[Senate Report 110-454]
[From the U.S. Government Publishing Office]



110th Congress 
 2d Session                      SENATE                          Report
                                                                110-454
_______________________________________________________________________

                                     

                                                       Calendar No. 952


 AMENDING THE HOMELAND SECURITY ACT OF 2002 TO PROVIDE FOR A ONE-YEAR 
                EXTENSION OF OTHER TRANSACTION AUTHORITY

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 3328


 AMENDING THE HOMELAND SECURITY ACT OF 2002 TO PROVIDE FOR A ONE-YEAR 
                EXTENSION OF OTHER TRANSACTION AUTHORITY




               September 11, 2008.--Ordered to be printed
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
                     Kevin J. Landy, Chief Counsel
                         Troy H. Cribb, Counsel
                      Nora K. Adkins, GAO Detailee
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
               Richard A. Beutel, Minority Senior Counsel
                   Eric B. Cho, Minority GSA Detailee
                  Trina Driessnack Tyrer, Chief Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................2
 IV. Section-by-Section Analysis......................................2
  V. Evaluation of Regulatory Impact..................................3
 VI. Congressional Budget Office Cost Estimate........................3
VII. Changes in Existing Law Made by the Bill, as Reported............4


                                                       Calendar No. 952
110th Congress
                                 SENATE
                                                                 Report
 2d Session                                                     110-454

======================================================================



 
 AMENDING THE HOMELAND SECURITY ACT OF 2002 TO PROVIDE FOR A ONE-YEAR 
                EXTENSION OF OTHER TRANSACTION AUTHORITY

                                _______
                                

               September 11, 2008.--Ordered to be printed

                                _______
                                

      Mr. Lieberman,  from the Committee on Homeland Security and 
             Governmental Affairs, submitted the following

                               R E P O R T

                         [To accompany S. 3328]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 3328) to amend the 
Homeland Security Act of 2002 to provide for a one-year 
extension of other transaction authority, having considered the 
same, reports favorably thereon and recommends that the bill do 
pass.

                         I. Purpose and Summary

    S. 3328 extends the Department of Homeland Security's (DHS 
or the Department) ability to use Other Transaction Authority 
(OTA) by 1-year to September 30, 2009. An ``Other Transaction'' 
(OT) is an alternative procurement approach not based on the 
Federal Acquisition Regulation (FAR) and specifically 
authorized by Congress to accelerate prototyping of 
breakthrough technologies. Agencies with OTA are freer to 
negotiate provisions that are mutually acceptable to all 
parties, such as intellectual property provisions and indemnity 
provisions, because most laws and standards applicable to 
standard federal procurements, grants, and cooperative 
agreements, such as the Truth in Negotiations Act, Competition 
in Contracting Act, or Cost Accounting Standards are not 
applicable to contracts entered pursuant to OTA. This 
encourages nontraditional government contractors to offer to 
develop technologies that would otherwise be unavailable to the 
government. Primarily, DHS uses OTA to contract with cutting-
edge, non-traditional government contractors to foster 
development of programs and technologies critical to homeland 
security needs.
    To ensure proper use and oversight, S. 3328 requires DHS to 
produce guidance, increase training, and report on OTA usage 
during this interim 1-year extension period. The annual report 
would include, among other requirements, the extent to which 
use of OTA has contributed to a broadening of the technology 
and industrial base that supports national security, the 
rationale for using OTA, including an explanation of why grants 
or FAR-based contracts were not used, the extent of 
competition, and the amount expended for each project.

              II. Background and Need for the Legislation

    The Departments of Defense (DoD), Energy, and 
Transportation have used OTA, as have the FAA and NASA. Section 
831 of the Homeland Security Act of 2002 (P.L. 107-296) 
provided DHS its initial 5-year grant of OTA, modeled after 
DoD's OTA statute. The FY 2008 DHS Appropriations Act (P.L. 
110-161, Div. E, Title V, 572) extended the Department's 
authority for an additional year through September 30th, 2008. 
OTA is used primarily by the Science and Technology (S&T) 
Directorate to contract with non-traditional government 
contractors with innovative solutions to further its mission of 
developing basic, applied, and advanced research and 
development on critical homeland security technologies.

                        III. Legislative History

    On July 24, 2008, S. 3328 was introduced by Senator Collins 
and referred to the Senate Committee on Homeland Security and 
Governmental Affairs. The bill's original co-sponsor was 
Senator Lieberman. On July 30, 2008, S. 3328 was reported 
favorably by the Committee by voice vote without amendment. 
Members present for the vote on the bill were Senators 
Lieberman, Akaka, Carper, Pryor, Landrieu, Tester, Collins, 
Stevens, and Voinovich.

                    IV. Section-by-Section Analysis


Section 1. One-year extension of other transaction authority

    Section 1 amends Section 831 of the Homeland Security Act 
of 2002 (6 U.S.C. 391(a)) to provide for a one-year extension 
of other transaction authority through September 30, 2009. This 
extension is conditioned upon the Secretary's issuance of 
policy guidance by September 30, 2008, detailing the 
appropriate use of OTA and provision of mandatory training to 
each employee who has the authority to handle OTA.
    Section 1 also expands the annual OTA report required under 
Section 831(a)(1) of the Homeland Security Act of 2002 (Public 
Law 107-296) by requiring that the report also include--
          (i) The technology areas in which research projects 
        were conducted under other transactions;
          (ii) The extent of the cost-sharing among Federal and 
        non-Federal sources;
          (iii) The extent to which use of the other 
        transactions I) has contributed to a broadening of the 
        technology and industrial base available for meeting 
        the needs of the Department of Homeland Security; and 
        II) has fostered within the technology and industrial 
        base new relationships and practices that support the 
        national security of the United States;
          (iv) The total amount of payments, if any, that were 
        received by the Federal Government during the fiscal 
        year covered by the report;
          (v) The rationale for using other transaction 
        authority, including why grants or Federal Acquisition 
        Regulation-based contracts were not used, the extent of 
        competition, and the amount expended for each such 
        project.
    These reporting elements resemble those for Department of 
Defense OTA under 10 U.S.C. 2371(h) except for subparagraph 
(v), which requires an explanation, for each OTA transaction, 
why standard FAR-based procurement contracts or financial 
assistance instruments such as grants or cooperative agreements 
were not appropriate. This reflects the Committee's belief that 
OTA serves a limited purpose and should only be used when these 
other well-established instruments are not appropriate.

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill. The 
Congressional Budget Office states that S. 3328 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would not affect the budgets 
of state, local, or tribal governments. The enactment of this 
legislation will not have significant regulatory impact.

             VI. Congressional Budget Office Cost Estimate

                                                   August 12, 2008.
Hon. Joseph I. Lieberman,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3328, a bill to 
amend the Homeland Security Act of 2002 to provide for a one-
year extension of other transaction authority.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

S. 3328--A bill to amend the Homeland Security Act of 2002 to provide 
        for a one-year extension of other transaction authority

    Current law permits the Department of Homeland Security 
(DHS) to waive the requirements of the Federal Acquisition 
Regulation (procedures that guide federal procurement actions) 
for certain research and development projects. DHS allocated 
about $400 million for such projects over the 2004-2007 period, 
enabling the department to increase its use of small 
contractors for research and development activities. This 
authority (known as ``other transaction authority'') is 
scheduled to expire on September 30, 2008; S. 3328 would extend 
it for one year.
    Based on information from DHS about the department's 
research and development plans, CBO estimates that implementing 
S. 3328 would not significantly affect DHS spending for those 
activities. Enacting the bill would not affect direct spending 
or revenues.
    S. 3328 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Mark Grabowicz. 
This estimate was approved by Peter H. Fontaine, Assistant 
Director for Budget Analysis.

       VII. Changes to Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 3328 as reported are shown as follows (existing law proposed 
to be omitted is enclosed in [brackets], new matter is printed 
in italic, and existing law in which no change is proposed is 
shown in roman):

                     HOMELAND SECURITY ACT OF 2002


Pub. L. 107-296, Title VIII, 831, Nov. 25, 2002; as amended by Pub. L. 
             110-161, Div. E, Title V, 572, Dec. 26, 2007.

6 U.S.C. 391

SEC. 831. RESEARCH AND DEVELOPMENT PROJECTS.

    (a) Authority.--If the Secretary issues policy guidance by 
September 30, 2008, detailing the appropriate use of other 
transaction authority and provides mandatory other transaction 
training to each employee who has the authority to handle 
procurements under other transaction authority, the Secretary 
may, before September 30, 2009, carry out a program[Until 
September 30, 2008, the Secretary may carry out a pilot 
program] under which the Secretary may exercise the following 
authorities:
          (1) In general.--When the Secretary carries out 
        basic, applied, and advanced research and development 
        projects, including the expenditure of funds for such 
        projects, the Secretary may exercise the same authority 
        (subject to the same limitations and conditions) with 
        respect to such research and projects as the Secretary 
        of Defense may exercise under section 2371 of title 10, 
        United States Code (except for subsections (b) and 
        (f)), after making a determination that the use of a 
        contract, grant, or cooperative agreement for such 
        project is not feasible or appropriate. The annual 
        report required under subsection (b)(1)[subsection (b)] 
        of this section, as applied to the Secretary by this 
        paragraph, shall be submitted to the President of the 
        Senate and the Speaker of the House of Representatives.
          (2) * * *
    (b) Reports._
          (1) In general._(b) Report.--] Not later than 2 
        years after the effective date of this Act, and 
        annually thereafter, the Comptroller General shall 
        report to the Committee on Government Reform of the 
        House of Representatives and the Committee on 
        Governmental Affairs of the Senate on--
          (A) [(1)] whether use of the authorities described in 
        subsection (a) attracts nontraditional Government 
        contractors and results in the acquisition of needed 
        technologies; and
          (B) [(2)] if such authorities were to be made 
        permanent, whether additional safeguards are needed 
        with respect to the use of such authorities.
          (2) Annual report on exercise of other transaction 
        authority--
                  (A) In general.--The Secretary shall submit 
                to the Committee on Homeland Security and 
                Governmental Affairs of the Senate and the 
                Committee on Homeland Security of the House of 
                Representatives an annual report on the 
                exercise of other transaction authority under 
                subsection (a).
                  (B) Content.--The report required under 
                subparagraph (A) shall include the following:
                          (i) The technology areas in which 
                        research projects were conducted under 
                        other transactions.
                          (ii) The extent of the cost-sharing 
                        among Federal and non-Federal sources.
                          (iii) The extent to which use of the 
                        other transactions--
                                  (I) has contributed to a 
                                broadening of the technology 
                                and industrial base available 
                                for meeting the needs of the 
                                Department of Homeland 
                                Security; and
                                  (II) has fostered within the 
                                technology and industrial base 
                                new relationships and practices 
                                that support the national 
                                security of the United States.
                          (iv) The total amount of payments, if 
                        any, that were received by the Federal 
                        Government during the fiscal year 
                        covered by the report.
                          (v) The rationale for using other 
                        transaction authority, including why 
                        grants or Federal Acquisition 
                        Regulation-based contracts were not 
                        used, the extent of competition, and 
                        the amount expended for each such 
                        project.

                                  
