DEFENSE FACILITY-WIDE PILOT PROGRAM.

SEC. 822. DEFENSE FACILITY-WIDE PILOT PROGRAM. (a) Authority To Conduct Defense Facility-Wide Pilot Program.— The Secretary of Defense may conduct a pilot program, to be known as the “defense facility-wide pilot program”, for the purpose of determining the potential for increasing the efficiency and effectiveness of the acquisition process in facilities by using commercial practices on a facility-wide basis. (b) Designation of Participating Facilities.— (1) Subject to paragraph (2), the Secretary may designate up to two facilities as participants in the defense facility-wide pilot program. (2) The Secretary may designate for participation in the pilot program only those facilities that are authorized to be so designated in a law authorizing appropriations for national defense programs that is enacted after the date of the enactment of this Act. (c) Scope of Program.— At a facility designated as a participant in the pilot program, the pilot program shall consist of the following: (1) All contracts and subcontracts for defense supplies and services that are performed at the facility. (2) All Department of Defense contracts and all subcontracts under Department of Defense contracts performed 110 STAT. 397elsewhere that the Secretary determines are directly and substantially related to the production of defense supplies and services at the facility and are necessary for the pilot program. (d) Criteria for Designation of Participating Facilities.— The Secretary shall establish criteria for selecting a facility for designation as a participant in the pilot program. In developing such criteria, the Secretary shall consider the following: (1) The number of existing and anticipated contracts and subcontracts performed at the facility— (A) for which contractors are required to provide certified cost or pricing data pursuant to section 2306a of title 10, United States Code; and (B) which are administered with the application of cost accounting standards under section 26(f) of the Office of Federal Procurement Policy Act (41 U.S.C. 422(D). (2) The relationship of the facility to other organizations and facilities performing under contracts with the Department of Defense ana subcontracts under such contracts. (3) The impact that the participation of the facility under the pilot program would have on competing domestic manufacturers. (4) Such other factors as the Secretary considers appropriate. (e) Notification.— (1) The Secretary shall transmit to the Committee on Armed Services of the Senate and the Committee on National Security of the House of Representatives a written notification of each facility proposed to be designated by the Secretary for participation in the pilot program. (2) The Secretary shall include in the notification regarding a facility designated for participation in the program a management plan addressing the following: (A) The proposed treatment of research and development contracts or subcontracts to be performed at the facility during the pilot program. (B) The proposed treatment of the cost impact of the use of commercial practices on the award and administration of contracts and subcontracts performed at the facility. (C) The proposed method for reimbursing the contractor for existing and new contracts. (D) The proposed method for measuring the performance of the facility for meeting the management goals of the Secretary. (E) Estimates of the annual amount and the total amount of the contracts and subcontracts covered under the pilot program. (3) (A) The Secretary shall ensure that the management plan for a facility provides for attainment of the following objectives: (i) A significant reduction of the cost to the Government for programs carried out at the facility. (ii) A reduction of the schedule associated with programs carried out at the facility. (iii) An increased use of commercial practices and procedures for programs carried out at the facility. (iv) Protection of a domestic manufacturer competing for contracts at such facility from being placed at a significant competitive disadvantage by the participation of the facility in the pilot program. 110 STAT. 398 (B) The management plan for a facility shall also require that all or substantially all of the contracts to be awarded and performed at the facility after the designation of that facility under subsection (b), and all or substantially all of the subcontracts to be awarded under those contracts and performed at the facility after the designation, be— (i) for the production of supplies or services on a firm-fixed price basis; (ii) awarded without requiring the contractors or subcontractors to provide certified cost or pricing data pursuant to section 2306a of title 10, United States Code; and (iii) awarded and administered without the application of cost accounting standards under section 26(f) of the Office of Federal Procurement Policy Act (41 U.S.C. 422(f)). (f) Exemption From Certain Requirements.— In the case of a contract or subcontract that is to be performed at a facility designated for participation in the defense facility-wide pilot program and that is subject to section 2306a of title 10, United States Code, or section 26(f) of the Office of Federal Procurement Policy Act (41 U.S.C. 422(f)), the Secretary of Defense may exempt such contract or subcontract from the requirement to obtain certified cost or pricing data under such section 2306a or the requirement to apply mandatory cost accounting standards under such section 26(f) if the Secretary determines that the contract or subcontract— (1) is within the scope of the pilot program (as described in subsection (c)); and (2) is fairly and reasonably priced based on information other than certified cost and pricing data. (g) Special Authority.— The authority provided under subsection (a) includes authority for the Secretary of Defense— (1) to apply any amendment or repeal of a provision of law made in this Act to the pilot program before the effective date of such amendment or repeal; and (2) to apply to a procurement of items other than commercial items under such program— (A) the authority provided in section 34 of the Office of Federal Procurement Policy Act (41 U.S.C. 430) to waive a provision of law in the case of commercial items, and (B) any exception applicable under this Act or the Federal Acquisition Streamlining Act of 1994 (Public Law 103–355) (or an amendment made by a provision of either Act) in the case of commercial items, before the effective date of such provision (or amendment) to the extent that the Secretary determines necessary to test the application of such waiver or exception to procurements of items other than commercial items. (h) Applicability.— (1) Subsections (f) and (g) apply to the following contracts, if such contracts are within the scope of the pilot program at a facility designated for the pilot program under subsection (b): (A) A contract that is awarded or modified during the period described in paragraph (2). (B) A contract that is awarded before the beginning of such period, that is to be performed (or may be performed), in whole or in part, during such period, and that may be modified as appropriate at no cost to the Government. 110 STAT. 399 (2) The period referred to in paragraph (1), with respect to a facility designated under subsection (b), is the period that— (A) begins 45 days after the date of the enactment of the Act authorizing the designation of that facility in accordance with paragraph (2) of such subsection; and (B) ends on September 30, 2000. (i) Commercial Practices Encouraged.— With respect to contracts and subcontracts within the scope of the defense facility-wide pilot program, the Secretary of Defense may, to the extent the Secretary determines appropriate and in accordance with applicable law, adopt commercial practices in the administration of contracts and subcontracts. Such commercial practices may include the following: (1) Substitution of commercial oversight and inspection procedures for Government audit and access to records. (2) Incorporation of commercial oversight, inspection, and acceptance procedures. (3) Use of alternative dispute resolution techniques (including arbitration). (4) Elimination of contract provisions authorizing the Government to make unilateral changes to contracts.