PAYROLL, FINANCE, AND ACCOUNTING FUNCTIONS OF THE DEPARTMENT OF DEFENSE.

SEC. 353. PAYROLL, FINANCE, AND ACCOUNTING FUNCTIONS OF THE DEPARTMENT OF DEFENSE. (a) Plan for Private Operation of Certain Functions.— (1) Not later than October 1, 1996, the Secretary of Defense shall submit to Congress a plan for the performance by private-sector sources of payroll functions for civilian employees of the Department of Defense other than employees paid from nonappropriated funds. (2) (A) The Secretary shall implement the plan referred to in paragraph (1) if the Secretary determines that the cost of performance by private-sector sources of the functions referred to in that paragraph does not exceed the cost of performance of those functions by employees of the Federal Government. (B) In computing the total cost of performance of such functions by employees of the Federal Government, the Secretary shall include the following: (i) Managerial and administrative costs. (ii) Personnel costs, including the cost of providing retirement benefits for such personnel. (iii) Costs associated with the provision of facilities and other support by Federal agencies. (C) The Defense Contract Audit Agency shall verify the costs computed for the Secretary under this paragraph by others. (3) At the same time the Secretary submits the plan required by paragraph (1), the Secretary shall submit to Congress a report on other accounting and finance functions of the Department that are appropriate for performance by private-sector sources. (b) Pilot Program for Private Operation of NAFI Functions.— (1) The Secretary shall carry out a pilot program to test the performance by private-sector sources of payroll and other accounting and finance functions of nonappropriated fund instrumentalities and to evaluate the extent to which cost savings and efficiencies would result from the performance of such functions by those sources. (2) The payroll and other accounting and finance functions designated by the Secretary for performance by private-sector sources under the pilot program shall include at least one major payroll, accounting, or finance function. (3) To carry out the pilot program, the Secretary shall enter into discussions with private-sector sources for the purpose of developing a request for proposals to be issued for performance by those sources of functions designated by the Secretary under paragraph (2). The discussions shall be conducted on a schedule that accommodates issuance of a request for proposals within 60 days after the date of the enactment of this Act. (4) A goal of the pilot program is to reduce by at least 25 percent the total costs incurred by the Department annually for the performance of a function referred to in paragraph (2) through the performance of that function by a private-sector source. (5) Before conducting the pilot program, the Secretary shall develop a plan for the program that addresses the following: (A) The purposes of the program. 110 STAT. 268 (B) The methodology, duration, and anticipated costs of the program, including the cost of an arrangement pursuant to which a private-sector source would receive an agreed-upon payment plus an additional negotiated amount not to exceed 50 percent of the dollar savings achieved in excess of the goal specified in paragraph (4). (C) A specific citation to any provisions of law, rule, or regulation that, if not waived, would prohibit the conduct of the program or any part of the program. (D) A mechanism to evaluate the program. (E) A provision for all payroll, accounting, and finance functions of non appropriated fund instrumentalities of the Department of Defense to be performed by private-sector sources, if determined advisable on the basis of a final assessment of the results of the program. (6) The Secretary shall act through the Under Secretary of Defense (Comptroller) in the performance of the Secretary’s responsibilities under this subsection. (c) Limitation on Opening of New Operating Locations for Defense Finance and Accounting Service.— (1) Except as provided in paragraph (2), the Secretary may not establish a new operating location for the Defense Finance and Accounting Service during fiscal year 1996. (2) The Secretary may establish a new operating location for the Defense Finance and Accounting Service if— (A) for a new operating location that the Secretary planned before the date of the enactment of this Act to establish on or after that date, the Secretary reconsiders the need for establishing that new operating location; and (B) for each new operating location, including a new operating location referred to in subparagraph (A)— (i) the Secretary submits to Congress, as part of the report required by subsection (a)(4), an analysis of the need for establishing the new operating location; and (ii) a period of 30 days elapses after the Congress receives the report. (3) In this subsection, the term “new operating location” means an operating location that is not in operation on the date of the enactment of this Act, except that such term does not include an operating location for which, as of such date— (A) the Secretary has established a date for the commencement of operations; and (B) funds have been expended for the purpose of its establishment.