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 100 STAT. 3930

PUBLIC LAW 99-661—NOV. 14, 1986

and ending on September 30, 1986, and shall be completed not later than 180 days after the date of the enactment of this Act. Contracts. (3) If the Administrator of the Small Business Administration determines, on the basis of the review referred to in paragraph (2), that contracts awarded under the set-aside programs under sections 15 USC 637, 644. 8(a) and 15(a) of the Small Business Act in any industry category subject to that review exceed 30 percent of the dollar value of the total contract awards for that industry category, as determined in accordance with the last sentence of section 15(a)(3) of such Act, the Administrator shall propose adjustments to the size standards for such industry category establishing eligibility for a set-aside program to a size that will likely reduce the number of contracts which may be set aside to approximately 30 percent of the value of Federal contracts to be awarded under such sections. The Administrator Register, shall publish such proposed adjustments in the Federal Register for publication. public comment. The Administrator may not issue final regulations implementing revised size standards for an industry category under section 3(a)(3) of such Act (as added by subsection if)) until October 1, 1987. 15 USC 632 note.

(i) REPORT ON EFFECT OF AMENDMENTS MADE BY THIS SECTION.—(1)

The Administrator of the Small Business Administration shall submit to the Committees on Armed Services and the Committees on Small Business of the Senate and House of Representatives a report on the amendments made by this section. The report shall include the Administrator's views on the advisability and feasibility of implementing such amendments. (2) The report shall also include— . (A) the Administrator's findings and determinations under the review of size standards for businesses that qualify as small businesses carried out pursuant to section 3(a)(2)(B) of the Small Business Act (as amended by subsection if)); (B) a determination of whether or not the amendments made by subsection if) will further the interests of the set-aside program; and (C) recommendations for furthering the interests described in subparagraphs (A) and (B) in a more efficient or more effective manner than provided in such amendments. (3) In preparing the report required by paragraph (1), the Administrator of the Small Business Administration shall seek the views of all affected agencies of the Government and the views of the public, including the views of business concerns of all sizes and of trade, business, and professional organizations. The views of such agencies, and a summary of the views of the public, shall be included in the report. (4) The report shall be submitted not later than July 15, 1987. Contracts. Illinois.

(j)

LIMITATION

RESPECTING

GREAT

LAKES

NAVAL

TRAINING

CENTER.—Of the total dollar amount of the contracts awarded for fiscal year 1987 for construction and refuse systems and related services at Great Lakes Naval Training Center, Illinois, not more than 30 percent of such dollar amount may be under contracts awarded through the so-called small business set-aside programs 15 USC 637, 644. under sections 8 and 15 of the Small Business Act. SEC. 922. THRESHOLDS FOR CERTAIN REQUIREMENTS RELATING TO SMALL PURCHASES

(a) SMALL BUSINESS ACT NOTICE THRESHOLDS.—Section 8(e)(1) of the Small Business Act (15 U.S.C. 637(e)(1)) is amended—

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100 STAT. 3931

(1) in subparagraph (A)— (A) by striking out "$10,000" both places such term appears and inserting in lieu thereof "$25,000"; (B) by striking out "or" at the end of clause (i); (C) by striking out the comma at the end of clause (ii) and inserting in lieu thereof "; or"; (D) by inserting after clause (ii) the following new clause: "(iii) solicit bids or proposals for a contract for property or Contracts, services for a price expected to exceed $10,000, if there is not a reasonable expectation that at least two offers will be received from responsive and responsible offerors,"; and (E) by striking out "subsection (b); and" and inserting in lieu thereof "subsection (f);"; (2) by redesignating subparagraph (B) as subparagraph (C); and (3) by inserting after subparagraph (A) the following new subparagraph (B): "(B) an executive agency intending to solicit bids or proposals for a contract for property or services shall post, for a period of not less than ten days, in a public place at the contracting office issuing the solicitation a notice of solicitation described in subsection (f)— "(i) in the case of an executive agency other than the Department of Defense, if the contract is for a price expected to exceed $10,000, but not to exceed $25,000; and "(ii) in the case of the Department of Defense, if the contract is for a price expected to exceed $5,000, but not to exceed $25,000; and". (b) OFFICE OF FEDERAL PROCUREMENT POLICY ACT NOTICE THRESH-

OLDS.—Section 18(a)(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 416(a)(1)(A)) is amended— (1) in subparagraph (A)— (A) by striking out "$10,000" both places such term appears in and inserting in lieu thereof "$25,000"; (B) by striking out "or" at the end of clause (i); (C) by striking out the comma at the end of clause (ii) and inserting in lieu thereof "; or"; (D) by inserting after clause (ii) the following new clause: Contracts, "(iii) solicit bids or proposals for a contract for property or services for a price expected to exceed $10,000, if there is not a reasonable expectation that at least two offers will be received from responsive and responsible offerors,"; and (E) by striking out "and" at the end; (2) by redesignating subparagraph (B) as subparagraph (C); and (3) by inserting after subparagraph (A) the following new subparagraph (B): "(B) an executive agency intending to solicit bids or proposals for a contract for property or services shall post, for a period of not less than ten days, in a public place at the contracting office issuing the solicitation a notice of solicitation described in subsection (0— "(i) in the case of an executive agency other than the Department of Defense, if the contract is for a price expected to exceed $10,000, but not to exceed $25,000; and "(ii) in the case of the Department of Defense, if the contract is for a price expected to exceed $5,000, but not to exceed $25,000; and".

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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 100 STAT. 3932

15 USC 637. 41 USC 416.

PUBLIC LAW 99-661—NOV. 14, 1986

(c) SMALL BUSINESS SET-ASIDES.—The first sentence of section 150') of the Small Business Act (15 U.S.C. 644(j)) is amended by striking out "$10,000" and inserting in lieu thereof "$25,000". (d) CONFORMING AMENDMENTS.—(1) Section 8(f) of the Small Business Act is amended by striking out "subsection (e)(1)(A)" and inserting in lieu thereof "subparagraph (A) or (B) of subsection (e)(1)". (2) Section 18(b) of the Office of Federal Procurement Policy Act is amended by striking out "subsection (a)(1)(A)" and inserting in lieu thereof "subparagraph (A) or (B) of subsection (a)(1)". SEC. 923. REQUIREMENTS RELATING TO PROCEDURES OTHER THAN COMPETITIVE PROCEDURES

(a) LIMITED SOURCES.—Section 2304(c)(1) of title 10, United States Code, is amended by inserting "or only from a limited number of responsible sources" after "only one responsible source". (b) UNSOLICITED PROPOSALS FOR SERVICE.—Subparagraph (A) of

section 2304(d)(1) of such title is amended by striking out "a unique and innovative concept" and all that follows and inserting in lieu thereof "a concept— "(i) that is unique and innovative or, in the case of a service, for which the source demonstrates a unique capability of the source to provide the service; and "(ii) the substance of which is not otherwise available to the United States, and does not resemble the substance of a pending competitive procurement; and". (c) FOLLOW-ON CONTRACTS.—Subparagraph (B) of such section is amended— (1) by inserting ", or the continued provision of highly specialized services, such property or services may be deemed to be available only from the original source and may be procured through procedures other than competitive procedures" after "highly specialized equipment"; (2) by inserting a one-em dash after "would result in"; (3) by paragraphing clauses (i) and (ii) and aligning their margins so as to be cut in four ems; (4) by striking out the comma after "competition" at the end .BS-^snif^j of clause (i) and inserting in lieu thereof a semicolon; and (5) by striking out ", such property" and all that follows and inserting in lieu thereof a period. Contracts. (d) EFFECTIVE DATES.—(1) The amendment made by subsection (a) 10 USC 2304 shall apply with respect to contracts for which solicitations are "****• issued after the end of the 180-day period beginning on the date of the enactment of this Act. (2) The amendment made by subsection (b) shall apply with respect to contracts awarded on the basis of unsolicited research proposals after the end of the 180-day period beginning on the date of the enactment of this Act. (3) The amendments made by subsection (c) shall apply with respect to follow-on contracts awarded after the end of the 180-day period beginning on the date of the enactment of this Act. SEC. 924. EVALUATION FACTORS IN AWARD OF CONTRACTS

(a) EVALUATION FACTORS.—Subsection (a) of section 2305 of title 10, United States Code, is amended— (1) in paragraph (2)(A)(i)— ^ '^ (A) by striking out "(including price)";

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100 STAT. 3933

,xt;;

(B) by inserting "(including price)" after "sealed bids"; and (C) by inserting "(including cost or price)" after "competitive proposals"; and (2) by adding at the end the following new paragraph: "(3) In prescribing the evaluation factors to be included in each solicitation for competitive proposals, the head of an agency shall clearly establish the relative importance assigned to the quality of the services to be provided (including technical capability, management capability, and prior experience of the offeror).". (b) CONFORMING AMENDMENT.—Subsection (b) of such section is amended by inserting "cost or" in paragraph (4)(B) before "price". (c) EFFECTIVE DATE.—The amendments made by this section shall 10 USC 2305 apply with respect to solicitations for sealed bids or competitive ^o*®. proposals issued after the end of the 180-day period beginning on the date of the enactment of this Act. SEC. 925. COMPUTATION OF CONTRACT BID PRICES

(a) IN GENERAL.—Section 2301(a) of title 10, United States Code, is amended— (1) by striking out "and" at the end of paragraph (5); (2) by striking out the period at the end of paragraph (6) and inserting in lieu thereof "; and"; and (3) by adding at the end the following new paragraph: "(7) the head of an agency, in issuing a solicitation for a contract to be awarded using sealed-bid procedures, not include in such solicitation a clause providing for the evaluation of prices under the contract for options to purchase additional supplies or services under the contract unless the head of the agency has determined that there is a reasonable likelihood that the options will be exercised.". (b) EFFECTIVE DATE.—-Section 2301(a)(7) of title 10, United States 10 USC 2301 Code (as added by subsection (a)), shall not apply to solicitations for note, sealed bids issued before the end of the 180-day period beginning on the date of the enactment of this Act. SEC. 926. PRICES FOR SPARE OR REPAIR PARTS SOLD COMMERCIALLY (a) ESTABLISHMENT OF COMMERCIAL PRICING REQUIREMENT.—(1)

Section 2323 of title 10, United States Code, is amended to read as follows: "§ 2323. Commercial pricing for spare or repair parts "(a) LIMITATION ON PRICE OF COMMERCIALLY AVAILABLE PARTS.— Contracts. Except in the case of an offer submitted with a written statement under subsection (b)(2) and except as provided in subsection (c), if the head of an agency, using procedures other than competitive procedures, enters into a contract with a contractor for the purchase of spare or repair parts which the contractor also offers for sale to the general public, the price charged the United States for such parts under the contract may not exceed the lowest commercial price charged by the contractor in sales of such parts during a period described in subsection (b)(1). "(b) REQUIREMENTS FOR INCLUSION IN OFFER.—The head of an agency, with respect to an offeror who submits an offer to the head of an agency to enter into a contract for the supply of spare or repair parts under a contract awarded using procedures other than

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 100 STAT. 3934

PUBLIC LAW 99-661—NOV. 14, 1986

competitive procedures, and who also offers such parts for sale to the general public, shall require that the offeror— "(1) certify in such offer that, to the best of the knowledge and belief of the offeror, the price proposed in the offer does not exceed the lowest commercial price at which such offeror sold such parts during the most recent regular monthly, quarterly, or other period for which sales data are reasonably available; or "(2) submit with such offer a written statement— J "(A) specifying the amount of the difference between the price proposed in the offer and thd lowest commercial price at which such offeror sold such parts during a period described in paragraph (1); and "(B) providing a justification for that difference. "(c) EXCEPTION TO LIMITATION.—Subsections (a) and (b) do

m

^

Post, p. 3946.

not

apply in the case of a contract with respect to which the contracting officer includes in the file on the contract a written determination by such officer that the use of the lowest commercial price with respect to such contract is not appropriate because of— "(1) national security considerations; or "(2) significant differences between the terms of the commercial sales of the parts to be acquired under such contract and the terms of such contract, including differences in— "(A) quantity; "(B) quality; "(C) delivery requirements; or "(D) other terms and conditions. "(d) AUDITING.—(1) In order to verify any certification or statement made under subsection (b) with respect to a contract, the contracting officer who awards such contract (or any representative of the contracting officer who is an employee of the United States or a member of the armed forces), during the time period specified in paragraph (2), may examine and audit all records of sales (including contract terms and conditions) maintained by or for the contractor that are directly pertinent to sales by the contractor of spare or repair parts identical to those covered by the contract during the period covered by such certification or statement. "(2) The head of an agency shall require an offeror who submits a certification or written statement under subsection (b) to make available the records, books, data, and documents described in paragraph (1) for examination, audit, or reproduction for the purposes of such paragraph during the three-year period beginning on the date that the offeror submits such certification or statement to such head of an agency. "(3) The authority provided by this subsection is in addition to the authority of the head of an agency under section 2306a of this title. "(e) REGULATIONS.—The Secretary of Defense, after consultation with the Secretary of Transportation and the Administrator of the National Aeronautics and Space Administration, shall prescribe regulations to carry out this section. Such regulations may not require the disclosure or submission of any data related to any element underlying the price of a commercial product not otherwise required by law. "(f) DEFINITIONS.—In this section: "(1) The term 'spare or repair part' means any individual piece, part, subassembly, or component which is furnished for the logistic support or repair of an end item and not as an end item itself. -

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100 STAT. 3935

V ,

u^2) The term 'lowest commercial price' means the lowest price at which a sale was made to the general public of a particular part. Such term does not include the price at which a sale was made— "(A) to any agency of the United States; "(B) to any person for resale by such person after such person performs a service or function in connection with jy < such part that increases the cost of the part, unless the agency procuring the part can demonstrate that the agency is procuring the part before such service or function has I been performed by any such person; "(C) to a subsidiary, affiliate, or parent business organization of the contractor, or any other branch of the same business entity; "(D) to any person at a price that, for the purpose of making a donation, has been substantially discounted below the fair market value or regular price of such part; or "(E) to a customer located outside the United States. "(g) APPLICABILITY.—This section does not apply to a contract entered into using simplified small purchase procedures established under section 2304(g) of this title.". (2) The item relating to section 2323 at the beginning of chapter 137 is amended to read as follows:

^ ^',

"2323. Commercial pricing for spare or repair parts.".

(b) EFFECTIVE DATE.—Regulations prescribed under section 2323(e) 10 USC 2323 of title 10, United States Code (as amended by subsection (a)(1)), J^o**shall take effect on the date of the enactment of this Act.

j

SEC. 927. ALLOCATION OF OVERHEAD TO PARTS TO WHICH CONTRACTOR HAS ADDED LITTLE VALUE

i

(a) IN GENERAL.—Section 2304 of title 10, United States Code, is amended by adding at the end the following new subsection: "(i)(l) The Secretary of Defense shall prescribe by regulation the Regulations. manner in which the Department of Defense negotiates prices for supplies to be obtained through the use of procedures other than competitive procedures, as defined in section 2302(2) of this title. "(2) The regulations required by paragraph (1) shall— "(A) specify the incurred overhead a contractor may appropriately allocate to supplies referred to in that paragraph; and "(B) require the contractor to identify those supplies which it did not manufacture or to which it did not contribute significant value. "(3) Such regulations shall not apply to an item of supply included in a contract or subcontract for which the price is based on established catalog or market prices of commercial items sold in substantial quantities to the general public". Oa) DEADLINE.—The Secretary of Defense shall prescribe the regu- 10 USC 2304 lations required by section 2304(i) of such title (as added by subsec- note, tion (a)) not later than 180 days after the date of the enactment of this Act. (c) REPEAL.—Section 1245 of the Department of Defense Authorization Act, 1985 (Public Law 98-525, 98 Stat. 2609), is repealed.

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 100 STAT. 3936

PUBLIC LAW 99-661—NOV. 14, 1986

SEC. 928. CLARIFICATION OF REQUIREMENTS TO MARK SUPPLIES TO IDENTIFY SUPPLIERS AND SOURCES (a) EXCEPTION FOR CERTAIN COMMERCIAL ITEMS.—Section 2384(b) of

title 10, United States Code, is amended— (1) by redesignating paragraph s (1), (2), and (3) as subparagraph s (A), (B), and (C), respectively; (2) by inserting "(1)" after "(b)"; ';rt ^ - : (3) by inserting "(other than a contract described i n paragraph (2))" after "delivery of supplies"; and (4) by adding a t the end the following new paragraph: "(2) Paragraph (1) does not apply to a contract that requires the delivery of supplies that a r e commercial items sold in substantial quantities to the general public if the contract— "(A) provides for the acquisition of such supplies by the Department of Defense a t established catalog or m a r k e t prices; or "(B) is awarded through the use of competitive procedures.".

Contracts.

10 USC 2384 note.

(b) EFFECTIVE D A T E. — The amendments

m a d e by subsection

(a)

shall apply with respect to contracts entered into after the e n d of the 180-day period beginning on the date of the e n a c t m e n t of this Act. ' ' P A R T C — P R O C U R E M E N T P E R S O N N E L POLICY SEC. 931. C O N F L I C T - O F - I N T E R E S T IN DEFENSE PROCUREMENT

(a) IN GENERAL.—(1) Chapter 141 of title 10, United States Code, is amended by inserting after section 2397a the following n e w sections: 10 USC 2397b. Contracts. ,

" § 2397b. Certain former Department of Defense p r o c u r e m e n t officials: limitations o n employment by c o n t r a c to r s "(a)(1) Subject to subsections (c) and (d), a person who is a former officer or employee of the Department of Defense or a former or retired m e m b e r of the a r m e d forces may not accept compensation ,, from a contractor during the two-year period beginning on the date of such person's separation from service in the Department of Defense if— "(A) on a majority of the person's working days during the two-year period ending on the date of such person's separation from service in the Department of Defense, the person performed a p r o c u r e m e n t function (relating to a contract of the Department of Defense) a t a site or plant that is owned or operated by the contractor and that was the principal location of such person's performance of that p r o c u r e m e n t function; "(B) the person performed, on a majority of the person's working days during such two-year period, p r o c u r e m e n t functions relating to a major defense system and, in the performance of such functions, participated personally and substantially, and in a m a n n e r involving decisionmaking . i; responsibilities, with respect to a contract for that system through contact with the contractor; or "(C) during such two-year period the person acted a s a p r i m a r y representative of the United States— "(i) in the negotiation of a Department of Defense contract in a n a m o u n t in excess of $10,000,000 with the contractor; or

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100 STAT. 3937

"(ii) in the negotiation of a settlement of an unresolved claim of the contractor in an amount in excess of $10,000,000 under a Department of Defense contract. "(2) In the application of paragraph (1) to a former officer or employee of the Department of Defense or a former or retired member of the armed forces, a person's status as a contractor shall be determined as of the date of the separation from service in the Department of Defense of the officer or employee or member or former member involved. "(b)(1) Any person who knowingly violates subsection (a)(1) shall be subject to a civil fine, in an amount not to exceed $250,000, in a civil action brought by the United States in the appropriate district court of the United States. "(2) Any person who knowingly offers or provides any compensation to another person, and who knew or should have known that the acceptance of such compensation is or would be in violation of subsection (a)(1), shall be subject to a civil fine, in an amount not to exceed $500,000, in a civil action brought by the United States in the appropriate district court of the United States. "(c) This section does not apply to any person with respect to— "(1) duties described in clause (A) or (B) of subsection (a)(1) which were performed while such person was serving— ' ' "(A) in a civilian position for which the rate of pay is less •'' than the minimum rate of pay payable for grade GS-13 of the General Schedule; or 5 USC 5332. "(B) as a member of the armed forces in a pay grade •'^ below pay grade 0-4; or "(2) duties described in clause (C) of subsection (a)(1) which were performed while such person was serving— "(A) in a civilian position for which the rate of pay is less than the minimum rate of pay payable for a Senior Executive Service position; or "(B) as a member of the armed forces in a pay grade below pay grade 0-7. "(d) This section does not prohibit any person from accepting compensation from any contractor that, during the fiscal year preceding the fiscal year in which such compensation is accepted, was not a Department of Defense contractor or was a contractor under Department of Defense contracts in a total amount less than $10,000,000. "(e)(1) Any person may, before accepting any compensation, request the appropriate designated agency ethics official to advise such person on the applicability of this section to the acceptance of such compensation. For purposes of the preceding sentence, the appropriate designated agency ethics official is the designated agency ethics official of the agency in which such person was • ' serving at the time such person separated from service in the Department of Defense. "(2) A request for advice under paragraph (1) shall contain all information that is relevant to a determination by the designated agency ethics official on such request. "(3) Not later than 30 days after the date on which a designated SJJ | ^ij,.. agency ethics official receives a request for advice under paragraph (1), such official shall issue a written opinion on the applicability of this section to the acceptance of compenstion covered by the request. "(4) If a designated agency ethics official, on the basis of a complete disclosure as required by paragraph (2), states in a written

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 100 STAT. 3938

^

J

10 USC 2397c.

Ante, p. 3936.

PUBLIC LAW 99-661—NOV. 14, 1986

opinion furnished to any person under this subsection that this section is inapplicable to the acceptance of compensation by such person from a contractor in a particular case, there shall be a conclusive presumption in favor of such person, for the purposes of this section, that the person's acceptance of such compensation in such case is not a violation of subsection (a)(1). "(f) In this section: "(1) The term 'compensation' includes any payment, gift, benefit, reward, favor, or gratuity— "(A) which is provided, directly or indirectly, for services rendered by the person accepting such payment, gift, benefit, reward, favor, or gratuity; and "(B) which is valued in excess of $250 at the prevailing market price. f "(2)(A) The term 'contractor' means a person— "(i) that contracts to supply the Department of Defense with goods or services; • "(ii) that controls or is controlled by a person described in clause (i); or "(iii) that is under common control with a person 'i described in clause (i). "(B) Such term does not include— "1 "(i) an affiliate or subsidiary of a person described in subparagraph (A) that is clearly not engaged in the performance of a Department of Defense contract; or ' i"(ii) a State or local government. "(3) The term 'procurement function' includes, with respect to a contract, any function relating to— "(A) the negotiation, award, administration, or approval of the contract; "(B) the selection of a contractor; "(C) the approval of changes in the contract; t / "(D) quality assurance, operational and developmental testing, the approval of payment, or auditing under the "•• contract; or "(E) the management of the procurement program. "(4) The term 'armed forces' does not include the Coast Guard. i "(5) The term 'major defense system' has the meaning given the term 'major system' in section 2302(5) of this title. "(g) For the purposes of this section, a person who is a retired member or a former member of the armed forces shall be considered to have been separated from service in the Department of Defense upon the date of the person's discharge or release from active duty. "§ 2397c. Defense contractors: requirements concerning former Department of Defense officials "(a)(1) Each contract for the procurement of goods or services in excess of $100,000 entered into by the Department of Defense shall include a provision under which the contractor agrees not to provide compensation to a person if the acceptance of such compensation by such person would violate section 2397b(a)(l) of this title. "(2) Such a contract shall also provide that if the contractor knowingly violates a contract provision required by paragraph (1) the contractor shall pay to the United States, as liquidated damages under the contract, an amount equal to the greater of— "(A) $100,000; or

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100 STAT. 3939

"(B) three times the amount of the compensation paid by the contractor to the person in violation of such contract provision. "(b)(1)(A) Any contractor that was awarded one or more contracts Reports. by the Department of Defense during the preceding fiscal year in an aggregate amount of at least $10,000,000 that is subject during a calendar year to a contract provision described in subsection (a) shall submit to the Secretary of Defense, not later than April 1 of the next year, a written report covering the preceding calendar year. Each such report shall list the name of each person (together with other information adequate for the Government to identify the person) who— "(i) is a former officer or employee of the Department of Defense or a former or retired member of the armed forces; and "(ii) during the preceding calendar year was provided compensation by that contractor, if such compensation was provided within two years after such officer, employee, or member left service in the Department of Defense. "(B) In the case of each person named in a report submitted under subparagraph (A), the report shall— ^' "(i) identify the agency in which the person was employed or served on active duty during the last two years of the person's service with the Department of Defense; "(ii) state the person's job title and identify each major defense system, if any, on which the person performed any work with the Department of Defense during the last two years of the person's service with the Department; "(iii) contain a complete description of any work that the person is performing on behalf of the contractor; and "(iv) identify each major defense system on which the person has performed any work on behalf of the contractor. "(2) A person who knowingly fails to file a report required by paragraph (1) shall be subject to an administrative penalty, not to exceed $10,000, imposed by the Secretary of Defense after an opportunity for an agency hearing on the record pursuant to regulations prescribed by the Secretary of Defense. The determinations of the Secretary shall be included in such record. The determinations of the Secretary shall be subject to judicial review under chapter 7 of title 5.

"(3) The Secretary of Defense shall review each report under paragraph (1) for the purposes of (A) assessing the accuracy and completeness of the report, and (B) identifying possible violations of section 2397b(a)(l) of this title or of a contract provision required by subsection (a). The Secretary shall report any such possible violation to the Attorney General. "(4) The Secretary shall make reports submitted under this subsection available to any Member of Congress upon request. "(d) Subsection (g) of section 2397b of this title, and the definitions prescribed in subsection (f) of such section, apply to this section.". (2) The table of sections at the beginning of chapter 141 of title 10, United States Code, is amended by inserting after the item relating to section 2397a the following new items: "2397b. Certain former Department of Defense procurement officials: limitations on employment by contractors. "2397c. Defense contractors: requirements concerning former Department of Defense officials.".

5 USC 701 et seg.

Ante, p. 3936.

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 100 STAT. 3940

10 USC 2397b ^°^-

10 USC 1621 note.

PUBLIC LAW 99-661—NOV. 14, 1986

(b) REPEAL.—Section 921 of the Defense Procurement Improvement Act of 1985 (title IX of Public Law 99-145; 10 U.S.C. 2397a note) is repealed. (c) EFFECTIVE DATES.—(1) Subject to paragraph (2), this section and the amendments made by this section shall take effect 180 days after the date of the enactment of this Act. (2)(A) The amendments made by this section— (i) do not preclude the continuation of employment that began before the effective date of this section or the acceptance of ' ^ compensation for such employment; and (ii) do not, except as provided in subparagraph (B), apply to a person whose service in the Department of Defense terminates before the effective date of this section. (B) Subparagraph (A)(ii) does not preclude the application of the amendments made by this section to a person with respect to service in the Department of Defense by such person on or after the effective date of this section. SEC. 932. PLAN FOR ENHANCEMENT OF PROFESSIONALISM OF ACQUISITION PERSONNEL (a) DEVELOPMENT OF PLAN.—The Secretary of Defense shall

'

develop a plan for a personnel initiative designed to enhance the professionalism of, and career opportunities available to, acquisition personnel of the Department of Defense. (b) REQUIREMENTS FOR PLAN.—The plan required to be developed under subsection (a) shall— (1) include standards for the examination, appointment, classification, training, and assignment of acquisition personnel; ' and (2) assess the feasibility and desirability of— (A) the designation of certain acquisition positions of the ' •' Department of Defense as professional positions; and '^ ' (B) the establishment of an alternative personnel system that would— (i) include acquisition positions that are designated as professional positions; and (ii) include quality of performance as a factor in promotions for persons in such positions. (c) REPORT.—(1) The Secretary shall submit to Congress a report— (A) describing the plan developed under subsection (a); and (B) recommending any changes in existing law that would facilitate the enhancement of the professionalism of, and career opportunities available to, acquisition personnel of the Department of Defense. (2) The report required by subparagraph (A) shall be submitted ^ not later than April 15, 1987. ' (d) EFFECTIVE DATE.—The report required by subsection (c) shall be submitted not later than the end of the one-year period beginning on the date of the enactment of this Act. SEC. 933. EDUCATIONAL REQUIREMENTS FOR ACQUISITION PERSONNEL

Section 1622(b)(1) of title 10, United States Code, is amended by striking out "attended" and inserting in lieu thereof "completed".

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100 STAT. 3941

SEC. 934. PLAN FOR COORDINATION OF DEFENSE ACQUISITION EDUCATIONAL PROGRAMS

10 USC 1621 ^°^-

(a) COORDINATION PLAN.—The Secretary of Defense shall submit Reports. ,, to the Committees on Armed Services of the Senate and House of - .. Representatives a report containing a plan for the coordination of educational programs managed by the Department of Defense for acquisition personnel of the Department. (b) REQUIREMENTS FOR PLAN.—The plan required by subsection (a) shall provide for— (1) the education of acquisition personnel of the Department i of Defense through programs offered by the Department or through educational courses offered by organizations other than the Department; 0!' (2) the education of acquisition personnel of the Department • in various acquisition specialties, including contracting, logistics, quality, program management, systems engineering, production, and manufacturing; and (3) the elimination of duplication of functions and courses by schools of the Department that provide educational courses for acquisition personnel of the Department. (c) EFFECTIVE DATE.—The report required by subsection (a) shall be submitted not later than the end of the one-year period beginning on the date of the enactment of this Act. PART D—REQUIREMENTS RELATING TO DEFENSE CONTRACTORS

SEC. 941. CODIFICATION AND EXTENSION OF PROHIBITION ON PERSONS CONVICTED OF DEFENSE-CONTRACT RELATED FELONIES AND RELATED CRIMINAL PENALTY ON DEFENSE CONTRACTORS

(a) IN GENERAL.—(1) Chapter 141 of title 10, United States Code, is amended by adding at the end the following new section:

, n

"§ 2408. Prohibition on persons convicted of defense-contract 10 USC 2408. related felonies and related criminal penalty on defense .,; contractors "(a) PROHIBITION.—A person who is convicted of fraud or any other felony arising out of a contract with the Department of Defense shall be prohibited from working in a management or supervisory capacity on any defense contract, or serving on the board of directors of any defense contractor, for a period, as determined by the Secretary of Defense, of not less than one year from .,. > . the date of the conviction. "(b) CRIMINAL PENALTY.—A defense contractor shall be subject to a criminal penalty of not more than $500,000 if such contractor is convicted of knowingly— "(1) employing a person under a prohibition under subsection (a); or "(2) allowing such a person to serve on the board of directors of such contractor.". (2) The table of sections at the beginning of such chapter is amended by adding at the end the following new item: ) "2408. Prohibition on persons convicted of defense-contract related felonies and related criminal penalty on defense contractors.".

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Page:United States Statutes at Large Volume 100 Part 5.djvu/468

 100 STAT. 3942 10 USC 2304 note. 10 USC 2408 note.

PUBLIC LAW 99-661—NOV. 14, 1986 (b)

CONFORMING

AMENDMENT.—Section

932

of

the

Defense

Procurement Improvement Act of 1985 (title IX of Public Law 99145; 99 Stat. 699) is repealed. (c) EFFECTIVE DATE.—Section 2408 of title 10, United States Code (as added by subsection (a)(1)), shall apply with respect to employment or service on a board of directors after the date of the enactment of this Act. SEC. 942, PROTECTION OF CONTRACTOR EMPLOYEES FROM REPRISAL FOR DISCLOSURE OF CERTAIN INFORMATION

(a) IN GENERAL.—(1) Chapter 141 of title 10, United States Code, is amended by adding after section 2408 (as added by section 941) the following new section: 10 USC 2409.

Reports.

Discrimination, prohibition.

"§ 2409. Contractor employees: protection from reprisal for disclosure of certain information "(a) PROHIBITION OF REPRISALS.—An employee of a defense contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a Member of Congress or an authorized official of the Department of Defense or the Department of Justice information relating to a substantial violation of law related to a defense contract (including the competition for or negotiation of a defense contract). "(b) INVESTIGATION OF COMPLAINTS.—A person who believes that the person has been subjected to a reprisal prohibited by subsection (a) may submit a complaint to the Inspector General of the Department of Defense. Unless the Inspector General determines that the complaint is frivolous, the Inspector General shall investigate the complaint and, upon completion of such investigation, submit a report of the findings of the investigation to the person, the contractor concerned, and the Secretary of Defense. "(c) CONSTRUCTION.—Nothing in this section may be construed to authorize the discharge of, demotion of, or discrimination against an employee for a disclosure other than a disclosure protected by subsection (a) or to modify or derogate from a right or remedy otherwise available to the employee.". (2) The table of sections at the beginning of such chapter is amended by adding after the item relating to section 2408 (as added by section 941) the following new item: "2409. Contractor employees: protection from reprisal for disclosure of certain information.'.

10 USC 2409 note.

(b) EFFECTIVE DATE.—Section 2409 of title 10, United States Code (as added by subsection (a)(1)), shall apply with respect to any reprisal action taken on or after the date of the enactment of this Act. SEC. 943. REVISION OF WORK MEASUREMENT PROVISIONS

(a) IN GENERAL.—(1) Section 2406 of title 10, United States Code, is amended to read as follows: contracts.

"§ 2406. Availability of cost and pricing records "(a) REQUIREMENT.—(1) The head of an agency shall require a contractor under a covered contract with that agency to make available in a timely manner to any authorized representative of the head of the agency records of the contractor's cost and pricing data

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 PUBLIC LAW 99-661—NOV. 14, 1986

100 STAT. 3943

described in subsection (b) with respect to work under the covered contract. "(2) The head of the agency (or the representative of the head of the agency) shall be entitled to have access to records in the form and manner maintained by the contractor. "(b) COVERED RECORDS.—Records covered by subsection (a) include (for a covered contract and end items under such a contract) the following: "(1) Work measurement system data (and any revision to such data), including records of labor content expressed in standard hours of work content for— (A) the contractor's proposal for the contract; and (B) the contract as negotiated. "(2) The costs described in subsection (c)— "(A) as proposed by the contractor; "(B) as negotiated by the contractor with the head of the ' agency; and "(C) as incurred by the contractor. "(3) Bills of material. "(c) COVERED COSTS.—Costs referred to in subsection (b)(2) are— "(1) labor costs; "(2) material costs; "(8) subcontract costs; ' "(4) overhead costs; i'•<. " L > "(5) general and administrative costs; and "(6) fee or profit. "(d) NATURE OF RECORDS TO B E MAINTAINED.—Nothing in this section shall require a contractor under a covered contract to— "(1) collect or maintain additional data not otherwise collected or maintained by the contractor, or "(2) maintain data in a form or manner different from that in which the contractor maintains such data. "(e) REGULATIONS.—The Secretary of Defense shall prescribe regulations to carry out this section. Such regulations shall specify the period for which records shall be covered by this section, which shall not be less than three years after final payment under the contract to which the records pertain. "(f) DEFINITIONS.—In this section: "(1) The term 'head of an agency' means the Secretary of Defense or the Secretary of a military department. "(2) The term 'covered contract means a manufacturing contract— "(A) that is awarded under a major defense acquisition program (as such term is defined in 2432(a) of this title); and lo USC 2432. "(B) that is subject to the provisions of section 2306a of this title. Post, p. 3946. "(3) The term 'work measurement system data' means— ^ "(A) data generated from time standard setting, time monitoring, and variance analysis; and "(B) such data described in subparagraph (A) as included in planning, cost estimating, and productivity improvement. "(4) The term 'authorized representative' means a representative of the head of an agency who is an employee of the United States or a member of the armed forces.". (2) The item relating to such section in the table of sections at the beginning of chapter 141 of such title is amended to read as follows:

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 100 STAT. 3944

PUBLIC LAW 99-661—NOV. 14, 1986

"2406. Availability of cost and pricing records.".

10 USC 2406 note.

10 USC 2406 "°**-

(b) APPLICABILITY OF SECTION.—Section 2406 of title 10, United States Code, as amended by subsection (a), shall apply with respect to— (1) contracts entered into on or after the date of the enactment of this Act; and (2) contracts entered into before such date that are not completed before such date. (c) DEADLINE FOR REGULATIONS.—The Secretary of Defense shall prescribe regulations as required by section 2406(e) of title 10, United States Code (as amended by subsection (a)(1)), not later than the end of the 180-day period beginning on the date of the enactment of this Act. PART E—MISCELLANEOUS

,

SEC. 951. CONTRACTING WITH FIRMS OWNED OR CONTROLLED BY

GOVERNMENTS THAT SUPPORT TERRORISM (a) CONSIDERATION OF NATIONAL INTERESTS WITH RESPECT TO DEFENSE CONTRACTS.—(1) Chapter 137 of title 10, United States

Code, is amended by adding after the item relating to section 2326 (as added by section 908) the following new section: 10 USC 2327.

"§ 2327. Contracts: consideration of national security objectives "(a) DISCLOSURE OF OWNERSHIP OR CONTROL BY A FOREIGN GOVERN-

MENT.—The head of an agency shall require a firm or a subsidiary of a firm that submits a bid or proposal in response to a solicitation issued by the Department of Defense to disclose in that bid or proposal any significant interest in such firm or subsidiary (or, in the case of a subsidiary, in the firm that owns the subsidiary) that is owned or controlled (whether directly or indirectly) by a foreign government or an agent or instrumentality of a foreign government, if such foreign government is the government of a country that the Secretary of State determines under section 6(j)(l)(A) of the Export Administration Act of 1979 (50 U.S.C. 24050")(1)(A)) has repeatedly provided support for acts of international terrorism. "(b) PROHIBITION ON ENTERING INTO CONTRACTS AGAINST THE INTERESTS OF THE UNITED STATES.—Except as provided in subsection

,,,

(c), the head of an agency may not enter into a contract with a firm or a subsidiary of a firm if— "(1) a foreign government owns or controls (whether directly or indirectly) a significant interest in such firm or subsidiary (or, in the case of a subsidiary, in the firm that owns the subsidiary); and "(2) such foreign government is the government of a country that the Secretary of State determines under section 6(j)(l)(A) of the Export Administration Act of 1979 (50 U.S.C. 2405(j)(l)(A)) has repeatedly provided support for acts of international terrorism. "(c) WAIVER.—dXA) If the Secretary of Defense determines under paragraph (2) that entering into a contract with a firm or a subsidiary of a firm described in subsection (b) is not inconsistent with the national security objectives of the United States, the head of an agency may enter into a contract with such firm or subsidiary after the date on which such head of an agency submits to Congress a report on the contract. "(B) A report under subparagraph (A) shall include the following:

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Page:United States Statutes at Large Volume 100 Part 5.djvu/471

 PUBLIC LAW 99-661—NOV. 14, 1986

100 STAT. 3945

"(i) The identity of the foreign government concerned. C • "(ii) The nature of the contract. ,'; "(iii) The extent of ownership or control of the firm or subsidiary concerned (or, if appropriate in the case of a subsidiary, of the firm that owns the subsidiary) by the foreign government concerned or the agency or instrumentality of such foreign government. "(iv) The reasons for entering into the contract. "(C) After the head of an agency submits a report to Congress under subparagraph (A) with respect to a firm or a subsidiary, such head of an agency is not required to submit a report before entering into any subsequent contract with such firm or subsidiary unless the information required to be included in such report under subparagraph (B) has materially changed since the submission of the previous report. "(2) Upon the request of the head of an agency, the Secretary of Defense shall determine whether entering into a contract with a firm or subsidiary described in subsection (b) is inconsistent with the national security objectives of the United States. In making such a determination, the Secretary of Defense shall consider the following: "(A) The relationship of the United States with the foreign government concerned. "(B) The obligations of the United States under international agreements. "(C) The extent of the ownership or control of the firm or subsidiary (or, if appropriate in the case of a subsidiary, of the firm that owns the subsidiary) by the foreign government or an agent or instrumentality of the foreign government. "(D) Whether payments made, or information made available, to the firm or subsidiary under the contract could be used for purposes hostile to the interests of the United States. "(d) APPLICABILITY.—This section does not apply to a contract for an amount less than $100,000. "(2) This section does not apply to the Coast Guard or the National Aeronautics and Space Administration. "(e) REGULATIONS.—The Secretary of Defense, after consultation with the Secretary of State, shall prescribe regulations to carry out this section. Such regulations shall include a definition of the term 'significant interest'.". (2) The table of sections at the beginning of such chapter is amended by adding after the item relating to section 2326 (as added by section 908) the following new item:

Defense and national security.

International agreements.

"2327. Contracts: consideration of national security objectives.".

(b) CONFORMING AMENDMENT.—Section 503 of the Military Retire-

ment Reform Act of 1986 (Public Law 99-348; 100 Stat. 708) is repealed. (c) EFFECTIVE DATE.—Section 2327 of title 10, United States Code 10 USC 2327 (as added by subsection (a)(1)), shall apply to contracts entered into note. by the Secretary of Defense after the end of the 90-day period beginning on the date of the enactment of this Act. SEC. 952. TRUTH-IN-NEGOTIATIONS ACT AMENDMENTS (a) STRENGTHENING OF PREVENTION OF UNEARNED AND EXCESSIVE CONTRACTOR PROFITS.—Chapter 137 of title 10, United States Code,

is amended by inserting after section 2306 the following new section:

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Page:United States Statutes at Large Volume 100 Part 5.djvu/472

 100 STAT. 3946 Contracts. 10 USC 2306a.

,

,

PUBLIC LAW 99-661—NOV. 14, 1986

"§ 2306a. Cost or pricing data: truth in negotiations ,u ^-r, ^ T^ T^ ^ ,,T„ (a) REQUIRED COST OR PRICING DATA AND CERTIFICATION.—(1) The

head of an agency shall require offerors, contractors, and subcontractors to make cost or pricing data available as follows: "(A) An offeror for a prime contract under this chapter to be entered into using procedures other than sealed-bid procedures shall be required to submit cost or pricing data before the award of the contract if the price of the contract to the United States is expected to exceed $100,000. "(B) The contractor for a contract under this chapter shall be required to submit cost or pricing data before the pricing of a change or modification to the contract if the price adjustment is expected to exceed $100,000 (or such lesser amount as may be prescribed by the head of the agency). "(C) An offeror for a subcontract (at any tier) of a contract under this chapter shall be required to submit cost or pricing data before the award of the subcontract if— "(i) the price of the subcontract is expected to exceed '., $100,000; and

"(ii) the prime contractor and each higher-tier subcontractor have been required to make available cost or pricing data under this section. "(D) The subcontractor for a subcontract covered by subparagraph (C) shall be required to submit cost or pricing data before the pricing of a change or modification to the subcontract if the price adjustment is expected to exceed $100,000 (or such lesser amount as may be prescribed by the head of the agency). "(2) A person required, as an offeror, contractor, or subcontractor, to submit cost or pricing data under paragraph (1) (or required by the head of the agency concerned to submit such data under subsection (c)) shall be required to certify that, to the best of the person's knowledge and belief, the cost or pricing data submitted are accurate, complete, and current. "(3) Cost or pricing data required to be submitted under paragraph (1) (or under subsection (c)), and a certification required to be submitted under paragraph (2), shall be submitted— "(A) in the case of a submission by a prime contractor (or an offeror for a prime contract), to the contracting officer for the contract (or to a designated representative of the contracting officer); or "(B) in the case of a submission by a subcontractor (or an offeror for a subcontract), to the prime contractor. "(4) Except as provided under subsection (b), this section applies to contracts entered into by the head of an agency on behalf of a foreign government. "(5) The head of the agency may waive the requirement under this subsection for a contractor, subcontractor, or offeror to submit cost or pricing data. For purposes of paragraph (l)(C)(ii), a contractor or subcontractor granted such a waiver shall be considered as having been required to make available cost or pricing data under this section. "(b) EXCEPTIONS.—This section need not be applied to a contract or subcontract— "(1) for which the price agreed upon is based on— "(A) adequate price competition; '

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Page:United States Statutes at Large Volume 100 Part 5.djvu/473

 PUBLIC LAW 99-661—NOV. 14, 1986

100 STAT. 3947

"(B) established catalog or market prices of commercial items sold in substantial quantities to the general public; or "(C) prices set by law or regulation; or "(2) in an exceptional case when the head of the agency determines that the requirements of this section may be waived and states in writing his reasons for such determination. "(c) AUTHORITY TO REQUIRE COST OR PRICING DATA.—When cost or pricing data are not required to be submitted by subsection (a), such data may nevertheless be required to be submitted by the head of the agency if the head of the agency determines that such data are necessary for the evaluation by the agency of the reasonableness of the price of the contract or subcontract. "(d) PRICE REDUCTIONS FOR DEFECTIVE COST OR PRICING DATA.—

(1)(A) A prime contract (or change or modification to a prime contract) under which a certificate under subsection (a)(2) is required shall contain a provision that the price of the contract to the United States, including profit or fee, shall be adjusted to exclude any significant amount by which it may be determined by the head of the agency that such price was increased because the contractor (or any subcontractor required to make available such a certificate) submitted defective cost or pricing data. "(B) For the purposes of this section, defective cost or pricing data are cost or pricing data which, as of the date of agreement on the price of the contract (or another date agreed upon between the parties), were inaccurate, incomplete, or noncurrent. If for purposes of the preceding sentence the parties agree upon a date other than the date of agreement on the price of the contract, the date agreed upon by the parties shall be as close to the date of agreement on the price of the contract as is practicable. "(2) In determining for purposes of a contract price adjustment under a contract provision required by paragraph (1) whether, and to what extent, a contract price was increased because the contractor (or a subcontractor) submitted defective cost or pricing data, it shall be a defense that the United States did not rely on the defective data submitted by the contractor or subcontractor. "(3) It is not a defense to an adjustment of the price of a contract under a contract provision required by paragraph (1) that— "(A) the price of the contract would not have been modified even if accurate, complete, and current cost or pricing data had been submitted by the contractor or subcontractor because the contractor or subcontractor— "(i) was the sole source of the property or services procured; or "(ii) otherwise was in a superior bargaining position with respect to the property or services procured; "(B) the contracting officer should have known that the cost and pricing data in issue were defective even though the contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the contracting officer; "(C) the contract was based on an agreement between the contractor and the United States about the total cost of the contract and there was no agreement about the cost of each item procured under such contract; or "(D) the prime contractor or subcontractor did not submit a certification of cost and pricing data relating to the contract as required under subsection (a)(2).

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Page:United States Statutes at Large Volume 100 Part 5.djvu/474

 100 STAT. 3948

PUBLIC LAW 99-661—NOV. 14, 1986

"(4)(A) A contractor shall be allowed to offset an amount against the amount of a contract price adjustment under a contract provision required by paragraph (1) if— "(i) the contractor certifies to the contracting officer (or to a designated representative of the contracting officer) that, to the best of the contractor's knowledge and belief, the contractor is entitled to the offset; and "(ii) the contractor proves that the cost or pricing data were available before the date of agreement on the price of the contract (or price of the modification) and that the data were not submitted as specified in subsection (a)(3) before such date. "(B) A contractor shall not be allowed to offset an amount otherwise authorized to be offset under subparagraph (A) if— "(i) certification under subsection (a)(2) with respect to the cost or pricing data involved was known to be false when signed; or "(ii) the United States proves that, had the cost or pricing data referred to in subparagraph (A)(ii) been submitted to the United States before the date of agreement on the price of the contract (or price of the modification), the submission of such cost or pricing data would not have resulted in an increase in that price in the amount to be offset. "(e) INTEREST AND PENALTIES FOR CERTAIN OVERPAYMENTS.—(1) If

Ante, p. 2095. 26 USC 6621.

the United States makes an overpayment to a contractor under a contract with the Department of Defense subject to this section and the overpayment was due to the submission by the contractor of defective cost or pricing data, the contractor shall be liable to the United States— "(A) for interest on the amount of such overpayment, to be computed— "(i) for the period beginning on the date the overpayment was made to the contractor and ending on the date the '' = contractor repays the amount of such overpayment to ' the United States; and "(ii) at the current rate prescribed by the Secretary of the ^^ Treasury under section 6621 of the Internal Revenue Code of 1954; and "(B) jf the submission of such defective data was a knowing submission, for an additional amount equal to the amount of the overpayment. "(2) Except as provided under subsection (d), the liability of a • contractor under this subsection shall not be affected by the contractor's refusal to submit a certification under subsection (a)(2) with respect to the cost or pricing data involved. "(f) RIGHT OF UNITED STATES TO EXAMINE CONTRACTOR RECORDS.—

(1) For the purpose of evaluating the accuracy, completeness, and currency of cost or pricing data required to be submitted by this section with respect to a contract or subcontract, the head of the agency, acting through any authorized representative of the head of the agency who is an employee of the United States or a member of the armed forces, shall have the right to examine all records of the contractor or subcontractor related to— "(A) the proposal for the contract or subcontract; '•"(B) the discussions conducted on the proposal; ^^ "(C) pricing of the contract or subcontract; or "(D) performance of the contract or subcontract. ^

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Page:United States Statutes at Large Volume 100 Part 5.djvu/475

 PUBLIC LAW 99-661—NOV. 14, 1986

100 STAT. 3949

"(2) The right of the head of an agency under paragraph (1) shall expire three years after final payment under the contract or subcontract. "(3) In this subsection, the term 'records' includes books, documents, and other data. "(g) COST OR PRICING DATA DEFINED.—In this section, the term 'cost or pricing data' means all information that is verifiable and that, as of the date of agreement on the price of a contract (or the price of a contract modification), a prudent buyer or seller would reasonably expect to affect price negotiations significantly. Such term does not include information that is judgmental, but does include the factual information from which a judgment was derived.". (b) CONFORMING AMENDMENTS.—(1) Subsection (f) of section 2306 of such title is amended to read as follows: 10 USC 2306. "(1) So-called 'truth-in-negotiations' provisions relating to cost or pricing data to be submitted by certain contractors and subcontractors are provided in section 2306a of this title.". Ante, p. 3946. (2) Section 934(a) of the Defense Procurement Improvement Act of 10 USC 2304 1985 (title IX of Public Law 99-145; 99 Stat. 700) is repealed, note. (c) CLERICAL AMENDMENTS.—(1) The heading of section 2306 of title 10, United States Code, is amended to read as follows: "§ 2306. Kinds of contracts". (2) The table of sections at the beginning of chapter 137 of such title is amended by striking out the item relating to section 2306 and inserting in lieu thereof the following: "2306. Kinds of contracts. "2306a. Cost or pricing data: truth in negotiations.".

(d) EFFECTIVE DATES.—(1) Except as provided in paragraph (2), 10 USC 2306a section 2306a of title 10, United States Code (as added by subsection note. (a)), and the amendment and repeal made by subsection (b), shall apply with respect to contracts or modifications on contracts entered into after the end of the 120-day period beginning on the date of the enactment of this Act. (2) Subsection (e) of such section shall apply with respect to contracts or modifications on contracts entered into after November 7, 1985. SEC. 953. RIGHTS IN TECHNICAL DATA

(a) RIGHTS IN TECHNICAL DATA.—Subsection (a) of section 2320 of title 10, United States Code, is amended to read as follows: "(a)(1) The Secretary of Defense shall prescribe regulations to Regulations, define the legitimate interest of the United States and of a contractor or subcontractor in technical data pertaining to an item or process. Such regulations shall be included in regulations of the Department of Defense prescribed as part of the Federal Acquisition Regulation. Such regulations may not impair any right of the United States or of any contractor or subcontractor with respect to patents or copyrights or any other right in technical data otherwise established by law. "(2) Such regulations shall include the following provisions: "(A) In the case of an item or process that is developed by a . contractor or subcontractor exclusively with Federal funds, the United States shall have the unlimited right to—

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 100 STAT. 3950

PUBLIC LAW 99-661—NOV. 14, 1986 "(i) use technical data pertaining to the item or process;

-Jii-

.

•'•'-.

or

"(ii) release or disclose the technical data to persons ' outside the government or permit the use of the technical data by such persons. ^' "(B) Except as provided in subparagraphs (C) and (D), in the case of an item or process that is developed by a contractor or subcontractor exclusively at private expense, the contractor or subcontractor may restrict the right of the United States to release or disclose technical data pertaining to the item or process to persons outside the government or permit the use of the technical data by such persons. "(C) Subparagraph (B) does not apply to technical data that—, '" "(i) constitutes a correction or change to data furnished by the United States; "(ii) relates to form, fit, or function; ,,"(iii) is necessary for operation, maintenance, installation, or training (other than detailed manufacturing or r, process data); or t "(iv) is otherwise publicly available or has been released or disclosed by the contractor or subcontractor without restriction on further release or disclosure. "(D) Notwithstanding subparagraph (B), the United States may release or disclose technical data to persons outside the Government, or permit the use of technical data by such persons, if— "(i) such release, disclosure, or use— "(I) is necessary for emergency repair and overhaul; or "(II) is a release or disclosure of technical data (other ^ than detailed manufacturing or process data) to, or use of such data by, a foreign government that is in the interest of the United States and is required for evaluational or informational purposes; (ii) such release, disclosure, or use is made subject to a prohibition that the person to whom the data is released or disclosed may not further release, disclose, or use such data; and "(iii) the contractor or subcontractor asserting the restriction is notified of such release, disclosure, or use. ' "(E) In the case of an item or process that is developed in part with Federal funds and in part at private expense, the respec;i:tuH,.H tive rights of the United States and of the contractor or subcontractor in technical data pertaining to such item or process shall be agreed upon as early in the acquisition process as practicable (preferably during contract negotiations), based upon consideration of all of the following factors: "(i) The statement of congressional policy and objectives -* in section 200 of title 35, the statement of purposes in '^ ' ' section 2(b) of the Small Business Innovation Development Act of 1982 (15 U.S.C. 638 note), and the declaration of policy in section 2 of the Small Business Act (15 U.S.C. 631). (> "(ij) "pj^g interest of the United States in increasing competition and lowering costs by developing and locating alternative sources of supply and manufacture.

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 PUBLIC LAW 99-661—NOV. 14, 1986

100 STAT. 3951

h

"(iii) The interest of the United States in encouraging contractors to develop at private expense items for use by the Government. "(F) A contractor or subcontractor (or a prospective contractor or subcontractor) may not be required, as a condition of being responsive to a soUcitation or as a condition for the award of a contract, to sell or otherwise relinquish to the United States any rights in technical data except— "(i) rights in technical data described in subparagraph (C);or "(ii) under the conditions described in subparagraph (D). "(G) The Secretary of Defense may— "(i) negotiate and enter into a contract with a contractor or subcontractor for the acquisition of rights in technical data pertaining to an item or process developed by such contractor or subcontractor exclusively at private expense if necessary to develop alternative sources of supply and manufacture; or "(ii) agree to restrict rights of the United States in technical data pertaining to an item or process developed entirely or in part with Federal funds if the United States receives a royalty-free license to use, release, or disclose the data for purposes of the United States (including purposes of competitive procurement). "(3) The Secretary of Defense shall define the terms 'developed' and 'private expense' in regulations prescribed under paragraph (1). "(4) For purposes of this subsection, the term 'Federal Acquisition Regulation' means the single system of Government-wide procurement regulations as defined in section 4(4) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(4)).". (b) VALIDATION OF PROPRIETARY DATA RESTRICTIONS.—Subsections

(a) and (b) of section 2321 of title 10, United States Code, are amended to read as follows: "(a) A contract for supplies or services entered into by the Department of Defense which provides for the delivery of technical data shall provide that a contractor or subcontractor at any tier shall be prepared to furnish to the contracting officer a written justification for any restriction asserted by the contractor or subcontractor on the right of the United States to use such technical data. "(b)(1) The Secretary of Defense shall ensure that there is a thorough review of the appropriateness of any restriction on the right of the United States to release or disclose technical data delivered under a contract to persons outside the Government, or to permit the use of such technical data by such persons. Such review shall be conducted before the end of the three-year period beginning on the date on which final payment is made on a contract under which technical data is required to be delivered, or the date on which the technical data is delivered under such contract, whichever is later. "(2)(A) If the Secretary determines, at any time before the end of the three-year period beginning on the date on which final payment is made on a contract under which technical data is required to be delivered, or the date on which the technical data is delivered under such contract, whichever is later, that a challenge to a restriction is warranted, the Secretary shall provide written notice to the contractor or subcontractor asserting the restriction. Such a determination shall be based on a finding by the Secretary that reasonable grounds

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PUBLIC LAW 99-661—NOV. 14, 1986

exist to question the c u r r e n t validity of the asserted restriction and that the continued adherence to the asserted restriction by the United States would m a k e it impracticable to procure the item competitively a t a later time. Such notice shall— "(i) state the specific grounds for challenging the asserted restriction; "(ii) require a response within 60 days justifying the current validity of the asserted restriction; and "(iii) s t a t e that evidence of a validation,by the Department of Defense of a restriction identical to the asserted restriction within the three-year period preceding the challenge shall serve as justification for the asserted restriction if— "(I) the validation occurred after a review of the validated restriction under this subsection; and "(II) the validated restriction w a s asserted by the same contractor or subcontractor (or any licensee of such contractor or subcontractor) to which such notice is being provided. "(B) Notwithstanding subparagraph (A), the United States may challenge a restriction on the release, disclosure, or use of technical d a t a delivered under a contract a t any time if such technical data— "(i) is publicly available; "(ii) has been furnished to the United States without restriction; or "(iii) has been otherwise m a d e available without restriction.". (c) CONFORMING AMENDMENTS. — S e c t i o n 1202 of the Department

of Defense Authorization Act, 1985 (10 U.S.C. 2301 note), is amended— (1) by inserting " and " a t the end of paragraph (4); (2) by striking out "; and " a t the end of paragraph (5) and inserting in lieu thereof a period; and (3) by striking out paragraph (6). 10 USC 2320 note. Federal Register, publication. Federal Register, publication. 10 USC 2320 note.

(d) DEADLINE FOR REVISION OF REGULATIONS.—(1) Proposed regula-

tions under section 2320(a)(1) of title 10, United States Code (as amended by subsection (a)), shall be published in the Federal Register for comment not l a t e r than 90 days after the date of the e n a c t m e n t of this Act. (2) Proposed final regulations under such section shall be published in the Federal Register not l a t e r than 180 days after the date of the e n a c t m e n t of this Act. (e) EFFECTIVE D A T E. — The amendments m a d e by subsections (a)

and (b) shall apply to contracts for which solicitations a r e issued after the end of the 210-day period beginning on the date of the e n a c t m e n t of this Act. SEC. 954. RECOVERY OF COSTS TO PROVIDE TECHNICAL DATA

(a) IN GENERAL.—(1) Chapter 137 of title 10, United States Code, is amended by adding after section 2327 (as added by section 951) the following new section: 10 USC 2328.

"§ 2328. Release of technical d a t a "(a) IN GENERAL.—(1) The Secretary of Defense shall, if required to release technical d a t a under section 552 of title 5 (relating to the Freedom of Information Act), release technical d a t a to a person requesting such a release if the person pays all reasonable costs a t t r i b u t a b l e to search and duplication. h..
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"(2) The Secretary of Defense shall prescribe regulations, pursu- Regulations. ant to notice and receipt of public comment, specifying a uniform schedule of fees under this section. "(b) DISPOSITION OF COSTS.—An amount received under this section— "(1) shall be retained by the Department of Defense or the element of the Department of Defense receiving the amount; and "(2) shall be merged with and available for the same purpose and the same time period as the appropriation from which the costs incurred in complying with requests for technical data were paid. "(c) WAIVER.—The Secretary of Defense shall waive the payment of costs required by subsection (a) which are in an amount greater than the costs that would be required for such a release of information under section 552 of title 5 if— "(1) the request is made by a citizen of the United States or a Contracts. United States corporation, and such citizen or corporation certifies that the technical data requested is required to enable such citizen or corporation to submit an offer or determine whether it is capable of submitting an offer to provide the product to which the technical data relates to the United States or a contractor with the United States (except that the Secretary may require the citizen or corporation to pay a deposit in an amount equal to not more than the cost of complying with the request, to be refunded upon submission of an offer by the citizen or corporation); "(2) the release of technical data is requested in order to comply with the terms of an international agreement; or "(3) the Secretary determines, in accordance with section 552(a)(4)(A) of title 5, that such a waiver is in the interests of the United States.". (2) The table of sections at the beginning of such chapter is amended by adding after the item relating to section 2327 (as added by section 971) the following new item: "2328. Release of technical data.".

(b) EFFECTIVE DATE.—The amendments made by this section shall take effect at the end of the 90-day period beginning on the date of the enactment of this Act.

10 USC 2328 note.

SEC. 955. COMPARABLE BUDGETING FOR SIMILAR SYSTEMS

10 USC 113 note.

(a) MATTERS TO B E INCLUDED IN ANNUAL DEFENSE BUDGETS.—In

preparing the defense budget for any fiscal year, the Secretary of Defense shall— ,„^ (1) specifically identify each common procurement weapon • system included in the budget; (2) take all feasible steps to minimize variations in procures ment unit costs for any such system as shown in the budget requests of the different armed forces requesting procurement funds for the system; and " (3) identify and justify in the budget all such variations in procurement unit costs for common procurement weapon systems. (b)

ASSISTANT

SECRETARY

(COMPTROLLER).—The

Secretary

of

Defense shall carry out this section through the Assistant Secretary of Defense (Comptroller).

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PUBLIC LAW 99-661—NOV. 14, 1986 (c) DEFINITIONS.—In this section: (1) The term "defense budget" means the budget of the Department of Defense included in the President's budget i: submitted to Congress under section 1105 of title 31 United States Code, for a fiscal year. (2) The term "common procurement weapon system" means a weapon system for which two or more of the Army, Navy, Air Force, and Marine Corps request procurement funds in a defense budget.

SEC. 956. FUNDING OF PROCUREMENT TECHNICAL ASSISTANCE PROGRAMS SERVING DISTRESSED AREAS

(a) DEFINITIONS.—Section 2411 of title 10, United States Code, is amended to read as follows: "§2411. Definitions "In this chapter: "(1) The term 'eligible entity' means any of the following: "(A) A State. "(B) A local government. '.. . t* "(C) A private, nonprofit organization. "(2) The term 'distressed area' means the area of a unit of local government (or such area excluding the area of any defined political jurisdiction within the area of such unit of local government) that— "(A) has a per capita income of 80 percent or less of the State average; or "(B) has an unemployment rate that is one percent greater than the national average for the most recent 24^ r; month period for which statistics are available. "(3) The term 'Secretary' means the Secretary of Defense acting through the Director of the Defense Logistics Agency. "(4) The terms 'State' and 'local government' have the meaning given those terms in section 6302 of title 31.". (b) SERVICE AREAS.—Section 2413(b) of such title is amended — (1) by inserting "sponsor program s to " after " a g r e e to "; (2) by inserting " under such program s " after "cost of furnishi n g such assistance";

V-,;. > ( ', • vij

'' i ^

(3) by striking out "an eligible entity that is a distressed entity" and inserting in lieu thereof "a program sponsored by such an entity that provides services solely in a distressed area"; and (4) by inserting "with respect to such program" before the period.

SEC. 957. SUBCONTRACTOR INFORMATION TO PROCUREMENT OUTREACH CENTERS

BE

PROVIDED

TO

(a) CONTRACTORS TO FURNISH INFORMATION.—(1) Chapter 142 of

10 USC 2411 et ««9-

title 10, United States Code, is amended— (A) by redesignating section 2416 as section 2417; and » < (B) by inserting after section 2415 the following new section:

10 USC 2416.

"§ 2416. Subcontractor information "(a) The Secretary of Defense shall require that any defense contractor in any year shall provide to an eligible entity with which the Secretary has entered into a cooperative agreement under this

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100 STAT. 3955

chapter, on the request of such entity, the information specified in subsection (b). "(b) Information to be provided under subsection (a) is a listing of the name of each appropriate employee of the contractor who has responsibilities with respect to entering into contracts on behalf of such contractor that constitute subcontracts of contracts being performed by such contractor, together with the business address and telephone number and area of responsibility of each such employee. "(c) A defense contractor need not provide information under this section to a particular eligible entity more frequently than once a year. "(d) In this section, the term 'defense contractor', for any year, means a person awarded a contract with the Department of Defense in that year for an amount in excess of $500,000.". (2) The table of sections at the beginning of such chapter is amended by striking out the item relating to section 2416 and inserting in lieu thereof the following new items:

-t

"2416. Subcontractor information. "2417. Regulations.".

(b) EFFECTIVE DATE.—Section 2416 of title 10, United States Code, 10 USC 2416 as added by subsection (a), shall take effect on January 1, 1987. note. PART F—MISCELLANEOUS REPORTS SEC. 961. SELECTED ACQUISITION REPORTS

(a) REVISION OF REPORTING REQUIREMENTS.—Section 2432 of title 10, United States Code (as redesignated by section 101(a) of the Goldwater-Nichols Department of Defense Reorganization Act of 1986 (Public Law 99-433)), is amended— Ante, p. 994. (1) by adding at the end of subsection (a)(3) the following new sentence: "If for any fiscal year the funds appropriated, or the number of fully-configured end items to be purchased, differ from those programmed, the procurement unit cost shall be revised to reflect the appropriated amounts and quantities."; (2) by striking out "$2,000,000" in subsection (a)(4) and inserting in lieu thereof "$40,000,000"; f(3) by striking out "three-month" in subsection (b)(2)(B) and inserting in lieu thereof "six-month"; (4) by striking out paragraph (2) of subsection (c) and inserting in lieu thereof the following: "(2) Each Selected Acquisition Report for the first quarter of a fiscal year shall be designed to provide to the Committees on Armed Services of the Senate and House of Representatives the information such Committees need to perform their oversight functions. A change in the content of the Selected Acquisition Report for the first quarter of a fiscal year from the content as reported for the first quarter of the previous fiscal year may not be made until appropriate officials of the Department of Defense consult with such Committees regarding the proposed changes."; (5) by inserting "that is produced at a rate of six units or more per year" in subsection (c)(3)(C) after "report" in the matter preceding clause (i); and (6) by adding at the end the following new subsection: "(h)(1) Total program reporting under this section shall apply to a major defense acquisition program when funds have been appro-

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10 USC 2431.

-^

-'*'

Ante, p. 994.

Ante, p. 3955. 10 USC 2432 note.

PUBLIC LAW 99-661—NOV. 14, 1986

priated for such and the Secretary of Defense has decided to proceed to full-scale engineering development of such program. Reporting may be limited to the development program as provided in paragraph (2) before a decision is made by the Secretary of Defense to proceed to full-scale engineering development if the Secretary notifies the Committees on Armed Services of the Senate and House of Representatives of the intention to submit a limited report under this subsection not less than 15 days before a report is due under this section. "(2) A limited report under this subsection shall include the following: "(A) The same information, in detail and summarized form, as ^ is provided in reports submitted under subsections (c)(1) and (c)(3) of section 2431 of this title. "(B) Reasons for any change in the development cost and t schedule. "(C) The major contracts under the development program and the reasons for any cost or schedule variances under those contracts since the last Selected Acquisition Report. "(D) The completion status of the development program, expressed— "(i) as the percentage that the number of years for which funds have been appropriated for the development program is of the number of years for which it is planned that funds will be appropriated for the program; and "(ii) as the percentage that the amount of funds that have been appropriated for the development program is of the •-'^l' total amount of funds which it is planned will be appro' priated for the program. "(E) Program highlights since the last Selected Acquisition Report. "(F) Other information as the Secretary of Defense considers appropriate. "(3) The submission requirements for a limited report under this subsection shall be the same as for quarterly Selected Acquisition Reports for total program reporting.". (b) UNIT COST REPORTS.—Section 2433 of title 10, United States Code (as redesignated by section 101(a) of the Goldwater-Nichols Department of Defense Reorganization Act of 1986 (Public Law 99-433)), is amended— (1) in subsection (b), by inserting "(excluding Saturdays, Sundays, and legal public holidays)" after "days" both places such term appears in the second sentence; and (2) by adding at the end the following new subsection: "(h) Reporting under this section shall not apply if a program has received a limited reporting waiver under section 2432(h) of this title.". (c) EFFECTIVE DATE.—The amendments made by subsections (a) and (b) shall take effect on January 1, 1987. SEC. 962. REPORT ON EFFORTS TO INCREASE DEFENSE CONTRACT AWARDS TO INDIAN-OWNED BUSINESSES

(a) REPORT.—The Secretary of Defense shall submit to Congress a report on the efforts by the Department of Defense during fiscal years 1986 and 1987 to increase awards of defense contracts to Indian-owned businesses in accordance with the memorandum of understanding between the Department of Defense and the Small

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Business Administration of September 29, 1983. Such report shall include, to the maximum extent practicable, any data regarding the number and value of prime contracts awarded by the Department of Defense during such fiscal years to such businesses. (b) DEADLINE.—The report required by subsection (a) shall be submitted no later than March 31, 1988. (c) INDIAN-OWNED BUSINESS DEFINED.—For purposes of this section, the term "Indian-owned business" means a firm owned and controlled by American Indians, including a tribally owned forprofit entity. SEC. 963. REPORT ON INCREASED DEFENSE CONTRACTORS

GEOGRAPHIC

DISTRIBUTION

OF

(a) IN GENERAL.—(1) The Secretary of Defense shall submit to Congress a report on the actions taken by the Department of Defense during fiscal years 1985 and 1986 to increase contract competition and the national defense industrial base by increasing the participation in defense contracts of contractors in all geographic areas of the United States. (2) Such report shall be submitted not later than March 31, 1987. (b) CONTENTS OF REPORTS.—The report required by subsection (a)(1)(1) shall include a description of the use of procurement technical assistance centers, procurement conferences sponsored or supported by the Department of Defense, and any other Department of Defense programs conducted for the purpose of expanding the base of defense contractors; and (2) shall categorize, by State and other appropriate geographic region, the actions described in the report. TITLE X—ARMS CONTROL MATTERS SEC. 1001. SENSE OF THE CONGRESS RELATING TO SALT II COMPLIANCE

(a) CONTINUED ADHERENCE TO SALT II NUMERICAL SUBLIMITS.—It is the sense of the Congress that it is in the national security interests of the United States to continue voluntary compliance with the central numerical sublimits of the SALT II Treaty as long as the Soviet Union complies with such sublimits. (b) DEFINITION.—For purposes of this section, the central numerical sublimits of the SALT II Treaty include prohibitions on the deployment of the following: (1) Launchers for more than 820 intercontinental ballistic missiles carrying multiple independently-targetable reentry If vehicles. (2) Launchers for an aggregate of more than 1,200 intercontinental ballistic missiles carrying multiple independently-targetable reentry vehicles and submarine-launched ballistic missiles carrying multiple independently-targetable reentry vehicles. (3) An aggregate of more than 1,320 launchers described in paragraph (2) and heavy bombers equipped for air-launched cruise missiles capable of a range in excess of 600 kilometers.

Defense and national security. Union of Soviet Socialist Republics.

SEC. 1002. SENSE OF THE CONGRESS ON NUCLEAR TESTING

(a) FINDINGS.—The Congress makes the following findings: (1) The United States is committed in the Limited Test Ban , Treaty of 1963 and in the Non-Proliferation Treaty of 1968 to 14 UST 1313. 21 UST 483.

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President of U.S.

PUBLIC LAW 99-661—NOV. 14, 1986

seek to achieve the discontinuance of all test explosions of nuclear weapons for all time. (2) A comprehensive test ban treaty would promote the security of the United States by constraining the United StatesSoviet nuclear arms competition and by strengthening efforts to prevent the proliferation of nuclear weapons. (3) The Threshold Test Ban Treaty was signed in 1974 and the Peaceful Nuclear Explosions Treaty was signed in 1976, and both have yet to be considered by the full Senate for its advice and consent to ratification. (4) The entry into force of the Peaceful Nuclear Explosions Treaty and the Threshold Test Ban Treaty will ensure full implementation of significant new verification procedures and so make completion of a comprehensive test ban treaty more probable. (5) A comprehensive test ban treaty must be adequately verifiable, and significant progress has been made in methods for detection of underground nuclear explosions by seismological and other means. (6) At present, negotiations are not being pursued by the United States and the Soviet Union toward completion of a comprehensive test ban treaty. (7) The past five administrations have supported the achievement of a comprehensive test ban treaty. (b) SENSE OF CONGRESS.—It is the sense of Congress that, at the earliest possible date, the President should— (1) request the advice and consent of the Senate to ratification (with a report containing any plans the President may have to negotiate supplemental verification procedures, or if the President believes it necessary, any understanding or reservation on the subject of verification which should be attached to the treaty) of the Threshold Test Ban and Peaceful Nuclear Explosions Treaties, signed in 1974 and 1976, respectively; and (2) propose to the Soviet Union the immediate resumption of negotiations toward conclusion of a verifiable comprehensive test ban treaty. In accordance with international law, the United States shall have no obligation to comply with any bilateral arms control agreement with the Soviet Union that the Soviet Union is violating. SEC. 1003. REPORT BY THE CHAIRMAN OF THE JOINT CHIEFS OF STAFF ON UNITED STATES NON-COMPLIANCE WITH EXISTING STRATEGIC OFFENSIVE ARMS AGREEMENTS

(a) IN GENERAL.—The Chairman of the Joint Chiefs of Staff shall submit to Congress a report containing a detailed assessment of— (1) the military consequences to the United States of a policy decision by the United States to discontinue compliance with the major provisions of existing strategic offensive arms limitations agreements (including central numerical sublimits on strategic nuclear delivery vehicles in the SALT II accord) would have on the security of the United States; and (2) the likely military responses of the Soviet Union to such a policy decision. (b) MATTERS TO B E CONSIDERED.—The assessment required by subsection (a) shall focus on what the likely Soviet military responses would be during the period between 1987 and 1996. In

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making such assessment, the Chairman shall specifically consider the following: (1) The effect on the ability of United States strategic forces to accomplish their nuclear deterrent mission (including the effect on the survivability of United States strategic forces and on the ability of United States strategic forces to achieve required damage expectancies against Soviet targets) of any expansion of Soviet military capabilities undertaken in response to a United States decision to abandon compliance with existing strategic offensive arms agreements. (2) The additional cost to the United States, above currently projected military expenditures for those periods for which such budget projections are available, of research, development, production, deployment, and annual operations and support for any additional strategic forces required to counter any expansion in Soviet military capabilities undertaken in response to a United States decision to abandon compliance with existing strategic offensive arms agreements. ? (3) Under average annual real growth projections in defense spending of 0 percent, 1 percent, 2 percent, and 3 percent, the percent of the annual defense budget in each year between fiscal year 1987 and fiscal year 1996 which would be consumed by increased United States strategic forces needed to counter '^' 'c ^MI the Soviet force expansions. (4) The military effect on United States national security of the diversion the funds identified under paragraph (2) away from nonstrategic defense programs and to strategic programs to counter expanded Soviet strategic capabilities, including the military effect of such a diversion on the ability of United States conventional forces to meet the specific non-nuclear defense commitments of the United States as a member of the North Atlantic Treaty Organization and under the 1960 Treaty of Mutual Cooperation and Security with Japan. 11 UST 1632. (5) The military implications for the United States of Soviet violations of offensive arms control agreements that have been J ii^rfn*, • determined, (c) REPORT REQUIREMENTS.—(1) The Chairman shall—

(A) include in the report required under subsection (a) the individual views of the other members of the Joint Chiefs of Staff; and (B) submit such report in both classified and unclassified ' form. (2) The report required by subsection (a) shall be submitted not later than December 19, 1986. (e) RESTRICTION ON OBLIGATION OF FUNDS.—If the Chairman of the

Joint Chiefs of Staff fails to submit the report required by subsection (a) before December 20, 1986, no funds may be obligated or expended, directly or indirectly, on or after such date by the Organization of the Joint Chiefs of Staff for any study or analysis to be conducted by a civilian contractor until such report is received by Congress. SEC. 1004. SENSE OF CONGRESS EXPRESSING SUPPORT FOR A CENTRAL ROLE FOR NUCLEAR RISK REDUCTION CENTERS (a) CONGRESSIONAL STATEMENTS.—The Congress—

f

(1) has expressed its prior support for the establishment of nuclear risk reduction centers; and

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r>i

(2) supports the President's willingness to negotiate an agreement with the Soviet Union to establish such centers in each nation, (b) SENSE OF CONGRESS.—It is the sense of Congress that if an agreement on nuclear risk reduction centers is signed, the United States center should— (1) be assigned the responsibility to serve as the center of activity for United States risk reduction activities under the agreement; and (2) make recommendations to the Assistant to the President for National Security Affairs regarding additional risk reduction arrangements that might be proposed to the Soviet Union. TITLE XI—MATTERS RELATING TO NATO AND OTHER ALLIES SEC. 1101. MODERNIZATION OF DEFENSE CAPABILITIES OF COUNTRIES OF NATO'S SOUTHERN FLANK

22 USC 2321J.

Chapter 2 of part II of the Foreign Assistance Act of 1961 (22 U.S.C. 2311 et seq.) is amended by adding at the end the following new section: "SEC. 516. MODERNIZATION OF DEFENSE CAPABILITIES OF COUNTRIES OF NATO'S SOUTHERN FLANK. "(a)

gS?i '?• President of U.S.

AUTHORITY TO TRANSFER EXCESS DEFENSE ARTICLES.—Not-

withstanding any other provision of law and subject to subsection (b), during the fiscal years 1987 and 1988 the President may transfer to those member countries of the North Atlantic Treaty Organization (NATO) on the southern flank of NATO which are eligible for United States security assistance and which are integrated into NATO's military structure such defense articles as the President determines necessary to help modernize the defense capabilities of such countries. Such articles may be transferred without cost to the recipient countries. "(b) LIMITATIONS ON TRANSFERS.—The President may transfer defense articles under this section only if— "(1) the equipment is drawn from existing stocks of the Department of Defense; ' "(2) no funds available to the Department of Defense for the procurement of defense equipment are expended in connection b'-il with the transfer; and "(3) the President determines that the transfer of the excess '•' defense articles will not have an adverse impact on the military readiness of the United States. "(c) NOTIFICATION TO COMMITTEES OF CONGRESS.—The President

may not transfer defense articles under this section until 30 days after he has notified the Committees on Armed Services and Foreign Relations of the Senate and the Committees on Armed Services and Foreign Affairs of the House of Representatives of the proposed transfer. This notification shall include a certification of the need for the transfer and an assessment of the impact of the transfer on the military readiness of the United States. "(d)

22 USC 2392.

WAIVER OF REQUIREMENT FOR REIMBURSEMENT OF D O D

EXPENSES.—Section 632(d) shall not apply with respect to transfers of defense articles under this section. "(e) DEFINITION.—As used in subsection (a), the term 'member countries of the North Atlantic Treaty Organization (NATO) on the

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