REDUCTION OR SUSPENSION OF CONTRACT PAYMENTS UPON FINDING OF FRAUD

SEC. 836. REDUCTION OR SUSPENSION OF CONTRACT PAYMENTS UPON FINDING OF FRAUD (a) In General.— Section 2307 of title 10, United States Code, is amended by adding at the end the following new subsection: “(f) (1) In any case in which the remedy coordination official of an agency finds that there is substantial evidence that the request of a contractor for advance, partial, or progress payment under a contract awarded by that agency is based on fraud, the remedy coordination official shall recommend that the head of the agency reduce or suspend further payments to such contractor. “(2) The head of an agency receiving a recommendation under paragraph (1) in the case of a contractor’s request for payment under a contract shall determine whether there is substantial evidence that the request is based on fraud. Upon making such a determination, the agency head may reduce or suspend further payments to the contractor under such contract. “(3) The extent of any reduction or suspension of payments by the head of an agency under paragraph (2) on the basis of fraud shall be reasonably commensurate with the anticipated loss to the United States resulting from the fraud. “(4) A written justification for each decision of the head of an agency whether to reduce or suspend payments under paragraph (2) and for each recommendation received by such agency head in connection with such decision shall be prepared and be retained in the files of such agency. “(5) The head of an agency shall prescribe procedures to ensure that, before such agency head decides to reduce or suspend payments in the case of a contractor under paragraph (2), the contractor is afforded notice of the proposed reduction or suspension and an opportunity to submit matters to the head of the agency in response to such proposed reduction or suspension. “(6) Not later than 180 days after the date on which the head of an agency reduces or suspends payments to a contractor under paragraph (2), the remedy coordination official of such agency shall— “(A) review the determination of fraud on which the reduction or suspension is based; and “(B) transmit a recommendation to the head of such agency whether the suspension or reduction should continue. “(7) The head of an agency shall prepare for each year a report containing the recommendations made by the remedy coordination official of that agency to reduce or suspend payments under paragraph (2), the actions taken on the recommendations and the reasons for such actions, and an assessment of the effects of such actions on the Federal Government. The Secretary of each military department shall transmit the annual report of such department to104 STAT. 1616 the Secretary of Defense. Each such report shall be available to any member of Congress upon request. “(8) This subsection applies to the agencies named in paragraphs (1), (2), (3), and (4) of section 2303(a) of this title. “(9) The head of an agency may not delegate responsibilities under this subsection to any person in a position below level IV of the Executive Schedule. “(10) In this subsection, the term ‘remedy coordination official’, with respect to an agency, means the person or entity in that agency who coordinates within that agency the administration of criminal, civil, administrative, and contractual remedies resulting from investigations of fraud or corruption related to procurement activities.”. (b) Information From Contractor.— Subsection (e)(1) of such section is amended by adding at the end the following new sentence: “The contractor shall provide such information and evidence as the Secretary of Defense determines necessary to permit the Secretary to carry out the preceding sentence.”. (c) Effective Date.— Section 2307(f) of title 10, United States Code, and the second sentence of section 2307(e)(1) of such title, as added by subsections (a) and (b), shall apply with respect to contracts entered into after the expiration of the 180-day period beginning on the date of the enactment of this Act.