PENDING LEGISLATION CONCERNING HIRING OF FORMER GOVERNMENT PROCUREMENT OFFICIALS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86B00338R000200260008-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 117
• Document Creation Date: December 21, 2016
• Document Release Date: December 8, 2008
• Sequence Number: 8
• Publication Date: August 1, 1984
• Content Type: MEMO

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ROUTING AND RECORD SHEET
STAT FROM:
1
STAT
Assistant General Counsel
TO: (Officer designation, room number, and
building)
STAT
STAT
7B24 HqS
STAT 4.
N.~
C5 ~3 ~aa~
FORM 610 USE PREVIOUS
1-79 EDITIONS
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DATE
1 August 1984
OFFICER'S I COMMENTS (Number each comment to show from whom
INITIALS to whom. Draw a line across column after each comment.)
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1 August 1984
MEMORANDUM FOR: Chief, Legislation Division, OLL
Assistant General Counsel
SUBJECT: Pending Legislation Concerning Hiring of
Former Government Procurement Officials
1. According to the July 23, 1984 edition of Aviation
Week and Space Technology, there is a new bill before Congress,
which is generally described as follows:
A bill before Congress takes a new approach to
discourage government contractors from hiring former
government procurement officials. The measure would
require disclosure by contractors of all former
government employees they had hired in the previous
five years. Those disclosure reports would be
reviewed by the Office of Government Ethics for
possible violations of conflict of interest laws. The
bill also contains a provision banning former
government employees from going to work for
contractors they had dealt with officially for at
least five years after leaving the government. The
bill was introduced in the Senate by Sen. David Pryor
(D.-Ark.) and in the House by Rep. Barbara Boxer
(D.-Calif.).
2. Could you please provide us with a copy.
'~141 ole
XI,"~~301 ~e -
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OLL 84-2673
23 July 1984
MEMORANDUM FOR: Chief, Procurement Management Staff
Office of Logistics
Chief, Logistics and Procurement Law Division
Office of General Counsel
Office of Legislative Liaison
SUBJECT: Recent Procurement-related Legislation:
S. 2489, S. 2842, and H.R. 5509.
1. Attached for your review and comment are the following
recent bills.
S. 2489: amends the Small Business Act to enhance
competition in Government procurement. This bill contains
parts of S. 1730, which OGC previously reviewed and found
to have no impact. Recent committee amendments, however,
have substantially enhanced the scope of this bill.
S. 2842: the "Consultant Reform and Disclosure Act of
1984" clarifies the authority for appointment and
compensation of experts and consultants and requires the
publication of notice of consulting contracts over $10,000
(S 202).
H.R. 5509: the "Program Fraud Civil Penalties Act of 1984"
would provide civil penalties for false claims and
statements made to the United States in connection with
contracts.
2. It is unclear whether any of these bills will succeed
to enactment, although they could be added as amendments to
other active pieces of legislation.
3. Please provide this office with your views on these
bills. Our office will monitor and report on Aiese bills as
appropriate.
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OLL:LEG:ROD:sm (23 July 1984)
Distribution:
Original - Addressee
1 -C/L&PD/OGC
STAT 1 -
1 - OLL Chrono
1 - LEG Subject (Procurement)
1 - D OLL
1 - DD/OLL
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98TH CONGRESS
2D SESSION
Calendar No. 975
S. 2489
To amend the Small Business Act to enhance competition in Government
procurement.
IN THE SENATE OF THE UNITED STATES
MARCH 29 (legislative day, MARCH 26), 1984
Mr. WEICKER (for himself, Mr. DIXON, Mr. KASTEN, Mr. RUDMAN, Mr. NICK-
LES, Mr. SASSER, Mr. NUNN, Mr. DANFORTH, Mr. CHILES, Mr. D'AMATO,
Mr. MOYNIHAN, Mr. HATCH, Mr. PRYOR, Mr. ABDNOR, Mr. BAUCUS, Mr.
BOREN, Mr. HUDDLESTON, Mr. HECHT, Mr. FORD, Mr. HEFLIN, Mr.
L AHY, Mr. PELL, Mr. SARBANES, Mr. NUNN, Mr. D'AMATO, Mr. BUMP-
ERS, Mr. ZORINSKY, Mr. BOSCHWITZ, Mr. LEVIN, and Mr. MATTINGLY) in-
troduced the following bill; which was read twice and referred to the Com-
mittee on Small Business
MAY 11 (legislative day, APRIL 30), 1984
Reported by Mr. WEICKER, with amendments
[Omit the part struck through and insert the part printed in italic]
Ordered referred to the Committee on Armed Services until June 8, 1984
JUNE 8 (legislative day, JUNE 6), 1984
Committee discharged; placed on the calendar
JUNE 11, 1984
Ordered referred to the Committee on Armed Services until the close of business
June 11, 1984
JUNE 11, 1984
Reported by Mr. TOWER, with amendments and an amendment to the title
[Omit the part in bold face brackets and insert the part printed in bold roman]
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A BILL
To amend the Small Business Act to enhance competition in
Government procurement.
1 Be it enacted by the Senate and House of Representa-
2 tines of the United States of America in Congress assembled,
3 SHORT TITLE
4 SECTION 1. This Act may be cited as the "Small Busi-
5 ness and Federal Procurement Competition Enhance-
6 ment Act of 1984".
7 PURPOSES
8 SEC. 2. The purposes of this Act are to-
9 (1) eliminate Federal procurement procedures and
10 practices which dimeerage of prevent by
11 new eearpe#iters ?ef aovefnm t eeffitfaets, espeeial y
12 effmU mess eenee [, ] inhibit [maximum] free
13 and open competition for Government contracts, espe-
14 cially by small business competitors;
15 (2) use Federal contracting opportunities as a
16 means to expand our Nation's industrial base E, and
17 thereby enable it to respond more quickly] in order
18 to ensure adequate responsive capability of
19 the economy to the increased demands of the
20 defense and civilian agencies in times of national
21 emergency;
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1 (3) reduce the number of noncompetitive govern-
2 ment contract awards; and
3 (4) foster opportunities for increased small busi-
4 ness and small disadvantaged business participation in
5 the competitive Federal procurement process.
6 PLANNING FOR FUTURE COMPETITION
7 SEC. 3. Section 15 of the Small Business Act is amend-
8 ed by adding at the end thereof the following:
9 "(m) (1) To encourage the competitive acquisition of
10 oqui emonts to supplies and services to support and maintain
11 a major system during its service life, the head of the Federal
12 agency with responsibility for that system shall ensure that-
13 " [(1)] (A) the ?ollowing aye aeeer-ded weight as
14 eensidef-ati in aeyewnpetitiv-e seheitation
15 ?ef the award of any developfae ee et ?et a major
16 system; to the maximum extent practicable eensider-ing
17 the yeses ?ef which the system is being preeored:
18 in any competitive solicitation for the award of any de-
19 velopment contract for a major system, the following
20 [are accorded substantial weight] shall be includ-
21 ed as evaluation factors, giving due consideration to
22 the purposes for which the system is being procured
23 and the technology to achieve the system's required ca-
24 pabilities:
25 "[(A) Proposals] (i) proposals to incor-
26 porate in the, design of the major system system,
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1 components which are currently available within
the supply system of the Federal agency responsi-
3 ble for the major system, available elsewhere in
4 the national supply system, or commercially avail-
5 able from more than one source; and
6 "[(B) Proposals] (ii) proposals to incor-
7 porate' in the design of the major system system,
8 components whose asseeiated teehniea4 data will
9 permit the agency to eempetitively a com-
10 ponents that are likely to be required in substan-
11 tial quantities during the system's service life and
12 will permit future competitive acquisitions by the
13 Government; a
14 " [(2)] (B) the fig are aeeer-ded substan
15 tial weight as evaluation considerations in a* y oompeti
16 time solicitation ?er the award of aey production eee
17 tract ?ef suck major in any competitive solici-
18 tation for the award of any production contract for a
19 major system, the following [are accorded substantial
20 weight] shall be included as evaluation factors:
21 "[(A) Proposals] (i) proposals to identify
22 components in the system that are likely to be re-
23 quired in substantial quantities during the sys-
24 tem's service life and which provide ?of a predc
25 tefminatieft as to whether the technical data asse
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1 eiated with for such components will be restricted
2 fef further- ese; permit future competitive acquisi-
3 tions by the Government; and
4 " [(B)] (ii) Separately priced options ?er
5 the purchase of lieensiig of such restrieted tochai
6 eal data by the Federal agency se ae to permit
7 the competitive $eguisition of fef .40 8 such ; aid [Proposals] proposals
9 to identify technical data for sale or license to the
10 Federal Government which the offeror, at its dis-
11 cretion, will identify and separately price so as to
12 permit the Government to competitively acquire
13 future requirements for such components [: ] ;
14 and
15 Prepesals to expand the par-tieipati of
16 oiaall aid s business eerieerxs
17 in meeting the regeire s of the pie eextpac
18 ter:
19 a for-egoing evaluation eensider-ati aloe sal be eensid
20 eyed as in mahing a neneempet e
21 award of a developme contract of a prediction contract ?ete
22 a major system The application of any of the
23 speei?ied in paragraph (-9) 44 of B) of this sehseetiern may he
24 waived if the contracting o ieer determines in writing that
25 such would net he applicable to the production
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1 contract of other -wise would net be in the best interests of the
2 Gover-amet in attaining the purposes Of which the system is
3 being preeu stating the reasons there?er. Such determina
4 tine shall he made a part of the eexbraet file.".
5 [Provided, That the provisions of this paragraph (2)
6 may be waived if the contracting officer determines in
7 writing that such provisions would not be applicable to
8 such production contract, giving due consideration to
9 the stability of the system's design, or otherwise would
10 not be in the best interests of the Government in at-
11 taining the purposes for which the system is being pro-
12 cured, stating the reasons therefor, and including such
13 determination and finding as part of the contract file;
14 and]
15 '103 (C) the evaluation factors specified in
16 paragraphs (1) and (2) of this subsection shall be con-
17 sidered as negotiation objectives when an agency is
18 making a noncompetitive award of a development con-
19 tract or a production contract for a major system. [' . ]
20 "(2) The provisions of paragraph (1)(B) may
21 be waived if the contracting officer determines in
22 writing that such provisions would not be applica-
23 ble to such production contract, giving due consid-
24 eration to the stability of the system's design, or
25 otherwise would not be in the best interests of the
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1 Government in attaining the purposes for which
2 the system is being procured, states the reasons
3 therefor, and includes such determination and
4 finding as part of the contract file.
5 ENCOURAGING NEW COMPETITORS TO BROADEN THE
6 INDUSTRIAL BASE
7 SEC. 4. (a) Section 15 of the Small Business Act is
8 amended by adding at the end thereof the following new
9 paragraph:
10 "(n)(1) Before [a Federal agency may establish) es-
11 tablishing any prequalification requirement applicable to
12 an offeror or its product which would be considered as an
13 element of responsiveness to a solicitation, the Federal
14 agency shall-
15 "(A) prepare a written justification stating the
16 reasens ?ff the restriction aad why free a open eon-
17 petition is tiot feasible; necessity for establishing the
18 pre qualification requirement and the reasons why free
19 and open competition is not feasible;
20 "(B) specify in writing and make available upon
21 request all standards which a prospective contractor, or
22 its product, must meet satisfy in order to become
23 qualified, such standards being limited to those least
24 restrictive to attain the objective stated as the ju ti?iea
25 tion fof the restrietien; meet the purposes necessitating
26 the establishment of the prequali fication requirement;
S 2489 RS
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1 "(C) specify an estimate of the costs of
2 testing and evaluation likely to be incurred
3 by a prospective contractor for that contrac-
4 tor to become qualified;
5 "[(c)] (D) pmvi& a ?ec
6 ensure that (i) a prospective contractor is provided,
7 upon request, a prompt opportunity to demonstrate its
8 ability to meet the standards specified for qualification,
9 utilizing qualified personnel and facilities of the agency
10 or another agency obtained through interagency agree-
11 ment, or the eefvieea of $ ovate contractor other
12 methods approved by the agency E: Provided, That],
13 and (ii) any testing and evaluation services provided
14 by a pfive eentor ghee; ,rhea- -
15 under contract to the agency should be provided by a
16 contractor ether Omft a Boner who eed r-easen-
17 aMy who will not be expected to benefit from an ab-
18 sence of additional qualified sources and suteh eentrae-
19 ter who shall be required to adhere to any restrict
20 restriction on technical data asserted by the prospec-
21 tive contractor seeking qualification; and
22 " [(D)] (E) i4em the pcocpeetive contractor
23 ply ensure that a prospective contractor seeking
24 qualification is promptly informed as to whether quali-
25 fication,,has been attained, or in the event qualification
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1 has not been attained, information sufficient to specifi-
2 tally inform the prospective contractor why qualifica-
3 tion was not attained.
4 "(2) Before a Federal agency may enforce any existing
5 prequalification requirement [on] with respect to an of-
6 feror or its product, the Federal agency shall; upeft request,
7 comply with the requirements of paragraph (1) of this subsec-
8 tion. A Federal agency need not delay a procurement action
9 in order to provide a prospective contractor with an opportu-
10 nity to demonstrate its ability to meet the standards specified
11 for qualification.
12 "(3) In the event that the number of currently qualified
13 sources or qualified products available to actively compete for
14 anticipated future requirements is fewer than [five] two
15 actual manufacturers or the products of two
16 actual manufacturers, respectively, the Federal
17 agency shall-
18 "(A) periodically publish notice in the Commerce
19 Business Daily soliciting additional sources or products
20 to seek qualification; and
21 "(B) waive erase bear the cost of conduct-
22 ing the specified testing and evaluation, but excluding
23 the costs associated with producing the item or estab-
24 lishing the production, quality control, or other system
25 to be tested and evaluated, only for a small business
S 2489 RS--2
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1 concern or a product manufactured by a small business
2 concern; ultimately deter-mined to be quali?ied. which
3 has met the standards specified for qualification, and
4 which could reasonably be expected to compete, except
5 that the Federal agency shall bear such costs
6 only if it determines that such additional
7 qualified sources or products are likely to
8 result in cost savings from increased competi-
9 tion for future requirements sufficient to am-
10 ortize the costs incurred by the Federal
11 agency.
12 The Federal agency may request a certification from require
13 a prospective contractor seeking the waiver- e
14 of requesting testing and evaluation costs to certify as to its
15 status as a small business concern, and, in good faith, rely
16 thereon. [Nothing herein shall prohibit a Federal agency
17 from funding, either before or after testing, some or all of the
18 costs incurred by a small business concern in producing the
19 product to be tested. The Federal agency may fund some or
20 all of the cost of production and qualification for additional
21 small business sources or the products manufactured by such
22 sources beyond the five if the Federal agency determines that
23 such additional qualified sources or products will expand the
24 industrial mobilization base or is likely to result in cost sav-
25 ings from increased competition for future requirements suffi-
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1 cient to amortize the costs incurred by the Federal ageney.".
2 agency. ]
3 "(4) Within [five] seven years after the establish-
4 ment of any prequali fication requirement pursuant to para-
5 graph (1), or within [five] seven years following an agen-
6 cy's enforcement of any existing prequali fication requirement
7 pursuant to paragraph (2), any such prequali fication re-
8 quirement shall be [automatically terminated unless the
9 Federal agency complies] examined and revalidated in
10 accordance with the requirements of paragraph (1) of this
11 subsection (n).
12 "(5) [ Whenever] Except in an emergency,
13 whenever a Federal agency determines not to enforce an
14 existing prequali fication requirement for a solicitation, the
15 agency may not enforce any such prequalification require-
16 ment unless the agency complies with the requirements of
17 paragraph (1) of this subsection (n). "18 REPORTING REQUIREMENT
19 SEC. 5. Not later than July 1, 1985, a report
20 prepared under the direction of the Office of Fed-
21 eral Procurement Policy shall be submitted to the
22 Congress on the desirability and feasibility of re-
23 quiring the prime contractor for a major system to
24 establish and maintain procedures to qualify com-
25 peting sources for those components of the major
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1 system likely to be needed in substantial quanti-
2 ties during the system's service life.
3 ENHANCED PROCUREMENT NOTICES
4 (b)(1) Sec. [5-3 6. (a) Section 8(e) of the Small Busi-
5 ness Act is amended-
6 (A4 (1) by inserting before the semicolon at the
7 end of subparagraph (3)(A) a comma and "and in-
8 cludes, as appropriate, agency nomenclature, National
9 Stock Number or other part number, aa4 system a i
10 eation, all amplified by a brief description relating to
11 the item's form, fit or function, physical dimensions,
12 predominant material of manufacture, or similar infor-
13 mation to assist a prospective contractor to make an
14 informed business judgment as to whether a solicitation
15 should be requested";
16 (9) (2) by redesignating subparagraphs (B) and
17 (C) of paragraph (3) as subparagraphs (C) and (E),
18 respectively;
19 (Q4 (3) by inserting after subparagraph (A) of
20 paragraph (3) a new subparagraph (B) as follows:
21 "(B) a procurement history and forecast of re-
22 quirements, to the extent available, including-
23 "(i) date of last award and price thereof,
24 number of units and unit price, time for perform-
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1 ance, and whether the last contract was awarded
2 competitively;
3 "(ii) aggregate dollar value and number of
4 units procured during the last two fiscal years;
5 and
6 "(iii) number of additional requirements (ex-
7 pressed in the same unit term as the procurement
8 history) estimated for procurement during the re-
9 mainder of the current fiscal year and each of the
10 two succeeding fiscal years;";
11 (4) by inserting after subparagraph (C) of
12 paragraph (3), as redesignated, a new subparagraph
13 (D) as follows:
14 "(D) notations as to whether-
15 "(i) the sermon will reference tee
16 data Leh a preopeetive contractor will be re-
17 quired to obtain from ethe gevenmne sexrees
18 prier to subs an effer-; a a4 the technical data
19 required to respond to a solicitation will not be
20 furnished as part of such solicitation, and identi-
21 fying the governmental source, if any, from which
22 the technical data may be obtained; and
23 "(ii) a pr-espeetive an offeror or its product
24 must be prequalified in order to have its offer con-
25
sidered for away award, and identify identifying
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1 the office from which the standards specified for
2 prequalification may be obtained;"; [and]
3 [(F4 (5) by redesignating paragraph (6) as para-
4 graph (7) and inserting a new paragraph (6) as
5 follows:]
6 (5) by inserting in paragraph (4), after
7 "provisions of this paragraph were complied
8 with," the following: "or unless the procure-
9 ment is under the foreign military sales pro-
10 gram and a foreign government has request-
11 ed a sole source,";
12 (6) by redesignating paragraph (6) as
13 paragraph (7) and inserting a new paragraph
14 (6) as follows:
15 "(6) In order to further carry out the requirements of
16 this subsection and section 223(a) of the Act of October 24,
17 1978 (Public Law 95-507, 15 U.S.C. 637b), each Federal
18 agency shall-
19 "(A) publicly post in either full text or abstract
20 format[,] at the contracting office, a seheita
21 ties or otherwise readily make available a compilation,
22 of information relating to [, ] procurement actions in
23 excess of $2,500 which would have been synopsized
24 in the Commerce Business Daily if it such procurement
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1 actions had equaled or exceeded the applicable dollar
2 threshold for such publication publication; and
3 "(B) reasenably make available to any small busi-
4 ness concern, or to the authorized representative of
5 such concern, the complete solicitation package for any
6 ooliei ion posted ii abstract ?er-mett on-going procure-
7 ment action announced pursuant to this paragraph and
8 permit the copying thereof: Provided, That a A Feder-
9 al agency may require the payment of a fee, not ex-
10 ceeding the actual cost of duplication." 1.3; and
11 (7) by inserting at the end of paragraph
12 (7) (as redesignated by clause (6)) the follow-
13 ing new clause:
14 "(C) the term `procuring activity'
15 means that organizational element of a
16 Federal department actually responsible
17 for the issuance of solicitations, the eval-
18 uation of offers, and the award of con-
19 tracts.".
20 (2 (b) Section 8(d)(1) of the Small Business Act is
21 amended by adding at the end thereof the following new sen-
22 tence: "It is further the policy of the United States that small
23 business concerns, and small business concerns owned and
24 controlled by socially and economically disadvantaged indi-
25 viduals, shall have the maximum practicable opportunity to
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1 , participate in the performance of contracts and subcontracts
2 for appropriate portions of subsystems, assemblies, compo-
3 nents, and related services for major systems.".
4 44 (c) Section 8(d)(3)(A) of the Small Business Act is
5 amended by adding at the end thereof the following new sen-
6 tence: "It is further the policy of the United States that small
7 business concerns, and small business concerns owned and
8 controlled by socially and economically disadvantaged indi-
9 viduals, shall have the maximum practicable opportunity to
10 participate in the performance of contracts and subcontracts
11 for appropriate portions of subsystems, assemblies, compo-
12 nents, and related services for major systems.".
13 TECHNICAL DATA MANAGEMENT TO FOSTER FUTURE
14 COMPETITION
15 SEC. & [6-37. (a) Section 15 of the Small Business
16 Act is further amended by adding at the end thereof the fel-
17 lowing following:
18 "(o)(1)(A) An offeror submitting a proposal
19 for a contract shall furnish information in the
20 proposal identifying-
21 "(i) with respect to all items that will be
22 delivered to the United States under the con-
23 tract (other than items to which clause (ii)
24 applies), those items for which technical data
25 will not be provided to the United States; and
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1 "(ii) with respect to technical data that
2 will be delivered to the United States under
3 the contract, any of such technical data that
4 will not be provided with restrictions on the
5 Government's right to use such data for gov-
6 ernmental purposes.
7 "(B) With respect to items that will be deliv-
8 ered to the United States under a contract de-
9 scribed in subparagraph (A) with respect to which
10 it would be impracticable to ascertain, at the time
11 the contract is entered into, the technical data re-
12 lating to such items that will not be provided to
13 the United States with unlimited rights, the con-
14 tract shall require that the contractor shall pro-
15 vide identifying information similar to that re-
16 quired to be furnished under subparagraph (A) at
17 the time to be specified in the contract.
18 "(C) The head of a Federal agency shall
19 ensure that the information furnished under sub-
20 paragraph (A) is considered in selecting the con-
21 tractor for the contract.
22 "[o] (2) To foster competition for the acquisition of
23 supplies and services to maintain a major
24 system during its service life, the head of the Federal agency
25 with responsibility for the system shall insur-e ensure that the
S 2489 RS--3
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1 initial and all subsequent production contracts for a major
2 system, developed under Government contract, contain appro-
3 priate provisions related to technical data, including-
4 "[(1)] (A) specifying the technical data deliver
5 a.Me to be delivered under the contract, if any, includ-
6 ing a a delivery sehede}e schedules there?er, there-
7 for; including eptions ?ef deferred delivery of multiple
8 deliveries
9 "[(2)] (B) establishing criteria for determining
10 the acceptability of technical data to be delivered under
11 the contract;
12 "[(3)] (C) establishing separate payment lines
13 relating to the delay of technical data ceder the eon
14 tract for the technical data to be delivered under the
15 contract, if any, and authorizing the withholding of
16 payments for failure to make timely deliveries of ac-
17 ceptable data;
18 " [(4)] (D) speei?ying defining [J ] the respec-
19 tive rights of the Government and a contractor or sub-
20 contractor regarding any technical data to be submit
21 ted delivered under the contract, including therein a
22 definition of the [phrase] term `developed at private
23 expense';
24 "[(5)] (E) to the maximum practicable
25 extent, identifying, in advance of its delivery, techni-
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1 cal data which is to be delivered with restrictions on
2 the Government's fights in such data right to use such
3 data for governmental purposes, except that data
4 not so identified may be identified and
5 marked with restrictions on the Govern-
6 ment's right to use such data if by a time
7 specified by regulation the contractor re-
8 quests to so limit the Government's right to
9 the data, demonstrates the validity of such
10 limitations, demonstrates that the failure to
11 identify the data in advance of delivery was
12 inadvertent, and relieves the Government of
13 any liability with respect to the use of such
14 technical data prior to the assertion of a re-
15 striction;
16 "[(6)] (F) requiring the contractor to prepare
17 of eautse to he prepared in advance of delivery, ftod
18 mtain, a jusfifieettion ?ef a restriction to be asserted
19 by the eentr-aeter of any subeentr-ae limiting the
20 Government's rights in such dates and each subcon-
21 tractor to be prepared to furnish, within 60 days after
22 a written request directed to the party assert-
23 ing a restriction, a written justification for any re-
24 striction to be asserted limiting the Government's right
25 to use such data for governmental purposes, for as long
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1 as such restriction is asserted by the contractor or sub-
2 contractor;
3 474 attthor-izifteg) the Gover-nme n` to diselese limit 4 ed rights data to a contractor retained by the Gover-n
5 ment solely ?ef the purpose of r e~~g the jestifiea
6 tiett ?ef the limitation plaeed off the data, end rec ri g
7 such eontraetor to sfirietly adhere to any
8 placed et} the data;
gig} speeifying liquidated damages to be paid to
10 the Government by the eentraetor or by a subco ae
11 ter in the event that the Gove--ft challenge to a
12 limitation off the Goyer~ment'3 rights in technical data
13 asserted by the eeeter of a sttbeentraeter is Sus
14 taieed;
15 "(9) [(7)] (G) prohibiting a contractor from re-
16 quiring a subcontractor or the Government to pay a
17 fee, royalty, or other charge for the subcontractor's use
18 of any technical data; except that protected by patent,
19 in the performance of a contract to furnish a compo-
20 nent of ethe directly to the Government,
21 except that data protected by patent, licensing agree-
22 ment or any preexisting agreement involving a subcon-
23 tractor's performance under a [commerical] com-
24 mercial contract, if the same technical data was fur-
25 nisl3e4 of otherwise made available by the contractor
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1 to the subcontractor ?eF the of a contract
2 between them furnishing that component;
3 "( [(8)] (H) prohibiting the contractor from
4 limiting, either directly or indirectly, the Govcramen"
5 right to from a subcontractor a sub-
6 contractor from selling to the Government any compo-
7 nent of of of ire t which the subcontractor had
8 previously furnished to the contractor without restrie
9 ter; restriction, except that the contractor may restrict
10 a subcontrator from providing to the Government any
11 component restricted by a preexisting agreement involv-
12 ing the subcontractor's performance for the contractor
13 under its commercial contracts;
14 "(} E(9)3 (I) ascertaining and documenting
15 the identity of the manufacturer of a component by re-
16 qe g the af4 each subcontractor at e
17 tied to annotate drawings with such infer-
18 mation; and through the annotation of engineering
19 drawings, the maintenance of lists, or otherwise l. 3;
20 "(J) requiring the contractor to revise
21 any technical data delivered pursuant to the
22 contract to reflect engineering design
23 changes and to deliver such revised technical
24 data to an agency within a specified time;
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1 "(K) requiring the contractor to certify
2 at the time the technical data is made avail-
3 able or delivered, that the technical data is
4 complete, accurate, and adequate for the pur-
5 pose for which the technical data is procured;
6 "(L) requiring the contractor to promptly
7 correct any technical data found to be incom-
8 plete, inadequate, or deficient or to promptly
9 furnish complete, accurate, and adequate
10 technical data to the agency; and
11 "(M) authorizing the head of the agency
12 to withhold progress payments under a con-
13 tract during any period that the contractor
14 does not meet the requirements of the con-
15 tract pertaining to the delivery of technical
16 data.
17 41-24 requig the eentraetor, a *d each 3ibeen
18 tractor at every tier; to maintain a listing of the ae4-
19 eentraeters and sappliere from whom it hoe purchased,
20 of selieited to pur-ehase, eempenents included in the
21 major system axd gmeting to the Government the
22 right to obtain a copy thereof.
23 The application of axy of the previsions speeified in this sub-
24 seetien fnay be waived. The provisions specified in this sub-
25 section shall be [included] implemented in the single
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1 system of Government-wide procurement regulations, [as
2 defined in section 403 of title 41, United States Code,3
3 section 4(4) of the Office of Federal Procurement
4 Policy Act (41 U.S.C. 403(4)) and may be waived in
5 accordance with such procurement regulations if the contract-
6 ing officer determines in writing that any such provision
7 [would] should not be applicable to the production con-
8 tract, or otherwise would not be in the best interests of the
9 Government in attaining the purposes for which the system is
10 being procured, stating the reasons therefor. Such determina-
11 tion shall be made part of the contract file. [".]
12 "(3) Nothing in this subsection or subsection
13 (m) of this section prohibits an agency from in-
14 cluding-
15 "(A) in any competitive solicitation for
16 the award of a contract, or
17 "(B) as a negotiation objective when the
18 agency is making a noncompetitive award,
19 a provision specifying in the contract the date
20 after which the United States shall have the right
21 to use or have used for any governmental purpose
22 all technical data required to be delivered to the
23 United States under contract.".
24 (b)(1) Within one year after the date of enactment of
25 [the Small Business Competition Enhancement Act of
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1 1984] this Act, each Federal agency shall develop a plan
2 for the management of technical data received under con-
3 tracts for the development, production, modification, or main-
4 tenance of major systems within its jurisdiction. Amen ethff
5 mmatter-s, At a minimum, the management plan shall address
6 procedures for-
7 (A) inventer-y of exiting
8 (B) (A) ?ec inventorying, indexing,
9 storing, and updating items of technical data enter
10 into the a system;
11 (G) (B) teeheiqees ?er verifying contractor-im-
12 posed limitations on the Government's rights to make
13 future use of the data in competitive acquisitions; and
14 ~D4 (C) proeedures to assure assuring that agency
15 procurement officials and qualified prospective contrac-
16 tors will have timely access to complete and current
17 technical data for the competitive acquisition of ft-
18 geeete supplies and services for the maintenance
19 of the system during its service life.
20 (2) Within 5 years after the date of enactment of [the
21 Small Business Competition Enhancement Act of 1984]
22 this Act, each Federal agency shall complete implementa-
23 tion of the management plan required by paragraph (1), and
24 include in the system the available technical data for each
25 currently operational major system within its jurisdiction.
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1 (3) Not later than eighteen months after the enactment
2 of this [section] Act, the Comptroller General of the
3 United States shall transmit to the Congress a report evalu-
4 ating the plans of selected Federal agencies for the manage-
5 ment of technical data for major systems within their jurisdic-
6 tion. The report shall include an evaluation of the plans of
7 the Department of Defense, the Department of Energy and
8 the Department of Transportation, and the National Aero-
9 nautics and Space Administration.
10 VALIDATING PROPRIETARY DATA RESTRICTIONS
11 SEC. (r. [7] 8. Section 15 of the Small Business Act
12 is amended by adding at the end thereof the following:
13 "(p)(1) 1* order to eempetitivey procure the 14 der To encourage the competitive acquisition of compo-
15 nents needed to maintain a major system during its service
16 life, a review of the validity of any restriction on the Govern-
17 ment's its in right to use for governmental purposes tech-
18 nical data furnished under contract shall be initiated by the
19 contracting officer, if the contracting officer, an agency advo-
20 cate for competition, or [an authorized representative of the
21 Administration] the representative of the Adminis-
22 tration assigned to the procurement center deter-
23 mines such a review is warranted-,, warranted and the con-
24 tracting officer determines that compliance with the asserted
25 restriction makes it impracticable to competitively procure the
26 required component. ?.t
S 2489 RS--4
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1 "(2) Upon the retest written demand of the contracting
2 officer, the contractor or subcontractor, as appropriate, shall
3 submit its justification for the asserted restriction on the Gov-
4 ernment's rights in seer right to use such data for gov-
5 ernmental purposes certifying to the current validity of the
6 asserted restriction within-
7 "(A) 60 days, if the contract contains a provision
8 that requires the pr-epffittien a d retention of a con-
9 tractor or subcontractor to be prepared to furnish a
10 written justification for any restriction limiting the
11 Government's rights in right to use for governmental
12 purposes technical data to be delivered under the con-
13 tract, or
14 "(B) 180 days, if the contract does not contain
15 such a provision[: Provided, Thatl , except that the
16 contracting officer may extend such time limits for a
17 reasonable period for good cause shown.
18 "(3) Upon a failure to submit any justification; ee re-
19 by pursuant to the requirements of paragraph (2) of
20 this subsection, the contracting officer shall, after giving
21 notice to the contractor to the party asserting the re-
22 striction, promptly cancel the restriction on the Govern-
23 ment's rights in right to use for governmental purposes tech-
24 nical data for which justification had been requested.
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1 "(4) If after review of the justification submitted pursu-
2 ant to paragraph (2) of this subsection, the contracting officer
3 determines that the justification for the trietieas restriction
4 on the Government's fights i right to use the data for gov-
5 ernmental purposes the data does not adequately support the
6 restrictions, [restriction the] asserted limitation restric-
7 tion [, ] on the technical data, [and] the justification there-
8 for shall be promptly subjected to technical review and audit.
9 by qualif personnel of the ageney or another Federal
10 ageney obtained through inter-ageney aagr-eement, of a pfivate
11 eefttr-aeter- who ie capable of providing an impety-titt!
12 and who shall be require to adheres to any asserts restric
13 tiene on teehnieal data.
14 "(5) If after reviewing the findings of the technical
15 review and audit, it is determined that the lifnitettion restric-
16 tion on the Government's rights in the data right to use such
17 data for governmental purposes warrants challenge, the con-
18 tracting officer shall issue a final decision pertaining thereto
19 which shall be subject to the provisions of the Contract Dis-
20 putes Act (41 U.S.C. 601 et seq.).
21 "(6) If the Government's challenge to the restriction on
22 the Government's rights in right to use for governmental pur-
23 poses technical data as certified pursuant to paragraph (2) of
24 this subsection is sustained, upon final disposition-
S 2489 RS
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"(A) the restriction on the Government's rights in
2 right to use that technical data for governmental pur-
3 poses shall be cancelled; and
"(B) the contractor or subcontractor, as appropri-
ate, shall be liable to the Government for [-]
teliqitidated d&mages speeified in the
-~ a*d
" i the Government's cost of technically
evaluating and auditing the asserted restriction,
o and the fees and other expenses, as defined in
( section 2412 () (d)(2)(A) of title 4.8 28, United
12 States Code, incurred by the Government in chal-
:i lenging the asserted restriction, if the asserted re-
14 striction, as certified, is found not to be substan-
r tially justified, unless special circumstances would
16 make such awards unjust.".
17 BREAKOUT PROCUREMENT CENTER REPRESENTATIVES
I s SEC. 7 18.3 9. Section 15 of the Small Business Act
(15 U.S.C. 644) is amended by adding at the end thereof the
2() following:
"(q)(1) The Administration shall assign to each major
22 procurement center a breakout procurement center repre-
2ii sentative, with such assistance as may be appropriate; who
2q shad be a a acate ?e the eex efi a pfeettrefae of the
25 eenter!s req riremen and be response for executing the
26 f iees de~ tmder. paragraph (9). In carrying out the
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1 functions described in paragraph (2), such representative
2 shall be an advocate for the breakout of components for com-
3 petitive procurement whenever possible while maintaining the
4 integrity of the system in which such components are used,
5 and be an advocate for the competitive procurement of the
6 supplies and services procured by the center. Any breakout
7 procurement center reprerentatives representative appointed
8 under the authority of the preeeding onteeee this subsection
9 shall be distinct from from, and in addition to to, any other
10 procurement center represe twee representative who may
11 be, from time to time, assigned by the Administration to van
12 eas a procurement eenters center for the purpose of advocat-
13 ing increased small business participation.
14 "(2) The In addition to carrying out the responsibilities
15 assigned by the Administrator, a breakout procurement
16 center representative is empowered to-
17 "(A) participate as a regular member of any pro-
18 visioning conference, or similar evaluation session re-
19 lating to maintaining a major system during its service
20 life, during which determinations are made as to
21 whether requirements are to be procured through other
22 than free and open competition;
23 "(B) review, at any time, restrictions on competi-
24 tion previously imposed on requirements through acqui-
25 sition method coding or similar procedures, and to re-
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1 quest prompt reevaluation of such limitations on com-
2 petition by agency personnel;
3 "(C) review restrictions on competition arising out
4 of restrictions on the Government's rights in technical
5 data and, when appropriate, recommend that the con-
6 tracting officer initiate a review of the validity of such
7 an asserted restriction;
8 "(D) obtain from a seuree teekni
9 eal data suitable ?ef the of a eempet e
10 selieitettion package ?of a preview=
11 procured nonco itively due to he arabilit.y of
12 unr-estr-ieted teems data aad ffwAie i. available fef
13 validation by appr-epr-iftt-e preen center person
14 eel; and obtain from any source, and make available to
15 the appropriate procurement center personnel, unre-
16 stricted technical data necessary for the preparation of
17 a competitive solicitation package for any item of
18 supply or service previously procured noncompetitively
19 due to the unavailability of such unrestricted data; and
20 "(E) have access to the unclassified procurement
21 records and other data of the procurement center so as
22 to facilitate effective discharge of the foregoing func-
23 tions and to permit the preparation of complete and ac-
24 curate reports to the Adfninistr-a Administration;
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1 "(F) receive unsolicited value-engineering propos-
2 als, forwarding them with or without recommendation
3 to procurement center personnel responsible for review-
4 ing such proposals and who shall furnish the breakout
5 procurement center representative with information re-
6 garding any' action taken with respect to any such pro-
7 posal, and
8 "(G) review the procurement practices of the
9 center and make recommendations to the Administrator
10 who shall, as appropriate, consult with the responsible
11 agency procurement executive regarding the implemen-
12 tation thereof.
13 "(3)(A) Each Federal agency having one or more major
14 procurement centers shall assign at least one technical
15 advisor[s] to each major procurement center to which the
16 Administration has assigned a breakout procurement center
17 representative.
18 "(B) Technical advisors assigned under this paragraph
19 shall be-
20 "(i) full-time employees of such agency;
21 "(ii) colocated with the assigned breakout procure-
22 ment center representative; and
23 "(iii) fully qualified, technically trained, and famil-
24 iar with the supplies and services procured by the
25 major procurement center.
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1 [At least one such technical advisor position assigned to
2 each major procurement rr++te r shall be elassi?ied as ~g
3 an accredited engineer.]
4 "(C) The primary d>t y of a technical advisor assigned
5 under this paragraph shall lx, to assist the breakout procure-
6 ment center representative for the center to which such advi-
7 sor is assigned in carrying o"t his functions.
8 "(4) There are ,uthOOrittld to be appropriated to the Ad-
9 ministration such sums a~ nu v be necessary to carry out the
10 provisions of paragraphs (1) is nd (2) of this subsection.".
11 PROHIBITION OF LIMITING DIRECT SALES BY
12 SUBCONTRACTORS TO THE UNITED STATES
13 SEC. 10. Section i:, of the Small Business Act
14 (15 U.S.C. 644) is further amended by adding at the
15 end thereof the following:
16 "(r) Each contract for the purchase of sup-
17 plies or services made by a Federal agency shall
18 provide that the contractor will not-
19 "(1) enter into any agreement with a sub-
20 contractor under the contract that has the
21 effect of unreasonably restricting sales by the
22 subcontractor dir'M tly to the United States of
23 any item or procWS (including computer soft-
24 ware) like those made, or services like those
25 furnished, by the subcontractor under the
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1 contract (or any follow-on production con-
2 tract); or
3 "(2) otherwise act to restrict unreason-
4 ably the ability of a subcontractor to make
5 sales to the United States described in clause
6 (1).".
7 CERTIFICATE OF COMPETENCY
8 Sec. [9.] 11. Section 8(b)(7) of the Small Business
9 Act is amended by adding at the end thereof the following:
10 "Notwithstanding the first sentence of this subsection, the
11 Administration may not establish an exemption from referral
12 or notification or refuse to accept a referral or notification
13 from a Government procurement officer made pursuant to
14 subparagraph (A) or (B) of this paragraph, but nothing in
15 this paragraph shall require the processing of an application
16 for certification if the small business concern to which the
17 referral pertains declines to have the application processed. If
18 a Government procurement officer proposes to deny a con-
19 tractor's decision to use a small business concern as a sub-
20 contractor because of a lack of any element of responsibility
21 provided for in subparagraphs (A) or (B) of this paragraph,
22 such officer may not preclude the contractor from subcon-
23 tracting to such small business concern without referring the
24 matter for final disposition to the Administration. ".
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1 contract (or any follow-on production con-
2 tract); or
3 "(2) otherwise act to restrict unreason-
4 ably the ability of a subcontractor to make
5 sales to the United States described in clause
6 (1)
7 CERTIFICATE OF COMPETENCY
8 Sec. [9. ] 11. Section 8(b)(7) of the Small Business
9 Act is amended by adding at the end thereof the following:
10 "Notwithstanding the first sentence of this subsection, the
11 Administration may not establish an exemption from referral
12 or notification or refuse to accept a referral or notification
13 from a Government procurement officer made pursuant to
14 subparagraph (A) or (B) of this paragraph, but nothing in
15 this paragraph shall require the processing of an application
16 for certification if the small business concern to which the
17 referral pertains declines to have the application processed. If
18 a Government procurement officer proposes to deny a con-
19 tractor's decision to use a small business concern as a sub-
20 contractor because of a lack of any element of responsibility
21 provided for in subparagraphs (A) or (B) of this paragraph,
22 such officer may not preclude the contractor from subcon-
23 tracting to such small business concern without referring the
24 matter for final disposition to the Administration. ".
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1 [DEFINITIONS] DEFINITIONS
2 Sec. [&] 110.3 12. Section 3 of the Small Business
3 Act is amended by adding at the end thereof the following:
4 "(j) For the purpose of this Act and section & [6(b)]
5 7(b) of the Small Business and Federal Procurement
6 Competition Enhancement Act of 1984, the term-
7 "(1) `component' means any individual part, sub-
8 assembly, assembly, or subsystem integral to a major
9 system, which may be replaced during the service life
10 of the system. The term includes spare part and re-
11 plenishment spare part. The term does not include
12 packaging or labeling associated with shipment or iden-
13 tification of a `component';
14 "(2) `major procurement['] center' means a pro-
15 curement center that awarded contracts for compo-
16 nents other than commercial items totaling at least
17 $150,000,000 in the preceeding fiscal year;
18 "(3) `major system' means a combination of ele-
19 ments that will function together to produce the capa-
20 bilities required to fulfill a mission need. The elements
21 may include hardware, equipment, software or any
22 combination thereof, but excludes construction or other
23 improvements to real property. A system shall be con-
24 sidered a `major system' if[: (a) the Department of
25 Defense is responsible for the system and the total ex-
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penditures for research, development, test and evalua-
tion are estimated to be more than $75,000,000 (based
3 on fiscal year 1980 constant dollars) or an eventual
4 total expenditure for procurement of more than
5 $300,000,000 (based on fiscal year 1980 constant dol-
(; lars); or (b) a civilian agency is responsible for the
7 system and] (A) total expenditures for the system are
8 estimated to exceed $750,000 (based on fiscal year
9 1980 constant dollars) or the dollar threshold for a
1 U `major system' established by the agency pursuant to
11 Office of Management and Budget (OMB) Circular A-
12 109, entitled `Major Systems Acquisitions', whichever
13 is greater, or [(3) any] (B) the system is designated
14 a `major system' by the head of the agency responsible
15 for the system;
16
1_d
"(4) `technical data' means recorded information,
ega lees of form of ehe raetcri tic, of a seientifie of
18 technical flatupe. It dooms researel ,
19
20
21
- ,i
_ 5
developmental e mil, o is usable er
used to define a design of prunes of to pr-eettre,
produce, sapper maintain, of operate metter-iod. The
dafit ffmy be graphic of piece ial delineettiona in mediet
such as digs of ; test in speeifieatiens
of related performance a demos; of
computer mss. Examples of technical data include
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1 resesfeh and engineering engineering drawings
2 aed associated lists-, sp , standards, preees-s
3 sheets, manuals, technical reports, catalog item identi-
4 ?ieatiofts and related ' . Techaieal data does
5 sot include computer software; ?inaneial, add-
6 tine, eest er prism and mana-geme data, or other
7 infemation ineidental to eentraet administ-atiefr
8 `Teehnieal data', as herein defined, does net include
9 teehnieal data ?er ee ereial products or components
10 thereof developed at ate expense.". (regardless of
11 form or method of recording) of a scientific or technical
12 nature, including data resulting from work which was
13 specified and directly funded. as an element of per-
14 formance of a contract from the United States, but
15 does not include-
16 "(i) computer software [and documenta-
17 Lion];
18 "(ii) financial, administrative, cost or pric-
19 ing, management data, or other information inci-
20 dential to contract administration;
21 "(iii) data relating to products, components,
22 or processes developed at private expense; or
23 "(iv) data relating to products, components,
24 or processes developed [solely] at private ex-
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pence and offered for sale to the general
2 public. ". 3
3 "(k) For the purpose of subsections (m), (n),
4 (o), (p), and (r) of section 15, the term `Federal
5 agency' does not include an agency which is sub-
6 ject to chapter 137 of title 10, United States Code.".
7 EFFECT DATE
8 9 (a) Exeept ae previded in subseetion ph,) the
9 amendmen made by this Aet s tie effect up(m the expi-
10 ration 4-80 days gthe date of enezetmentof this
11
12 (b The afnendment. made by section aed the p e -
13 sieesof seet )o?thisA-et eha4 take effectoff the date of
14 enact of this
15 EFFECTIVE DATES
16 [SEC. 10. (a) Sections 6(b), 8, 9, and 10 shall take
17 effect on the date of enactment of this Act.
18 (b) Sections 4 and 7 of this Act shall take effect 180
19 days after the enactment of this Act.
20 (c) The amendments made to section 8(e) of the Small
21 Business Act by section 5(a) of this Act shall apply to pro-
22 curement actions initiated 180 days after the date of enact-
23 ment of this Act.
24 (d) The amendments made to section 8(d) of the Small
25 Business Act by section 5 of this Act shall take effect imme-
26 diately upon enactment, and shall be included in all contracts
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1 required to contain the clauses contained in paragraph (3) of
2 section 8(d) of the Small Business Art which are awarded on
3 or after 180 days followinq the date of enactment of this Act.
4 (e) The amendments made to section 15 of the Small
5 Business Act by sections 3 and 6 of this Act shall take effect
6 immediately and shall be included in applY,priate solicita-
7 tions for bids or proposals issued on or after 180 days after
8 the effective date of this Act.]
9 PROVISIONS APPLICABLE TO THE DEPART-
10 MENT OF DEFENSE AND RELATED
11 AGENCIES
12 SEC. 13. (a)(1) Chapter 137 of title 10, United
13 States Code, is amended by adding at the end
14 thereof the following new sections:
15 "? 2317. Planning for future competition
16 "(a) To encourage the competitive acquisition
17 of supplies and services to support and maintain a
18 major system during its service life, the head of an
19 agency with responsibility for that system shall
20 ensure that-
21 "(1) in any competitive solicitation for
22 the award of any development contract for a
23 major system, the following shall be included
24 as evaluation factors, giving due consider-
25 ation to the purposes for which the system is
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1 being procured and the technology to achieve
2 the system's required capabilities:
3 "(A) proposals to incorporate in the
4 design of the major system, components
5 that are currently available within the
6 supply system of the Federal agency re-
7 sponsible for the major system, available
8 elsewhere in the national supply system,
9 or commercially available from more
10 than one source; and
11 "(B) proposals to incorporate in the
12 design of the major system, components
13 that are likely to be required in substan-
14 tial quantities during the system's service
15 life and will permit future competitive
16 acquisitions by the Government;
17 "(2) in any competitive solicitation for
18 the award of any production contract for a
19 major system, the following shall be included
20 as evaluation factors:
21 "(A) proposals to identify compo-
22 nents in the system that are likely to be
23 required in substantial quantities during
24 the system's service life and whether the
25 technical data for such components will
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1 permit future competitive acquisitions by
2 the Government; and
3 "(B) proposals to identify technical
4 data for sale or license to the Federal
5 Government which the offeror, at its dis-
6 cretion, will identify and separately price
7 so as to permit the Government to com-
8 petitively acquire future requirements for
9 such components; and
10 "(3) the evaluation factors specified in
11 paragraphs (1) and (2) of this subsection
12 shall be considered as negotiation objectives
13 when an agency is making a noncompetitive
14 award of a development contract or a produc-
15 tion contract for a major system.
16 "(b) The provisions of paragraph (2) of sub-
17 section (a) may be waived in whole or in part if
18 the contracting officer determines in writing that
19 such provisions should not be applicable to such
20 production contract, giving due consideration to
21 the stability of the system's design, or otherwise
22 would not be in the best interests of the United
23 States in attaining the purposes for which the
24 system is being procured, states the reasons there-
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1 for, and includes such determination and finding
2 as part of the contract file.
3 "? 2318. Encouraging new competitors to broaden the industrial base
4 "(a) Before establishing any prequalification
5 requirement applicable to an offeror or its product
6 which would be considered as an element of re-
7 sponsiveness to a solicitation, the head of an
8 agency shall-
9 "(1) prepare a written justification stat-
10 ing the necessity for establishing the prequal-
11 ification requirement and the reasons why
12 free and open competition is not feasible;
13 "(2) specify in writing and make avail-
14 able upon request all standards which a pro-
15 spective contractor, or its product, must satis-
16 fy in order to become qualified, such stand-
17 ards to be limited to those least restrictive to
18 meet the purposes necessitating the establish-
19 ment of the prequalification requirement;
20 "(3) specify an estimate of the costs of
21 testing and evaluation likely to be incurred
22 by a prospective contractor for that contrac-
23 tor to become qualified;
24 "(4) ensure that (A) a prospective con-
25 tractor is provided, upon request, a prompt
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1 opportunity to demonstrate its ability to meet
2 the standards specified for qualification, uti-
3 lizing qualified personnel and facilities of the
4 agency or another agency obtained through
5 interagency agreement, or other methods ap-
6 proved by the agency, and (B) any testing
7 and evaluation services provided under con-
8 tract to the agency should be provided by a
9 contractor who will not be expected to bene-
10 fit from an absence of additional qualified
11 sources and who shall be required to adhere
12 to any restriction on technical data asserted
13 by the prospective contractor seeking qualifi-
14 cation; and
15 "(5) ensure that a prospective contractor
16 seeking qualification is promptly informed as
17 to whether qualification has been attained, or
18 in the event qualification has not been at-
19 tained, is promptly furnished specific infor-
20 mation why qualification was not attained.
21 "(b) Before the head of an agency may en-
22 force any existing prequalification requirement
23 with respect to an offeror or its product, the
24 agency shall comply with the requirements of sub-
25 section (a). The head of an agency need not delay
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1 "a procurement action in order to provide a pro-
2 spective contractor with an opportunity to demon-
3 strate its ability to meet the standards specified
4 for qualification.
5 "(c) In the event that the number of qualified
6 sources or qualified products available to actively
7 compete for anticipated future requirements is
8 fewer than two actual manufacturers or the prod-
9 ucts of two actual manufacturers, respectively, the
10 head of an agency shall-
11 "(1) periodically publish notice in the
12 Commerce Business Daily soliciting addition-
13 al sources or products to seek qualification;
14 and
15 "(2) bear the cost of conducting the spec-
16 ified testing and evaluation, but excluding the
17 costs associated with producing the item or
18 establishing the production, quality control,
19 or other system to be tested and evaluated,
20 only for a small business concern or a prod-
21 uct manufactured by a small business con-
22 cern which has met the standards specified
23 for qualification, and which could reasonably
24 be expected to compete, except that the head
25 of an agency shall bear such costs only if it
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] determines that such additional qualified
2 sources or products are likely to result in
cost savings from increased competition for
4 future requirements sufficient to amortize
r, the costs incurred by the agency.
( The head of an agency may require a prospective
7 contractor requesting testing and evaluation costs
8 to certify as to its status as a small business con-
;) cern, and, in good faith, rely thereon.
1() "(d) Within seven years after the establish-
1 ] ment of any prequalification requirement under
12 subsection (a), or within seven years following an
13 agency's enforcement of any existing prequalifica-
14 tion requirement pursuant to subsection (b), any
15 such prequalification requirement shall be exam-
] h ined and revalidated in accordance with the re-
17 quirements of subsection (a) of this section.
is "(e) Except in an emergency, whenever the
] 99 head of an agency determines not to enforce an
2() existing prequalification requirement for a solici-
21 tation, the agency may not enforce any such pre-
22 qualification requirement unless the agency com-
23 plies with the requirements of subsection (a).
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1 '12319. Technical data management to foster future competition
2 "(a)(1) An offeror submitting a proposal for a
3 contract shall furnish information in the proposal
4 identifying-
5 "(A) with respect to all items that will be
6 delivered to the United States under the con-
7 tract (other than items to which paragraph
8 (2) applies) those items for which technical
9 data will not be provided to the United
10 States; and
11 "(B) with respect to technical data that
12 will be delivered to the United States under
i3 the contract, any of such technical data that
14 will be provided with restrictions on the Gov-
15 ernment's right to use such data for govern-
16 mental purposes.
17 "(2) With respect to items that will be deliv-
18 ered to the United States under a contract de-
19 scribed in paragraph (1) with respect to which it
20 would be impracticable to ascertain, at the time
21 the contract is entered into, the technical data re-
22 lating to such items that will not be provided to
23 the United States with unlimited rights, the con-
24 tract shall require that the contractor provide
25 identifying information similar to that required to
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1 be furnished under paragraph (1) at a time to be
2 specified in the contract.
3 "(3) The head of an agency shall ensure that
4 the information furnished under paragraph (1) is
5 considered in selecting the contractor for the con-
6 tract.
7 "(b) To foster competition for the acquisition
8 of supplies and services to maintain a major
9 system during its service life, the head of the
10 agency with responsibility for the system shall
11 ensure that the initial and all subsequent produc-
12 tion contracts for a major system, developed
13 under Government contract, contain appropriate
14 provisions related to technical data, including-
15 "(1) specifying the technical data to be
16 delivered under the contract, if any, includ-
17 ing delivery schedules therefor;
18 "(2) establishing criteria for determining
19 the acceptability of technical data to be deliv-
20 ered under the contract;
21 "(3) establishing separate payment lines
22 for the technical data to be delivered under
23 the contract, if any, and authorizing the with-
24 holding of payments for failure to make
25 timely deliveries of acceptable data;
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1 "(4) defining the respective rights of the
2 Government and a contractor or subcontrac-
3 tor regarding any technical data to be deliv-
4 eyed under the contract, including therein a
5 definition of the term `developed at private
6 expense';
7 "(5) to the maximum practicable extent,
8 identifying, in advance of its delivery, techni-
9 cal data which is to be delivered with restric-
10 tions on the Government's right to use such
11 data for governmental purposes;
12 "(6) requiring the contractor and each
13 subcontractor to be prepared to furnish,
14 within 60 days after a written request direct-
15 ed to the party asserting a restriction, a writ-
16 ten justification for any restriction to be as-
17 serted limiting the Government's right to use
18 such data for governmental purposes, for as
19 long as such restriction is asserted by the
20 contractor or subcontractor;
21 "(7) prohibiting a contractor from requir-
22 ing a subcontractor or the Government to
23 pay a fee, royalty, or other charge for the
24 subcontractor's use of any technical data in
25 the performance of a contract to furnish a
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1 component directly to the Government,
2 except that data protected by patent, licens-
3 ing agreement or any preexisting agreement
4 involving a subcontractor's performance
5 under a commercial contract, if the same
6 data was made available by the contractor to
7 the subcontractor furnishing that component;
8 "(8) prohibiting the contractor from lim-
9 iting, either directly or indirectly, a subcon-
10 tractor from selling to the Government any
11 component which the subcontractor had pre-
12 viously furnished to the contractor without
13 restriction, except that the contractor may re-
14 strict a subcontrator from providing to the
15 Government any component restricted by a
16 preexisting agreement involving the subcon-
17 tractor's performance for the contractor
18 under its commercial contracts;
19 "(9) ascertaining and documenting the
20 identity of the manufacturer of a component
21 through the annotation of engineering draw-
22 ings, the maintenance of lists, or otherwise;
23 "(10) requiring the contractor to revise
24 any technical data delivered pursuant to the
25 contrast to reflect engineering design
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1 changes and to deliver such revised technical
2 data to an agency within a specified time;
3 "(11) requiring the contractor to certify,
4 at the time the technical data is made avail-
5 able or delivered, that the technical data is
6 complete, accurate, and adequate for the pur-
7 pose for which the technical data is procured;
8 "(12) requiring the contractor to prompt-
9 ly. correct any technical data found to be in-
10 complete, inadequate, or deficient to or
11 promptly furnish complete, accurate, and
12 adequate technical data to the agency; and
13 "(13) authorizing the head of the agency
14 to withhold progress payments under a con-
15 tract during any period that the contractor
16 does not meet the requirements of the con-
17 tract pertaining to the delivery of technical
18 data.
19 The provisions specified in this subsection may be
20 waived in accordance with the single system of
21 Government-wide procurement regulations de-
22 fined in section 4(4) of the Office of Federal Pro-
23 curement Policy Act (41 U.S.C. 403(4)) if the con-
24 tracting officer determines in writing that any
25 such provision should not be applicable to the pro-
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1 duction contract, or otherwise would not be in the
2 best interests of the Government in attaining the
3 purposes for which the system is being procured,
4 stating the reasons therefor. Such determination
5 shall be made part of the contract file.
6 "(c) Nothing in this section or section 2317 of
7 this title prohibits an agency from including-
8 "(1) in any competitive solicitation for
9 the award of a contract, or
10 "(2) as a negotiation objective when the
11 agency is making a noncompetitive award,
12 a provision specifying in the contract the date
13 after which the United States shall have the right
14 to use or have used for any governmental purpose
15 all technical data required to be delivered to the
16 United States under contract.
17 "0 2320. Validating proprietary data restrictions
18 "(a) To encourage the competitive acquisition
19 of components needed to maintain a major system
20 during its service life, a review of the validity of
21 any restriction on the Government's right to use
22 for governmental purposes technical data fur-
23 nished under contract shall be initiated by the
24 contracting officer, if the contracting officer, an
25 agency advocate for competition, or the represent-
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i ative of the Small Business Administration as-
2 signed to the procurement center determines such
3 a review is warranted and the contracting officer
4 determines that compliance with the asserted re-
5 striction makes it impracticable to competitively
6 procure the required component.
7 "(b) Upon the written demand of the contract-
8 ing officer, the contractor or subcontractor, as ap-
9 propriate, shall submit its justification for the as-
10 serted restriction on the Government's right to use
11 such data for governmental purposes certifying to
12 the current validity of the asserted restriction
13 within-
14
"(1) 60 days, if the contract contains a
15 provision that requires a contractor or sub-
16 contractor to be prepared to furnish a written
17 justification for any restriction limiting the
18 Government's right to use for governmental
19 purposes technical data to be delivered under
20 the contract, or
21
"(2) 180 days, if the contract does not
22 contain such a provision, except that the con-
23 tracting officer may extend such time limits
24 for a reasonable period for good cause
25 shown.
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1 "(c) Upon a failure to submit any justification
2 pursuant to the requirements of subsection (b),
3 the contracting officer shall, after giving notice to
4 the party asserting the restriction, promptly
5 cancel the restriction on the Government's right to
6 use for governmental purposes technical data for
7 which justification had been requested.
8 "(d) If after review of the justification submit-
9 ted pursuant to subsection (b), the contracting of-
10 ficer determines that the justification for the re-
11 striction on the Government's right to use the data
12 for governmental purposes does not adequately
13 support the asserted restriction on the technical
14 data, the justification therefor shall be promptly
15 subjected to technical review and audit.
16 "(e) If after reviewing the findings of the tech-
17 nical review and audit, it is determined that the
18 restriction on the Government's right to use such
19 data for governmental purposes warrants chal-
20 lenge, the contracting officer shall issue a final de-
21 cision pertaining thereto which shall be subject to
22 the provisions of the Contract Disputes Act (41
23 U.S.C. 601 et seq.).
24 "(f) If the Government's challenge to the re-
25 striction on the Government's right to use for gov-
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1 ernmental purposes technical data as certified
2 pursuant to subsection (b) is sustained, upon final
3 disposition-
4 "(1) the restriction on the Government's
5 right to use that technical data for govern-
6 mental purposes shall be cancelled; and
7 "(2) the contractor or subcontractor, as
8 appropriate, shall be liable to the Govern-
9 ment for the Government's cost of technically
10 evaluating and auditing the asserted restric-
11 tion, and the fees and other expenses, as de-
12 fined in section 2412(d)(2)(A) of title 28,
13 United States Code, incurred by the Govern-
14 ment in challenging the asserted restriction,
15 if the asserted restriction, as certified, is
16 found not to be substantially justified, unless
17 special circumstances would make such
18 awards unjust.".
19 (2) The analysis of such chapter is amended
20 by adding at the end thereof the following new
21 items:
"2317. Planning for future competition.
"2318. Encouraging new competitors to broaden the industrial base.
"2319. Technical data management to foster future competition.
"2320. Validating proprietary data restrictions.".
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1 (b) Section 2302 of title 10, United States
2 Code, is amended by adding at the end thereof the
3 following:
4 "(4) `Component' means any individual
5 part, subassembly, assembly, or subsystem in-
6 tegral to a major system, which may be re-
7 placed during the service life of the system.
8 The term includes spare part and replenish-
9 ment spare part. The term does not include
10 packaging or labeling associated with ship-
11 ment or identification of a `component'.
12 "(5) `Major procurement center' means a
13 procurement center that awarded contracts
14 for components other than commercial items
15 totaling at least $150,000,000 in the preceed-
16 ing fiscal year.
17 "(6) `Major system' means a combination
18 of elements that will function together to
19 produce the capabilities required to fulfill a
20 mission need. The elements may include
21 hardware, equipment, software or any com-
22 bination thereof, but excludes construction or
23 other improvements to real property. A
24 system shall be considered a major system if
25 (A) the Department of Defense is responsible
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1 for the system and the total expenditures for
2 research, development, test and evaluation
3 for the system are estimated to be more than
4 $75,000,000 (based on fiscal year 1980 con-
5 stant dollars) or the eventual total expendi-
6 ture for . procurement of more than
7 $300,000,000 (based on fiscal year 1980 con-
8 stant dollars); or (B) a civilian agency is re-
9 sponsible for the system and total expendi.
10 tures for the system are estimated to exceed
11 $750,000 (based on fiscal year 1980 constant
12 dollars) or the dollar threshold for a `major
13 system' established by the agency pursuant to
14 Office of Management and Budget (OMB)
15 Circular A-109, entitled `Major Systems Ac-
16 quisitions', whichever is greater, or (C) the
17 system is designated a `major system' by the
18 head of the agency responsible for the
19 system.
20 "(7) `Technical data' means recorded in-
21 formation (regardless of form or method of
22 recording) of a scientific or technical nature,
23 including data resulting from work which
24 was specified and directly funded as an ele-
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1 ment of performance of a contract from the
2 United States, but does not include-
3 "(A) computer software;
4 "(B) financial, administrative, cost or
5 pricing, management data, or other infor-
6 mation incidential to contract adminis-
7 tration;
8 "(C) data relating to products, com-
9 ponents, or processes developed at pri-
10 vate expense; or
11 "(D) data relating to products, com-
12 ponents, or processes developed at pri-
13 vate expense and offered for sale to the
14 general public.".
15 (c)(1) Within one year after the date of enact-
16 ment of this Act, the head of each agency shall de-
17 velop a plan for the management of technical data
18 received under contracts for the development, pro-
19 duction, modification, or maintenance of major
20 systems within its jurisdiction. At a minimum, the
21 management plan shall address procedures for-
22 (A) inventorying, indexing, storing, and
23 updating items of technical data into a
24 system;
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1 (B) verifying contractor-imposed limita-
2 tions on the Government's rights to make
3 future use of the data in competitive acquisi-
4 tions; and
5 (C) assuring that agency procurement of-
6 ficials and prospective contractors will have
7 timely access to complete and current techni-
8 cal data for the competitive acquisition of
9 supplies and services for the maintenance of
10 the system during its service life.
11 (2) Within 5 years after the date of enactment
12 of this Act, the head of each agency shall complete
13 implementation of the management plan required
14 by paragraph (1), and include in the system the
15 available technical data for each currently oper-
16 ational major system within the jurisdiction of the
17 head of such agency.
18 (3) Not later than eighteen months after the
19 date of enactment of this section, the Comptroller
20 General of the United States shall transmit to the
21 Congress a report evaluating the plans of selected
22 agencies for the management of technical data for
23 major systems within the jurisdiction of such
24 agencies. The report shall include an evaluation of
25 the plans.
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1 (4) As used in this subsection, the term
2 "agency" means an agency which is subject to
3 chapter 137 of title 10, United States Code.
4 (c)(1) Chapter 141 of title 10, United States
5 Code, is amended by adding at the end thereof the
6 following new section:
7 'T 2402. Prohibition of contractors limiting subcontractor sales di-
8 rectly to the United States
9 "Each contract for the purchase of supplies or
10 services made by the Department of Defense shall
11 provide that the contractor will not-
12 "(1) enter into any agreement with a sub-
13 contractor under the contract that has the
14 effect of unreasonably restricting sales by the
15 subcontractor directly to the United States of
16 any item or process (including computer soft-
17 ware) like those made, or services like those
18 furnished, by the subcontractor under the
19 contract (or any follow-on production con-
20 tract); or
21 "(2) otherwise act to restrict unreason-
22 ably the ability of a subcontractor to make
23 sales to the United States described in clause
24 (1).".
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1 (2) The table of sections at the beginning of
2 such chapter -is amended by adding at the end
3 thereof the following new item:
"2402. Prohibition of contractors limiting subcontractor sales directly
to the United States.".
4 EFFECTIVE DATES
5 SEC. 14. (a) Except as provided in subsection
6 (b), the amendments made by this Act shall take
7 effect 180 days after the date of enactment of this
8 Act.
9 (b)(1) The amendments made to section 8(d)
10 of the Small Business Act by subsections (b) and
11 (c) of section 6 of this Act shall take effect imme-
12 diately upon enactment, and shall be included in
13 all contracts required to contain the clauses con-
14 tained in paragraph (3) of section 8(d) of the
15 Small Business Act which are awarded on or after
16 the date 180 days following the date of enactment
17 of this Act.
18 (2) The amendments made to section 8(e) of
19 the Small Business Act by section 6(a) of this Act
20 shall apply to procurement actions initiated on or
21 after the date 180 days after the date of enactment
22 of this Act.
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1 (3) The amendments made by sections 5, 9,
2 and 11 shall take effect on the date of enactment
3 of this Act.
Amend the title so as to read "A bill to amend the
Small Business Act and title 10, United States Code, to en-
hance competition in Government procurement.".
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98TH CONGRESS
2D SESSION
.2842
To amend section 3109 of title 5, United States Code, to clarify the authority for
appointment and compensation of experts and consultants, to provide statu-
tory guidelines concerning the award of contracts for the procurement of
consulting services, management and professional services, and special stud-
ies and analyses, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JUNE 29 (legislative day, JUNE 25), 1984
Mr. FSYo$ (for himself, Mr. BUMPERS, and Mr. SASSES) introduced the following
bill; which was read twice and referred to the Committee on Governmental
Affairs
A BILL
To amend section 3109 of title 5, United States Code, to clarify
the authority for appointment and compensation of experts
and consultants, to provide statutory guidelines concerning
the award of contracts for the procurement of consulting
services, management and professional services, and special
studies and analyses, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That this Act may be cited as the "Consultant Reform and
4 Disclosure Act of 1984".
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STATEMENT OF FINDINGS
SEC. 2. The Congress finds and declares that-
(1) Federal procurement officials have not consist-
ently complied with the laws relating to procurement
activities and regulations and management guidelines
in awarding contracts for the procurement of consulting
services, management and professional services, and
special studies and analyses;
(2) procurement practices, insofar as they relate to
the procurement of consulting services, management
and professional services, and special studies and anal-
yses, do not presently provide for (A) full and open
competition, (B) the prevention of duplication or over-
lap among contracts, (C) adequate consideration of con-
flicts of interest, or (D) the public disclosure of the use
and role of contractors who provide such services,
studies, and analyses;
(3) information regarding the Federal Govern-
ment's use of consulting services, management and
professional services, and special studies and analyses
is not maintained in a manner that results in the avail-
ability of helpful or meaningful information to the Con-
gress, the executive branch, or the public;
(4) the competitive pressures of the free market-
place increase the likelihood that consulting services,
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1 management and professional services, and special
2 studies and analyses will be provided at competitive
3 prices;
4 (5) full and open competition in the Federal pro-
5 curement process supports the basis of the free enter-
6 prise system while guaranteeing maximum return on
7 Federal procurement expenditures;
8 (6) the costs of performing governmental functions
9 are borne by the taxpayer regardless of whether the
10 functions are performed in the private or public sector;
11 (7) the integrity of the governmental process, es-
12 pecially when consulting services, management and
13 professional services, and special studies and analyses
14 are used in the performance of governmental functions,
15 requires full public disclosure of the use and role of
16 contractors who perform such functions; and
17 (8) legislation and oversight is necessary to
18 achieve the consistent policies and practices needed in
19 Federal procurement of consulting services, manage-
20 ment and professional services, and special studies and
21 analyses.
22 STATEMENT OF POLICY
23 SEC. 3. It is the policy of the United States that-
24 (1) governmental policymaking and decisionmak-
25 ing functions should be performed by accountable Fed-
26 eral officials;
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1 (2) the procurement of consulting services, man-
2 agement and professional services, and special studies
3 and analyses by contract should be in compliance with
4 applicable laws and regulations; and
5 (3) governmental functions should be accomplished
6 through the most economical means available while
7 recognizing the inherently governmental nature of cer-
8 tain activities.
9 TITLE I-APPOINTMENTS
10 REVISION OF SECTION 3109 OF TITLE 5
11 SEC. 101. (a) Section 3109 of title 5, United States
12 Code, is amended to read as follows:
13 "? 3109. Employment of individual experts and consult-
14 ants
15 "(a) For the purposes of this section-
16 "(1) `agency' has the same meaning as in section
17 552(e) of this title;
18 "(2) `appointed consultant' means an individual-
19 "(A) who has a high degree of knowledge,
20 skill, or experience in a particular field; and
21 "(B) whose primary function is to serve an
22 agency in an advisory capacity in that, field,
23 rather than to perform or supervise an operating
24 function of the agency; and
25 "(3) `appointed expert' means an individual-
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1 "(A) who has excellent qualifications and a
2 high degree of attainment in a professional, scien-
3 tific, technical, or other field;
4 "(B) who, because of such qualifications and
5 attainment, is usually regarded as an authority or
6 as a practitioner of unusual competence and skill
7 by other individuals who work in that field; and
8 "(C) whose primary function is to perform or
9 supervise an operating function of an agency
10 rather than to provide advisory services.
11 "(b) When authorized by an appropriation Act or other
12 statute, the head of an agency may appoint and fix the pay of
13 appointed experts and consultants for temporary (not in
14 excess of one year) or intermittent services, without regard
15 to-
16 "(1) the provisions of this title governing appoint-
17 ment in the competitive service; and
18 "(2) chapter 51 and subchapter III of chapter 53
19 of this title (relating to position classification and pay
20 rates),
21 except that the rate of pay for any individual so appointed
22 may not exceed the rate of basic pay payable for GS-18
23 unless otherwise specifically authorized by statute.
24 "(c) Positions in the Senior Executive Service may not
25 be filled under the authority of subsection (b) of this section.
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1 "(d) The Office of Personnel Management shall pre-
2 scribe regulations governing the employment of appointed ex-
3 perts and consultants and the reporting requirements of this
4 section, and may take such action as it considers appropriate
5 to assure compliance with those regulations, including audit
6 of individual cases, and, if necessary, suspension of the au-
7 thority to appoint experts and consultants. Agencies shall
8 comply with the requirements of the Office, including taking
9 any corrective action the Office may direct.
10 "(e) Each agency shall report to the Office of Personnel
11 Management on a periodic basis with respect to-
12 "(1) the number of days each appointed expert or
13 appointed consultant employed by the agency during
14 the period was so employed, and
15 "(2) the total amount paid by the agency to each
16 appointed expert and appointed consultant for such
17 work during the period.
18 "(f) The head of any agency with statutory authority to
19 appoint experts and consultants without regard to the provi-
20 sions of this section shall, to the extent practicable and in
21 keeping with the provisions of such authority, appoint such
22 experts and consultants in a manner consistent with the pro-
23 visions of this section.
24 "(g) The head of each agency shall establish procedures
25 for the review and approval of-
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1 "(1) any determination relating to the need for the
2 services of an appointed expert or appointed consultant
3 under this section; and
4 "(2) the appointment of each appointed expert or
5 appointed consultant.".
6 (b) The table of sections at the beginning of chapter 31
7 of title 5, United States Code, is amended by striking out the
8 item relating to section 3109 and inserting in lieu thereof the
9 following new item:
"8109. Employment of individual experts and consultants.".
10 EFFECTIVE DATE
11 SEC. 102. The amendments made by this title shall take
12 effect one hundred and eighty days after the date of enact-
13 ment of this Act.
14 TITLE II-CONTRACTS
15 DEFINITIONS
16 SEC. 201. For purposes of this title:
17 (1) The term "agency" has the same meaning as in sec-
18 tion 552(e) of title 5, United States Code.
19 (2) The term "contract" means (A) any agreement, in-
20 cluding any amendment to or modification of an agreement,
21 between the Government and a contractor for the procure-
22 ment of goods and services, or (B) any letter authorizing a
23 contractor to provide goods or services to the United States
24 prior to a specification of the compensation for the provision
25 of such goods or services.
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1 (3) The term "contractor" means any person, firm, un-
2 incorporated association, joint venture, partnership, corpora-
3 tion or affiliates thereof, including consultants and organiza-
4 tions thereof, which is a party to a contract with the Govern-
5 ment.
6 (4) The term "report" means a written study, plan,
7 evaluation, analysis, manual, or similar document, in draft or
8 final form, which is prepared by a contractor pursuant to a
9 contract with an agency and which is submitted-
10 (A) to such agency, or
11 (B) on behalf of such agency to any other agency
12 of the Government,
13 but does not mean a billing document, invoice, or other rou-
14 tine business transmittal made with respect to the contract.
15 (5) The term "consulting services" means advisory serv-
16 ices with respect to agency administration and management
17 or agency program management.
18 (6) The term "management and professional services"
19 means professional services related to management and con-
20 trol of programs, including-
21 (A) management data collection services;
22 (B) policy review and development services;
23 (C) program evaluation services;
24 (D) program management support services;
25 (E) program review and development services;
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1 (F) systems engineering services; and
2 (G) other management and professional services of
3 a similar nature which are not related to any specific
4 program.
5 (7) The term "special study or analysis"-
6 (A) means any nonrecurring examination of a sub-
7 ject which-
8 (i) is undertaken to provide greater under-
9 standing of relevant issues and alternatives re-
10 garding organizations, policies, procedures, Sys-
11 tems, programs, and resources; and
12 (ii) leads to conclusions or recommendations
13 with respect to planning, programing, budgeting,
14- decisionmaking, or policy development; and (B)
15 includes-
16 (i) any study initiated by or for the program
17 management office;
18 (ii) a cost benefit analysis, a data analysis
19 (other than a scientific analysis), an economic
20 study or analysis, an environmental assessment or
21 impact study, a feasibility study which does not
22 relate to construction, a legal or litigation study, a
23 legislative study, a regulatory study, or a socio-
24 economic study;
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1 (iii) a geological study, a natural resources
2 study, a scientific data study, a soil study, a water
3 quality study, a wildlife study, or a general health
4 study; or
5 (iv) any similar special study or analysis.
6 PUBLICATION OF NOTICE OF CONTRACTS
7 SEC. 202. (a) Notwithstanding any other provision of
8 law, as soon as an agency completes preparation of a pro-
9 curement request for consulting services, management and
10 professional services, or a special study or analysis which the
11 agency estimates will result in the award of a contract the
12 cost of which exceeds $10,000, the agency shall transmit to
13 the Secretary of Commerce a written notice describing such
14 contract. The Secretary of Commerce shall publish each
15 notice received pursuant to this subsection in the publication
16 "Commerce Business Daily" published by the Department of
17 Commerce. An agency is not required by the first sentence of
18 this subsection to transmit to the Secretary of Commerce a
19 notice with respect to any contract-
20 (1) for which a national security classification has
21 been lawfully made relative to the contract or the
22 terms therein; or
23 (2) which is awarded due to such an unusual and
24 compelling emergency that the Government would be
25 seriously injured if award of such contract were de-
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1 layed for the purpose of publishing such notice prior to
2 award.
3 (b) Whenever an agency modifies a contract for consult-
4 ing services, management and professional services, or a spe-
5 cial study or analysis, and in the modification of such contract
6 increases the cost of the contract award by at least $25,000,
7 the agency shall transmit to the Inspector General of such
8 agency or comparable official, or in the case of an agency
9 which does not have an Inspector General or comparable of-
10 ficial, the head of the agency or his designee, a written notice
11 describing-
12 (1) the original contract;
13 (2) the modification being made; and
14 (3) the justification for the modification.
15 DISCLOSURE OF INFORMATION CONCERNING THE USE OF
16 CONTRACTORS
17 SEC. 203. Each report prepared by a contractor pursu-
18 ant to a contract for consulting services, management and
19 professional services, or a special study or analysis, and each
20 report prepared by an agency which is substantially derived
21 from or includes substantial portions of any such report, shall
22 include a statement disclosing-
23 (1) the name and business address of the contrac-
24 tor who prepared or contributed to the report;
25 (2) the total cost of the contract;
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1 (3) whether the contract was awarded using com-
2 petitive or noncompetitive procedures;
3 (4) the name of the office which or employee who
4 authorized the award of the contract;
5 (5) in any case in which a contractor uses a sub-
6 contractor to prepare any portion of a report for an
7 agency, the name and business address of the subcon-
8 tractor and the amount paid to the subcontractor for
9 the work;
10 (6) the names of all employees of the contractor,
11 and any subcontractor, who substantially contributed to
12 the report; and
13 (7) in any case in which an organizational conflict
14 of interest has been determined under section 205 to
15 exist with respect to the contract, the facts and cir-
16 cumstances of the conflict of interest.
17 CONTRACT EVALUATION
18 SEC. 204. (a) Within one hundred and twenty days after
19 the date of completion of the performance required by any
20 contract for consulting services, management and profession-
21 al services, or a special study or analysis, the total cost of
22 which exceeds $50,000, the agency shall prepare a written
23 evaluation of the contract performance. The evaluation shall
24 include a summary of the performance of the contractor
25 under the contract, including-
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1 (1) the performance of the contractor, based on
2 the terms and specifications included in the contract;
3 and
4 (2) any deviation by the contractor from the provi-
5 sions of the contract originally awarded with respect to
6 cost and time for completion of the contract and a
7 statement of the reasons for any such deviation.
8 (b) The agency shall include the evaluation required by
9 subsection (a) in the records maintained by the agency re-
10 garding the contract and shall maintain a copy of the evalua-
11 tion in a central location within the agency.
12 (c) A written copy of any evaluation made under this
13 section shall be transmitted to the contractor concerned to-
14 gether with a notice stating that the contractor may, within
15 ten days after the date on which the contractor receives such
16 copy, transmit comments to the agency concerning such eval-
17 uation. Any such comments shall be included in the evalua-
18 tion as a supplement.
19 ORGANIZATIONAL CONFLICT OF INTEREST
20 SEC. 205. (a) For purposes of this section-
21 (1) the term "designated agency" means the De-
22 partment of Energy, the Department of Transporta-
23 tion, or the Environmental Protection Agency;
24 (2) the term "organizational conflict of interest"
25 means any relationship or situation in which an offeror
26 for a contract for 1onsulting services, management and
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1 professional services, or a special study or analysis or a
2 contractor under such contract has past, present, or
3 anticipated interests which either directly, or indirectly
4 through a client relationship, relate to work to be per-
5 formed under such contract and which-
6 (A) may diminish the capacity of the offeror
7 or contractor to furnish impartial, technically
8 sound, and objective assistance, advice or services
9 under such contract; or
10 (B) may result in an unfair competitive ad-
11 vantage to the offeror or contractor;
12 except that, such term does not include the normal
13 flow of benefits from the performance of the contract;
14 and
15 (3) the terms "offeror" and "contractor" in-
16 clude-
17 (A) a chief executive or director of the of-
18 feror or contractor, to the extent that such execu-
19 tive or director will or does become substantially
20 involved in the performance of a contract for con-
21 suiting services, management and professional
22 services, or a special study or analysis entered
23 into with a designated agency; and
24 (B) a consultant or subcontractor proposed to
25 be used by the offeror or contractor in the per-
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1 formance of such contract in any case in which
2 such consultant or subcontractor may be perform-
3 ing services similar to the services performed by
4 the offeror or contractor.
5 (b)(1) Whenever an offeror submits to a designated
6 agency a bid or proposal for a contract for consulting serv-
7 ices, management and professional services, or a special
8 study or analysis, the offeror shall include with such bid or
9 proposal-
10 (A) a statement which discloses all relevant facts
11 relating to each existing or potential organizational
12 conflict of interest with respect to the contract; or
13 (B) a statement certifying, to the best knowledge
14 and belief of such offeror, that there is no existing or
15 potential organizational conflict of interest with respect
16 to the contract.
17 (2) Any consultant or subcontractor which any such of-
18 feror proposes to use in the performance of a contract de-
19 scribed in paragraph (1) shall also submit to the designated
20 agency receiving the bid or proposal a statement including
21 the information required by paragraph (1).
22 (3) In any case in which a contract described in para-
23 graph (1) has been entered into by a designated agency and a
24 modification of the contract becomes necessary, the contrac-
25 tor and any consultant or subcontractor used by the offeror in
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1 the performance of the contract shall submit to such
2 agency-
3 (A) a statement with respect to such modification
4 which includes the information required by paragraph
5 (1) to be submitted with respect to a contract; or
6 (B) a revision of any statement submitted under
7 paragraph (1) which relates to any existing or potential
8 organizational conflict of interest concerning such
9 modification.
10 (4) Each contractor, consultant, and subcontractor
11 which has submitted a statement to a designated agency
12 under this subsection shall submit to the same agency, on a
13 timely basis, such revisions of such statement as may be nec-
14 essary to reflect clearly and accurately any changes in cir-
15 cumstances relating to an existing or potential organizational
16 conflict of interest arising after such statement was made or
17 last revised.
18 (c) The head of each designated agency shall establish
19 or designate an office to administer the provisions of this sec-
20 tion with respect to contracts of the agency and bids and
21 proposals submitted for such contracts. The head of each
22 such office shall evaluate each statement received pursuant
23 to subsection (b) to determine whether an organizational con-
24 flict of interest or the appearance of such a conflict exists
25 with respect to the contract for which the statement is sub-
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1 mitted. In making such evaluation, the head of such office
2 shall-
3 (1) consider whether-
4 (A) the offeror, contractor, consultant, or
5 subcontractor has conflicting roles or interests
6 which might bias the judgment of the offeror, con-
7 tractor, consultant, or subcontractor concerning
8 the work to be performed pursuant to the con-
9 tract; or
10 (B) the offeror or contractor will have an
11 unfair competitive advantage in the performance
12 of the contract; and
13 (2) specifically consider any proposed terms of the
14 contract which require the offeror or the contractor to
15 furnish advice, evaluation, or other services which will
16 have a direct effect on future decisions of the agency
17 relating to contracts, procurement, research and devel-
18 opment programs, production, or regulatory activities.
19 (d) Whenever the head of an office established,or desig-
20 nated under subsection (c) determines that an organizational
21 conflict of interest or that the appearance of such a conflict
22 exists with respect to a contract for consulting services, man-
23 agement and professional services, or a special study or anal-
24 ysis, or a proposal for such a contract, he shall transmit a
25 notice of his determination to the offeror or contractor in-
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1 volved. Within ten days after the date on which the offeror or
2 contractor receives such notice, the offeror or contractor may
3 transmit written comments to the head of the office concern-
4 ing the determination or may transmit such comments to the
5 head of the agency with a request that the head of the agency
6 review such determination. Within thirty days after the date
7 on which the head of the agency receives any such request,
8 the head of the agency shall review the determination of the
9 head of the office and shall issue a written decision. In re-
10 viewing such determination, the head of the agency may re-
11 quest the offeror or contractor to furnish additional informa-
12 tion concerning the issues involved. The head of the agency
13 shall transmit a copy of his decision under this subsection to
14 the offeror or contractor and the head of the office.
15 (e) If, prior to the award of a contract for consulting
16 services, management or professional services, or a special
17 study or analysis, the head of the office established or desig-
18 nated by the head of a designated agency under subsection (c)
19 determines that an organizational conflict of interest or the
20 appearance of such a conflict exists in the case of any offeror
21 for, or of any consultant or subcontractor proposed to be used
22 by an offeror in the performance of, such contract and such
23 determination is not reversed by the head of the designated
24 agency-
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1 (1) such agency shall disqualify such offeror from
2 eligibility for award of the contract or, in the case of
3 an organizational conflict of interest or the appearance
4 of such a conflict involving a consultant or subcontrac-
5 tor proposed to be used by the offeror in the perform-
6 ance of the contract, shall prohibit the offeror from
7 using the services of such consultant or subcontractor;
8 (2) such agency shall include in the contract
9 awarded to the offeror such conditions as such agency
10 determines would avoid an organizational conflict of in-
11 terest or the appearance of such a conflict involving
12 such offeror or such consultant or subcontractor; or
13 (3) if such agency determines that-
14 (A) the facts and circumstances surrounding
15 the contract necessitate immediate action; and
16 (B) such agency is unable to obtain the serv-
17 ices to be performed pursuant to the contract from
18 any other person other than the offeror, consult-
19 ant, or subcontractor involved in the organization-
20 al conflict of interest or the appearance of such a
21 conflict,
22 such agency may award the contract to the offeror if
23 such agency includes in the records maintained by such
24 agency on the contract, makes available to the public,
25 and transmits to each committee of the Senate and the
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1 House of Representatives having legislative jurisdiction
2 over the agency, a complete statement of the relevant
3 facts disclosed by the offeror, consultant, or subcon-
4 tractor pursuant to subsection (b), or otherwise known
5 or made available to the agency.
6 (f)(1) If, after a designated agency has entered into a
7 contract for consulting services, management and profession-
8 al services, or a special study or analysis, the head of an
9 office established or designated in the agency under subsec-
10 tion (c) determines that an organizational conflict of interest
11 or the appearance of such a conflict exists with respect to the
12 contract, and such determination is not reversed by the head
13 of the agency, the agency shall-
14 (A) terminate the contract; or
15 (B) in any case in which termination is not in the
16 best interest of the Government, modify the contract to
17 the extent necessary to prevent or mitigate to the
18 greatest extent possible the conflict or the appearance
19 of the conflict and include in the records maintained by
20 the agency on the contract, make available to the
21 public, and transmit to each committee of the Senate
22 and the House of Representatives having legislative ju-
23 risdiction over the agency, a complete statement of the
24 relevant facts determined to exist regarding the offeror,
25 consultant, or subcontractor.
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1 (2)(A) Except as provided in the second sentence of this
2 subparagraph, a contractor who has entered into a contract
3 with a designated agency for consulting services, manage-
4 ment and professional services, or a special study or analysis,
5 or a consultant or a subcontractor to any such contractor,
6 shall have no claim against the United States for damages as
7 a result of an action of such agency under paragraph (1)
8 (other than a claim specified pursuant to a clause in the con-
9 tract authorizing termination for the convenience of the Gov-
10 ernment). Except as provided in subparagraph (B), such con-
11 tractor, consultant, or subcontractor may have a claim
12 against the United States for compensation for work per-
13 formed prior to such agency action.
14 (B) A contractor who has enter into a contract with a
15 designated agency for consulting services, management and
16 professional services, or a special study or analysis, or a con-
17 sultant or a subcontractor to any such contractor shall have
18 no claim for compensation for work performed prior to an
19 action of such agency under paragraph (1) if it is determined
20 that such contractor's, consultant's, or subcontractor's failure
21 to disclose completely the relevant facts under subsection (b)
22 precluded a determination of the existence of an organiza-
23 tional conflict of interest or the appearance of such a conflict
24 involving such contractor, consultant, or subcontractor prior
25 to the award of the contract.
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1 (i)(1) This section shall not only apply to contracts for
2 consulting services, management and professional services, or
3 any special study or analysis entered into, or bids or propos-
4 als for such contracts submitted, on or after the date three
5 years after the effective date of this title.
6 (2) Two years after the effective date of this title, the
7 Comptroller General of the United States, in conjunction
8 with the Director of the Office of Management and Budget,
9 shall commence an evaluation of the operations of the provi-
10 sions of this section, and, within nine months after the com-
11 mencement of such evaluation, shall prepare and transmit a
12 report to the Congress concerning the result of such evalua-
13 tion, including recommendations for the continuation, modifi-
14 cation, or termination of such provisions.
15 BUDGET IDENTIFICATION AND JUSTIFICATION
16 SEC. 206. (a) The head of each agency shall include
17 with the request for regular appropriations for each fiscal
18 year submitted to the President pursuant to section 1108 of
19 title 31, United States Code, an itemized statement of the
20 amounts requested by the agency for procurement in such
21 fiscal year. The statement shall identify such amounts ac-
22 cording to the same subfunctional categories to be used by
23 the President in the submission of the Budget for such fiscal
24 year pursuant to section 1105 (a) of such title and, within
25 each such category, shall identify such amounts according to
26 classifications fof (1) procurement of consulting services,
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1 management and professional services, and special studies
2 and analyses, and (2) all other procurement activities.
3 (b) The Budget transmitted by the President to the Con-
4 gress for each fiscal year under section 1105(a) of title 31,
5 United States Code, shall set forth separately, within each
6 subfunctional category used in such Budget, requests for new
7 budget authority for, and estimates of outlays by, each
8 agency for (1) procurement of consulting services, manage-
9 ment and professional services, and special studies and analy-
10 sis, and (2) all other procurement activities.
11 (c)(1) By April 1 of the fiscal year preceding the fiscal
12 year for which the Budget is submitted pursuant to section
13 1105(a) of title 31, United State Code, the head of each
14 agency shall prepare and transmit to the Committees on Ap-
15 propriations of the Senate and the House of Representatives
16 an analysis of each request for new budget authority and of
17 the estimates of outlays included in such Budget for such
18 agency pursuant to subsection (b) of this section and a state-
19 ment justifying the need for each such request and estimate.
20 (2) Within sixty days after the date on which the Presi-
21 dent transmits to the Congress a revision of any request or
22 estimate included in the Budget for any fiscal year pursuant
23 to subsection (b), the head of the agency affected by such
24 revision shall prepare and transmit to the Congress a modifi-
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1 cation of the analysis and statement required by paragraph
2 (1) which reflects the revision made by the President.
3 FEDERAL PROCUREMENT DATA SYSTEM
4 SEC. 207. (a) The Administrator for Federal Procure-
5 ment Policy shall establish a data system for the collection
6 and dissemination of information regarding all contracts en-
7 tered into by each agency. The system shall classify each
8 contract or contract modification in an amount exceeding
9 $10,000 as either a contract for professional type services or
10 a contract for commercial and industrial type activities, and
11 shall include for each such contract or contract modifica-
12 tion-
13 (1) the name of the agency awarding the contract;
14 (2) an identification number or other designation
15 for the contract or modification, as the case may be;
16 (3) the name of the contracting office of the agency
17 which awarded the contract;
18 (4) the name of the contractor;
19 (5) whether the contractor is a small business or a
20 minority business;
21 (6) the date on which the contract award or the
22 modification was made;
23 (7) the city, county, State, or country in which
24 the work under the contract will be performed;
25 (8) a brief description of the work to be performed
26 under the oontract;
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1 (9) the total amount payable by the Government
2 under the contract;
3 (10) the estimated completion date of the contract;
4 (11) whether the contract was awarded through
5 competitive or noncompetitive procedures;
6 (12) the type of contract, such as a cost reim-
7 bursement contract or fixed price contract; and
8 (13) if applicable, the authority used to negotiate
9 the contract under the second sentence of section
10 2304(a) of title 10, United States Code, or section
11 302(c) of the Federal Property and Administrative
12 Services Act of 1949.
13 (b)(1) Consistent with otherwise applicable law, the Ad-
14 ministrator for Federal Procurement Policy shall make infor-
15 mation in the data system established under subsection (a)
16 available, on request, to the Congress, the various agencies,
17 and the public.
18 (2) The Administrator for Federal Procurement Policy
19 shall prepare and transmit to the Congress quarterly and
20 annual reports regarding the information maintained on each
21 agency within the system.
22 (c) Each agency shall provide such information to the
23 Administrator for Federal Procurement Policy as may be
24 necessary to assure that the data concerning the agency con-
25 tained in the data system established under subsection (a) and
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1 in the reports transmitted under subsection (b)(2) is current,
2 accurate, and complete.
3 PUBLIC AVAILABILITY
4 SEC. 208. (a)(1) Each agency shall compile and make
5 available to the public a list of all contracts entered into by
6 the agency during the twelve-month period immediately pre-
7 ceding the month during which the list is prepared and a
8 separate list of all contracts entered into by the agency for
9 which performance has not been completed on the date on
10 which such list is prepared. The lists shall be updated on a
11 quarterly basis and shall include, for each such contract-
12 (A) the contract identification number assigned by
13 the agency;
14 (B) the contractor's name;
15 (C) the date of award and the estimated comple-
16 tion date;
17 (D) the original and current amounts to be paid
18 by the agency under the contract; and
19 (E) a brief description of the work to be per-
20 formed.
21 (2) Each agency shall prepare and maintain a written
22 statement justifying the need for each contract for consulting
23 services, management and professional services, or a special
24 study or analysis which is entered into by the agency. The
25 statement shall include the name of the Government officer
26 or employee who authorized the award of the contract and
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1 the Government officer or employee who is responsible for
2 the administration of the contract.
3 (3) Each agency shall permit the public to inspect and
4 make copies of the list prepared under paragraph (1) and the
5 statements prepared under paragraph (2). The agency may
6 charge a reasonable fee to reimburse the agency for the costs
7 of making such copies.
8 (b)(1) Except in the case of a contract the disclosure of
9 which or of any information included therein is prohibited by
10 law, and except in the case of a contract the terms of which
11 are lawfully classified for reasons of national security-
12 (A) all contracts shall be considered public infor-
13 mation and shall be available to the public upon re-
14 quest; and
15 (B) in the case of a contract for consulting serv-
16 ices, management and professional services, or a spe-
17 cial study or analysis the following information shall be
18 available to the public:
19 (i) the name and qualifications of any person-
20 nel designated in the contract; and
21 (ii) in the case of a contract awarded on a
22 sole source basis, the justification for awarding
23 such contract on such basis.
24 (2) Paragraph (1) does not require an agency to make
25 technical proposals available to the public.
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1 EXEMPTIONS
2 SEC. 209. Notwithstanding any other provision of this
3 title, contracts for consulting services, management and pro-
4 fessional services, and special studies or analyses, and any
5 data, reports, or other material pertaining thereto, which-
6 (1) relate to sensitive foreign intelligence or for-
7 eign counterintelligence activities; .
8 (2) relate to sensitive law enforcement investiga-
9 tions; or
10 (3) are classified under the national security clas-
11 sification system,
12 are exempt from the provisions of this title.
13 EFFECT ON OTHER LAW
14 SEC. 210. The provisions of this title shall supersede
15 any statute enacted before the date of enactment of this Act
16 to the extent such statute is inconsistent with the provisions
17 of this title.
18 EFFECTIVE DATE
19 SEC. 211. The provisions of this title shall take effect
20 one hundred and eighty days after the date of enactment of
21 this Act.
0
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98TH CONGRESS H
2n SESSION
. R. 5509
To amend title 5, United States Code, to provide civil penalties for false claims
and statements made to the United States, to certain recipients of property,
services, or money from the United States, or to parties to contracts with the
United States, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 25, 1984
Mr. HERTEL of Michigan introduced the following bill; which was referred to the
Committee on the Judiciary
A BILL
To amend title 5, United States Code, to provide civil penalties
for false claims and statements made to the United States,
to certain recipients of property, services, or money from
the United States, or to parties to contracts with the United
States, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That this Act may be cited as the "Program Fraud Civil
4 Penalties Act of 1984".
5 SEc. 2. (a)(1) The Congress finds that-
6 (A) fraud in Government programs is a serious
7 and growing problem;
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1 (B) present civil and criminal remedies for pro-
2 gram fraud are not sufficiently responsive to this prob-
3 lem;
4 (C) fraud in Government programs results in the
5 loss of millions of dollars annually; and
6 (D) fraud in Government programs undermines
7 the integrity of these programs by allowing ineligible
8 persons to participate and receive Federal funds to
9 which they are not entitled.
10 (2) The Congress further finds that it is desirable to
11 create an expeditious and inexpensive administrative proce-
12 dure which Federal agencies may use to impose an adminis-
13 trative penalty for false, fictitious, or fraudulent claims and
14 statements.
15 (b) The purposes of this Act are-
16 (1) to allow Federal agencies which are the vic-
17 tims of false, fictitious, and fraudulent claims and state-
18 ments to have an administrative remedy penalizing
19 persons who submit such claims and statements;
20 (2) to provide an administrative penalty procedure
21 which is comparable with administrative penalty proce-
22 dures with respect to Government contracts, personnel
23 disciplinary proceedings, and Government grants; and
24 (3) to provide reasonable due process protections
25 to all persons who are subject to the adjudication of
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1 administrative penalties for false, fictitious, or fraudu-
2 lent claims or statements.
3 SEC. 8. (a) Title 5 of the United States Code is amended
4 by inserting after chapter 7 the following new chapter:
5 "CHAPTER 8-ADMINISTRATIVE PENALTIES AND
6 ASSESSMENTS FOR FALSE CLAIMS AND STATE-
7 MENTS
"Sec.
"801. Definitions.
"802. False claims and statements; liability.
"803. Hearing and determination by authority head; subpena authority.
"804. Judicial review.
"805. Collection of civil penalties and assessments.
"806. Limitations.
"807. Right to setoff.
"808. Regulations.
"809. Reports.
8 "i7 801. Definitions
9 "(a) As used in this chapter-
10 "(1) `authority' means any establishment as de-
11 fined in section 11(2) of the Inspector General Act of
12 1978 (92 Stat. 1109), any executive department, any
13 military department, and the United States Postal
14 Service;
15 "(2) `authority head' means-
16 "(A) the head of an authority, or
17 "(B) an official or employee of the authority
18 designated, in regulations promulgated by the
19 head of the authority, to make findings and deter-
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1 minations under this chapter on behalf of the head
2 of the authority;
3 "(3) `claim' means any request or demand, wheth-
4 er under a contract or otherwise-
5 "(A) to an authority for property, services,
or money (including money representing grants,
6
7 loans, insurance, or benefits); or
8 "(B) to a recipient of property, services, or
9 money from an authority or to a party to a con-
10 tract with an authority-
11 "(i) for property or services if the
United States provided such property or
12
13 services or any portion of the funds for the
14 purchase of such property or services or will
15 reimburse such recipient or party for the pur-
16 chase of such property or services; or
"(ii) for the payment of money (includ-
17
18 ing money representing grants, loans, insur-
19 ance, or benefits) if the United States provid-
20 ed any portion of the money requested or de-
21 manded or will reimburse such recipient for
any portion of the money paid on such re-
22
23 quest or demand;
24 "(4) `statement' means any written representation
25 or certification-
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1 "(A) with respect to a claim; or
2 "(B) with respect to-
3 "(i) a contract with, or a bid or proposal
4 for a contract with,
"(ii) a grant, loan, or benefit from,
5
6 "(iii) an application for insurance from,
8 "(iv) an application for employment
9 with,
an authority, or any State, political subdivision of
10
11 a State, or other party acting on behalf of, or
based upon the credit or guarantee of, an
12
13 authority;
14 "(5) `person' means any individual, partnership,
15 corporation, association, or private organization;
16 "(6) `investigating official' means-
17 "(A) the Inspector General in an authority
18 which is authorized an Inspector General by the
19 Inspector General Act of 1978 (92 Stat. 1101) or
20 any other Federal law; or
21 "(B) in the case of an authority which is not
22 authorized an Inspector General by the Inspector
23 General Act of 1978 (91 Stat. 1101) or any other
24 Federal law, any official or employee of the au-
25 thority when designated by the head of the au-
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1 thority to conduct investigations under the provi-
2 sions of section 803(a)(1) of this title; and
3 "(7) `reviewing official' means any official or em-
4 ployee of an authority-
5 "(A) whose rate of basic pay is equal to or
6 greater than the minimum rate of basic pay for
7 grade GS-18 under section 5332 of this title; and
8 "($) who is designated by the head of the
9 authority to make the determination provided in
10 section 803(a)(2) of this title.
11 "(b) For the purposes of subsection (a)(3) of this
12 section-
13 "(1) each voucher, invoice, claim form, or other
14 individual request or demand for property, services, or
15 money constitutes a separate claim whether submitted
16 separately or together with other claims;
17 "(2) each request or demand for property, serv-
18 ices, or money constitutes a claim regardless of wheth-
19 er such property, services, or money is actually deliv-
20 ered or paid; and
21 "(3) a claim shall be considered made to an au-
22 thority, recipient, or party when such claim is made to
23 an agent, fiscal intermediary, or other entity, including
24 any State or political subdivision thereof, acting for or
25 on behalf of such authority, recipient, or party.
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1 "(c) For the purposes of subsection (a)(4) of this sec-
2 tson-
3
"(1). each written representation or certification
4
constitutes a separate statement whether submitted
5
separately or together with other statements; and
6
"(2) a statement shall be considered made to an
7
authority although such statement is actually made to
8
an agent, fiscal intermediary, or other entity, including
9
any State or political subdivision thereof, acting for or
10
on behalf of such authority.
11 "? 802. False claims and statements; liability
12
"(a) For purposes of this chapter-
13
"(1) a claim is false when the claim-
14
"(A) includes or is supported by any false,
15
fictitious, fraudulent, or intentionally misleading
16
statement, document, record, or accounting or
17
bookkeeping entry;
18
"(B) is for payment for the provision of prop-
19
erty or services which the claimant has not pro-
20
vided, or has not provided in accordance with the
21
terms of the contract on which such claim is
22
based, or has provided in violation of any applica-
23
ble Federal or State statute or regulation; or
24
"(C) is for the payment of an amount in
25
excess of the amount which is properly due; and
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1 "(2) a statement is false when a material fact-
2 "(A) is asserted in such statement and is
3 false, fictitious, fraudulent, or intentionally mis-
4 leading; or
5 "(B) is omitted from such statement and-
6 "(i) as a result of the omission, such
7 statement is substantially false, fictitious, or
8 fraudulent or, in the case of an intentional
9 omission, is intentionally misleading; or
10 "(ii) the person 'making such statement
11 has a duty to include such material fact in
12 the statement.
13 "(b) Any person who, on or after the effective date of
14 the Program Fraud Civil Penalties Act of 1983, knowingly
15 makes, presents, or submits, or knowingly causes to be made,
16 presented, or submitted, a false claim or statement, is liable
17 to the United States for-
18 "(1) a civil penalty of not more than $10,000 for
19 each false claim or statement; and
20 "(2) an assessment of not more than double-
"(A) the full amount of money paid to and
21
22 the full value of property or services delivered to
23 a person as a result of the false claim or state-
24 ment of such person; or
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1 "(B) the amount of damages, including the
2 amount of consequential damages and the cost of
3 investigating such false claim or statement, sus-
4 tained by the United States as a result of the
5 false claim or statement.
6 "(c) Except as provided in section 803(b)(5) or 805(f)(1)
7 of this title, the total amount of the penalty and assessment
8 determined under this section shall not be less than the
9 amount of damages sustained by the United States as a result
10 of the false claim or statement.
11 "(d)(1) The penalties and assessments provided in this
12 section shall be in addition to all criminal penalties provided
13 by law.
14 "(2) Except as provided in subsection (e) of this section,
15 the authority head may use any administrative and contrac-
16 tual remedy authorized by any other applicable provision of
17 Federal law in addition to the provisions of this chapter to
18 impose or enforce a civil penalty and assessment for false
19 claims and statements.
20 "(e) Notwithstanding any other provision of Federal
21 law, a civil penalty or assessment imposed under any other
22 provision of Federal law in any case subject to this chapter
23 may be in any amount authorized in this section.
HR 5509 IH--2_
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1 "$ 803. Hearing and determination by authority head; sub-
2 Pena authority
3 "(a)(1) The investigating official of an authority shall
4 investigate allegations that a person is liable under section
5 802(b) of this title and report the findings and conclusions to
6 the reviewing official of the authority-
7 "(2) If the reviewing official determines, based upon the
8 report of the investigating official or upon information from
9 any other source, that there is probable cause to believe that
10 a person is liable under section 802(b) of this title, the re-
11 viewing official shall refer the allegations contained in such
12 report to the authority head for a hearing. Before referring
13 the allegations to the authority head, the reviewing official
14 may refer the allegations to the investigating official and re-
15 quire the investigating official to obtain more information
16 with respect to the allegations.
17 "(b)(1) The authority head shall conduct a hearing on
18 the record regarding any allegation referred to him pursuant
19 to subsection (a) of this section to determine, based on the
20 preponderance of the evidence-
21 "(A) the liability of any person under section
22 802(b) of this title;
23 "(B) the amount of damages suffered by the
24 United States as a result of the false claim or state-
25 ment creating the liability of such person; and
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1 "(C) the amount of any penalty and assessment to
2 be imposed on such person.
3 "(2) The person alleged to be liable under section 802(b)
4 of this title shall be entitled-
5 "(A) to written notice of the hearing specifically
6 setting forth all allegations and the date, time, and
7 place for such hearing;
8 "(B) to be present at such hearing;
9 "(C) to be represented by counsel;
10 "(D) to present evidence; and
11 "(E) to cross-examine any witnesses.
12 "(3) Each hearing under paragraph (1) of this subsection
13 shall be conducted in an impartial manner and resolve the
14 issues expeditiously and inexpensively consistent with funda-
15 mental fairness. A written decision including findings and de-
16 terminations shall be issued after the conclusion of the hear-
17 ing.
18 "(4)(A) Except as provided in subparagraph (B) of this
19 paragraph and section 804 of this title, the findings and de-
20 terminations of the authority head issued in connection with a
21 hearing conducted under paragraph (1) of this subsection are
22 final.
23 "(B) If the authority head conducting the hearing under
24 paragraph (1) of this subsection is an individual described in
25 section 801(a)(2)(B) of this title, the amount of the penalty
I
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1 and assessment imposed on a person may be reduced by the
2 authority head described in section 801(a)(2)(A) of this title
3 to any amount not less than the amount provided in section
4 802(c) of this title.
5 "(5) The total amount of the penalty and assessment
6 determined under this section may be less than the amount
7 provided in section 802(c) of this title if the authority head
8 determines that a lower amount is in the best interest of the
9 United States and enters in the written decision and makes
10 available for public inspection the determination and the rea-
11 sons for the determination.
12 "(c) After a hearing pursuant to subsection (b) of this
13 section, the authority head shall promptly send to any person
14 determined to be liable under section 802(b) of this title writ-
15 ten notice of the findings and determinations of the authority
16 head and the right to judicial review under section 804 of this
17 title.
18 "(d) For the purposes of an investigation under subsec-
19 tion (a) of this section the investigating official is author-
20 ized-
21 "(1) to administer oaths or affirmations; and
22 "(2) to require by subpena the attendance and tes-
23 timony of witnesses and the production of all informa-
24 tion, documents, reports, answers, records, accounts,
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1 papers, and other data and documentary evidence nec-
2 essary to conduct such investigation.
3 "(e) For the purposes of conducting a hearing under
4 subsection (b) of this section, the authority head is author-
5 ized-
6 "(1) to administer oaths or affirmations; and
7 "(2) to require by subpena the attendance and tes-
8 timony of witnesses and the production of all informa-
9 tion, documents, reports, answers, records, accounts,
10 papers, and other data and documentary evidence
11 which the authority head considers relevant and mate-
12 rial to the hearing.
13 "(f) In the case of contumacy or refusal to obey a subpe-
14 na issued pursuant to subsection (d) or (e) of this section, the
15 investigating official or authority head, as the case may be,
16 may invoke the aid of any district court of the United States
17 where such investigation or hearing is being conducted, or
18 where such subpenaed person resides or conducts business.
19 The district courts of the United States shall have jurisdiction
20 to issue an appropriate order for the enforcement of any such
21 subpena. Any failure to obey such order of the court is pun-
22 ishable by such court as contempt.
23 "(g) Unless a petition is filed as provided in section 804
24 of this title, the determination of liability pursuant to this
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1 section shall be final and shall not be subject to judicial
2 review.
3 "? 804. Judicial review
4 "(a) Any person who has been determined pursuant to
5 section 803 of this title to be liable under section 802(b) of
6 this title may obtain review of such determination in the
7 United States Court of Appeals for the circuit in which such
8 person resides or in which the claim or statement upon which
9 the determination of liability is based was made, presented,
10 or submitted, or for the District of Columbia Circuit, by filing
11 in such court, within sixty days after the date on which the
12 notice required by section 803(c) of this title is sent, a written
13 petition that such determination be modified or set aside. The
14 clerk of the court shall transmit a copy of such petition to the
15 authority head concerned and to the Attorney General. Upon
16 receipt of the copy of such petition the authority head shall
17 transmit to the Attorney General the record in the proceed-
18 ing resulting in the determination of liability. Except as oth-
19 erwise provided in this section, the courts of appeals of the
20 United States shall have jurisdiction to review the findings
21 and determinations in issue and to affirm, modify, remand for
22 further consideration, or set aside, in whole or in part, the
23 findings and determinations of the authority head, and to en-
24 force such findings and determinations to the extent that such
25 findings and determinations are affirmed or modified.
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1 "(b) The findings of the authority head with respect to
2 questions of fact, if supported by substantial evidence on the
3 record considered as a whole, shall be conclusive.
4 "(c) The determination of the authority head as to the
5 amount of any penalty and assessment shall be conclusive
6 and shall not be subject to review except to determine wheth-
7 er such amount exceeds the maximum amount provided in
8 section 802 of this title.
9 "(d) Any court of appeals reviewing, under this section,
10 the findings and determinations of the authority head shall
11 not consider any objection that was not raised in the hearing
12 conducted pursuant to section 803(b) of this title, if any,
13 absent a showing of extraordinary circumstances causing the
14 failure to raise the objection. If any party shows to the satis-
15 faction of the court that additional evidence not presented at
16 such hearing is material and that there were reasonable
17 grounds for the failure to present such evidence at such hear-
18 ing, the court shall remand the matter to the authority head
19 for consideration of such additional evidence.
20 "(e) Upon a final determination by the court of appeals
21 that a person is liable under section 802(b) of this title, the
22 court shall enter a final judgment for the appropriate amount
23 in favor of the United States, and such judgment may be
24 recorded and enforced by the Attorney General to the same
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1 extent and in the same manner as a judgment entered by any
2 United States district court.
3 "Zl 805. Collection of civil penalties and assessments
4 "(a) The Attorney General, with the support of the au-
5 thority head when required, shall be responsible for judicial
6 enforcement of any civil penalty or assessment imposed pur-
7 suant to the provisions of this chapter.
8 "(b) Any penalty or assessment imposed in a determina-
9 tion which has become final pursuant to section 803(g) of this
10 chapter may be recovered in a civil action brought by the
11 Attorney General. In any such action, no matters that were
12 raised or that could have been raised in a hearing conducted
13 under section 803(b) of this title or in a review pursuant to
14 section 804 of this title may be raised as a defense, and the
15 determination of liability and the determination of amounts of
16 penalties and assessments shall not be subject to review.
17 "(c) The district courts of the United States and of any
18 territory or possession of the United States shall have juris-
19 diction of any action commenced by the United States under
20 subsection (b) of this section.
21 "(d) Any action under subsection (b) of this section may,
22 without regard to venue requirements, be joined and consoli-
23 dated with or asserted as a counterclaim, cross-claim, or
24 setoff by the United States in any other civil action which
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1 includes as parties the United States and the person against
2 whom such action may be brought.
3 "(e)(1) The United States Claims Court shall have juris-
4 diction of any action under subsection (b) of this section to
5 recover any penalty and assessment if the cause of action is
6 asserted by the United States as a counterclaim in a matter
7 pending in such court. The United States may join as addi-
8 tional parties in such counterclaim all persons who may be
9 jointly and severally liable with the person against whom
10 such counterclaim is asserted.
11 "(2) No cross-claims or third-party claims not otherwise
12 within the jurisdiction of the United States Claims Court
13 shall be asserted among additional parties joined under para-
14 graph (1) of this subsection.
15 "(f)(1) Except as provided in paragraph (2) of this sub-
16 section, the authority head may compromise or settle any
17 penalty and assessment determined pursuant to section 803
18 of this title. No compromise or settlement under this subsec-
19 tion shall provide for a recovery of an amount less than the
20 amount described in section 802(c) of this title unless the
21 authority head makes the determination and takes the action
22 provided in section 803(b)(5) of this title.
23 "(2) The Attorney General shall have exclusive author-
24 ity to compromise or settle any penalty and assessment the
25 determination of which is the subject of a pending petition
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1 pursuant to section 804 of this title or a pending action to
2 recover such penalty or assessment pursuant to this section.
3 "(g) Whenever a penalty and assessment is imposed and
4 collected pursuant to this chapter and part of any money paid
5 or property or services delivered as a result of the false claim
6 or statement on which such penalty and assessment is based
7 was provided by a State or political subdivision thereof which
8 has not previously been reimbursed for such money or prop-
9 erty, the United States shall reimburse such State or political
10 subdivision the lesser of-
11 "(1) an amount bearing the same ratio to the civil
12 penalty and assessment recovered as the amount paid,
13 or the cost to the State or political subdivision of prop-
14 erty or services delivered, by the State or political sub-
15 division on the basis of such false claim or statement
16 bears to the total amount paid, or total cost of property
17 or services delivered, based on such false claim or
18 statement; or
19 "(2) the total amount actually paid, or the total
20 actual cost to the State or political subdivision of prop-
21 erty or services delivered, by the State or political sub-
22 division on the basis of such false claim or statement.
23 "(h) Except as provided in subsection (g) of this section,
24 any amount of penalty and assessment collected under this
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1 chapter shall be deposited as miscellaneous receipts in the
2 Treasury of the United States.
3 '1 806. Limitations
4 "(a)(1) Prior to initiating a proceeding under section
5 803(b) of this title. the authority head shall transmit to the
6 Attorney General written notice of the intention to initiate
7 such proceeding together with the reasons for such intention.
8 "(2) The authority head may initiate a proceeding under
9 section 803(b) of this title if-
10 "(A) the Attorney General approves the initiation
11 of such proceeding; or
12 "(B) the Attorney General takes no action to dis-
13 approve the initiation of such proceeding within ninety
14 days after the date on which the notice required by
15 paragraph (1) of this subsection is received or within
16 such longer period after such date as is provided in a
17 memorandum of understanding entered into by the au-
18 thority head and the Attorney General with respect to
19 such proceeding.
20 "(b)(1) No proceeding under section 803(b) of this title
21 shall be commenced more than six years after the date on
22 which the claim or statement alleged to be a false claim or
23 statement is made, presented, or submitted.
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1 "(2) A proceeding under such section is commenced by
2 mailing by registered or certified mail the notice required in
3 section 803(b)(2)(A)of this title.
4 "(c) A civil action to recover a penalty and assessment
5 under section 805 of this title shall be commenced within
6 three years after the date on which the determination of li-
7 ability for such penalty and assessment becomes final.
8 "(d) If at any time during the course of proceedings
9 brought pursuant to this chapter the authority head receives
10 or discovers any specific information regarding bribery, gra-
11 tuities, conflict of interest, or other corruption or similar ac-
12 tivity in relation to a false claim or statement, the authority
13 head shall immediately report such information to-
14 "(1) the Inspector General of the authority, if an
15 Inspector General is authorized for the authority by
16 the Inspector General Act of 1978 (92 Stat. 1101) or
17 any other Federal law, for transmission to the Attor-
18 ney General; or
19 "(2) the Attorney General, if the authority is not
20 authorized an Inspector General by the Inspector Gen-
21 eral Act of 1978 (92 Stat. 1101) or any other Federal
22 law.
23 "(e) If the Attorney General transmits to an authority
24 head a written finding that the continuation of any proceed-
25 ing under section 803 of this title may adversely affect any
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1 pending or potential criminal or civil action related to an al-
2 leged false claim or statement under consideration in such
3 proceeding, such proceeding shall be immediately stayed and
4 may be resumed only upon written authorization of the At-
5 torney General.
6 "(f) No proceeding shall be commenced under section
7 803(b) of this title with respect to any claim, statement, or
8 group of claims or statements submitted before the com-
9 mencement of such proceedings by any person or group of
10 persons acting in concert if (1) the amount of money or the
11 value of property or services requested or demanded in such
12 claim, statement, or group of claims or statements exceeds
13 $100,000, or (2) the amount of damages, including the
14 amount of consequential damages, sustained by the United
15 States as a result of such claim, statement, or group of claims
16 or statements exceeds $100,000.
17 "? 807. Right to setoff
18 "(a)(1) The amount of any penalty and assessment
19 which has become final under section 803(g) of this title, or
20 for which a judgment has been entered under section 804(e)
21 or 805 of this title, or any amount agreed upon in a settle-
22 ment or compromise under section 805(f) of this title, may be
23 deducted from any sum, including a refund of an overpay-
24 ment of Federal taxes, then or later owing by the United
25 States to the person liable for such penalty and assessment.
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1 "(2) The authority head shall transmit written notice of
2 each deduction made under this paragraph to the person
3 liable for such penalty and assessment.
4 "(3) All amounts retained pursuant to this paragraph
5 shall be remitted to the Secretary of the Treasury for deposit
6 in accordance with section 805 (h) of this title.
7 "(b) An authority head may forward a certified copy of
8 any determination as to liability for any penalty and assess-
9 ment which has become final under section 803(g) of this
10 title, or a certified copy of any judgment which has been
11 entered under section 804(e) or 805 of this title to the Secre-
12 tary of the Treasury for action in accordance with subsection
13 (a) of this section.
14 "? 808. Regulations
15 "(a) The head of each authority shall issue rules and
16 regulations implementing paragraphs (1), (2), and (3) of sec-
17 tion 803(b) of this title and such additional rules and regula-
18 tions as may be necessary to carry out the provisions of this
19 chapter. Such rules and regulations shall insure that investi-
20 gating officials are not responsible for making the determina-
21 tions or conducting the hearing required in section 803(b) of
22 this title or making the collections under section 805 of this
23 title.
24 "(b) The Attorney General may enter into a memoran-
25 dum of understanding with the head of any authority to pro-
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1 vide expeditious procedures for approving or disapproving the
2 initiation of proceedings under section 803(b) of this title and
3 for referral of matters for action under sections 804, 805, and
4 806(e) of this title. Such memorandum of understanding may
5 provide advanced authorization to initiate proceedings under
6 section 803(b) of this title with respect to any particular type
7 or class of alleged false claims or statements if not otherwise
8 barred by section 806 of this title.
9 "? 809. Reports
10 "(a) Each investigating official shall, not later than Oc-
11 tober 31 of each year, prepare an annual report summarizing
12 actions taken under this chapter during the most recent
13 twelve-month period ending September 30. Such report shall
14 include-
15 "(1) a summary of matters referred to the author-
16 ity head under section 803(a)(2) of this title during
17 such period;
18 "(2) a summary of matters transmitted to the At-
19 torney General under section 806(a)(1) of this title
20 during such period;
21 "(3) a summary of all proceedings initiated by the
22 authority head under section 803(b) of this title, and
23 the results of such proceedings, during such period; and
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1 "(4) a summary of the actions taken during such
2 period to collect any civil penalty or assessment im-
3 posed under this chapter.
4 "(b) The annual report of an investigating official shall
5 be furnished to the authority head not later than October 31
6 of the year such report is prepared. Each such report shall be
7 transmitted to the appropriate committees and subcommittees
8 of Congress in the same manner as the October 31 reports of
9 Inspectors General are transmitted under section 5 (b) of the
10 Inspector General Act of 1978 (92 Stat. 1103).".
11 (b) The table of chapters at the beginning of part I of
12 title 5, United States Code, is amended by inserting after the
13 item relating to chapter 7 the following new item:
"8. Administrative Penalties and Assessments for False Claims
and Statements ........................................................... 801.".
14 SEC. 4. The regulations required by section 808 of title
15 5, United States Code, as added by section 3(a) of this Act,
16 shall be promulgated not later than one hundred and eighty
17 days after the effective date of this Act.
18 SEC. 5. This Act and the amendments made by this Act
19 shall take effect December 31, 1983.
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