HR 3832 IH

To make improvements with respect to the procurement of services for the Federal Government, and for other purposes.

March 4, 2002

Mr. TOM DAVIS of Virginia introduced the following bill; which was referred to the Committee on Government Reform, and in addition to the Committee on Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To make improvements with respect to the procurement of services for the Federal Government, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Services Acquisition Reform Act of 2002'.

SEC. 2. TABLE OF CONTENTS.

The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I--ACQUISITION WORKFORCE TRAINING

Sec. 101. Definition of acquisition.

Sec. 102. Acquisition workforce training fund.

Sec. 103. Government-industry exchange program.

Sec. 104. Reimbursement of costs.

Sec. 105. Conforming amendments.

Sec. 106. Acquisition workforce recruitment and retention pilot program.

Sec. 107. Authorization of telecommuting for Federal contractors.

Sec. 108. Architectural and engineering acquisition workforce.

TITLE II--ADAPTATION OF BUSINESS ACQUISITION PRACTICES

Subtitle A--Adaptation of Business Management Practices

Sec. 201. Chief Acquisition Officers.

Sec. 202. Increased role for Defense Contract Management Agency.

Sec. 203. Study on horizontal acquisition.

Sec. 204. Statutory and regulatory review.

Subtitle B--Payment Terms

Sec. 211. Payment terms.

Subtitle C--Acquisitions Generally

Sec. 221. Increase in authorization levels of Federal purchase cards.

Sec. 222. Reauthorization of franchise funds.

Sec. 223. Acquisition protests.

Sec. 224. Architectural and engineering services.

TITLE III--CONTRACT INCENTIVES

Sec. 301. Revisions to share-in-savings initiatives.

Sec. 302. Incentives for contract efficiency.

TITLE IV--ACQUISITIONS OF COMMERCIAL ITEMS

Sec. 401. Preference for performance-based contracting.

Sec. 402. Authorization of additional contract types in FAR part 12.

Sec. 403. Clarification of commercial services definition.

Sec. 404. Designation of commercial business entities.

Sec. 405. Continuation of eligibility of contractor for award of information technology contract after providing design and engineering services.

Sec. 406. Commercial liability.

TITLE V--TECHNOLOGY ACCESS IN A COMMERCIAL ENVIRONMENT

Sec. 501. Trade Agreements Act of 1979 exemption for information technology commercial items.

Sec. 502. Authorization for acquisition of information technology by State and local governments through Federal supply schedules.

Sec. 503. Certain research and development by civilian agencies.

TITLE VI--INFLATIONARY ADJUSTMENTS

Sec. 601. Simplified acquisition threshold inflation adjustment.

TITLE I--ACQUISITION WORKFORCE TRAINING

SEC. 101. DEFINITION OF ACQUISITION.

Section 4 of the Office of Federal Procurement Policy Act (41 U.S.C. 403) is amended by adding at the end the following:

`(16) The term `acquisition'--

`(A) means acquiring, by contract with appropriated funds, property or services (including construction) by and for the use of the Federal Government through purchase or lease, from the point at which executive agency needs are established by the chief acquisition officer of the executive agency; and

`(B) includes--

`(i) acquiring property or services that are already in existence, or that must be created, developed, demonstrated, and evaluated;

`(ii) the description of requirements to satisfy agency needs;

`(iii) solicitation and selection of sources;

`(iv) award of contracts;

`(v) contract performance;

`(vi) contract administration; and

`(vii) technical and management functions directly related to the process of fulfilling agency needs by contract.'.

SEC. 102. ACQUISITION WORKFORCE TRAINING FUND.

(a) PURPOSES- The purposes of this section are to ensure that the Federal acquisition workforce--

(1) adapts to fundamental changes in the nature of Federal Government acquisition of property and services associated with the changing role of the Federal Government; and

(2) acquires new skills and a new mindset to enable it to contribute effectively in the changing environment of the 21st century.

(b) AMENDMENT OF OFFICE OF FEDERAL PROCUREMENT POLICY ACT- Section 37 of the Office of Federal Procurement Policy Act (41 U.S.C. 433) is amended--

(1) by striking subsection (a) and inserting the following:

`(a) APPLICABILITY- Subsections (b) through (g) do not apply to an executive agency that is subject to chapter 87 of title 10, United States Code. Subsection (h) applies to all executive agencies, the United States Postal Service, and mixed-ownership Government corporations (as defined in section 9101 of title 31, United States Code).'; and

(2) by adding at the end of subsection (h) the following new paragraph:

`(3) ACQUISITION WORKFORCE TRAINING FUND- (A) The Administrator of General Services shall establish an acquisition workforce training fund, which shall be managed by the Federal Acquisition Institute in support of acquisition workforce training across executive agencies other than the Department of Defense.

`(B) The training fund described in subparagraph (A) shall be funded by depositing into the fund 5 percent of the fees collected by executive agencies under Governmentwide task-and-delivery-order contracts authorized under sections 2304a through 2304d of title 10, United States Code, sections 303H through 303K of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253h-253k), Governmentwide acquisition contracts described in section 5112(e) of the Clinger-Cohen Act of 1996 (40 U.S.C. 1412(e)), multiagency acquisition contracts authorized under section 5124 of the Clinger-Cohen Act of 1996 (40 U.S.C. 1424), or

multiple-award schedule contracts awarded by the General Services Administration.

`(C) The head of an executive agency that administers a contract described in subparagraph (B) shall remit the amount specified to the General Services Administration at the end of each quarter of the fiscal year.

`(D) The Administrator of General Services and the Office of Federal Acquisition Policy shall ensure that funds collected for training under this section are not used for any purpose other than the purpose specified in subparagraph (A). Amounts deposited into the fund shall remain available until expended.'.

SEC. 103. GOVERNMENT-INDUSTRY EXCHANGE PROGRAM.

(a) IN GENERAL- Subpart B of part III of title 5, United States Code, is amended by adding at the end the following new chapter:

`CHAPTER 37--ACQUISITION PROFESSIONAL EXCHANGE PROGRAM

`Sec.

`3701. Definitions.

`3702. Detail authority.

`3703. Detail of employees to private sector organizations.

`3704. Transfer and detail of employees from private sector organizations.

`3705. Authority of the Office of Personnel Management.

`Sec. 3701. Definitions

`For purposes of this chapter--

`(1) the term `agency'--

`(A) subject to subparagraph (B), means an executive agency; and

`(B) does not include--

`(i) the General Accounting Office;

`(ii) an Office of Inspector General of an establishment or a designated Federal entity established under the Inspector General Act of 1978; and

`(iii) the Defense Contract Audit Agency referred to in section 2313(b) of title 10; and

`(2) the term `detail' means--

`(A) the assignment or loan of an employee to a private sector organization without a change of position in the agency at which the individual is employed; or

`(B) the assignment or loan of an employee of a private sector organization to an agency without a change of position in the private sector organization.

`Sec. 3702. Detail authority

`(a) At the request of, or with the agreement of, a private sector organization, and with the consent of the employee concerned, the head of an agency may arrange for the detail of an eligible employee of the agency to a private sector organization or an eligible individual employed by a private sector organization to the agency. For purposes of this section, an eligible employee or individual employed is an individual employed at the GS-11 level or above (or the equivalent) who--

`(1) works in the field of Federal acquisition or acquisition management;

`(2) is considered an exceptional performer by the individual's employer; and

`(3) is expected to assume increased acquisition management responsibilities.

An employee of an agency shall be eligible to participate under this section only if the employee is serving under a career or career-conditional appointment or an appointment of equivalent tenure in the excepted service.

`(b) Each agency that exercises the authority provided by this section shall establish a plan for implementing such authority. The plan shall provide for a written agreement between the agency and the employee concerned regarding the terms and conditions of the employee's detail. In the case of an employee of the agency, the agreement shall--

`(1) require the employee to serve in the civil service, upon completion of the assignment, for a period equal to the length of the detail; and

`(2) provide that, in the event the employee fails to carry out the agreement (except for good and sufficient reason, as determined by the head of the detailing agency), the employee shall be liable to the United States for payment of all expenses (excluding salary) of the detail. The amount shall be treated as a debt due to the United States.

`(c) A detail under this chapter may be terminated by the agency or private sector organization concerned for any reason at any time.

`(d) A detail under this chapter shall be for a period of between 6 months and 1 year and may be extended in three-month increments for a total of not more than 1 year.

`(e) The Procurement Executives Council, by agreement with the Office of Personnel Management, may assist in the administration of this chapter, including by maintaining lists of potential candidates for detail under this chapter, establishing mentoring relationships for the benefit of individuals who are given a detail under this chapter, and publicizing the program carried out under this chapter.

`Sec. 3703. Detail of employees to private sector organizations

`(a) An employee of an agency may be assigned to a private sector organization under this chapter as a detail to a regular work assignment.

`(b) Notwithstanding any other provision of law, an employee assigned under subsection (a) is entitled--

`(1) to receive supplemental pay from the agency in the amount equal to the difference between the rate paid by the organization to which detailed and the rate of basic pay (including locality pay, where applicable, subject to regulations of the Office of Personnel Management) payable for the employee's Federal position, if the latter is greater;

`(2) in the case of an employee who is detailed under subsection (a), to credit for the period of assignment under this chapter toward periodic step increases, retention, and leave accrual;

`(3) to retain coverage, rights, and benefits under chapters 87 and 89, if necessary employee deductions and agency contributions for the period of the assignment are deposited in the Employees' Life Insurance Fund and the Employees Health Benefits Fund, respectively, and the period of the assignment is service as an employee under chapters 87 and 89;

`(4) to retain coverage, rights, and benefits under any system established by law for the retirement of employees, if necessary employee deductions and agency contributions in payment for the coverage, rights, and benefits for the period of assignment are deposited in the system's fund and the period of the assignment is creditable under the system, except that such service shall not be considered creditable service for the purpose of any retirement system for Federal employees if such service forms the basis, in whole or in part, for an annuity or pension under the retirement system of the private sector organization; and

`(5) to retain coverage, rights, and benefits under subchapter I of chapter 81, and employment during the assignment is deemed employment by the United States, but if the employee or the employee's dependents receive from the private sector organization any payment under an insurance policy for which the premium is wholly paid by the private sector organization, or other benefit of any kind on account of the same injury or death, the amount of such payment or benefit shall be credited against any compensation otherwise payable under subchapter I of chapter 81.

During the employee's assignment to the private sector organization, the agency from which the employee is detailed shall make contributions for retirement and insurance purposes from the appropriations or funds of that agency so long as contributions are made by the employee.

`(c) The detail of an employee of an agency under subsection (a) may be made with or without reimbursement by the private sector organization for the travel and transportation expenses to or from the place of assignment, subject to the same terms and conditions that apply with respect to an employee of a Federal agency or a State or local government under section 3375, and for the pay, or supplemental pay, or any part thereof of the employee during assignment. Any reimbursements shall be credited to the appropriation of the agency used for paying the travel and transportation expenses or pay.

`(d) An employee assigned on detail under subsection (a) remains an employee of the agency from which detailed. The Federal Tort Claims Act and any other Federal tort liability law apply to the employee. The supervision of the duties of an employee on detail may be governed by an agreement between the agency and the organization to which detailed.

`(e) Notwithstanding any other provision of law, an employee detailed under subsection (a) is entitled to accrue annual and sick leave to the same extent as if the employee had continued working in the position from which detailed.

`Sec. 3704. Transfer and detail of employees from private sector organizations

`(a) Notwithstanding any other provision of law, an individual employed by a private sector organization who is assigned to an agency under section 3702(a) may be--

`(1) transferred to the agency and appointed without regard to the provisions of this title governing appointment in the competitive service for the period of assignment; or

`(2) detailed to the agency.

`(b) An individual appointed under subsection (a)(1) is entitled to pay in accordance with chapter 51 and subchapter III of chapter 53 or other applicable law, and is deemed an employee of the agency for all purposes except--

`(1) subchapter III of chapter 83, chapter 84, or other applicable retirement system;

`(2) chapter 87; and

`(3) chapter 89 or other applicable health benefits system unless the appointment results in the employee's loss of coverage in a group health benefits plan the premium of which has been paid in whole or in part by the private sector organization.

The exceptions set forth in paragraphs (1) through (3) shall not apply to non-Federal employees who are covered by chapters 83, 84, 87, and 89 by virtue of their non-Federal employment immediately before appointment under subsection (a)(1).

`(c) An employee of a private sector organization who is detailed to an agency under subsection (a)(2)--

`(1) is not entitled to pay from the agency, except to the extent that the pay for the position to which detailed (including locality pay, where applicable) exceeds the pay the individual was receiving from the private sector organization immediately before the detail;

`(2) may continue to receive pay and benefits from the private sector organization from which he is detailed;

`(3) is deemed an employee of the agency for the purposes of--

`(A) chapter 73, except for section 7353(a)(1);

`(B) sections 203, 205, 207, 208, 603, 606, 607, 643, 654, 1905, and 1913 of title 18;

`(C) sections 1343, 1344, and 1349(b) of title 31;

`(D) the Federal Tort Claims Act and any other Federal tort liability law;

`(E) the Ethics in Government Act of 1978;

`(F) section 1043 of the Internal Revenue Code of 1986; and

`(G) section 27(b) of the Office of Federal Procurement Policy Act; and

`(4) is subject to such regulations as the President may prescribe.

The supervision of an employee who is detailed under subsection (a)(2) may be governed by agreement between the agency and the private sector organization concerned. A detail under subsection (a)(2) may be made with or without reimbursement by the agency for the pay, or a part thereof, of the employee during the period of assignment, or for any contribution of the private sector organization to employee benefit systems.

`(d) If a private sector organization fails to continue the employer's contribution to private sector retirement, life insurance, and health benefit plans for an individual who is appointed in an agency under this section, the employer's contributions covering the period of the assignment may be made from the appropriations of the agency concerned.

`(e) A private sector employee who is given an assignment in an agency under subsection (a) and who suffers disability or dies as a result of personal injury sustained while performing duties during the assignment shall be treated, for the purpose of subchapter I of chapter 81, as an employee as defined by section 8101 who had sustained the injury in the performance of duty, except that if the employee or the employee's dependents receive from the private sector organization any payment under an insurance policy for which the premium is wholly paid by the private sector organization, or other benefit of any kind on account of the same injury or death, the amount of such payment or benefit shall be credited against any compensation otherwise payable under subchapter I of chapter 81.

`Sec. 3705. Authority of the Office of Personnel Management

`The Director of the Office of Personnel Management shall prescribe regulations for the administration of this chapter.'.

(b) CLERICAL AMENDMENT- The table of contents for part III of title 5, United States Code, is amended by inserting after the item relating to chapter 35 the following:

`37. Acquisition Professional Exchange Program.'.

SEC. 104. REIMBURSEMENT OF COSTS.

Not later than 120 days after the date of the enactment of this Act, the Federal Acquisition Regulation shall be amended to provide for reimbursement of costs associated with an employee's participation in the program authorized by chapter 37 of title 5, United States Code (as added by section 103) as allowable training and education costs. Such costs--

(1) include--

(A) the employee's salary and fringe benefits for a period not to exceed the period of the employee's assignment under such program; and

(B) moving and travel expenses; and

(2) may be treated, for accounting purposes--

(A) as an indirect cost and accounted for in--

(i) an established overhead account; or

(ii) an overhead account established specifically for such program and allocated exclusively to the contractor's Federal Government contracts; or

(B) as a direct cost chargeable to fixed price or time and material contracts.

SEC. 105. CONFORMING AMENDMENTS.

(a) TITLE 5, U.S.C- Title 5, United States Code, is amended--

(1) in section 3111, by adding at the end the following:

`(d) Notwithstanding section 1342 of title 31, the head of an agency may accept voluntary service for the United States under chapter 37 of this title and regulations of the Office of Personnel Management.'; and

(2) in section 4108, by striking subsection (d).

(b) OTHER LAWS- Section 125(c)(1) of Public Law 100-238 (5 U.S.C. 8432 note) is amended--

(1) in subparagraph (B), by striking `or' at the end;

(2) in subparagraph (C), by striking `and' at the end and inserting `or'; and

(3) by adding at the end the following:

`(D) an individual assigned from a Federal agency to a private sector organization under chapter 37 of title 5, United States Code; and'.

SEC. 106. ACQUISITION WORKFORCE RECRUITMENT AND RETENTION PILOT PROGRAM.

(a) IN GENERAL- For purposes of sections 3304, 5333, and 5753 of title 5, United States Code, the head of an agency (including the Secretary of Defense) may determine that certain Federal acquisition positions are `shortage category' positions in order to recruit and directly hire employees with high qualifications, such as employees who--

(1) hold a bachelor's degree from an accredited institution of higher learning, earned with a grade point average of 3.2 or higher (or the equivalent);

(2) hold a law or masters or equivalent degree from an accredited institution of higher education in business administration, public administration, or systems engineering; or

(3) have had outstanding experience with commercial acquisition practices, terms, and conditions.

(b) REQUIREMENTS- Personnel actions under this paragraph shall be subject to policies prescribed by the Office of Personnel Management for direct recruitment, including the appointment of a preference eligible as long as preference eligibles are available who satisfy the stipulated high level of qualifications.

(c) PERIOD OF AUTHORITY- Authority under this section shall expire on September 30, 2006. The Administrator of the Office of Federal Procurement Policy shall submit a report to Congress 180 days prior to the expiration of this authority describing the efficacy of this program in attracting employees with unusually high qualifications to the acquisition workforce and providing a recommendation on whether the authority should be extended.

SEC. 107. AUTHORIZATION OF TELECOMMUTING FOR FEDERAL CONTRACTORS.

(a) AMENDMENT TO THE FEDERAL ACQUISITION REGULATION- Not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulation issued in accordance with sections 6 and 25 of the Office of Federal Procurement Policy Act (41 U.S.C. 405 and 421) shall be amended to permit the use of telecommuting by employees of Federal contractors in the performance of contracts with executive agencies.

(b) CONTENT OF AMENDMENT- The amendment issued pursuant to subsection (a) shall, at a minimum, provide that solicitations for the acquisition of goods or services shall not set forth any requirement or evaluation criteria that would--

(1) render an offeror ineligible to receive a contract award based on the offeror's plan to allow its employees to telecommute; or

(2) reduce the scoring of an offeror's proposal based upon the contractor's plan to allow its employees to telecommute, unless the contracting officer first--

(A) determines that the needs of the agency, including the security needs of the agency, cannot be met without any such requirement; and

(B) explains in writing the basis for that determination.

(c) GAO REPORT- Not later than one year after the date on which the amendment required by subsection (a) is published in the Federal Register, the Comptroller General shall submit to Congress an evaluation of--

(1) compliance by executive agencies with the regulations; and

(2) conformance of the regulations with existing law, together with any recommendations that the Comptroller General considers appropriate.

(d) DEFINITION- In this section, the term `executive agency' has the meaning given that term in section 105 of title 5, United States Code.

SEC. 108. ARCHITECTURAL AND ENGINEERING ACQUISITION WORKFORCE.

The Administrator of the Office of Federal Procurement Policy, in consultation with the Secretary of Defense and the Director of the Office of Personnel Management, shall develop and implement a plan to assure that the Federal Government maintains a core in-house architectural and engineering capability to--

(1) ensure expertise to determine each agency's need for services;

(2) establish priorities and programs (including acquisition plans);

(3) establish professional standards;

(4) develop scopes of work; and

(5) manage and award contracts for such services.

TITLE II--ADAPTATION OF BUSINESS ACQUISITION PRACTICES

Subtitle A--Adaptation of Business Management Practices

SEC. 201. CHIEF ACQUISITION OFFICERS.

(a) APPOINTMENT OF CHIEF ACQUISITION OFFICERS- (1) Section 16 of the Office of Federal Procurement Policy Act (41 U.S.C. 414) is amended to read as follows:

`SEC. 16. APPOINTMENT OF CHIEF ACQUISITION OFFICERS.

`(a) To further achieve effective, efficient, and economic administration of the Federal acquisition system, the head of each executive agency shall appoint a Chief Acquisition Officer for the agency.

`(b) A Chief Acquisition Officer appointed under subsection (a), in accordance with applicable laws, Governmentwide policies and regulations, and good business practices, shall be responsible for--

`(1) providing advice and other assistance to the head of the executive agency and other senior management personnel of the executive agency to ensure that the agency's mission goals are achieved through the management of the agency's acquisition activities and acquisitions in a manner that implements the policies and procedures of this division, consistent with chapter 11 of title 31, United States Code, and the priorities established by the head of the executive agency;

`(2) increasing the use of full and open competition in the acquisition of property or services by the executive agency by establishing policies, procedures, and practices that assure that the executive agency receives a sufficient number of sealed bids or competitive proposals from responsible sources to fulfill the Government's requirements (including performance and delivery schedules) at the best value considering the nature of the property or service procured;

`(3) making acquisition decisions consistent with all applicable law and establishing clear lines of authority, accountability, and responsibility for acquisition decisionmaking within the executive agency;

`(4) managing the direction of acquisition policy for the executive agency, including implementation of the unique acquisition policies, regulations, and standards of the executive agency; and

`(5) developing and maintaining an acquisition career management program in the executive agency to assure an adequate professional workforce.

`(c) The Chief Acquisition Officer of an executive agency shall--

`(1) have acquisition management as that official's primary duty;

`(2) monitor the performance of acquisition activities and acquisition programs of the agency, evaluate the performance of those programs on the basis of the applicable performance measurements, and advise the head of the agency regarding the appropriate business strategy to achieve the agency mission; and

`(3) annually, as part of the strategic planning and performance evaluation process required (subject to section 1117 of title 31, United States Code) under section 306 of title 5, United States Code, and sections 1105(a)(29), 1115, 1116, 1117, and 9703 of title 31, United States Code--

`(A) assess the requirements established for agency personnel regarding knowledge and skill in acquisition resources management and the adequacy of such requirements for facilitating the achievement of the performance goals established for acquisition management;

`(B) in order to rectify any deficiency in meeting those requirements, develop strategies and specific plans for hiring, training, and professional development; and

`(C) report to the head of the agency on the progress made in improving acquisition management capability.'.

(2) The item relating to section 16 in the table of contents of such Act is amended to read as follows:

`Sec. 16. Chief Acquisition Officers.'.

(b) CONFORMING AMENDMENTS- The Office of Federal Procurement Policy Act (41 U.S.C. 403 et seq.), the Federal Property and Administrative Services Act of 1949, and title 10, United States Code, are each amended by striking `senior procurement executive' each place such term appears and inserting `Chief Acquisition Officer'.

SEC. 202. INCREASED ROLE FOR DEFENSE CONTRACT MANAGEMENT AGENCY.

The Under Secretary of Defense for Acquisition, Technology, and Logistics shall review the feasibility of establishing the Defense Contract Management Agency as the primary organization responsible for performing contract management services on Department of Defense base operating service contracts in excess of $5,000,000.

SEC. 203. STUDY ON HORIZONTAL ACQUISITION.

Not later than 9 months after the date of the enactment of this Act, the Administrator of the Office of Federal Procurement Policy shall submit to the Committee on Government Reform of the House of Representatives and the Committee on Governmental Affairs of the Senate a study on the laws, executive orders, and regulations that hinder the performance of acquisition functions across department or agency lines and otherwise impact the use of Governmentwide contracts.

SEC. 204. STATUTORY AND REGULATORY REVIEW.

(a) ESTABLISHMENT- Not later than 60 days after the date of the enactment of this Act, the Administrator of the Office of Federal Procurement Policy shall establish an advisory panel to review laws and regulations that hinder the use of commercial practices and performance-based contracting.

(b) MEMBERSHIP- The panel shall be composed of at least nine individuals who are recognized experts in acquisition law and Government acquisition policy. In making appointments to the panel, the Administrator shall ensure that the members of the panel reflect the diverse experiences in the public and private sectors.

(c) DUTIES- The panel shall--

(1) review all Federal acquisition laws and regulations with a view toward ensuring the use of greater commercial practices and performance-based contracting; and

(2) make any recommendations for the repeal or amendment of such laws or regulations considered necessary as a result of such review to--

(A) eliminate any such laws or regulations that are unnecessary for the establishment and administration of buyer and seller relationships in acquisition;

(B) ensure the continuing financial and ethical integrity of Government acquisition programs; and

(C) protect the best interests of the Government.

(d) REPORT- (1) Not later than one year after the establishment of the panel, a report shall be transmitted to the Administrator and to the Committees on Government Reform and Armed Services of the House of Representatives and the Committees on Governmental Affairs and Armed Services of the Senate.

(2) The report shall contain a detailed statement of the findings and conclusions of the panel, the proposed codification of acquisition laws or proposed regulations prepared pursuant to subsection (c), and such additional recommendations for such legislation or regulations as the panel considers appropriate.

Subtitle B--Payment Terms

SEC. 211. PAYMENT TERMS.

Not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulation shall be revised to provide that--

(1) service contractors may submit invoices for payment either biweekly or monthly, provided that any biweekly invoicing must be through electronic means;

(2) for an electronic invoice, the date of the invoice shall be the date the invoice is electronically delivered to the Federal Government;

(3) the Federal Government shall accept or reject an electronically delivered invoice within 5 working days of the date of the invoice;

(4) all accepted invoices shall be paid as soon as possible, but in no event shall an accepted invoice be paid later than 30 days after the date of the invoice; and

(5) payment of an invoice does not prohibit either the Government or the contractor from making corrections or adjustments to the invoice at a later date.

Subtitle C--Acquisitions Generally

SEC. 221. INCREASE IN AUTHORIZATION LEVELS OF FEDERAL PURCHASE CARDS.

Section 32 of the Office of Federal Procurement Policy Act (41 U.S.C. 428) is amended by striking `$2,500' in subsections (c), (d), and (f), and inserting `$25,000'.

SEC. 222. REAUTHORIZATION OF FRANCHISE FUNDS.

Section 403(f) of the Federal Financial Management Act of 1994 (31 U.S.C. 501 note) is amended by striking `October 1, 2001' and inserting `October 1, 2005'.

SEC. 223. ACQUISITION PROTESTS.

(a) DEFENSE CONTRACTS- (1) Chapter 137 of title 10, United States Code, is amended by inserting after section 2305a the following new section:

`Sec. 2305b. Protests

`(a) IN GENERAL- A protest of an acquisition of supplies or services by an agency concerning an alleged violation of an acquisition law or regulation submitted to the agency by an interested party shall be decided by the agency if submitted in accordance with this section.

`(b) RESTRICTIONS PENDING DECISION- (1) A contract may not be awarded in an acquisition after a protest concerning the acquisition has been submitted and while the protest is pending except that the head of the acquisition activity responsible for the award of the contract may authorize the award of the contract, notwithstanding the pending protest, upon a written finding that urgent and compelling circumstances do not allow for waiting for a decision.

`(2) Performance of a contract shall not be authorized (and performance of the contract shall cease if performance has already begun) in any case in which a protest of the contract award is submitted not later than 10 days after the date of contract award or 5 days after an agency debriefing, whichever is later, except that the head of the acquisition activity responsible for the award of the contract may authorize performance of the contract notwithstanding the pending protest upon a written finding that urgent and compelling circumstances do not allow for waiting for a decision.

`(c) DEADLINE FOR DECISION- The head of the agency shall issue a decision not later than the date that is 10 working days after the date that the protest is submitted to the agency.

`(d) CONSTRUCTION- Nothing contained in this section shall affect the right of an interested party to file a protest with the General Accounting Office under subchapter V of chapter 35 of title 31 or in the United States Court of Federal Claims.

`(e) DEFINITIONS- In this section:

`(1) The term `interested party', with respect to a contract or a solicitation or other request for offers described in paragraph (2), means an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract.

`(2) The term `protest' means a written objection by an interested party to any of the following:

`(A) A solicitation or other request by an agency for offers for a contract for the acquisition of property or services.

`(B) The cancellation of such a solicitation or other request.

`(C) An award or proposed award of such a contract.

`(D) A termination or cancellation of an award of such a contract, if the written objection contains an allegation that the termination or cancellation is based in whole or in part on improprieties concerning the award of the contract.'.

(2) The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 2305a the following new item:

`2305b. Protests.'.

(b) OTHER AGENCIES- (1) The Federal Property and Administrative Services Act of 1949 is amended by inserting after section 303M the following new section:

`SEC. 303L. PROTESTS.

`(a) IN GENERAL- A protest of an acquisition of supplies or services by an executive agency concerning an alleged violation of an acquisition law or regulation submitted to the agency by an interested party shall be decided by the agency if submitted in accordance with this section.

`(b) RESTRICTIONS PENDING DECISION- (1) A contract may not be awarded in an acquisition after a protest concerning the acquisition has been submitted and while the protest is pending except that the head of the acquisition activity responsible for the award of the contract may authorize the award of the contract, notwithstanding the pending protest, upon a written finding that urgent and compelling circumstances do not allow for waiting for a decision.

`(2) Performance of a contract shall not be authorized (and performance of the contract shall cease if performance has already begun) in any case in which a protest of the contract award is submitted not later than 10 days after the date of contract award or 5 days after an agency debriefing, whichever is later, except that the head of the acquisition activity responsible for the award of the contract may authorize performance of the contract notwithstanding the pending protest upon a written finding that urgent and compelling circumstances do not allow for waiting for a decision.

`(c) DEADLINE FOR DECISION- The head of the agency shall issue a decision not later than the date that is 10 working days after the date that the protest is submitted to the agency.

`(d) CONSTRUCTION- Nothing contained in this section shall affect the right of an interested party to file a protest with the General Accounting Office under subchapter V of chapter 35 of title 31, United States Code, or in the United States Court of Federal Claims.

`(e) DEFINITIONS- In this section:

`(1) The term `interested party', with respect to a contract or a solicitation or other request for offers described in paragraph (2), means an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract.

`(2) The term `protest' means a written objection by an interested party to any of the following:

`(A) A solicitation or other request by an agency for offers for a contract for the acquisition of property or services.

`(B) The cancellation of such a solicitation or other request.

`(C) An award or proposed award of such a contract.

`(D) A termination or cancellation of an award of such a contract, if the written objection contains an allegation that the termination or cancellation is based in whole or in part on improprieties concerning the award of the contract.'.

(2) The table of contents in section 1(b) of such Act is amended by inserting after the item relating to section 303M the following new item:

`303L. Protests.'.

(c) CONFORMING AMENDMENT- Section 3553(d)(4) of title 31, United States Code, is amended--

(1) in subparagraph (A), by striking `or' at the end;

(2) by striking the period at the end of subparagraph (B) and inserting `; or'; and

(3) by adding at the end the following new subparagraph:

`(C) the date that is 5 days after the date that the agency issues its decision under section 2305b of title 10 or section 303L of the Federal Property and Administrative Services Act of 1949.'.

SEC. 224. ARCHITECTURAL AND ENGINEERING SERVICES.

(a) FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT- Section 901 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 541) is amended by adding at the end the following new paragraph:

`(4) The term `surveying and mapping' means contracts and subcontracts for services utilizing Federal funds for collecting, storing, retrieving, or disseminating graphical or digital data depicting natural or manmade physical features, phenomena, or boundaries of the earth and any information related thereto, including but not limited to surveys, maps, charts, geographic information systems, remote sensing data and images, and aerial photographic services performed by professionals such as surveyors, photogrammetrists, hydrographers, geodesists, or cartographers.

`(5) The term `contract' means a contract or subcontract awarded by an agency head, prime contractor, or grantee.'.

(b) AMENDMENT OF FAR- The Federal Acquisition Regulation shall be revised to include the definitions added by subsection (a) of this section.

(c) TITLE 10- Section 2855(b) of title 10, United States Code, is amended--

(1) in paragraph (2), by striking `$85,000' and inserting `$300,000'; and

(2) by adding at the end the following new paragraph:

`(3) The selection and competition requirements of this section shall apply to any contract for architectural and engineering services (including surveying and mapping services) by all military departments and defense agencies.'.

(d) PROFESSIONAL ENGINEERING SERVICES- Notwithstanding any other provision of law, no executive agency shall establish or carry out a program to offer services or to offer contracts for professional engineering services unless--

(1) such services are performed under the direct supervision of a professional engineer licensed in a State; and

(2) such services are awarded in accordance with the selection procedures set forth in title IX of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 541).

TITLE III--CONTRACT INCENTIVES

SEC. 301. REVISIONS TO SHARE-IN-SAVINGS INITIATIVES.

(a) DEFENSE CONTRACTS- (1) Chapter 137 of title 10, United States Code, is amended by adding at the end the following new section:

`Sec. 2332. Share-in-savings contracts

`(a) AUTHORITY TO ENTER INTO SHARE-IN-SAVINGS CONTRACTS- (1) The head of an agency may enter into a share-in-savings contract for a period of not more than ten years.

`(2) An agency may retain savings realized through the use of a share-in-savings contract under this section that are in excess of the total amount of savings paid to the contractor under the contract. Amounts retained by the agency under this subsection shall, without further appropriation, remain available until expended.

`(3)(A) If funds are not made available for the continuation of a share-in-savings contract entered into under this section in a subsequent fiscal year, the contract shall be canceled or terminated. The costs of cancellation or termination may be paid out of--

`(i) appropriations available for the performance of the contract;

`(ii) appropriations available for acquisition of the type of property or services procured under the contract, and not otherwise obligated; or

`(iii) funds appropriated for payments of costs of cancellation or termination.

`(B) The amount payable in the event of cancellation or termination of a share-in-savings contract shall be negotiated with the contractor at the time the contract is entered into.

`(C) An agency may enter into a share-in-savings contract under this section even if funds are not made specifically available for the costs of cancellation or termination of the contract if funds are available and sufficient to make payments with respect to the first fiscal year of the contract.

`(b) DEFINITIONS- In this section:

`(1) The term `contractor' means a private entity that enters into a contract with an agency.

`(2) The term `savings' means--

`(A) monetary savings to an agency; or

`(B) savings in time or other benefits realized by the agency, including enhanced revenues.

`(3) The term `share-in-savings contract' means a contract under which--

`(A) a contractor provides solutions for--

`(i) improving the agency's mission-related or administrative processes; or

`(ii) accelerating the achievement of agency missions; and

`(B) the agency pays the contractor an amount equal to a portion of the savings derived by the agency from--

`(i) any improvements in mission-related or administrative processes that result from implementation of the solution; or

`(ii) acceleration of achievement of agency missions.'.

(2) The table of sections at the beginning of such chapter is amended by adding at the end the following new item:

`2332. Share-in-savings contracts.'.

(b) OTHER CONTRACTS- (1) Title III of the Federal Property and Administrative Services Act of 1949 is amended by adding at the end the following:

`SEC. 317. SHARE-IN-SAVINGS CONTRACTS.

`(a) AUTHORITY TO ENTER INTO SHARE-IN-SAVINGS CONTRACTS- (1) An executive agency may enter into a share-in-savings contract for a period of not more than ten years.

`(2) An executive agency may retain savings realized through the use of a share-in-savings contract under this section that are in excess of the total amount of savings paid to the contractor under the contract. Amounts retained by the executive agency under this subsection shall, without further appropriation, remain available until expended.

`(3)(A) If funds are not made available for the continuation of a share-in-savings contract entered into under this section in a subsequent fiscal year, the contract shall be canceled or terminated. The costs of cancellation or termination may be paid out of--

`(i) appropriations available for the performance of the contract;

`(ii) appropriations available for acquisition of the type of property or services procured under the contract, and not otherwise obligated; or

`(iii) funds appropriated for payments of costs of cancellation or termination.

`(B) The amount payable in the event of cancellation or termination of a share-in-savings contract shall be negotiated with the contractor at the time the contract is entered into.

`(C) An executive agency may enter into a share-in-savings contract under this section even if funds are not made specifically available for the costs of cancellation or termination of the contract if funds are available and sufficient to make payments with respect to the first fiscal year of the contract.

`(b) DEFINITIONS- In this section:

`(1) The term `contractor' means a private entity that enters into a contract with an executive agency.

`(2) The term `savings' means--

`(A) monetary savings to an executive agency; or

`(B) savings in time or other benefits realized by the executive agency, including enhanced revenues.

`(3) The term `share-in-savings contract' means a contract under which--

`(A) a contractor provides solutions for--

`(i) improving the executive agency's mission-related or administrative processes; or

`(ii) accelerating the achievement of agency missions; and

`(B) the executive agency pays the contractor an amount equal to a portion of the savings derived by the agency from--

`(i) any improvements in mission-related or administrative processes that result from implementation of the solution; or

`(ii) acceleration of achievement of agency missions.'.

(2) The table of contents in section 1(b) of such Act is amended by adding at the end the following new item:

`Sec. 317. Share-in-savings contracts.'.

(c) DEVELOPMENT OF INCENTIVES- The Director of the Office of Management and Budget shall--

(1) in consultation with executive agencies--

(A) identify potential opportunities for the use of share-in-savings contracts; and

(B) encourage the use of share-in-savings contracts for projects for which significant savings are expected; and

(2) in consultation with Congress and executive agencies, develop techniques--

(A) to provide incentives for the use of share-in-savings contracts; and

(B) to permit an executive agency to retain a portion of the savings (after payment of the contractor's share of the savings) derived from such contracts as funds are appropriated to the agency in future years.

(d) GUIDANCE AND REGULATIONS- (1) Not later than 180 days after the date of the enactment of this section, the Federal Acquisition Regulation shall be revised to implement the provisions enacted by this section.

(2) Not later than 180 days after the enactment of this section, the Director of the Office of Management and Budget shall issue guidance on the use by executive agencies of share-in-savings contracts. Such guidance shall--

(A) provide for the use of competitive procedures for the selection and award of share-in-savings contracts;

(B) allow maximum regulatory flexibility to facilitate the use of share-in-savings contracts by executive agencies, including the use of nonstandard Federal Acquisition Regulation contract clauses; and

(C) provide guidance to executive agencies for determining mutually beneficial savings share ratios and baselines from which savings may be measured.

(e) REPORT TO CONGRESS- In consultation with executive agencies, the Director of the Office of Management and Budget shall, not later than 2 years after the date of the enactment of this section, submit to Congress a report describing--

(1) the number of share-in-savings contracts entered into by each executive agency under the provisions enacted by this section; and

(2) any recommendations regarding additional changes in law necessary to encourage increased use of share-in-savings contracts by executive agencies.

(f) DEFINITIONS- In this section, the terms `contractor', `savings', and `share-in-savings contract' have the meanings given those terms under section 317 of the Federal Property and Administrative Services Act of 1949 (as added by subsection (b)).

SEC. 302. INCENTIVES FOR CONTRACT EFFICIENCY.

(a) DEFENSE CONTRACTS- (1) Chapter 137 of title 10, United States Code, is further amended by adding at the end the following new section:

`Sec. 2333. Incentives for contract efficiency

`(a) AUTHORITY TO ENTER INTO 10-YEAR SERVICE CONTRACTS- An agency may enter into contracts for the performance of services to the government for periods of not more than ten years if such contracts are performance-based.

`(b) EXTENSIONS- An agency may enter into contracts for the performance of services to the government that provide for the contract to be extended by additional performance periods in instances of exceptional performance by the contractor. A contract that provides for such extensions shall be performance-based, and must include performance parameters that can be used to measure performance under the contract. The entire term of the contract, including the additional performance periods, may not exceed ten years.

`(c) OTHER CONTRACTS- An agency may enter into a level-of-effort contract that provides for savings realized through cost efficiencies to be shared with the contractor in an amount sufficient to encourage the contractor to invest in methods of performance that are likely to reduce the overall cost of contract performance.'.

(2) The table of contents at the beginning of such chapter is amended by adding at the end the following new item:

(b) OTHER CONTRACTS- (1) Title III of the Federal Property and Administrative Services Act of 1949 is further amended by adding at the end the following new section:

`SEC. 318. INCENTIVES FOR CONTRACT EFFICIENCY.

`(a) AUTHORITY TO ENTER INTO 10-YEAR SERVICE CONTRACTS- An executive agency may enter into contracts for the performance of services for the Government for periods of not more than ten years if such contracts are performance-based.

`(b) EXTENSIONS- An executive agency may enter into contracts for the performance of services to the Government that provide for the contract to be extended by additional performance periods in instances of exceptional performance by the contractor. A contract that provides for such extensions shall be performance-based, and must include performance parameters that can be used to measure performance under the contract. The entire term of the contract, including the additional performance periods, may not exceed ten years.

`(c) OTHER CONTRACTS- An executive agency may enter into a level-of-effort type contract that provides for savings realized through cost efficiencies to be shared with the contractor in an amount sufficient to encourage the contractor to invest in methods of performance that are likely to reduce the overall cost of contract performance.'.

(2) The table of contents in section 1(b) of such Act is further amended by adding at the end the following new item:

TITLE IV--ACQUISITIONS OF COMMERCIAL ITEMS

SEC. 401. PREFERENCE FOR PERFORMANCE-BASED CONTRACTING.

(a) IN GENERAL- In the administration of the preferences established by the Federal Acquisition Regulation under section 821(a) of the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (as enacted into law by Public Law 106-398; 114 Stat. 1654A-218), a performance-based service contract or performance-based task order may be treated as a contract for the acquisition of commercial items if--

(1) the contract or task order sets forth specifically each task to be performed and, for each task--

(A) defines the task in measurable, mission-related terms; and

(B) identifies the specific end products or output to be achieved; and

(2) the source of the services provides similar services to the general public under terms and conditions similar to those offered to the Federal Government.

(b) INCENTIVE FOR USE OF PERFORMANCE-BASED SERVICE CONTRACTS- (1) A performance-based service contract or performance-based task order of a covered agency may be treated as a contract for the acquisition of commercial items if--

(A) the contract or task order is valued at $5,000,000 or less;

(B) the contract or task order sets forth specifically each task to be performed and, for each task--

(i) defines the task in measurable, mission-related terms; and

(ii) identifies the specific end products or output to be achieved; and

(C) the source of the services provides similar services to the general public under terms and conditions similar to those offered to the Federal Government.

(2) The special simplified procedures provided in the Federal Acquisition Regulation pursuant to section 2304(g)(1)(B) of title 10, United States Code, and section 303(g)(1)(B) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(g)(1)(B)) shall not apply to a performance-based service contract or performance-based task order that is treated as a contract for the acquisition of commercial items under subsection (a).

(3) Not later than 2 years after the date of the enactment of this Act, the Comptroller General shall submit a report on the implementation of this subsection to the congressional defense committees, the Committee on Government Reform of the House of Representatives, and the Committee on Governmental Affairs of the Senate.

(4) The authority under this subsection shall not apply to contracts entered into or task orders issued more than 3 years after the date of the enactment of this Act.

(c) CENTER OF EXCELLENCE IN SERVICE CONTRACTING- Not later than 180 days after the date of the enactment of this Act, the Administrator of the Office of Federal Procurement Policy shall establish a center of excellence in contracting for services. The center of excellence shall assist the acquisition community by identifying, and serving as a clearinghouse for, best practices in contracting for services in the public and private sectors.

(d) DEFINITIONS- In this section:

(1) The term `performance-based', with respect to a contract, a task order, or contracting, means that the contract, task order, or contracting, respectively, includes the use of performance work statements that set forth contract requirements in clear, specific, and objective terms with measurable outcomes.

(2) The term `commercial item' has the meaning given the term in section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12)).

(3) The term `covered agency' means an executive agency to which title III of the Federal Property and Administrative Services Act of 1949 applies under section 302(a) of that Act (41 U.S.C. 252(a)).

SEC. 402. AUTHORIZATION OF ADDITIONAL CONTRACT TYPES IN FAR PART 12.

Section 8002(d) of the Federal Acquisition and Streamlining Act of 1994 (Public Law 103-355; 41 U.S.C. 264 note) is amended--

(1) in paragraph (1), by striking `and';

(2) by redesignating paragraph (2) as paragraph (3); and

(3) by inserting after paragraph (1) the following new paragraph (2):

`(2) a provision which allows use of time and material, labor-hour or similar contract types, for services in appropriate circumstances;'.

SEC. 403. CLARIFICATION OF COMMERCIAL SERVICES DEFINITION.

Paragraph 12 of section 4 of the Office of Federal Procurement Policy Act (41 U.S.C. 403) is amended--

(1) in subparagraphs (A), (B), and (C), by inserting `or service' after `item';

(2) in subparagraph (D), by inserting `or services' after `items'; and

(3) by striking subparagraph (F) and redesignating the subsequent subparagraphs accordingly.

SEC. 404. DESIGNATION OF COMMERCIAL BUSINESS ENTITIES.

(a) IN GENERAL- Section 4 of the Office of Federal Procurement Policy Act (41 U.S.C. 403) is amended--

(1) by adding at the end of paragraph (12) the following new subparagraph:

`(H) Products or services produced or provided by a commercial entity.'; and

(2) by adding at the end the following new paragraph:

`(16) The term `commercial entity' means any enterprise whose primary customers are other than the United States Federal Government. In order to qualify as a commercial entity, at least 85 percent (in dollars) of the sales of the enterprise over the past three business years must have been made to nongovernment entities or under part 12 of the Federal Acquisition Regulation.'.

(b) COMPTROLLER GENERAL REVIEW- The Comptroller General shall review the implementation of the amendments made by subsection (a) to determine the success of such implementation.

SEC. 405. CONTINUATION OF ELIGIBILITY OF CONTRACTOR FOR AWARD OF INFORMATION TECHNOLOGY CONTRACT AFTER PROVIDING DESIGN AND ENGINEERING SERVICES.

(a) IN GENERAL- Notwithstanding any other provision of law, a contractor that provides architectural design and engineering services for an information system under an information technology program of an executive agency is not, solely by reason of having provided services, ineligible for award of a contract for acquisition of information technology under that program or for a subcontract under such a contract.

(b) DEFINITIONS- In this section:

(1) The term `architectural design and engineering services' includes, but is not limited to, business process reengineering, determining specifications, developing work statements, determining parameters, identifying and resolving interface problems, developing test requirements, evaluating test data, designing, and supervising design activities.

(2) The term `information system' has the meaning given that term in section 5002 of the Clinger-Cohen Act of 1996 (40 U.S.C. 1401).

SEC. 406. COMMERCIAL LIABILITY.

(a) LIMITATION- The Office of Federal Procurement Policy Act (41 U.S.C. 403 et seq.) is further amended by inserting after section 29 the following new section:

`SEC. 29A. LIMITATION OF CONTRACTOR LIABILITY.

`The Federal Acquisition Regulation shall provide that an executive agency shall include in all contracts and solicitations for contracts for the acquisition of property or services a provision that--

`(1) bars payment of consequential damages in cases of contractor liability with respect to the contract; and

`(2) places a cap on payment of direct damages in cases of contractor liability with respect to the contract that does not exceed the cost of the service that was not performed or of the product that was not delivered.'.

(b) CONFORMING AMENDMENT- The table of contents of such Act is amended by inserting after the item relating to section 29 the following new item:

`Sec. 29A. Limitation of contractor liability.'.

TITLE V--TECHNOLOGY ACCESS IN A COMMERCIAL ENVIRONMENT

SEC. 501. TRADE AGREEMENTS ACT OF 1979 EXEMPTION FOR INFORMATION TECHNOLOGY COMMERCIAL ITEMS.

(a) IN GENERAL- Notwithstanding any other provision of law, in order to promote Government access to commercial information technology, the restriction on purchasing nondomestic products set forth in the Buy American Act (41 U.S.C. 10a) and the prohibition on acquiring noneligible foreign products under section 302(a)(1) of the Trade Agreements Act of 1979 (Public Law 96-39; 19 U.S.C. 2512(a)(1)), shall not apply to the Federal Government's acquisition of commercial item information technology (as those terms are defined in section 5002 of the Clinger-Cohen Act of 1996 (40 U.S.C. 1401)).

(b) DEFINITION- Section 5002(3)(B) of the Clinger-Cohen Act of 1996 (40 U.S.C. 1401(3)(B)) is amended by inserting `(including imaging peripherals, input, output, and storage devices necessary for security and surveillance)' after `ancillary equipment'.

SEC. 502. AUTHORIZATION FOR ACQUISITION OF INFORMATION TECHNOLOGY BY STATE AND LOCAL GOVERNMENTS THROUGH FEDERAL SUPPLY SCHEDULES.

(a) AUTHORITY TO USE CERTAIN SUPPLY SCHEDULES- Section 201(b) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 481(b)) is amended by adding at the end the following new paragraph:

`(4)(A) The Administrator may provide for the use by State or local governments of Federal supply schedules of the General Services Administration for automated data processing equipment (including firmware), software, supplies, support equipment, and services (as contained in Federal supply classification code group 70).

`(B) In any case of the use by a State or local government of a Federal supply schedule pursuant to subparagraph (A), participation by a firm that sells to the Federal Government through the supply schedule shall be voluntary with respect to a sale to the State or local government through such supply schedule.

`(C) As used in this paragraph, the term `State or local government' includes any State, local, regional, or tribal government, or any instrumentality thereof (including any accredited public school district or public educational institution).'.

(b) PROCEDURES- Not later than 30 days after the date of the enactment of this Act, the Administrator of General Services shall establish procedures to implement section 201(b)(4) of the Federal Property and Administrative Services Act of 1949 (as added by subsection (a)).

(c) REPORT- Not later than December 31, 2004, the Administrator shall submit to the Committee on Government Reform of the House of Representatives and the Committee on Governmental Affairs of the Senate a report on the implementation and effects of the amendment made by subsection (a).

SEC. 503. CERTAIN RESEARCH AND DEVELOPMENT BY CIVILIAN AGENCIES.

(a) AUTHORITY- Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) is further amended by adding at the end the following new section:

`SEC. 319. RESEARCH AND DEVELOPMENT TO FACILITATE DEFENSE AGAINST, OR RECOVERY FROM, TERRORISM OR NUCLEAR, BIOLOGICAL, CHEMICAL, RADIOLOGICAL, OR TECHNOLOGICAL ATTACK.

`(a) AUTHORITY- (1) The head of an executive agency may engage in basic research, applied research, advanced research, and development projects that--

`(A) are necessary to the responsibilities of such official's executive agency in the field of research and development; and

`(B) have the potential to facilitate defense against, or recovery from, terrorism or nuclear, biological, chemical, radiological, or technological attack.

`(2) To engage in projects authorized under paragraph (1), the head of an executive agency may exercise the same authority (subject to the same restrictions and conditions) as the Secretary of Defense may exercise under sections 2358 and 2371 of title 10, United States Code, except for subsections (b), (f), and (g) of such section 2371.

`(3) The head of an executive agency may exercise authority under this subsection only if authorized by the Director of the Office of Management and Budget to do so.

`(b) ANNUAL REPORT- The annual report of the head of an executive agency that is required under subsection (h) of section 2371 of title 10, United States Code, as applied to the head of an executive agency by subsection (a), shall be submitted to the Committee on Governmental Affairs of the Senate and the Committee on Government Reform of the House of Representatives.

`(c) REGULATIONS- The Director of the Office of Management and Budget shall prescribe regulations to carry out this section.'.

(b) CLERICAL AMENDMENT- The table of contents in section 1(b) of such Act is further amended by adding at the end the following new item:

SEC. 504. AUTHORITY FOR CARRYING OUT CERTAIN PROTOTYPE PROJECTS.

(a) IN GENERAL- The head of an executive agency designated by the Director of the Office of Management and Budget to do so may, under the authority of section 319 of the Federal Property and Administrative Services Act of 1949 (as added by section 503), carry out prototype projects that meet the requirements of subparagraphs (A) and (B) of subsection (a)(1) of such section in accordance with the same requirements and conditions as are provided for carrying out prototype projects under section 845 of the National Defense Authorization Act for Fiscal Year 1994 (Public Law 103-160; 10 U.S.C. 2371 note).

(b) CONFORMING AUTHORITY- In the application of the requirements and conditions of section 845 of the National Defense Authorization Act for Fiscal Year 1994 (Public Law 103-160; 10 U.S.C. 2371 note) to the administration of authority under subsection (a)--

(1) subsection (c) of such section shall apply with respect to prototype projects carried out under this subsection; and

(2) the Director of the Office of Management and Budget shall perform the function of the Secretary of Defense under subsection (d) of such section.

TITLE VI--INFLATIONARY ADJUSTMENTS

SEC. 601. SIMPLIFIED ACQUISITION THRESHOLD INFLATION ADJUSTMENT.

The Administrator of the Office of Federal Procurement Policy may adjust the simplified acquisition threshold (as defined in section 4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11))) every three years to account for changes in inflation.

END