluid milk prices should have been lowered to reflect that trend. 
Instead, in 1985, the prices were increased for markets distant from 
Eau Claire. USDA has refused to use the administrative authority 
provided by Congress to make the appropriate adjustments to reflect 
economic realities. They continue to stand behind single-basing-point 
pricing.
  The result has been the decline in the Upper Midwest dairy industry, 
not because they can't compete in the marketplace, but because the 
system discriminates against them.
  Since 1980, Wisconsin has lost over 15,000 dairy farmers. The Upper 
Midwest, with the lowest fluid milk prices, is shrinking as a dairy 
region. Other regions with higher fluid milk prices are growing 
rapidly.
  In an unregulated market with a level playing field these shifts in 
production might be fair. But in a market where the Government is 
setting the prices and providing that artificial advantage, the current 
system is unconscionable.
  This bill is a first step in reforming Federal orders by prohibiting 
a practice that should have been dropped long ago. However, for 
Congress there is a long way to go. Through the process of the 1995 
farm bill we will have to determine not only what Federal orders should 
not do, but also what they should do, and, indeed, if they are still 
necessary. My bill is a starting point. I look forward to working with 
my colleagues and with the dairy industry in the upcoming months to 
determine more specifically how we should establish orderly marketing 
conditions. However, this bill identifies the one change that is 
absolutely necessary in any outcome--the elimination of single basing 
point pricing.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.

[[Page S4808]]

  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 645

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

     SECTION 1. LOCATION ADJUSTMENTS FOR MINIMUM PRICES FOR CLASS 
                   I MILK.

       Section 8c(5) of the Agricultural Adjustment Act (7 U.S.C. 
     608c(5)), reenacted with amendments by the Agricultural 
     Marketing Agreement Act of 1937, is amended--
       (1) in paragraph (A)--
       (A) in clause (3) of the second sentence, by inserting 
     after ``the locations'' the following: ``within a marketing 
     area subject to the order''; and
       (B) by striking the last 2 sentences and inserting the 
     following: ``Notwithstanding paragraph (18) or any other 
     provision of law, when fixing minimum prices for milk of the 
     highest use classification in a marketing area subject to an 
     order under this subsection, the Secretary may not, directly 
     or indirectly, base the prices on the distance from, or all 
     or part of the costs incurred to transport milk to or from, 
     any location that is not within the marketing area subject to 
     the order, unless milk from the location constitutes at least 
     50 percent of the total supply of milk of the highest use 
     classification in the marketing area. The Secretary shall 
     report to the Committee on Agriculture of the House of 
     Representatives and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate on the criteria that are used as 
     the basis for the minimum prices referred to in the preceding 
     sentence, including a certification that the minimum prices 
     are made in accordance with the preceding sentence''; and
       (2) in paragraph (B)(c), by inserting after ``the 
     locations'' the following: ``within a marketing area subject 
     to the order''.
                                 ______

      By Mr. ROTH (for himself, Mr. Grassley, and Mr. Cohen):
  S. 646. A bill to amend title 10, United States Code, to modernize 
Department of Defense acquisition procedures, and for other purposes, 
to the Committee on Armed Services.


             the acquisition management reform act of 1995

  Mr. ROTH. Mr. President, last year, we joined with the administration 
in taking a step toward improving the Federal Government's massive 
buying system. This is an issue that I have been working on for over a 
decade and the payoff from a comprehensive reform is significant. Last 
year's bill, the Federal Acquisition Streamlining Act, attempted to 
improve the Government's access to commercial items. It also laid the 
groundwork for more comprehensive reforms. However, it did not remedy 
the core problems of the Federal buying system. Today, Congressman 
Kasich and I are introducing legislation to dramatically reshape the 
Defense Department buying system.
  Recent reports from both the Defense Department and the General 
Accounting Office highlight the need for reform. In short, the Defense 
Department has become increasingly unable to produce the best 
technology in an affordable manner, when it is needed. The vast 
majority of weapon acquisition programs are experiencing serious cost 
and schedule problems. Last December, two of the Defense Department's 
own reports found that, on average, 33 percent of its programs are 
experiencing overruns. A Defense Systems Management College study, 
published last month in the College's journal, reported average cost 
overruns of 45 percent with schedule delays of 63 percent. For example, 
the C-17 transport's cost and schedule overruns have seriously delayed 
its availability. After spending $10.4 billion and over 20 years in 
developing the C-17, the Air Force is considering buying commercial 
aircraft in its place.
  We can point to such horror stories in all the services. Acquisition 
costs for Navy major weapon systems are over budget by as much as 179 
percent; Air Force systems by as much as 158 percent, and Army systems 
by as much as 220 percent, even after accounting for the effects of 
inflation and quantity. A July 1993 Defense Science Board study found 
that: ``without fundamental reform, DOD will be unable to afford the 
weapons, equipment, and services it needs to provide for our national 
security.''
  The defense buying bureaucracy is plagued by multi-billion-dollar 
cost overruns, programs that are years or even a decade behind 
schedule, incentives that encourage spending rather than cost-cutting, 
and topheavy bureaucratic agencies that rely on detailed regulations 
rather than good judgment. Defense Department studies find that it 
takes 16 to 25 years and more than 840 steps to bring a technology to 
the battlefield. By then the technologies are out of date. Until the 
buying system is changed, the results would not improve.
  Mr. President, I have long maintained that Congress must be bold if 
it is to make significant improvements in the Government's buying 
system--a system I have worked for more than a decade to reform. It was 
my legislation that led to the creation of the Packard Commission. I 
have sponsored and fought for many reforms, including the Federal 
Acquisition Streamlining Act, which I and my colleagues on the 
Governmental Affairs
 Committee successfully enacted into law.

  While last year's legislation made a good step forward more 
significant changes are required to fix the core problems. Without 
major cultural and structural change, cost and schedule overruns will 
continue, the Pentagon will pay more than it should for goods and 
services; and the taxpayer will pick up the inflated tab. Moreover, our 
brave young men and women in uniform will continue to wait for decades 
to get weapons that may not meet their needs.
  Mr. President, there are three root causes to this situation which 
must be addressed today:
  One, the defense acquisition process is too cumbersome, takes too 
long, and does not produce desired results. The DOD 5000 and 8000 
Series of documents and its consensus based management process must be 
abandoned in favor of a results oriented process.
  Two, incentives are wrong. They reward program managers and 
contractors for increasing the size of their program and their budget. 
There are no incentives for a job well done.
  Three, the organization is too large. It is a bureaucracy with layer 
upon layer of management and dozens of buying commands and subcommands 
spread across the four military services. Many of the bureaucratic 
layers exist solely for the purpose of satisfying the needs of the 
bureaucracy and add no value. The dozens of defense acquisition schools 
that were originally intended to ensure the excellence of the work 
force have now become a barrier to reform. And, dozens of military 
depots have become a hindrance to efficiently downsizing the defense 
industrial base.
  Mr. President, my proposal contains eight parts and incorporates the 
principles of unity of command, lean management structure, fast 
processes, and pay for performance for both Government workers and 
contractors.
  First, with respect to program performance, programs must be managed 
within 90 percent of their budget, schedule, and performance goals. If 
they overrun by 50 percent or more, programs must be terminated.
  Second, my legislation would require the Secretary of Defense to 
streamline the acquisition management process so that program managers 
focus on achieving results. It also integrates the operational testing 
reforms that I have been working on with Senator Pryor to prevent 
circumvention of operational tests and force early operational 
assessments to reduce the risk of major flaws being found after 
production has started.
  Third, my proposal streamlines the defense acquisition organization 
and its interface with operational users. The bill reorganizes the 
Defense Department research, development, and acquisition bureaucracies 
into a single DOD-wide agency, using the three layer organization 
endorsed by the Packard commission.
  Fourth, the bill re-emphasizes the commitment of Congress to a 
professional acquisition work force and establishes an incentive 
structure focused on program performance.
  Fifth, the legislation emphasizes the necessity for an efficient 
contracting process by establishing a policy goal of cutting in-half 
the time it takes to get an item to someone with a need. It also allows 
the Defense Department to limit the final selection process to the top 
two or three bidders, as recommended by the GAO.
  Sixth, the Defense Department will be able to manage its contractors 
on the basis of performance, rather than relying on continuous audit 
oversight and the threat of penalties. Under the 
[[Page S4809]] concept that I am proposing, contractor profit would be 
tried to achievement of quantifiable performance measures.
  Seventh, the bill addresses major financial management problems that 
afflict the defense buying system. It reduces the major source of 
program instability by enabling full-funding of a program for each 
phase of the development process. Additionally, those who use weapons 
will regain authority for determining what is bought to support them. 
The bill also applies pay for performance to responsible officials, 
requiring them to bring financial management up to commercial 
standards.
  Eighth, the bill consolidates duplicative military and industry 
maintenance and repair depots. The bill prohibits the Defense 
Department from performing depot and intermediate level maintenance and 
repair work, unless industry is unwilling to perform the work. 
Therefore existing repair depots must be either privatized or shut 
down.
  Mr. President, large savings can be realized from the comprehensive 
reforms I am proposing. I anticipate that my approach will reduce 
acquisition management personnel by as much as 25 to 30 percent through 
reduction in duplicative headquarters staffs. The Defense Science Board 
Task Force on Defense Acquisition Reform reported in July 1993 that a 
comprehensive reform along the lines I am proposing would save $20 
billion per year. The House Budget Committee has included $3.5 billion 
in its budget reduction proposal, and the Congressional Budget Office 
conservatively estimates the savings at about $1.7 billion per year.
  In summary, there is both a need and an opportunity for reforming 
Defense acquisition. But, Mr. President, I must point out that 
bureaucracies are inherently unable to reform themselves. The time has 
come for us to make some very hard and difficult decisions which have 
far-reaching impact on the future of our country. Change must be 
brought about by those of us who are concerned about maintaining a 
strong defense within today's budget constraints.
  Mr. President, I ask that the full text of the bill and a letter be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                 S. 646
       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 ``Department of Defense 
     Acquisition Management Reform Act of 1995''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

             TITLE I--PERFORMANCE BASED ACQUISITION PROCESS

                     Subtitle A--Performance Goals

Sec. 101. Strengthened reporting requirement.
Sec. 102. Termination of major defense acquisition programs not meeting 
              goals.
Sec. 103. Enhanced performance incentives for acquisition workforce.

            Subtitle B--Results-Oriented Acquisition Process

Sec. 111. Revision of regulations relating to acquisition of major 
              systems and information technology systems.
Sec. 112. Results oriented acquisition program cycle.
Sec. 113. Operational test and evaluation requirements in relation to 
              low-rate production.
Sec. 114. Acquisition of information technology.

                     Subtitle C--Rapid Contracting

Sec. 121. Goal.
Sec. 122. Authority to limit number of offerors.
Sec. 123. Preference for certified contractors.
Sec. 124. Consideration of past performance and eligibility 
              certification.
Sec. 125. Encouragement of multiyear contracting.
Sec. 126. Encouragement of use of leasing authority.

           Subtitle D--Performance Based Contract Management

Sec. 131. Unallowable costs.
Sec. 132. Alternatives approaches to contract management.
Sec. 133. Contractor share of gains and losses from cost, schedule, and 
              performance experience.

                    Subtitle E--Financial Management

Sec. 141. Phase funding of defense acquisition programs.
Sec. 142. Maximized benefit funding.
Sec. 143. Improved Department of Defense contract payment procedures.

               Subtitle F--Defense Acquisition Workforce

Sec. 151. Consideration of past performance in assignment to 
              acquisition positions.
Sec. 152. Termination of defense acquisition schools.

       Subtitle G--Revision of Procurement Integrity Requirements

Sec. 161. Amendments to Office of Federal Procurement Policy Act.
Sec. 162. Amendments to title 18, United States Code.
Sec. 163. Repeal of superseded and obsolete laws
Sec. 164. Implementation.

                    Subtitle H--Clerical Amendments

Sec. 171. Clerical amendments to title 10.
Sec. 172. Other laws.

 TITLE II--REORGANIZATION AND REFORM OF THE DEFENSE ACQUISITION SYSTEM

   Subtitle A--Streamlining and Improvement of Acquisition Management

Sec. 201. Reorganization of acquisition authority.
Sec. 202. Joint foreign products development.

                   Subtitle B--Transfer of Functions

Sec. 211. Transfers.
Sec. 212. Savings provisions.

                   Subtitle C--Conforming Amendments

Sec. 221. Modification of the responsibility of the Under Secretary of 
              Defense (Comptroller) for defense acquisition budgets.
Sec. 222. The defense acquisition work force.
Sec. 223. Procurement procedures generally.
Sec. 224. Research and development.
Sec. 225. Miscellaneous procurement provisions.
Sec. 226. Major defense acquisition programs.
Sec. 227. Service specific acquisition authority.
Sec. 228. Other laws.

                       Subtitle D--Effective Date

Sec. 241. Effective date.

                   TITLE III--DEPOT-LEVEL MAINTENANCE

Sec. 301. Elimination of 60/40 rule for public/private division of 
              depot-level maintenance workload.
Sec. 302. Preservation of core maintenance and repair capability.
Sec. 303. Performance of depot-level maintenance workload by private 
              sector whenever possible.
             TITLE I--PERFORMANCE BASED ACQUISITION PROCESS
                     Subtitle A--Performance Goals

     SEC. 101. STRENGTHENED REPORTING REQUIREMENT.

       Section 2220(b) of title 10, United States Code, is amended 
     in the first sentence by striking out ``an assessment of 
     whether major and nonmajor acquisition programs of the 
     Department of Defense are achieving'' and inserting in lieu 
     thereof ``an assessment, for each Department of Defense 
     appropriation account, of whether the major and nonmajor 
     acquisition programs funded from such account are 
     achieving''.

     SEC. 102. TERMINATION OF MAJOR DEFENSE ACQUISITION PROGRAMS 
                   NOT MEETING GOALS.

       Section 2220 of title 10, United States Code, is amended by 
     adding at the end the following:
       ``(d) Termination of Programs Significantly Under Goals.--
     The Secretary of Defense shall terminate any major defense 
     acquisition program that--
       ``(1) is more than 50 percent over the cost goal 
     established for a phase of the program;
       ``(2) fails to achieve at least 50 percent of the 
     performance capability goals established for a phase of the 
     program; or
       ``(3) is more than 50 percent behind schedule, as 
     determined in accordance with the schedule goal established 
     for a phase of the program.''.

     SEC. 103. ENHANCED PERFORMANCE INCENTIVES FOR ACQUISITION 
                   WORKFORCE.

       (a) Clarification of Requirements for System of 
     Incentives.--Subsection (b) of section 5001 of the Federal 
     Acquisition Streamlining Act of 1994 (Public Law 103-355; 108 
     Stat. 3350; 10 U.S.C. 2220 note) is amended--
       (1) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively;
       (2) by designating the second sentence as paragraph (2); 
     and
       (3) by inserting ``(1)'' after ``(b) Enhanced system of 
     Performance Incentives.--''; and
       (4) by adding at the end the following:
       ``(3) The Secretary shall include in the enhanced system of 
     incentives the following:
       ``(A) Pay bands.
       ``(B) Significant and material pay and promotion incentives 
     to be awarded, and significant and material unfavorable 
     personnel actions to be imposed, under the system 
     exclusively, or primarily, on the basis of the contributions 
     of personnel to the performance of the acquisition program in 
     relation to cost goals, performance goals, and schedule 
     goals.
       ``(C) Provisions for pay incentives and promotion 
     incentives to be awarded under the system only if--
     [[Page S4810]]   ``(i) the cost of the acquisition program is 
     less than 90 percent of the baseline parameter established 
     for the cost of the program under section 2435 of title 10, 
     United States Code;
       ``(ii) the period for completion of the program is less 
     than 90 percent of the period provided under the baseline 
     parameter established for the program schedule under such 
     section; and
       ``(iii) the results of the phase of the program being 
     executed exceed the performance parameter established for the 
     system under such section by more than 10 percent.
       ``(D) Provisions for unfavorable personnel actions to be 
     taken under the system only if the acquisition program 
     performance for the phase being executed exceeds by more than 
     10 percent the cost and schedule parameters established for 
     the program phase under section 2435 of title 10, United 
     States Code, and the performance of the system acquired or to 
     be acquired under the program fails to achieve at lease 90 
     percent of the baseline parameters established for 
     performance of the program under such section.''.
       (b) Recommended Legislation.--Subsection (c) of such 
     section is amended by adding at the end the following: ``The 
     Secretary shall include in the recommendations provisions 
     necessary to implement the requirements of subsection 
     (b)(3).''.
       (c) Implementation of Incentives System.--Section 5001 of 
     the Federal Acquisition Streamlining Act of 1994 is further 
     amended by adding at the end the following:
       ``(d) Implementation of Incentives System.--(1) The 
     Secretary shall complete the review required by subsection 
     (b) and take such actions as are necessary to provide an 
     enhanced system of incentives in accordance with such 
     subsection not later than October 1, 1997.
       ``(2) Not later than October 1, 1996, the Secretary shall 
     submit to the Committee on Armed Services of the Senate and 
     the Committee on National Security of the House of 
     Representatives a report on the actions taken to satisfy the 
     requirements of paragraph (1).''.
            Subtitle B--Results-Oriented Acquisition Process

     SEC. 111. REVISION OF REGULATIONS RELATING TO ACQUISITION OF 
                   MAJOR SYSTEMS AND INFORMATION TECHNOLOGY 
                   SYSTEMS.

       Not later than October 1, 1996, the Secretary of Defense 
     shall revise the regulations of the Department of Defense 
     relating to the acquisition of major systems and of 
     information technology systems to ensure that, in the 
     acquisition of those systems, program managers focus on 
     achieving results rather than on preparing and transmitting 
     reports and building consensus among interested persons.

     SEC. 112. RESULTS ORIENTED ACQUISITION PROGRAM CYCLE.

       (a) Cycle Defined.--Chapter 131 of title 10, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 2221. Results oriented acquisition program cycle

       ``(a) Program Phases.--The Secretary of Defense shall 
     define in regulations a simplified acquisition program cycle 
     that is results-oriented and consists of the following 
     phases:
       ``(1) The integrated decision team meeting which--
       ``(A) may be requested by a potential user of the system or 
     component to be acquired, the head of a laboratory, or a 
     program office on such bases as the emergence of a new 
     military requirement, cost savings opportunity, or new 
     technology opportunity;
       ``(B) shall be conducted by the program executive officer;
       ``(C) shall include representatives of commanders of 
     unified and specified combatant commands, all armed forces 
     (other than the Coast Guard), laboratories, and industry; and
       ``(D) shall result in the team recommending to the 
     potential user a range of solutions for meeting user 
     requirements or for evaluating opportunities;
       ``(E) shall be completed within one to three months.
       ``(2) The prototype development and testing phase which--
       ``(A) shall include operational tests and concerns relating 
     to manufacturing operations and life cycle support;
       ``(B) shall be completed within 6 to 36 months; and
       ``(C) shall produce sufficient numbers of prototypes to 
     assess operational utility.
       ``(3) Product integration, development, and testing which--
       ``(A) shall include full-scale development, operational 
     testing, and integration of components; and
       ``(B) shall be completed within one to five years.
       ``(4) Production, integration into existing systems, or 
     production and integration into existing systems.
       ``(b) Relationship Between Extent of Technical Risk and 
     Completion of Phases.--(1) The time constraints set forth in 
     subsections (a)(1)(E), (a)(2)(B), and (a)(3)(B) establish 
     maximum limits for completion of the acquisition program 
     cycle and for each phase of the program cycle. The 
     regulations prescribed for the acquisition program cycle 
     shall provide for reducing the maximum time limits for an 
     acquisition program in relation to the degree of the 
     technical difficulty that is involved in the execution of the 
     various recommendations developed for the program in the 
     integrated decision team phase under subsection (a)(1)(D).
       ``(2) The regulations shall provide three alternatives for 
     maximum time limits that are to apply to completion of the 
     acquisition program cycle for a program and for each phase of 
     the program cycle, as follows:
       ``(A) In the case of an acquisition that involves complex 
     technical risks and integration issues, completion within the 
     maximum time limits set forth in subsection (a).
       ``(B) In the case of an acquisition of a component 
     primarily using existing technology or of a modification of a 
     component or system primarily using existing technology, 
     accelerated completion.
       ``(C) In the case of an acquisition of a commercial item or 
     a nondevelopmental item, relatively rapid completion.
       ``(c) Single Major Decision Point.--(1) The acquisition 
     program approval process within the Department of Defense 
     shall have one major decision point which shall occur for an 
     acquisition program before that program proceeds into product 
     integration, development, and testing.
       ``(2) At the major decision point for an acquisition 
     program, the Under Secretary of Defense for Acquisition, in 
     consultation with the Vice Chairman of the Joint Chiefs of 
     Staff, shall--
       ``(A) review the program;
       ``(B) determine whether the program should continue to be 
     carried out beyond product integration and development; and
       ``(C) decide whether--
       ``(i) to direct the program manager to request an 
     integrated decision team meeting;
       ``(ii) to proceed into product integration or development; 
     or
       ``(iii) to terminate the program.
       ``(3) In the review of an acquisition program, the Under 
     Secretary shall consider the potential benefits, independent 
     cost estimates, affordability, needs, and risks of the 
     program.
       ``(d) User Involvement in Integration Matters.--The 
     regulations under subsection (a) shall ensure that the 
     potential users (within the military departments) of an item 
     being acquired under the program cycle set forth in 
     subsection (a) are afforded an opportunity to participate 
     meaningfully in the acquisition decisions concerning such 
     item during the phases described in paragraphs (3) and (4) of 
     that subsection.''.
       (b) Conforming Amendments.--
       (1) Coordination and communication of defense research 
     activities.--Section 2364 of title 10, United States Code, is 
     amended--
       (A) in subsection (b)(5), by striking out ``making 
     milestone 0, milestone I, and milestone II decision'' and 
     inserting in lieu thereof ``the integrated decision team 
     meeting, the making of the decision at the single major 
     decision point under subsection (c) of section 2221 of this 
     title, and, as appropriate, the making of other acquisition 
     program decisions during the acquisition program cycle 
     described in section 2221 of this title''; and
       (B) by striking out subsection (c).
       (2) Survivability and lethality testing.--Section 2366(c) 
     of such title is amended by striking out ``engineering and 
     manufacturing development'' in paragraph (1) and in the 
     second sentence of paragraph (2) and inserting in lieu 
     thereof ``product integration, development, and testing''.
       (3) Low-rate initial production of new systems.--Section 
     2400(a)(2) of such title is amended by striking out 
     ``engineering and manufacturing development'' and inserting 
     in lieu thereof ``product integration, development, and 
     testing''.
       (4) Selected acquisition reports.--Section 2432 of such 
     title is amended--
       (A) in subsection (b)(3)(A)(i), by striking out 
     ``engineering and manufacturing development'' and inserting 
     in lieu thereof ``product integration, development, and 
     testing'';
       (B) in subsection (c)(3)(A), by striking out ``engineering 
     and manufacturing development phase or has completed that 
     stage'' and inserting in lieu thereof ``product integration, 
     development, and testing phase or has completed that phase'';
       (C) in subsection (h)(1)--
       (i) in the first sentence, by striking out ``engineering 
     and manufacturing development'' and inserting in lieu thereof 
     ``prototype development and testing''; and
       (ii) in the second sentence, by striking out ``engineering 
     and manufacturing development'' and inserting in lieu thereof 
     ``product integration, development, and testing''.
       (5) Major defense acquisition programs.--
       (A) Independent cost estimates.--Section 2434(a) of such 
     title is amended by striking out ``engineering and 
     manufacturing development, or the production and 
     deployment,'' and inserting in lieu thereof ``product 
     integration, development, and testing''.
       (B) Baseline description.--Section 2435 of such title is 
     amended--
       (i) in subsection (b), by striking out ``engineering and 
     manufacturing development'' and inserting in lieu thereof 
     ``prototype development and testing''; and
       (ii) by striking out subsection (c) and inserting in lieu 
     thereof the following:
       ``(c) Schedule.--A baseline description for a major defense 
     acquisition program shall be prepared under this section--
       ``(1) before the program enters prototype development and 
     testing;
       ``(2) before the program enters product integration and 
     development; and
       ``(3) before the program enters production, integration 
     into existing systems, or production and integration into 
     existing systems.''.
     [[Page S4811]] SEC. 113. OPERATIONAL TEST AND EVALUATION 
                   REQUIREMENTS IN RELATION TO LOW-RATE 
                   PRODUCTION.

       (a) Requirements.--Section 2399 of title 10, United States 
     Code, is amended to read as follows:

     ``Sec. 2399. Operational test and evaluation of major systems

       ``(a) Condition for Proceeding Into Low-Rate Initial 
     Production.--(1) The Secretary of Defense may not issue a 
     notice to proceed with production of a major system until--
       ``(A) at least one phase of initial operational test and 
     evaluation has been completed, during the prototype 
     development and testing phase and again during the product 
     integration, development, and testing phase, in order to 
     demonstrate that the system--
       ``(i) meets the minimum performance requirements 
     established for the system;
       ``(ii) is suitable for the purposes for which the system is 
     to be acquired; and
       ``(iii) does not require significant design changes or 
     other significant modifications in order to demonstrate 
     required operational capabilities; and
       ``(B) the Director of Operational Test and Evaluation has 
     certified to the Secretary and to the congressional defense 
     committees that--
       ``(i) the test and evaluation performed on the system were 
     adequate; and
       ``(ii) the conditions set forth in clauses (i), (ii), and 
     (iii) of subparagraph (A) were satisfied.
       ``(2) The Secretary may waive the requirements of paragraph 
     (1)(B) in the case of a major system if the Secretary--
       ``(A) determines and certifies to the congressional defense 
     committees that the waiver is vital to national security 
     interests; or
       ``(B) certifies to the congressional defense committees 
     that the Secretary has information that demonstrates that the 
     conditions set forth in clauses (i), (ii), and (iii) of 
     paragraph (1)(A) can be satisfied without increasing--
       ``(i) the production unit cost of the system by more than 
     10 percent over the production unit cost estimated at the 
     time of the waiver; and
       ``(ii) the production period for the system by more than 10 
     percent over the production period estimated at the time of 
     the waiver.
       ``(3) Paragraph (1) does not apply to acquisition of a 
     naval vessel or a satellite.
       ``(b) Condition for Proceeding Beyond Low-Rate Initial 
     Production.--The Secretary of Defense shall provide that a 
     program for the acquisition of a major system may not proceed 
     beyond low-rate initial production until initial operational 
     test and evaluation of the program is completed.
       ``(c) Operational Test and Evaluation.--(1) Operational 
     testing of a major system may not be conducted until the 
     Director of Operational Test and Evaluation of the Department 
     of Defense--
       ``(A) approves (in writing) the adequacy of the plans for 
     operational test and evaluation of the system, including the 
     adequacy of the plans with regard to--
       ``(i) the projected level of funding; and
       ``(ii) demonstration of the matters set forth in clauses 
     (i), (ii), and (iii) of subsection (a)(1)(A); and
       ``(B) determines the quantity of articles of the system 
     that are needed for operational testing.
       ``(2) The Director shall analyze the results of the 
     operational test and evaluation of each major system. At the 
     conclusion of such testing, the Director shall determine 
     whether--
       ``(A) the test and evaluation performed were adequate; and
       ``(B) the results of such test and evaluation confirm that 
     the items or components actually tested are effective and 
     suitable for combat.
       ``(3) A final decision within the Department of Defense to 
     proceed with a program for the acquisition of a major system 
     beyond low-rate initial production may not be made until the 
     Director submits to the Secretary of Defense and the 
     congressional defense committees a written opinion on the 
     matters.
       ``(d) Non-Major Systems.--Operational testing of a new 
     system other than a major system may not be conducted until 
     the head of the operational test and evaluation agency of the 
     military department concerned determines the quantity of 
     articles of the system that are to be procured for 
     operational testing.
       ``(e) Impartiality of Contractor Testing Personnel.--No 
     person employed by the contractor under a program for the 
     acquisition of a major system may be involved in the conduct 
     of the operational test and evaluation necessary for the 
     program to proceed beyond low-rate production in accordance 
     with subsection (b). The limitation in the preceding sentence 
     does not apply to the extent that the Secretary of Defense 
     plans for persons employed by that contractor to be involved 
     in the operation, maintenance, and support of the system when 
     the system is deployed in combat.
       ``(f) Impartial Contracted Advisory and Assistance 
     Services.--(1) The Director may not contract with any person 
     for advisory and assistance services with regard to the test 
     and evaluation of a major system if that person participated 
     in (or is participating in) the development, production, or 
     testing of such system for a military department or Defense 
     Agency (or for another contractor of the Department of 
     Defense).
       ``(2) The Director may waive the limitation under paragraph 
     (1) in any case if the Director determines in writing that 
     sufficient steps have been taken to ensure the impartiality 
     of the contractor in providing the services. The Inspector 
     General of the Department of Defense shall review each such 
     waiver and shall include in the Inspector General's semi-
     annual report an assessment of those waivers made since the 
     last such report.
       ``(3)(A) A contractor that has participated in (or is 
     participating in) the development, production, or testing of 
     a system for the Department of Defense or for another 
     contractor of the Department of Defense may not be involved 
     in any way in the establishment of criteria for data 
     collection, performance assessment, or evaluation activities 
     for the operational test and evaluation of that system.
       ``(B) The limitation in subparagraph (A) does not apply to 
     a contractor that has participated solely in testing for the 
     Federal Government.
       ``(g) Source of Funds for Testing.--The costs for all tests 
     required under subsection (b) shall be paid from funds 
     available for the system being tested.
       ``(h) Director's Annual Report.--As part of the annual 
     report of the Director under section 139 of this title, the 
     Director shall describe for each program covered in the 
     report the status of test and evaluation activities in 
     comparison with the test and evaluation master plan for that 
     program, as approved by the Director. The Director shall 
     include in such annual report a description of each waiver 
     granted under subsection (f)(2) since the last such report.
       ``(i) Definitions.--In this section:
       ``(1) The term `major system' has the meaning given that 
     term in section 2302(5) of this title.
       ``(2) The term `operational test and evaluation' has the 
     meaning given that term in section 139(a)(2)(A) of this 
     title. For purposes of subsection (a), that term does not 
     include an operational assessment based exclusively on--
       ``(A) computer modeling;
       ``(B) simulation; or
       ``(C) an analysis of system requirements, engineering 
     proposals, design specifications, or any other information 
     contained in program documents.
       ``(3) The term `congressional defense committees' means--
       ``(A) the Committee on Armed Services and and the Committee 
     on Appropriations of the Senate; and
       ``(B) the Committee on National Security and the Committee 
     on Appropriations of the House of Representatives.''.
       (b) Quantities Procured for Low-Rate Initial Production.--
     (1) Subsection (a) of section 2400 of such title is amended--
       (A) by striking out paragraph (3);
       (B) by redesignating paragraphs (4) and (5) as paragraphs 
     (3) and (4), respectively;
       (C) by striking out the second sentence of paragraph (4), 
     as so redesignated; and
       (D) by adding at the end the following new paragraph:
       ``(5)(A) Except as provided in subparagraph (B), the 
     quantity determined for a system under paragraph (1) may not 
     exceed the quantity equal to 10 percent of the total quantity 
     of articles of the system that is to be acquired under the 
     program for the acquisition of such system, determined as of 
     the date on which funds appropriated for procurement are 
     first obligated for the program.
       ``(B) The quantity of articles determined for a system 
     under paragraph (1) may exceed the maximum quantity provided 
     under subparagraph (A)--
       ``(i) during a war declared by Congress or a national 
     emergency declared by Congress or the President; or
       ``(ii) if the Secretary of Defense certifies to the 
     congressional defense committees referred to in section 
     2399(i)(3) of this title that it is necessary to do so in 
     order to provide for completion of initial operational test 
     and evaluation of the system and that it is impracticable to 
     limit the quantity of the articles procured to such maximum 
     quantity.
       ``(6) The additional quantity of articles that may be 
     determined for a system pursuant to the exception in 
     paragraph (5)(B)(ii) may not exceed the quantity equal to 5 
     percent of the total quantity of articles of the system that 
     are to be acquired under the program, determined as of the 
     date referred to in paragraph (5)(A).''.
       (2) Subsection (b) of such section is amended to read as 
     follows:
       ``(b) Low-Rate Initial Production of Weapon Systems.--
     Except as provided in subsection (c), low-rate initial 
     production with respect to a new system is production of the 
     system in the minimum quantity necessary--
       ``(1) to establish an initial production base with the 
     capacity to provide production-configured or representative 
     articles for operational tests pursuant to section 2399 of 
     this title; and
       ``(2) to maintain such production base until initial 
     operational test and evaluation of the system is completed 
     and a decision is made regarding whether to proceed into 
     full-rate production.''.
       (c) Duties and Authority of Director of Operational Test 
     and Evaluation.--Section 139(c) of title 10, United States 
     Code, is amended by striking out the first sentence and 
     inserting in lieu thereof the following: ``The Director 
     reports directly, without intervening review or approval, to 
     the Secretary of Defense personally.''.
     [[Page S4812]]   (d) Effective Date and Savings Provision.--
     (1) The amendments made by this section shall take effect on 
     the date of the enactment of this Act.
       (2) The amendments made by subsections (a), (b), and (c) 
     shall apply with respect to programs for the acquisition of 
     systems that, as of the date of the enactment of this Act, 
     are scheduled to enter low-rate initial production on or 
     after October 1, 1996.
       (3) The provisions of sections 2399 and 2400 of title 10, 
     United States Code, as in effect on the day before the date 
     of the enactment of this Act, shall continue to apply after 
     that date to programs for the acquisition of major systems 
     that enter or, as of the date of the enactment of this Act, 
     are scheduled to enter low-rate initial production before 
     October 1, 1996.

     SEC. 114. ACQUISITION OF INFORMATION TECHNOLOGY.

       The Secretary of Defense shall revise the existing 
     Department of Defense directives regarding development and 
     procurement of information systems (numbered in the 8000 
     series) and the Department of Defense directives numbered in 
     the 5000 series in order to consolidate those directives into 
     one series of directives that is consistent with the 
     simplified acquisition program cycle provided for in section 
     2221 of title 10, United States Code, as added by section 
     112.
                     Subtitle C--Rapid Contracting

     SEC. 121. GOAL.

       (a) Establishment.--The Secretary of Defense shall 
     establish a goal of reducing by 50 percent the time necessary 
     for the Department of Defense to acquire an item for the user 
     of that item.
       (b) Action.--The Secretary shall take such action as is 
     necessary to ensure that the Department of Defense achieves 
     the goal established under subsection (a), including actions 
     necessary to facilitate--
       (1) the definition of the requirements for an acquisition; 
     and
       (2) the selection of sources from among the offerors.

     SEC. 122. AUTHORITY TO LIMIT NUMBER OF OFFERORS.

       Section 2305(b) of title 10, United States Code, is amended 
     by adding at the end the following:
       ``(5) Under regulations prescribed by the head of an 
     agency, a contracting officer of the agency receiving more 
     than three competitive proposals for a proposed contract may 
     solicit best and final offers from three of the offerors who 
     submitted offers within the competitive range. 
     Notwithstanding paragraph (4)(A)(i), the contracting officer 
     need not first conduct discussions with all of the 
     responsible parties that submit offers within the competitive 
     range.''.

     SEC. 123. PREFERENCE FOR CERTIFIED CONTRACTORS.

       Chapter 137 of title 10, United States Code is amended by 
     inserting after section 2319 the following new section:

     ``Sec. 2319a. Contractor performance certification system

       ``(a) Certification Authorized.--The Secretary of Defense 
     may establish a contractor certification system for the 
     procurement of particular property or services that are 
     procured by the Department of Defense on a repetitive basis. 
     Under the system, the Secretary shall use competitive 
     procedures to certify contractors as eligible for contracts 
     to furnish such property or services. The Secretary shall 
     award certifications on the basis of the relative efficiency 
     and effectiveness of the business practices, level of 
     quality, and demonstrated contract performance of the 
     responding contractors with regard to the particular property 
     or services.
       ``(b) Procurement From Certified Contractors.--The head of 
     an agency within the Department of Defense may enter into a 
     contract for a procurement of property or services referred 
     to in subsection (a) on the basis of a competition among 
     contractors certified with respect to such property or 
     services pursuant to that subsection.
       ``(c) Termination of Certification.--The Secretary--
       ``(1) may provide for the termination of a certification 
     awarded a contractor under this section upon the expiration 
     of a period specified by the Secretary; and
       ``(2) may revoke a certification awarded a contractor under 
     this section upon a determination that the quality of 
     performance of the contractor does not meet standards applied 
     by the Secretary as of the time of the revocation 
     decision.''.

     SEC. 124. CONSIDERATION OF PAST PERFORMANCE AND ELIGIBILITY 
                   CERTIFICATION.

       Section 2305 of title 10, United States Code, is amended--
       (1) in subsection (a)(2)(A)(i)--
       (A) by striking out ``(including price)'' and inserting in 
     lieu thereof ``(including price, past contract performance of 
     the offeror, and any certification of the offeror under 
     section 2319a of this title)''; and
       (B) by striking out ``and noncost-related'' and inserting 
     in lieu thereof the following: ``past contract performance of 
     the offeror, any certification of the offeror under section 
     2319a of this title, and other noncost-related'';
       (2) in subsection (b)--
       (A) in paragraph (3), by striking out ``and the other 
     price-related factors included in the solicitation'' in the 
     second sentence and inserting in lieu thereof ``, the other 
     price-related factors included in the solicitation, the past 
     contract performance (if any) of the offerors, and any 
     certification of offerors under section 2319a of this 
     title''; and
       (B) in paragraph (4)(B), by striking out ``and the other 
     factors included in the solicitation'' in the first sentence 
     and inserting in lieu thereof ``, the past contract 
     performance (if any) of the offerors, any certification of 
     offerors under section 2319a of this title, and the other 
     factors included in the solicitation'';
       (3) in subsection (c)(1), by inserting ``past performance 
     of the offerors, any certification of offerors under section 
     2319a of this title,'' after ``(considering quality, price, 
     delivery,''; and
       (4) by adding at the end the following new subsection:
       ``(g) The Secretary of Defense shall maintain a contractor 
     performance data base. The Secretary shall include in the 
     data base information on the history of the performance of 
     each contractor under Department of Defense contracts and, 
     for each such contract performed by the contractor, a 
     technical evaluation of the contractor's performance prepared 
     by the acquisition program manager responsible for the 
     contract. The Secretary shall make information in the data 
     base available to acquisition program executive officers and 
     acquisition program managers of the Department of Defense and 
     to the contractor to which the information pertains.''.

     SEC. 125. ENCOURAGEMENT OF MULTIYEAR CONTRACTING.

       Section 2306b(a) of title 10, United States Code, is 
     amended in the matter preceding paragraph (1) by striking out 
     ``may'' and inserting in lieu thereof ``shall, to the maximum 
     extent possible,''.

     SEC. 126. ENCOURAGEMENT OF USE OF LEASING AUTHORITY.

       (a) In General.--Chapter 137 of title 10, United States 
     Code, is amended by inserting after section 2316 the 
     following new section:

     ``Sec. 2317. Equipment leasing

       ``The Secretary of Defense shall authorize and encourage 
     the use of leasing in the acquisition of equipment whenever 
     such leasing is practicable and otherwise authorized by 
     law.''.
       (b) Report.--Not later than 90 days after the the date of 
     the enactment of this Act, the Secretary of Defense shall 
     submit to Congress a report setting forth changes in 
     legislation that would be required in order to facilitate the 
     use of leases by the Department of Defense in the acquisition 
     of equipment, including the use of multiyear leases.
           Subtitle D--Performance Based Contract Management

     SEC. 131. UNALLOWABLE COSTS.

       (a) Specific Costs.--Section 2324(e)(1) of title 10, United 
     States Code, is amended by adding at the end the following:
       ``(P) Labor costs in excess of the labor costs provided for 
     in the offer of the contractor.
       ``(Q) Bid protest costs.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act 
     and shall apply with respect to solicitations for offers 
     issued under chapter 137 of title 10, United States Code, on 
     or after that date.

     SEC. 132. ALTERNATIVES APPROACHES TO CONTRACT MANAGEMENT.

       The Secretary of Defense shall prescribe in regulations 
     policies and procedures that encourage contract 
     administrators of the Department of Defense to submit to 
     program managers, and program managers to consider, 
     alternative approaches to contract management. A contract 
     administrator submitting an alternative approach to the 
     program manager shall include an analysis of the costs and 
     benefits of each alternative.

     SEC. 133. CONTRACTOR SHARE OF GAINS AND LOSSES FROM COST, 
                   SCHEDULE, AND PERFORMANCE EXPERIENCE.

       Chapter 137 of title 10, United States Code, is amended by 
     inserting after section 2306b the following new section:

     ``Sec. 2306c. Contractor share of gains and losses from cost, 
       schedule, and performance experience

       ``The Secretary of Defense shall prescribe in regulations a 
     clause, to be included in each cost-type contract and 
     incentive-type contract, that provides a system for the 
     contractor to be rewarded for contract performance exceeding 
     the contract cost, schedule, or performance parameters to the 
     benefit of the United States and to be penalized for failing 
     to adhere to cost, schedule, or performance parameters to the 
     detriment of the United States.''.
                    Subtitle E--Financial Management

     SEC. 141. PHASE FUNDING OF DEFENSE ACQUISITION PROGRAMS.

       Chapter 131 of title 10, United States Code, as amended by 
     section 112, is further amended by adding at the end the 
     following:

     ``Sec. 2222. Funding for results oriented acquisition program 
       cycle

       ``(a) Program Phase Details To Be Submitted to Congress.--
     Before initial funding is made available for a phase of the 
     acquisition program cycle of an acquisition program for which 
     an authorization of appropriations is required by section 114 
     of this title, the Secretary of Defense shall submit to 
     Congress information about the objectives and plans for the 
     conduct of that phase and the funding requirements for the 
     entire 
     [[Page S4813]] phase. The information shall identify the 
     intended user of the system to be acquired under the program 
     and shall include objective, quantifiable criteria for 
     assessing the extent to which the objectives and goals 
     determined pursuant to section 2435 of this title are 
     achieved.
       ``(b) Full Phase Funding.--(1) In authorizing 
     appropriations for an acquisition program for which an 
     authorization of appropriations is required by section 114 of 
     this title, Congress shall provide in an Act authorizing 
     appropriations for the Department of Defense an authorization 
     of appropriations for a phase of the acquisition program in a 
     single amount that is sufficient for carrying out that phase. 
     Each such authorization of appropriations shall be stated in 
     the Act as a specific item.
       ``(2) In each Act making appropriations for the Department 
     of Defense Congress shall specify the phase of each such 
     acquisition program of the department for which an 
     appropriation is made and the amount of the appropriation for 
     the phase of that program.''.

     SEC. 142. MAXIMIZED BENEFIT FUNDING.

       Chapter 131 of title 10, United States Code, as amended by 
     section 141, is further amended by adding at the end the 
     following:

     ``Sec. 2223. Maximized benefit funding

       ``(a) Transfers Authority.--The Secretary of Defense may 
     transfer funds from appropriations available for a particular 
     phase of an acquisition program of the Department of Defense 
     in order to pay out of the transferred funds the cost of 
     incentives provided program managers who have been certified 
     by the Secretary as having achieved at least 90 percent of 
     the cost, schedule, and performance goals established for 
     that phase.
       ``(b) Limitations.--The Secretary shall prescribe in 
     regulations--
       ``(1) the percent of available funds that may be 
     transferred under the authority of subsection (a) for payment 
     of incentives; and
       ``(2) a limitation that the total amount transferred for a 
     phase of a program may not exceed \1/3\ of the total amount 
     of the cost of such phase that is determined under the 
     regulations to have been saved as a result of the achievement 
     of the goals for which the incentives are to be paid.''.

     SEC. 143. IMPROVED DEPARTMENT OF DEFENSE CONTRACT PAYMENT 
                   PROCEDURES.

       (a) Review and Improvement of Procedures.--The Comptroller 
     General of the United States shall review commercial 
     practices regarding accounts payable and, considering the 
     results of the review, develop standards for the Secretary of 
     Defense to use for improving the contract payment procedures 
     and financial management systems of the Department of 
     Defense.
       (b) GAO Report.--Not later than September 30, 1996, the 
     Comptroller General shall submit to Congress a report 
     containing the following matters:
       (1) The weaknesses in the financial management processes of 
     the Department of Defense.
       (2) Deviations of the Department of Defense payment 
     procedures and financial management systems from the 
     standards developed pursuant to subsection (a), expressed 
     quantitatively.
       (3) The officials of the Department of Defense who are 
     responsible for resolving the deviations.
       (c) Responsibilities of the Secretary.--The Secretary of 
     Defense shall take such corrective actions as are necessary 
     to resolve the deviations reported pursuant to subsection (b) 
     to within 90 percent of the applicable standards developed 
     under subsection (a).
       (d) Enforcement of Responsibility For Resolving System 
     Weaknesses.--The Secretary of Defense may not provide any 
     bonus or incentive pay to an official identified pursuant to 
     subsection (b) as responsible for resolving deviations until 
     the Secretary certifies to Congress that the official has 
     resolved more than 90 percent of those deviations to be 
     within the applicable standards developed under subsection 
     (a).
               Subtitle F--Defense Acquisition Workforce

     SEC. 151. CONSIDERATION OF PAST PERFORMANCE IN ASSIGNMENT TO 
                   ACQUISITION POSITIONS.

       (a) Requirement.--Section 1701(a) of title 10, United 
     States Code, is amended by adding at the end the following: 
     ``The policies and procedures shall provide that education 
     and training in acquisition matters, and past performance of 
     acquisition responsibilities, are major factors in the 
     selection of personnel for assignment to acquisition 
     positions in the Department of Defense.''.
       (b) Performance Requirements for Assignment.--(1) Section 
     1723(a) of title 10, United States Code, is amended by 
     inserting ``, including requirements relating to demonstrated 
     past performance of acquisition duties,'' in the first 
     sentence after ``experience requirements''.
       (2) Section 1724(a)(2) of such title is amended by 
     inserting before the semicolon at the end the following: 
     ``and have demonstrated proficiency in the performance of 
     acquisition duties in the contracting position or positions 
     previously held''.
       (3) Section 1735 of such title is amended--
       (A) in subsection (b)--
       (i) by striking out ``and'' at the end of paragraph (2);
       (ii) by striking out the period at the end of paragraph (3) 
     and inserting in lieu thereof ``; and''; and
       (iii) by adding at the end the following:
       ``(4) must have demonstrated proficiency in the performance 
     of acquisition duties.'';
       (B) in subsection (c)--
       (i) by striking out ``and'' at the end of paragraph (2);
       (ii) by striking out the period at the end of paragraph (3) 
     and inserting in lieu thereof ``; and''; and
       (iii) by adding at the end the following:
       ``(4) must have demonstrated proficiency in the performance 
     of acquisition duties.'';
       (C) in subsection (d), by inserting before the period at 
     the end the following: ``, and have demonstrated proficiency 
     in the performance of acquisition duties''; and
       (D) in subsection (e), by inserting before the period at 
     the end the following: ``, and have demonstrated proficiency 
     in the performance of acquisition duties''.

     SEC. 152. TERMINATION OF DEFENSE ACQUISITION SCHOOLS.

       (a) Contracting for Defense Acquisition Education and 
     Training.--Chapter 87 of title 10, United States Code, is 
     amended by adding at the end of subchapter IV the following:

     ``Sec. 1747 Professional educational development and training 
       programs

       ``The Secretary of Defense shall provide for the 
     acquisition of professional educational development and 
     training services for the acquisition workforce from 
     commercial sources and through programs provided by Federal 
     Government sources for all acquisition personnel of all 
     departments and agencies of the Federal Government.''.
       (b) Termination of Defense Acquisition University 
     Structure.--Section 1746 of title 10, United States Code, is 
     repealed.
       (c) Education and Training of Program Managers and Program 
     Executive Officers.--Section 1735 of such title is amended--
       (1) by striking out paragraph (1) of subsection (b) and 
     inserting in lieu thereof the following:
       ``(1) must have completed a course of program management 
     provided for under section 1747 of this title or determined 
     by the Secretary of Defense as appropriate training for 
     program managers of the Department of Defense;''; and
       (2) by striking out paragraph (1) of subsection (c) and 
     inserting in lieu thereof the following:
       ``(1) must have completed a course of program management 
     provided for under section 1747 of this title or determined 
     by the Secretary of Defense as appropriate training for 
     program executive officers of the Department of Defense;''.
       (d) Alternative Proposal.--The Secretary may submit to 
     Congress a proposed system of professional educational 
     development and training for the Department of Defense 
     acquisition workforce as an alternative to the system 
     provided for in the amendments made by this section. Any such 
     proposal shall be submitted not later than June 30, 1996.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on October 1, 1996.
       Subtitle G--Revision of Procurement Integrity Requirements

     SEC. 161. AMENDMENTS TO OFFICE OF FEDERAL PROCUREMENT POLICY 
                   ACT.

       (a) Recusal.--Subsection (c) of section 27 of the Office of 
     Procurement Policy Act (41 U.S.C. 423) is amended--
       (1) in paragraph (1)--
       (A) in the matter above subparagraph (A), by inserting 
     ``only'' after ``subsection (b)(1)''; and
       (B) in subparagraph (A), by inserting ``(including the 
     modification or extension of a contract)'' after ``any 
     procurement'';
       (2) by striking out paragraphs (2) and (3) and inserting in 
     lieu thereof:
       ``(2) Whenever the head of a procuring activity approves a 
     recusal under paragraph (1), a copy of the recusal request 
     and the approval of the request shall be retained by such 
     official for a period (not less than five years) specified in 
     regulations prescribed in accordance with subsection (o).
       ``(3)(A) Except as provided in subparagraph (B), all 
     recusal requests and approvals of recusal requests pursuant 
     to this subsection shall be made available to the public on 
     request.
       ``(B) Any part of a recusal request or an approval of a 
     recusal request that is exempt from the disclosure 
     requirements of section 552 of title 5, United States Code, 
     under subsection (b)(1) of such section may be withheld from 
     disclosure to the public otherwise required under 
     subparagraph (A).''; and
       (3) in paragraph (4), by striking out ``competing 
     contractor'' and inserting in lieu thereof ``person''.
       (b) Applicability of Certification Requirement.--Subsection 
     (e)(7)(A) of such section is amended by adding at the end the 
     following: ``However, paragraph (1)(B) does not apply with 
     respect to a contract for less than $500,000.''.
       (c) Restrictions Resulting From Procurement Activities of 
     Procurement Officials.--Subsection (f) of such section is 
     amended--
       (1) by redesignating paragraph (3) as paragraph (4); and
       (2) by striking out paragraphs (1) and (2) and inserting in 
     lieu thereof the following:
       ``(1) No individual who, in the year prior to separation 
     from service as an officer or employee of the Government or 
     an officer of the uniformed services in a covered position, 
     participated personally and substantially in 
     [[Page S4814]] acquisition functions related to a contract, 
     subcontract, or claim of $500,000 or more and--
       ``(A) engaged in repeated direct contact with the 
     contractor or subcontractor on matters relating to such 
     contract, subcontract, or claim; or
       ``(B) exercised significant ongoing decisionmaking 
     responsibility with respect to the contractor or 
     subcontractor on matters relating to such contract, 
     subcontract, or claim,

     shall knowingly accept or continue employment with such 
     contractor or subcontractor for a period of one year 
     following the individual's separation from service, except 
     that such individual may accept or continue employment with 
     any division or affiliate of such contractor or subcontractor 
     that does not produce the same or similar products as the 
     entity involved in the negotiation or performance of the 
     contract or subcontract or the adjustment of the claim.
       ``(2) No contractor or subcontractor, or any officer, 
     employee, agent, or consultant of such contractor or 
     subcontractor shall knowingly offer, provide, or continue any 
     employment for another person, if such contractor, 
     subcontractor, officer, employee, agent, or consultant knows 
     or should know that the acceptance of such employment is or 
     would be in violation of paragraph (1).
       ``(3) The head of each Federal agency shall designate in 
     writing as a `covered position' under this section each of 
     the following positions in that agency:
       ``(A) The position of source selection authority, member of 
     a source selection evaluation board, or chief of a financial 
     or technical evaluation team, or any other position, if the 
     officer or employee in that position is likely personally to 
     exercise substantial responsibility for ongoing discretionary 
     functions in the evaluation of proposals or the selection of 
     a source for a contract in excess of $500,000.
       ``(B) The position of procuring contracting officer, or any 
     other position, if the officer or employee in that position 
     is likely personally to exercise substantial responsibility 
     for ongoing discretionary functions in the negotiation of a 
     contract in excess of $500,000 or the negotiation or 
     settlement of a claim in excess of $500,000.
       ``(C) The position of program executive officer, program 
     manager, or deputy program manager, or any other position, if 
     the officer or employee in that position is likely personally 
     to exercise similar substantial responsibility for ongoing 
     discretionary functions in the management or administration 
     of a contract in excess of $500,000.
       ``(D) The position of administrative contracting officer, 
     the position of an officer or employee assigned on a 
     permanent basis to a Government Plant Representative's 
     Office, the position of auditor, a quality assurance 
     position, or any other position, if the officer or employee 
     in that position is likely personally to exercise substantial 
     responsibility for ongoing discretionary functions in the on-
     site oversight of a contractor's operations with respect to a 
     contract in excess of $500,000.
       ``(E) A position in which the incumbent is likely 
     personally to exercise substantial responsibility for ongoing 
     discretionary functions in operational or developmental 
     testing activities involving repeated direct contact with a 
     contractor regarding a contract in excess of $500,000.''.
       (d) Disclosure of Proprietary or Source Selection 
     Information to Unauthorized Persons.--Subsection (l) of such 
     section is amended--
       (1) by inserting ``who are likely to be involved in 
     contracts, modifications, or extensions in excess of 
     $25,000'' in the first sentence after ``its procurement 
     officials''; and
       (2) by striking out ``(e)'' each place it appears and 
     inserting in each such place ``(f)''.
       (e) Rules of Construction.--Subsection (n) of such section 
     is amended to read as follows:
       ``(n) Rules of Construction.--Nothing in this section shall 
     be construed to--
       ``(1) authorize the withholding of any information from the 
     Congress, any committee or subcommittee thereof, a Federal 
     agency, any board of contract appeals of a Federal agency, 
     the Comptroller General, or an inspector general of a Federal 
     agency;
       ``(2) restrict the disclosure of information to, or receipt 
     of information by, any person or class of persons authorized, 
     in accordance with applicable agency regulations or 
     procedures, to receive that information;
       ``(3) restrict a contractor from disclosing its own 
     proprietary information or the recipient of information so 
     disclosed by a contractor from receiving such information; or
       ``(4) restrict the disclosure or receipt of information 
     relating to a Federal agency procurement that has been 
     canceled by the agency and that the contracting officer 
     concerned determines in writing is not likely to be 
     resumed.''.
       (f) Term To Be Defined in Regulations.--Subsection 
     (o)(2)(A) of such section is amended--
       (1) by inserting ``money, gratuity, or other'' before 
     ``thing of value'''; and
       (2) by inserting before the semicolon ``and such other 
     exceptions as may be adopted on a Governmentwide basis under 
     section 7353 of title 5, United States Code''.
       (g) Terms Defined in Law.--Subsection (p) of such section 
     is amended--
       (1) in paragraph (1) by striking out ``clauses (i)-(viii)'' 
     and inserting in lieu thereof ``clauses (i) through (vii)'';
       (2) in paragraph (3)--
       (A) in subparagraph (A)--
       (i) by striking out clause (i);
       (ii) by redesignating clauses (ii), (iii), (iv), (v), (vi), 
     (vii), and (viii) as clauses (i), (ii), (iii), (iv), (v), 
     (vi), and (vii), respectively; and
       (iii) in clause (i) (as redesignated by subclause (II) of 
     this clause), by striking out ``review and approval of a 
     specification'' and inserting in lieu thereof ``approval or 
     issuance of a specification, acquisition plan, procurement 
     request, or requisition''; and
       (B) in subparagraph (B), by striking out all after 
     ``includes'' and inserting in lieu thereof the following: 
     ``any individual acting on behalf of, or providing advice to, 
     the agency with respect to any phase of the agency 
     procurement concerned, regardless of whether such individual 
     is a consultant, expert, or adviser, or an officer or 
     employee of a contractor or subcontractor (other than a 
     competing contractor).''; and
       (3) in paragraph (6)(A), by inserting ``nonpublic'' before 
     ``information''.

     SEC. 162. AMENDMENTS TO TITLE 18, UNITED STATES CODE.

       Section 208(a) of title 18, United States Code, is 
     amended--
       (1) by inserting ``(1)'' before ``Except as permitted''; 
     and
       (2) by adding at the end the following new paragraph:
       ``(2) Whoever knowingly aids, abets, counsels, commands, 
     induces, or procures conduct prohibited by this section shall 
     be subject to the penalties set forth in section 216 of this 
     title.''.

     SEC. 163. REPEAL OF SUPERSEDED AND OBSOLETE LAWS.

       (a) Repeal.--The following provisions of law are repealed:
       (1) Sections 2207, 2397, 2397a, 2397b, and 2397c of title 
     10, United States Code.
       (2) Section 281 of title 18, United States Code.
       (3) Part A of title VI of the Department of Energy 
     Organization Act (42 U.S.C. 7211 through 7218).
       (b) Repeal of Superseded Law.--Section 6001(b) of the 
     Federal Acquisition Streamlining Act of 1994 (Public Law 103-
     355; 108 Stat. 3362; (18 U.S.C. 281 note) is repealed.
     SEC. 164. IMPLEMENTATION.

       (a) Regulations.--Not later than 180 days after the date of 
     the enactment of this Act, regulations implementing the 
     amendments made by section 161 to section 27 of the Office of 
     Federal Procurement Policy Act (41 U.S.C. 423), including 
     definitions of the terms used in subsection (f) of such 
     section, shall be issued in accordance with sections 6 and 25 
     of such Act (41 U.S.C. 405 and 521) after coordination with 
     the Director of the Office of Government Ethics.
       (b) Savings Provisions.--(1) No officer, employee, agent, 
     representative, or consultant of a contractor who has signed 
     a certification under section 27(e)(1)(B) of the Office of 
     Federal Procurement Policy Act (41 U.S.C. 423(e)(1)(B)) 
     before the effective date of this Act shall be required to 
     sign a new certification as a result of the enactment of this 
     Act.
       (2) No procurement official of a Federal agency who has 
     signed a certification under section 27(l) of the Office of 
     Federal Procurement Policy Act (41 U.S.C. 423(l)) before the 
     date of enactment of this Act shall be required to sign a new 
     certification as a result of the enactment of this Act.
       (c) Inspector General Reports.--Not later than May 31 of 
     each of the years 1996 through 1999, the Inspector General of 
     each Federal agency (or, in the case of a Federal agency that 
     does not have an Inspector General, the head of such agency) 
     shall submit to Congress a report on the compliance by the 
     agency during the preceding year with the requirement for the 
     head of the agency to designate covered procurement positions 
     under section 27(f)(3) of the Office of Federal Procurement 
     Policy Act (as added by section 161(c)).
                    Subtitle H--Clerical Amendments

     SEC. 171. CLERICAL AMENDMENTS TO TITLE 10.

       (a) Chapter 87.--The table of sections at the beginning of 
     subchapter IV of chapter 87 of title 10, United States Code, 
     is amended--
       (1) by striking out the item relating to section 1746; and
       (2) by adding at the end the following new item:

``1747. Professional educational development and training programs.''.

       (b) Chapter 131.--The table of sections at the beginning of 
     chapter 131 of title 10, United States Code, is amended--
       (1) by striking out the item relating to section 2207; and
       (2) by adding at the end the following new items:

``2221. Results oriented acquisition program cycle.
``2222. Funding for results oriented acquisition program cycle.
``2223. Maximized benefit funding.''.

       (c) Chapter 137.--The table of sections at the beginning of 
     chapter 137 of title 10, United States Code, is amended--
       (1) by inserting after the item relating to section 2306b 
     the following new item:

``2306c. Contractor share of gains and losses from cost, schedule, and 
              performance experience.'';

       (2) by inserting after the item relating to section 2316 
     the following new item:

``2317. Equipment leasing.'';

     and
     [[Page S4815]]   (3) by inserting after the item relating to 
     section 2319 the following new item:

``2319a. Contractor performance certification system.''.

       (d) Chapter 141.--The table of sections at the beginning of 
     chapter 141 of title 10, United States Code, is amended--
       (1) by striking out the items relating to sections 2397, 
     2397a, 2397b, and 2397c; and
       (2) by striking out the item relating to section 2399 and 
     inserting in lieu thereof the following new item:

``2399. Operational test and evaluation of major systems under defense 
              acquisition programs.''.
     SEC. 172. OTHER LAWS.

       (a) Title 18.--The table of sections for chapter 15 of 
     title 18, United States Code, is amended by striking out the 
     item relating to section 281.
       (b) Department of Energy Organization Act.--The table of 
     contents in the first section of the Department of Energy 
     Organization Act (42 U.S.C. 7101 et seq.) is amended by 
     striking out the item relating to part A of title VI and the 
     sections therein.
 TITLE II--REORGANIZATION AND REFORM OF THE DEFENSE ACQUISITION SYSTEM
   Subtitle A--Streamlining and Improvement of Acquisition Management

     SEC. 201. REORGANIZATION OF ACQUISITION AUTHORITY.

       (a) Under Secretary of Defense for Acquisition and 
     Technology.--Section 133(b) of title 10, United States Code, 
     is amended--
       (1) by redesignating paragraphs (3) and (4) as paragraphs 
     (4) and (5), respectively; and
       (2) by striking out paragraphs (1) and (2) and inserting in 
     lieu thereof the following:
       ``(1) prescribing policies for research, development, and 
     acquisition activities of the Department of Defense;
       ``(2) planning, programming, and overseeing the research, 
     development, and acquisition activities of the Department of 
     Defense;
       ``(3) assisting in the preparation and integration of 
     budgets for the research, development, and acquisition 
     activities of the Department of Defense, including assisting 
     in the planning, programming, and budgeting system with 
     respect to such activities;''.
       (b) Defense Research, Development, and Acquisition 
     Agency.--(1) Part I of subtitle A of title 10, United States 
     Code, is amended by inserting after chapter 9 the following 
     new chapter:

  ``CHAPTER 10--DEFENSE RESEARCH, DEVELOPMENT, AND ACQUISITION AGENCY
``Sec.
``231. Establishment.
``232. Use of agency for all research, development, and acquisition 
              activities.
``233. Duties.
``234. Program executive officers.
``235. Program managers.
``236. Functional analytical capability.
     ``Sec.  231. Establishment

       ``(a) Agency.--There is established a Defense Research, 
     Development, and Acquisition Agency in the Department of 
     Defense.
       ``(b) Director.--(1) The head of the agency is the Director 
     of Defense Research, Development, and Acquisition who shall 
     be appointed by the Under Secretary of Defense for 
     Acquisition and Technology from among persons who are career 
     professional employees in the acquisition workforce of the 
     Department of Defense.
       ``(2) A member of the armed forces, while serving as the 
     Director, holds the grade of general or, in the case of an 
     officer of the Navy, admiral. A civilian, while serving as 
     the Director, holds an equivalent civilian grade.
       ``(c) Chief of Engineering and Analysis.--(1) In the 
     Defense Research, Development, and Acquisition Agency there 
     is a Chief of Engineering and Analysis who shall be appointed 
     by the Director from among the career professional employees 
     in the acquisition workforce of the Department of Defense.
       ``(2) The Director shall evaluate the performance of the 
     Chief of Engineering and Analysis. The Director may not 
     delegate the performance of the evaluation responsibility.
       ``(3) The Chief of Engineering and Analysis shall be the 
     senior technical adviser for the Defense Research, 
     Development, and Acquisition Agency.

     ``Sec.  232. Use of agency for all research, development, and 
       acquisition activities

       ``Subject to sections 3013(h), 5013(h), 8013(h) of this 
     title, the Director shall conduct the research, development, 
     and acquisition activities of the Department of Defense, 
     including the activities of the research, development, and 
     engineering centers of the Department of Defense.

     ``Sec.  233. Duties

       ``The responsibilities of the Under Secretary of Defense 
     for Acquisition and Technology that are to be performed by 
     the Defense Research, Development, and Acquisition Agency 
     include the following:
       ``(1) Planning, programming, and carrying out the research, 
     development, and acquisition activities of the Department of 
     Defense.
       ``(2) Advising the Secretary of Defense and the Secretaries 
     of the military departments regarding the preparation and 
     integration of the budgets for the research, development, and 
     acquisition activities of the Department of Defense.
       ``(3) Identifying and informing operational commanders 
     regarding alternative technology solutions to fulfill 
     emerging requirements.
       ``(4) Ensuring that the acquisition plan for each 
     acquisition program realistically reflects the budget and 
     related decisions made for that program.
       ``(5) Conducting research on management techniques as well 
     as on individual systems.

     ``Sec. 234. Program executive officers

       ``(a) Selection and Evaluation.--The program executive 
     officers of the Defense Research, Development, and 
     Acquisition Agency shall be selected and evaluated by the 
     Director.
       ``(b) Duties.--The duties of a program executive officer 
     are as follows:
       ``(1) To manage acquisition programs assigned to the 
     program executive officer.
       ``(2) To manage related technical support resources.
       ``(3) To establish and conduct integrated decision team 
     meetings.
       ``(4) To provide technological advice (including advice 
     regarding costs, schedule, and performance data relating to 
     alternative technological approaches for fulfilling emerging 
     requirements) to users of program products and to the 
     officials within the Department of Defense who plan, program, 
     and budget for the acquisition programs assigned to the 
     program executive officer.
       ``(c) Organization of Personnel.--The program executive 
     officers shall be organized on the basis of unique mission 
     areas or, in the case of programs for systems specifically 
     relating to certain classes of targets, on the basis of 
     target classes. No program executive officer may be organized 
     with other program executive officers on both bases. The 
     Secretary of Defense shall identify the mission areas or 
     target classes on the basis of which program executive 
     officers may be organized.
       ``(d) Acquisition Life-Cycle Management.--The 
     responsibilities of a program executive officer for a weapon 
     acquisition program shall cover the entire life cycle of the 
     program.
       ``(e) User and Operator Interaction.--(1) The Chairman of 
     the Joint Chiefs of Staff, in consultation with the Under 
     Secretary of Defense for Acquisition and Technology, shall 
     prescribe policies and procedures for the interaction of the 
     commanders of the unified and specified combatant commands 
     with program executive officers regarding the initiation and 
     conduct of weapon acquisition programs. The policies and 
     procedures shall include provisions for enabling such 
     commands to perform operational and acceptance testing of 
     weapons acquired pursuant to such programs.
       ``(2) The Under Secretary of Defense (Comptroller), in 
     consultation with the Under Secretary of Defense for 
     Acquisition and Technology and the Secretaries of the 
     military departments, shall prescribe policies and procedures 
     for the interaction between the commanders of the unified and 
     specified combatant commands and the program executive 
     officers regarding funding for weapon acquisition programs.
       ``(3) The policies and procedures prescribed pursuant to 
     this subsection shall include a system for the commanders of 
     the unified and specified combatant command to choose among 
     alternatives developed by program executive officers for 
     meeting acquisition requirements presented by the commanders.

     ``Sec.  235. Program managers

       ``(a) Selection and Evaluation.--Each program manager of 
     the Defense Research, Development, and Acquisition Agency 
     shall be selected and evaluated by the Director and a program 
     executive officer and shall report directly to the program 
     executive officer having primary responsibility for the 
     system being acquired under the program.
       ``(b) Duties.--A program manager is responsible for the 
     routine management of a research, development, and 
     acquisition program, including the obtaining of necessary 
     logistical support and support services for that program.
       ``(c) Nonduplication of Functions.--The management 
     functions of a program manager should not duplicate the 
     management functions of a program executive officer.

     ``Sec.  236. Functional analytical capability

       ``(a) Responsibility of Chief of Engineering and 
     Analysis.--The Chief of Engineering and Analysis shall be 
     responsible for ensuring that each of the functional 
     analytical capabilities provided to the Director, acquisition 
     program executive officers, and acquisition program managers 
     in connection with acquisition programs of the Department of 
     Defense is the most advanced capability of its type.
       ``(b) Functional Analytical Capabilities.--The functional 
     analytical capabilities referred to in subsection (a) are as 
     follows:
       ``(1) Cost and affordability analysis.
       ``(2) Logistics and support analysis.
       ``(3) Reliability and maintainability analysis.
       ``(4) Producibility analysis.
       ``(5) Environmental analysis.
       ``(6) Configuration management.
       ``(7) Warfighting and battlefield performance and utility 
     analysis.
       ``(8) System engineering.
       ``(9) Any other analytical capability that may be necessary 
     for ensuring the timeliness, performance, and affordability 
     of acquisition programs.''.
       (2) The tables of chapters at the beginning of subtitle A 
     of title 10, United States Code, and at the beginning of part 
     I of such subtitle, are amended by inserting after the item 
     relating to chapter 9 the following new item:

[[Page S4816]]

``10. Defense Research, Development, and Acquisition Agency..231''.....

       (c) Limitation of Procurement Authority of Military 
     Departments.--(1) Section 3013 of title 10, United States 
     Code, is amended--
       (A) in subsection (b)--
       (i) by striking out ``and subject to the provisions of 
     chapter 6 of this title,'' and inserting in lieu thereof ``, 
     subject to the provisions of chapter 6 of this title, and 
     subject to subsection (h),''; and
       (ii) in paragraph (4), by striking out ``(including 
     research and development)''; and
       (B) by adding at the end the following new subsection:
       ``(h)(1) The Secretary of the Army shall be responsible for 
     procurements of property and services, and may exercise 
     authority to conduct such procurements, only to the extent 
     that the Secretary of Defense determines necessary for the 
     sustainment of operations of the Army. The Secretary of 
     Defense shall prescribe in regulations the extent of the 
     responsibility and authority of the Secretary of the Army for 
     procurements of property and services.
       ``(2) In conducting a procurement in accordance with 
     paragraph (1), the Secretary of the Army shall be subject to 
     the same laws as are applicable to acquisitions conducted by 
     the Secretary of Defense.''.
       (2) Section 5013 of title 10, United States Code, is 
     amended--
       (A) in subsection (b)--
       (i) by striking out ``and subject to the provisions of 
     chapter 6 of this title,'' and inserting in lieu thereof ``, 
     subject to the provisions of chapter 6 of this title, and 
     subject to subsection (h),''; and
       (ii) in paragraph (4), by striking out ``(including 
     research and development)''; and
       (B) by adding at the end the following new subsection:
       ``(h)(1) The Secretary of the Navy shall be responsible for 
     procurements of property and services, and may exercise 
     authority to conduct such procurements, only to the extent 
     that the Secretary of Defense determines necessary for the 
     sustainment of operations of the Navy. The Secretary of 
     Defense shall prescribe in regulations the extent of the 
     responsibility and authority of the Secretary of the Navy for 
     procurements of property and services.
       ``(2) In conducting a procurement in accordance with 
     paragraph (1), the Secretary of the Navy shall be subject to 
     the same laws as are applicable to acquisitions conducted by 
     the Secretary of Defense.''.
       (3) Section 8013 of title 10, United States Code, is 
     amended--
       (A) in subsection (b)--
       (i) by striking out ``and subject to the provisions of 
     chapter 6 of this title,'' and inserting in lieu thereof ``, 
     subject to the provisions of chapter 6 of this title, and 
     subject to subsection (h),''; and
       (ii) in paragraph (4), by striking out ``(including 
     research and development)''; and
       (B) by adding at the end the following new subsection:
       ``(h)(1) The Secretary of the Air Force shall be 
     responsible for procurements of property and services, and 
     may exercise authority to conduct such procurements, only to 
     the extent that the Secretary of Defense determines necessary 
     for the sustainment of operations of the Air Force. The 
     Secretary of Defense shall prescribe in regulations the 
     extent of the responsibility and authority of the Secretary 
     of the Air Force for procurements of property and services.
       ``(2) In conducting a procurement in accordance with 
     paragraph (1), the Secretary of the Air Force shall be 
     subject to the same laws as are applicable to acquisitions 
     conducted by the Secretary of Defense.''.
       (4) Section 2302(1) of title 10, United States Code, is 
     amended by striking out ``the Secretary of the Army, the 
     Secretary of the Navy, the Secretary of the Air Force,''.
       (5) Section 2302c of such title is amended--
       (A) in subsection (a)(1), by striking out the second 
     sentence; and
       (B) in subsection (b), by striking out ``paragraph (5) or 
     (6)'' and inserting in lieu thereof ``paragraph (2) or (3)''.
       (6) Section 2303(a) of such title is amended--
       (A) by striking out paragraphs (2), (3), and (4); and
       (B) by redesignating paragraphs (5) and (6) as paragraphs 
     (2) and (3), respectively.

     SEC. 202. JOINT FOREIGN PRODUCTS DEVELOPMENT.

       Section 153 of title 10, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(c) Recommendations for Joint Development of Foreign 
     Products.--The Chairman of the Joint Chiefs of Staff, in 
     consultation with the commanders of the unified and specified 
     combatant commands, shall make recommendations to the Under 
     Secretary of Defense for Acquisition and Technology regarding 
     the desirability of joint development by the United States 
     and one or more foreign countries of systems proposed to be 
     developed, or under development, by such foreign country or 
     foreign countries.''.
                   Subtitle B--Transfer of Functions

     SEC. 211. TRANSFERS.

       (a) Military Departments.--Except as provided in subsection 
     (c), all research, development, and acquisition functions of 
     the Secretaries of the military departments are transferred 
     to the Secretary of Defense.
       (b) Procurement Agencies, Commands, and Offices.--Except as 
     provided in subsection (c), there is transferred to the 
     Defense Research, Development, and Acquisition Agency 
     referred to in section 231(a) of title 10, United States Code 
     (as added by section 201), all functions of the following 
     organizations:
       (1) The Defense Logistics Agency.
       (2) The Advanced Research Projects Agency.
       (3) The following procurement commands of the Army:
       (A) The Army Materiel Command.
       (B) The Army Information Systems Command.
       (C) The Army Space and Strategic Defense Command.
       (4) The following procurement commands of the Navy and 
     Marine Corps:
       (A) The Navy weapon systems commands.
       (B) The Navy Strategic Systems Program Office.
       (C) The Marine Corps Research, Development and Acquisition 
     Command.
       (5) The Air Force Materiel Command.
       (6) Any successor organization to any agency, command, or 
     office named in paragraphs (1) through (5).
       (7) Each agency or command within the Department of Defense 
     not referred to in paragraphs (1) through (6) that, on the 
     day before the effective date of this title, has as a primary 
     mission or function the performance of a research, 
     development, or acquisition function of the Department of 
     Defense.
       (c) Functions Not Transferred.--(1) The following functions 
     of the Secretaries of the military departments are not 
     transferred to the Secretary of Defense:
       (A) Functions that relate to planning, programming, and 
     budgeting.
       (B) Functions to be performed by the Secretary of a 
     military department pursuant to section 3013(h), 5013(h), or 
     8013(h) of title 10, United States Code, as added by section 
     201(c).
       (2) To the extent prescribed by the Secretary of Defense, 
     functions referred to in paragraph (1)(B) that are performed 
     by an organization referred to in subsection (b) need not be 
     transferred in accordance with that subsection.
       (d) Termination of Organization.--The Secretary of Defense 
     shall terminate each organization from which all of its 
     functions are transferred under subsection (b).

     SEC. 212. SAVINGS PROVISIONS.

       (a) Regulations, Instruments, Rights, and Privileges.--All 
     rules, regulations, contracts, orders, determinations, 
     permits, certificates, licenses, grants, and privileges--
       (1) which have been issued, made, granted, or allowed to 
     become effective by the Secretary or other officer or 
     employee of a military department, the head of a Defense 
     Agency of the Department of Defense, or by a court of 
     competent jurisdiction, in connection with any research, 
     development, or acquisition activity of a military department 
     or Defense Agency, and
       (2) which are in effect on the effective date of this 
     title,

     shall continue in effect according to their terms until 
     modified, terminated, superseded, set aside, or revoked in 
     accordance with law by the Secretary of Defense, the Under 
     Secretary of Defense for Acquisition and Technology, or 
     another authorized official, by a court of competent 
     jurisdiction, or by operation of law.
       (b) Proceedings and Applications.--(1)(A) The provisions of 
     this subtitle shall not affect any proceeding, including any 
     proceeding involving a claim or application, in connection 
     with any acquisition activity of a military department or a 
     Defense Agency of the Department of Defense that is pending 
     before that military department or Defense Agency on the 
     effective date of this title.
       (B) Orders may be issued in any such proceeding, appeals 
     may be taken therefrom, and payments may be made pursuant to 
     such orders, as if this Act had not been enacted. An order 
     issued in any such proceeding shall continue in effect until 
     modified, terminated, superseded, or revoked by the Secretary 
     of Defense or the Under Secretary of Defense for Acquisition 
     and Technology, by a court of competent jurisdiction, or by 
     operation of law.
       (C) Nothing in this paragraph prohibits the discontinuance 
     or modification of any such proceeding under the same terms 
     and conditions and to the same extent that such proceeding 
     could have been discontinued or modified if this Act had not 
     been enacted.
       (2) The Secretary of Defense may prescribe regulations 
     providing for the orderly transfer of proceedings continued 
     under paragraph (1) to the Secretary of Defense or to the 
     Under Secretary of Defense for Acquisition and Technology.
                   Subtitle C--Conforming Amendments

     SEC. 221. MODIFICATION OF THE RESPONSIBILITY OF THE UNDER 
                   SECRETARY OF DEFENSE (COMPTROLLER) FOR DEFENSE 
                   ACQUISITION BUDGETS.

       Section 135(c) of title 10, United States Code, is amended 
     in each of paragraphs (2), (3), and (4), by inserting after 
     the paragraph designation the following: ``subject to section 
     133(b) of this title,''.

     SEC. 222. THE DEFENSE ACQUISITION WORK FORCE.

       (a) General Authorities and Responsibilities.--(1)(A) 
     Sections 1704, 1705, and 1707 of title 10, United States 
     Code, are repealed.
       (B) The table of sections at the beginning of subchapter I 
     of chapter 87 of such title is amended by striking out the 
     items relating to sections 1704 through 1707 and inserting in 
     lieu thereof the following:

``1704. Acquisition career program boards.''.

[[Page S4817]]

       (2) Section 1706 of title 10, United States Code, is 
     amended--
       (A) in subsection (a), by striking out ``an Acquisition 
     Corps'' in the first sentence and inserting in lieu thereof 
     ``the Acquisition Corps'';
       (B) in the section heading by striking out ``Sec. 1706'' 
     and inserting in lieu thereof ``Sec. 1704'';
       (C) by striking out subsection (a) and inserting in lieu 
     thereof the following:
       ``(a) Establishment.--The Under Secretary of Defense for 
     Acquisition and Technology shall establish an acquisition 
     career program board to advise the Under Secretary in 
     managing the accession, training, education, and career 
     development of military and civilian personnel in the 
     acquisition workforce and in selecting individuals for the 
     Acquisition Corps under section 1731 of this title.'';
       (C) in subsection (b)--
       (i) in the first sentence, by striking out ``Each'' and 
     inserting in lieu thereof ``The''; and
       (ii) in the second sentence, by striking out ``service 
     acquisition executive'' and inserting in lieu thereof ``Under 
     Secretary''; and
       (D) in subsection (c)--
       (i) by striking out ``Secretary of a military department'' 
     and inserting in lieu thereof ``Under Secretary''; and
       (ii) by striking out ``in the department''.
       (b) Defense Acquisition Positions.--(1) Section 1722 of 
     title 10, United States Code, is amended--
       (A) in subsection (g), by striking out ``Secretary of each 
     military department, acting through the service acquisition 
     executive for that department,'' and inserting in lieu 
     thereof ``Secretary of Defense''; and
       (B) in subsection (h), by striking out ``or the Secretary 
     of a military department (as applicable)''.
       (2) Section 1724(d) of such title is amended in the first 
     sentence--
       (A) by striking out ``a military department'' and inserting 
     in lieu thereof ``the Department of Defense''; and
       (B) by striking out ``of that military department''.
       (c) Acquisition Corps.--(1) Section 1731 of title 10, 
     United States Code, is amended--
       (A) by striking out subsection (a) and inserting in lieu 
     thereof the following:
       ``(a) Acquisition Corps.--The Secretary of Defense shall 
     establish a Department of Defense Acquisition Corps.''; and
       (B) in subsection (b), by striking out ``an Acquisition 
     Corps'' and inserting in lieu thereof ``the Acquisition 
     Corps''.
       (2) Section 1732 of such title is amended--
       (A) in subsection (a), by striking out ``an Acquisition 
     Corps'' in the first sentence and inserting in lieu thereof 
     ``the Acquisition Corps'';
       (B) in subsection (b)--
       (i) in paragraph (2)(A)(ii), by striking out ``of the 
     employing military department''; and
       (ii) in paragraph (4), by striking out ``or the Secretary 
     of the military department concerned''; and
       (C) in subsection (d)--
       (i) by striking out ``of a military department'' in the 
     first sentence of paragraph (1) and in paragraph (2); and
       (ii) by striking out ``of that military department'' in the 
     first sentence of paragraph (1).
       (3) Section 1733(a) of such title is amended by striking 
     out ``an Acquisition Corps'' and inserting in lieu thereof 
     ``the Acquisition Corps''.
       (4) Section 1734 of such title is amended--
       (A) in subsection (a)(1), by striking out ``Secretary of 
     each military department, acting through the service 
     acquisition executive for that department,'' in the first 
     sentence and inserting in lieu thereof ``Secretary of 
     Defense, acting through the Under Secretary of Defense for 
     Acquisition and Technology,'';
       (B) in subsection (b)(1), by striking out ``major 
     milestone'' and inserting in lieu thereof ``phase of the 
     program cycle'';
       (C) by striking out subsection (c);
       (D) in subsection (d), by striking out paragraphs (2) and 
     (3) and inserting in lieu thereof the following:
       ``(2) The authority to grant waivers may be delegated by 
     the Under Secretary only to the Director of Acquisition, 
     Education, Training, and Career Development.
       ``(3) With respect to each waiver granted under this 
     subsection, the Under Secretary shall set forth in a written 
     document the rationale for the decision to grant the waiver. 
     The Director of Acquisition, Education, Training, and Career 
     Development shall maintain all such documents.'';
       (E) in subsection (e)--
       (i) in the first sentence of paragraph (1)--
       (I) by striking out ``an Acquisition Corps'' in the first 
     sentence and inserting in lieu thereof ``the Acquisition 
     Corps''; and
       (II) by striking out ``major program milestone'' and 
     inserting in lieu thereof ``phase of the program cycle''; and
       (ii) in paragraph (2), by striking out ``of the department 
     concerned'' in the first sentence;
       (F) by striking out subsections (g) and (h) and inserting 
     in lieu thereof the following:
       ``(g) Assignments.--Subject to the authority, direction, 
     and control of the Secretary, the Under Secretary shall make 
     the assignments of civilian and military members of the 
     Acquisition Corps to critical acquisition positions.'';
       (G) by striking out ``concerned'' in--
       (i) the second sentence of subsection (a)(1);
       (ii) the second sentence of subsection (a)(2);
       (iii) the sentence following subparagraph (B) in subsection 
     (b)(1);
       (iv) the second sentence of subsection (b)(2); and
       (v) subsection (d)(1); and
       (H) by redesignating subsections (d), (e), (f), (g), and 
     (h) as subsections (c), (d), (e), (f), and (g), respectively.
       (5) Section 1737 of title 10, United States Code, is 
     amended--
       (A) in subsection (a)--
       (i) in paragraph (1), by striking out ``an Acquisition 
     Corps'' and inserting in lieu thereof ``the Acquisition 
     Corps''; and
       (ii) in paragraph (5), by striking out ``, or a principal 
     deputy to a director of contracting'' and all that follows 
     through ``Department of Defense'' and inserting in lieu 
     thereof ``or a principal deputy to a director of 
     contracting''; and
       (B) by striking out subsection (c) and inserting in lieu 
     thereof the following:
       ``(c) Waiver.--(1) The Secretary of Defense may waive, on a 
     case-by-case basis, the requirements established under this 
     subchapter with respect to the assignment of an individual to 
     a particular critical acquisition position. Such a waiver may 
     be granted only if unusual circumstances justify the waiver 
     or if the Secretary determines that the individual's 
     qualifications obviate the need for meeting the education, 
     training, and experience requirements established under this 
     subchapter.
       ``(2) The Secretary shall act through the Under Secretary 
     of Defense for Acquisition and Technology in exercising the 
     authority provided in paragraph (1). The authority to grant 
     waivers under this subsection may be delegated by the Under 
     Secretary only to the Director of Acquisition Education, 
     Training, and Career Development.''.
       (d) Education and Training.--(1) Section 1741(c) of title 
     10, United States Code, is amended to read as follows:
       ``(c) Programs.--The Under Secretary shall establish and 
     implement the education and training programs authorized by 
     this subchapter.''.
       (2) Section 1742 of such title is amended by striking out 
     ``require that each military department''.
       (3) Section 1743 of such title is amended in the first 
     sentence by striking out ``require that the Secretary of each 
     military department''.
       (e) General Management.--(1) Section 1761(a) of title 10, 
     United States Code, is amended by striking out ``prescribe 
     regulations to ensure that the military departments and 
     Defense Agencies''.
       (2) Section 1762(c) of such title is amended--
       (A) by striking out the parenthetical material in the 
     matter above paragraph (1);
       (B) in paragraph (4), by striking out ``an acquisition 
     corps'' in subparagraphs (A) and (B) and inserting in lieu 
     thereof ``the Acquisition Corps''; and
       (C) in paragraph (14), by striking out ``and the 
     performance of each military department''.
       (3) Section 1763 of such title is amended by striking out 
     the second sentence.

     SEC. 223. PROCUREMENT PROCEDURES GENERALLY.

       Chapter 137 of title 10, United States Code, is amended as 
     follows:
       (1) Section 2305(d) is amended--
       (A) in the first sentence of paragraph (1)(A), by striking 
     out ``shall ensure that,'' and all that follows through ``the 
     head of an agency'' and inserting in lieu thereof ``, in 
     preparing a solicitation for the award of a development 
     contract for a major system, shall'';
       (B) in the first sentence of paragraph (2)(A), by striking 
     out ``shall ensure that,'' and all that follows through ``the 
     head of an agency'' and inserting in lieu thereof ``, in 
     preparing a solicitation for the award of a production 
     contract for a major system, shall'';
       (C) by striking out ``the head of the agency'' each place 
     it appears and inserting in lieu thereof ``the Secretary''; 
     and
       (D) by striking out ``the head of an agency'' each place it 
     appears and inserting in lieu thereof ``the Secretary of 
     Defense''.
       (2) Section 2306b is amended--
       (A) in subsection (b)(1), by striking out ``for the agency 
     or agencies under the jurisdiction of such official''; and
       (B) in subsection (j), by striking out ``instruct the 
     Secretary of the military department concerned to''.
       (3) Section 2307 is amended--
       (A) in subsection (g), by striking out ``Secretary of the 
     Navy'' each place it appears and inserting in lieu thereof 
     ``Secretary of Defense''; and
       (B) in subsection (h)(7), by striking out the second 
     sentence.
       (4) Section 2311 is amended in subsection (a)--
       (A) by inserting ``(1)'' after ``In Gen- eral.--''; and
       (B) by adding at the end the following new paragraph:
       ``(2) The Secretary of Defense may delegate any authority 
     of the Secretary under this chapter only to--
       ``(A) the Deputy Secretary of Defense, who may successively 
     delegate such authority only to the Under Secretary of 
     Defense for Acquisition and Technology;
       ``(B) the Under Secretary of Defense for Acquisition and 
     Technology; or
       ``(C) any acquisition program executive officer or 
     acquisition program manager of the 
     [[Page S4818]] Defense Research, Development, and Acquisition 
     Agency.''.
       (5) Section 2318(a) is amended by striking out ``Defense 
     Logistics Agency'' each place it appears and inserting in 
     lieu thereof ``Defense Research, Development, and Acquisition 
     Agency''.
       (6) Section 2320(b) is amended--
       (A) in the matter above paragraph (1), by striking out ``an 
     agency named in section 2303 of this title'' and inserting in 
     lieu thereof ``the Department of Defense''; and
       (B) in paragraph (9), by striking out ``the head of the 
     agency to withhold'' and inserting in lieu thereof ``the 
     withholding of''.
       (7) Section 2323(e)(1)(A)(iii) is amended by striking out 
     ``military departments, Defense Agencies,'' and inserting in 
     lieu thereof ``Department of Defense''.
       (8) Section 2324 is amended--
       (A) in subsection (e)(3)(A), by striking out the matter 
     above clause (i) and inserting in lieu thereof the following:
       ``(A) Pursuant to regulations prescribed by the Secretary 
     of Defense and subject to the availability of appropriations, 
     the Secretary may waive the application of the provisions of 
     subparagraphs (M) and (N) of paragraph (1) to a covered 
     contract (other than a contract to which paragraph (2) 
     applies) if the Secretary determines that--'';
       (B) in subsection (h)(2), by striking out ``or the 
     Secretary of the military department concerned'';
       (C) in subsection (k)(4)--
       (i) by striking out ``or Secretary of the military 
     department concerned'';
       (ii) by striking out ``or Secretary determines'' and 
     inserting in lieu thereof ``determines''; and
       (iii) by striking out ``or military department''; and
       (D) by striking out subsection (l) and inserting in lieu 
     thereof the following:
       ``(l) Covered Contract Defined.--(1) In this section, the 
     term `covered contract' means a contract for an amount in 
     excess of $500,000 that is entered into by the head of an 
     agency, except that such term does not include a fixed-price 
     contract without cost incentives or any firm fixed-price 
     contract for the purchase of commercial items.
       (9) Section 2326 is amended--
       ``(2) Effective on October 1 of each year that is divisible 
     by five, the amount set forth in paragraph (1) shall be 
     adjusted to the equivalent amount in constant fiscal year 
     1994 dollars. An amount, as so adjusted, that is not evenly 
     divisible by $50,000 shall be rounded to the nearest multiple 
     of $50,000. In the case of an amount that is evenly divisible 
     by $25,000 but is not evenly divisible by $50,000, the amount 
     shall be rounded to the next higher multiple of $50,000.''.
       (A) by striking out ``head of an agency'' each place it 
     appears and inserting in lieu thereof ``Secretary of 
     Defense'';
       (B) by striking out ``head of the agency'' each place it 
     appears and inserting in lieu thereof ``Secretary of 
     Defense'';
       (C) in subsection (a), by striking out ``military 
     department concerned'' and inserting in lieu thereof 
     ``Department of Defense''; and
       (D) in subsection (b)(4), by striking out ``of that agency 
     if such'' and inserting in lieu thereof ``of the Department 
     of Defense if the''.
       (10) Section 2327 is amended--
       (A) in subsection (a), by striking out ``The head of an 
     agency'' and inserting in lieu thereof ``The Secretary of 
     Defense'';
       (B) in subsection (b), by striking out ``the head of an 
     agency'' and inserting in lieu thereof ``the Secretary of 
     Defense'';
       (C) in subsection (c)(1)--
       (i) by striking out ``the head of an agency'' each place it 
     appears and inserting in lieu thereof ``the Secretary''; and
       (ii) by striking out ``such head of an agency'' each place 
     it appears and inserting in lieu thereof ``the Secretary'';
       (D) in subsection (c)(2), by striking out ``Upon the 
     request of the head of an agency, the'' and inserting in lieu 
     thereof ``The''; and
       (E) in subsection (d)--
       (i) by striking out ``(1)''; and
       (ii) by striking out paragraph (2).

     SEC. 224. RESEARCH AND DEVELOPMENT.

       Chapter 139 of title 10, United States Code, is amended as 
     follows:
       (1) Section 2352(a) is amended in the matter above 
     paragraph (1)--
       (A) by striking out ``The Secretary of a military 
     department'' and inserting in lieu thereof ``The Secretary of 
     Defense''; and
       (B) by striking out ``that military department'' and 
     inserting in lieu thereof ``the Department of Defense''.
       (2) Section 2353 is amended--
       (A) in the first sentence of subsection (a)--
       (i) by striking out ``contract of a military department'' 
     and inserting in lieu thereof ``Department of Defense 
     contract''; and
       (ii) by striking out ``the Secretary of the military 
     department concerned'' and inserting in lieu thereof ``the 
     Secretary of Defense''; and
       (B) in subsection (b)(3), by striking out ``the Secretary 
     concerned'' and inserting in lieu thereof ``the Secretary of 
     Defense''.
       (3) Section 2354 is amended--
       (A) in subsection (a), by striking out ``the Secretary of 
     the military department concerned, any contract of a military 
     department'' and inserting in lieu thereof ``the Secretary of 
     Defense, any contract of the Department of Defense'';
       (B) in subsection (c)--
       (i) by striking out ``the Secretary of the department 
     concerned'' and inserting in lieu thereof ``the Secretary of 
     Defense''; and
       (ii) by striking out ``of his department''; and
       (C) in subsection (d), by striking out ``the Secretary 
     concerned'' and inserting in lieu thereof ``the Secretary of 
     Defense''.
       (4) Section 2356(a) is amended to read as follows:
       ``(a)(1) Except as provided in paragraph (2), the Secretary 
     of Defense may delegate any authority under section 1584, 
     2353, 2354, or 2358 of this title to--
       ``(A) the Deputy Secretary of Defense, who may successively 
     delegate such authority only to the Under Secretary of 
     Defense for Acquisition and Technology;
       ``(B) the Under Secretary of Defense for Acquisition and 
     Technology; or
       ``(C) any employee of the Defense Research, Development, 
     and Acquisition Agency.
       ``(2) The authority of the Secretary under section 
     2353(b)(3) of this title may not be delegated to a person 
     described in paragraph (1)(C).''.
       (5) Section 2358 is amended--
       (A) by striking out ``or the Secretary of a military 
     department'' in subsections (a) and (b);
       (B) in subsection (a)(1), by striking out ``such 
     Secretary's department'' and inserting in lieu thereof ``the 
     Department of Defense''; and
       (C) in subsection (c)--
       (i) by striking out ``or the Secretary of that military 
     department, respectively,''; and
       (ii) by striking out ``or to such military department, 
     respectively''.
       (6) Section 2367(c) is amended to read as follows:
       ``(c) Funds appropriated to the Department of Defense may 
     not be obligated or expended for purposes of operating a 
     federally funded research center that was not in existence 
     before June 2, 1986, until--
       ``(1) the Secretary of Defense submits to Congress a report 
     with respect to such center that describes the purpose, 
     mission, and general scope of effort of the center; and
       ``(2) 60 days elapse after the date on which such report is 
     received by Congress.''.
       (7) Section 2371 is amended--
       (A) in subsection (a), by striking out ``and the Secretary 
     of each military department;''; and
       (B) by striking out subsection (b);
       (C) in subsection (f), by striking out ``There is hereby 
     established on the books of the Treasury separate accounts 
     for each of the military departments and the Advanced 
     Research Projects Agency'' and inserting in lieu thereof the 
     following: ``The Secretary of the Treasury, after 
     consultation with the Secretary of Defense, shall establish 
     on the books of the Treasury one or more separate accounts 
     for the Department of Defense''; and
       (D) in subsection (i), by striking out ``in carrying out 
     advanced research projects through the Advanced Research 
     Projects Agency, and the Secretary of each military 
     department,''.
       (8) Section 2373(a) is amended--
       (A) by striking out ``and the Secretaries of the military 
     departments may each'' and inserting in lieu thereof ``may''; 
     and
       (B) by striking out ``or the Secretary concerned''.

     SEC. 225. MISCELLANEOUS PROCUREMENT PROVISIONS.

       (a) Chapter 141.--Chapter 141 of title 10, United States 
     Code, is amended as follows:
       (1) Section 2381(b) is amended--
       (A) in the matter above paragraph (1), by striking out 
     ``the Secretary concerned'' and inserting in lieu thereof 
     ``the Secretary of Defense''; and
       (B) in paragraph (2), by striking out ``military department 
     concerned'' and inserting in lieu thereof ``Department of 
     Defense''.
       (2) Section 2385 is amended by striking out ``a military 
     department'' and inserting in lieu thereof ``the Department 
     of Defense''.
       (3) Section 2386 is amended by striking out ``a military 
     department'' and inserting in lieu thereof ``the Department 
     of Defense''.
       (4) Section 2388(a) is amended by striking out ``and the 
     Secretary of a military department may each'' and inserting 
     in lieu thereof ``may''.
       (5) Section 2393 is amended--
       (A) in subsection (a)--
       (i) by striking out ``the Secretary of a military 
     department'' in paragraph (1) and inserting in lieu thereof 
     ``the Secretary of Defense''; and
       (ii) by striking out ``the Secretary concerned'' in 
     paragraph (2) and inserting in lieu thereof ``the Secretary 
     of Defense''; and
       (B) in subsection (b), by striking out ``the Secretary 
     concerned'' and inserting in lieu thereof ``the Secretary of 
     Defense''.
       (6) Section 2394 is amended--
       (A) in subsection (a), by striking out ``the Secretary of a 
     military department'' and inserting in lieu thereof ``the 
     Secretary of Defense'';
       (B) by striking out subsection (b); and
       (C) by redesignating subsection (c) as subsection (b).
       (7) Section 2394a is amended--
       (A) in subsection (a)--
       (i) by striking out ``Secretary of a military department'' 
     and inserting in lieu thereof ``Secretary of Defense''; and
       (ii) by striking out ``military department under his 
     jurisdiction'' and inserting in lieu thereof ``Department of 
     Defense''; and
       (B) in subsection (b), by striking out the second sentence.
     [[Page S4819]]   (8) Section 2401(a) is amended by striking 
     out ``The Secretary of a military department'' both places it 
     appears and inserting in lieu thereof ``The Secretary of 
     Defense''.
       (9) Section 2104a is amended by striking out ``or the 
     Secretary of a military department''.
       (10) Section 2403 is amended--
       (A) in subsection (a), by striking out paragraph (8);
       (B) in subsection (b), by striking out ``the head of an 
     agency'' in the matter above paragraph (1) and inserting in 
     lieu thereof ``the Secretary of Defense'';
       (C) in subsections (c), (f), and (g), by striking out 
     ``head of the agency concerned'' each place it appears and 
     inserting in lieu thereof ``Secretary of Defense'';
       (D) in subsection (d)--
       (i) by inserting ``(1)'' after the subsection designation;
       (ii) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively;
       (iii) by striking out the second sentence; and
       (iv) by adding at the end the following new paragraph:
       ``(2) The Secretary may delegate authority under this 
     subsection only to the Under Secretary of Defense for 
     Acquisition and Technology.''; and
       (E) in subsection (h), by striking out paragraph (3).
       (11) Section 2405(a) is amended by striking out ``The 
     Secretary of a military department'' and inserting in lieu 
     thereof ``The Secretary of Defense.''
       (12) Section 2410c(a) of title 10, United States Code, is 
     amended by striking out ``Secretary of a military department 
     or the head of a Defense Agency, as the case may be,'' and 
     inserting in lieu thereof ``Secretary of Defense''.
       (13) Section 2410d(a) is amended by striking out ``a 
     military department or a Defense Agency'' and inserting in 
     lieu thereof ``the Department of Defense''.
       (14) Section 2410g(b) is amended by striking out 
     ``notification--'' and all that follows through ``any other 
     Department of Defense contract, to'' and insert in lieu 
     thereof ``notification to''.
       (b) Chapter 142.--Chapter 142 of title 10, United States 
     Code, is amended as follows:
       (1) Section 2411(3) is amended by striking out ``Director 
     of the Defense Logistics Agency'' and inserting in lieu 
     thereof ``Under Secretary of Defense for Acquisition and 
     Technology''.
       (2) Section 2417 is amended by striking out ``Director of 
     the Defense Logistics Agency'' and inserting in lieu thereof 
     ``Under Secretary of Defense for Acquisition and 
     Technology''.

     SEC. 226. MAJOR DEFENSE ACQUISITION PROGRAMS.

       Chapter 144 of title 10, United States Code, is amended as 
     follows:
       (1) Section 2432(c)(3)(A) is amended by striking out ``The 
     Secretary of Defense'' and all that follows.
       (2) Section 2433 is amended--
       (A) by striking out ``service acquisition executive 
     designated by the Secretary concerned'' each place it appears 
     and inserting in lieu thereof ``Under Secretary of Defense 
     for Acquisition and Technology'';
       (B) in subsection (c), by striking out ``such service 
     acquisition executive'' in the matter following paragraph (3) 
     and inserting in lieu thereof ``the Under Secretary of 
     Defense for Acquisition and Technology'';
       (C) in subsection (d)--
       (i) by striking out ``the service acquisition executive'' 
     in paragraphs (1) and (2) and inserting in lieu thereof ``the 
     Under Secretary''; and
       (ii) in paragraph (3), by striking out ``If, based upon the 
     service acquisition executive's determination, the Secretary 
     concerned'' and inserting in lieu thereof ``If the Under 
     Secretary of Defense for Acquisition and Technology''; and
       (D) in subsection (e)--
       (i) in paragraph (1)(A), by striking out ``Secretary 
     concerned'' and inserting in lieu thereof ``Under Secretary 
     of Defense for Acquisition and Technology'';
       (ii) in paragraph (1)(B), by striking out ``Secretary'' 
     both places it appears and inserting in lieu thereof ``Under 
     Secretary'';
       (iii) in paragraph (2), by striking out ``(as determined by 
     the Secretary'' in the matter above subparagraph (A) and 
     inserting in lieu thereof ``(as determined by the Under 
     Secretary''; and
       (iv) in paragraph (3), by striking out ``by the Secretary'' 
     both places it appears in the first sentence and inserting in 
     lieu thereof ``by the Under Secretary''.
       (3) Section 2434(b)(1)(A) is amended by striking out 
     ``under the supervision,'' and all that follows and inserting 
     in lieu thereof ``in the Department of Defense.''.
       (4) Section 2435 is amended--
       (A) in subsection (a)(1), by striking out ``Secretary of a 
     military department'' and inserting in lieu thereof ``Under 
     Secretary of Defense for Acquisition and Technology''; and
       (B) in subsection (d)(2), by striking out ``the Secretary 
     of the military department concerned and''.

     SEC. 227. SERVICE SPECIFIC ACQUISITION AUTHORITY.

       (a) Army.--Part IV of subtitle B of title 10, United States 
     Code, is amended by striking out ``Secretary of the Army'' in 
     sections 4540(a) and 4542 (each place it appears) and 
     inserting in lieu thereof ``Secretary of Defense''.
       (b) Navy.--Part IV of subtitle C of such title is amended 
     as follows:
       (1) The following sections are amended by striking out 
     ``Secretary of the Navy'' and inserting in lieu thereof 
     ``Secretary of Defense'': sections 7212(a), 7229, 7299a (each 
     place it appears), 7309(c), 7310(b) (both places it appears), 
     7311(a) (in the matter before paragraph (1)), 7311(b) (in the 
     matter before paragraph (1)), 7314, and 7361 (each place it 
     appears) .
       (2) Section 7314(1)(B) is amended by striking out ``Navy 
     supply system'' each place it appears and inserting in lieu 
     thereof ``Department of Defense supply system''.
       (3) Section 7522 is amended by striking out ``Secretary of 
     the Navy'' and all that follows through ``chiefs of bureaus'' 
     and inserting in lieu thereof ``Secretary of Defense''.
       (c) Air Force.--Part IV of subtitle D of such title is 
     amended as follows:
       (1) Sections 9511(10) and 9540(a) are amended by striking 
     out ``Secretary of the Air Force'' and inserting in lieu 
     thereof ``Secretary of Defense''.
       (2) Section 9513(a) is amended--
       (A) in paragraph (1), by striking out ``Secretary of the 
     Air Force--'' and all that follows and inserting in lieu 
     thereof the following: ``Secretary, in consultation with the 
     Secretary of the military department concerned, may, by 
     contract entered into with a contractor, authorize such 
     contractor to use one or more Department of Defense 
     installations designated by the Secretary of Defense.''; and
       (B) in paragraph (2), by striking out ``of the Air Force''.

     SEC. 228. OTHER LAWS.

       In any other provision of law providing authority for the 
     Secretary of a military department or the head of a Defense 
     Agency of the Department of Defense to perform a research, 
     development, or acquisition function of the Department of 
     Defense, the reference to that official shall be deemed to 
     refer to the Secretary of Defense. That function shall be 
     performed as provided in section 133(b) of title 10, United 
     States Code (as amended by section 201(a)), and section 232 
     of such title (as added by section 201(b)).
                       Subtitle D--Effective Date

     SEC. 231. EFFECTIVE DATE.

       This title and the amendments made by this title shall take 
     effect on the date that is one year after the date of the 
     enactment of this Act.
                   TITLE III--DEPOT-LEVEL MAINTENANCE

     SEC. 301. ELIMINATION OF 60/40 RULE FOR PUBLIC/PRIVATE 
                   DIVISION OF DEPOT-LEVEL MAINTENANCE WORKLOAD.

       (a) Elimination of Rule.--Section 2466 of title 10, United 
     States Code, is amended--
       (1) by striking out subsections (a), (c), (d), and (e); and
       (2) by striking out ``(b) Prohibition on Management by End 
     Strength.--''.
       (b) Conforming Amendments.--(1) The heading of such section 
     is amended to read as follows:

     ``Sec. 2466. Civilian employees involved in depot-level 
       maintenance and repair of materiel: prohibition on 
       management by end strength''.

       (2) The item relating to such section in the table of 
     sections at the beginning of chapter 146 of such title is 
     amended to read as follows:

``2466. Civilian employees involved in depot-level maintenance and 
              repair of materiel: prohibition on management by end 
              strength.''.
     SEC. 302. PRESERVATION OF CORE MAINTENANCE AND REPAIR 
                   CAPABILITY.

       (a) In General.--(1) Chapter 146 of title 10, United States 
     Code, is amended by adding at the end the following new 
     section:
     ``Sec. 2472. Core maintenance and repair capability: 
       preservation

       ``(a) Necessity for Core Maintenance and Repair 
     Capabilities.--It is essential for the national defense that 
     the Department of Defense preserve an organic maintenance and 
     repair capability (including personnel, equipment, and 
     facilities) to meet readiness and sustainability requirements 
     established by the Chairman of the Joint Chiefs of Staff for 
     the systems and equipment required for contingency plans 
     approved by the Chairman of the Joint Chiefs of Staff under 
     section 153(a)(3) of this title.
       ``(b) Identification of Core Maintenance and Repair 
     Capabilities.--The Secretary of Defense shall identify those 
     maintenance and repair activities of the Department of 
     Defense that are necessary to preserve the maintenance and 
     repair capability described in subsection (a). The Secretary 
     may identify for such purpose only those activities of the 
     Department of Defense that are necessary to ensure a ready 
     and controlled source of technical competence for that 
     purpose. The Secretary may not identify for such purpose any 
     intermediate-level or depot-level maintenance or repair 
     activity.
       ``(c) Limitation on Contracting.--The Secretary may not 
     contract for the performance by non-Government personnel of a 
     maintenance activity identified by the Secretary under 
     subsection (b) under the procedures and requirements of 
     Office of Management and Budget Circular A-76 or any 
     successor administrative regulation or policy unless the 
     Secretary of Defense determines (under regulations prescribed 
     by the Secretary) that Government performance of the activity 
     is no longer required for national defense reasons.
     [[Page S4820]]   ``(d) Contracting for Performance of Non-
     Core Functions.--In the case of any maintenance or repair 
     activity (including the making of major modifications and 
     upgrades) that is not identified by the Secretary under 
     subsection (b), the Secretary concerned shall provide for the 
     performance of that activity by an entity in the private 
     sector, selected through the use of competitive procedures, 
     unless the Secretary determines that the performance of that 
     activity by a Government entity is necessary to maintain the 
     defense industrial base.''.
       (2) The table of sections at the beginning of such chapter 
     is amended by adding at the end the following new item:

``2472. Core maintenance and repair capability: preservation.''.

       (b) Revision of Regulations.--The Secretary of Defense 
     shall revise the existing Department of Defense regulations 
     relating to depot level maintenance and repair activities in 
     order to ensure the consistency of those regulations with the 
     policy provided in section 2472(d) of title 10, United States 
     Code, as added by subsection (a).

     SEC. 303. PERFORMANCE OF DEPOT-LEVEL MAINTENANCE WORKLOAD BY 
                   PRIVATE SECTOR WHENEVER POSSIBLE.

       (a) Requirement.--Section 2469 of title 10, United States 
     Code, is amended to read as follows:

     ``Sec. 2469. Depot-level maintenance and repair activities: 
       use of private sector

       ``(a) In General.--The Secretary of Defense shall (except 
     as provided in subsection (b)) provide for the performance by 
     private sector entities of all depot-level maintenance and 
     all depot-level repair work of the Department of Defense.
       ``(b) Exception.--The Secretary may provide for the 
     performance of a particular depot-level maintenance workload, 
     or a particular depot-level repair workload, by an entity of 
     the Department of Defense if--
       ``(1) no responsive bids for performance of that workload 
     are received from responsible offerors; or
       ``(2) the Secretary makes a determination that subsection 
     (a) must be waived for that particular workload for reasons 
     of national security.''.
       (b) Clerical Amendment.--The item relating to section 2469 
     in the table of sections at the beginning of chapter 146 of 
     such title is amended to read as follows:

``2469. Depot-level maintenance and repair activities: use of private 
              sector.''.

         Aerospace Industries Association, American Defense 
           Preparedness Association, American Electronics 
           Association, Contract Services Association, Electronic 
           Industries Association, National Security Industrial 
           Association, Shipbuilders Council of America, U.S. 
           Chamber of Commerce,
                                                   March 29, 1995.
     Senator William V. Roth, Jr.,
     U.S. Senate, Washington, DC.
       Dear Senator Roth: As the associations representing the 
     hundreds of thousands of American workers employed in the 
     aerospace, electronics, shipbuilding and services industries, 
     we offer our strong support for the depot maintenance 
     provisions included in your procurement reform legislation. 
     We urge prompt action on these provisions in order to achieve 
     their enactment in this session of Congress.
       The elements of your proposal that repeal the $3 million 
     threshold for the shift of depot workload to the private 
     sector and the repeal of the so-called 60/40 rule will 
     eliminate management restrictions long opposed by the 
     Department of Defense as well as the private sector. The 
     elimination of these restrictions as called for by your bill 
     will afford the government much greater flexibility to obtain 
     the most cost effective use of every dollar spent on defense 
     logistics support.
       Similarly, we are greatly encouraged by the provisions of 
     your legislation that address the issue of government 
     ``core'' competencies. We support the language that calls for 
     the performance of the preponderance of this workload by 
     private sector entities selected on the basis of competitive 
     procedures in accordance with your narrow definition of 
     ``core'' government competency.
       The depot maintenance policy articulated in your 
     legislation will permit the development of a logistics 
     support program for the 21st century. Your legislation in 
     this regard is in the national interest and in the interest 
     of the private sector industrial base. We applaud your depot 
     policy initiative, and offer to work closely with you in the 
     weeks ahead to achieve its timely enactment.
           Sincerely,
         The Presidents of AIA, ADPA, AEA, CSA, EIA, NSIA, SCA, 
           and the U.S. Chamber of Commerce.
           

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