INTEGRATED FINANCING POLICY

SEC. 801. INTEGRATED FINANCING POLICY (a) In General.—(1) Chapter 137 of title 10, United States Code, is amended by adding at the end the following new section: “§ 2330. Integrated financing policy “(a) Plan.—(1) The Secretary of Defense shall develop and keep current a plan that ensures that Department of Defense policies referred to in paragraph (2) are structured to meet the long-term needs of the Department of Defense for industrial resources and technology innovation. “(2) This section applies to the following policies applicable to Department of Defense contracts: “(A) Policies relating to progress payments or other financing by the Department of Defense under such contracts. “(B) Policies relating to the return on contractor investment under such contracts. “(C) Policies relating to the allocation of contract risk between the Department of Defense and a contractor. “(b) Matters To Take Into Consideration.—In developing the plan under subsection (a) and keeping such plan current, the Secretary shall take into consideration the following: “(1) The Five-Year Defense Program submitted to Congress under section 114(g) of this title each year. “(2) Department of Defense mobilization plans. “(3) The different characteristics of separate segments and tiers of private industry. “(4) The profitability of contracts negotiated by the Department of Defense in each fiscal year. “(c) Review.—Each year the Secretary of Defense shall review the plan developed under subsection (a) and shall report the results of such review to the Committees on Armed Services of the Senate and the House of Representatives in conjunction with the submission of the Five-Year Defense Program in such year. “(d) Use of Information on Profitability.—The Secretary of Defense, in negotiating any contract, shall use the most current information on profitability developed or obtained by the Secretary of Defense. The Secretary shall submit a report to Congress each year in conjunction with the submission of the Five-Year Defense Program on the extent to which contracts negotiated during the preceding fiscal year have prevented excessive contractor profits, determined on the basis of information obtained by the Secretary of Defense.”. (2) The table of sections at the beginning of such chapter is amended by adding at the end the following: “2330. Integrated financing policy.”. 102 STAT. 2008 (b) Advisory Committee on Study Methodology.—(1) The Secretary of Defense shall appoint, in accordance with paragraph (3), an advisory committee consisting of five members for the purpose of recommending to the Secretary a financial analysis methodology for any return on investment study conducted by the Secretary. (2) In recommending a financial analysis methodology under paragraph (1), the advisory committee shall provide recommendations on the desirability of using separate calculations for— (A) the return on assets; (B) the return on sales; (C) capital-to-labor ratios; (D) asset turnover; (E) total investment in research and development; and (F) such other measures of rate of return on investment as the Secretary determines to be appropriate. (3) Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall appoint the members of the committee, with representation from both the public and private sectors. (4) The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the advisory committee appointed under this subsection. (5) Not later than November 1, 1989, the advisory committee shall submit to the Secretary of Defense a report containing the financial analysis methodology recommended for use in the conduct of the study referred to in paragraph (1). The committee shall cease to exist 90 days after submission of its report. (6) Not later than 90 days after receipt of the report from the advisory committee, the Secretary of Defense shall transmit the report to Congress, together with the Secretary’s views on the committee’s report.