quirement should be understood to include a common definition of the military threat to the members of the Organization.

(2) It is further the sense of Congress that standardization of weapons and equipment within the Organization on the basis of a "two-way street" concept of cooperation in defense procurement between Europe and North America can only work in a realistic sense if the European nations operate on a united and collective basis. Therefore, the governments of Europe are encouraged to accelerate their present efforts to achieve European armanents collaboration among all European members of the Organization.

(d) Before February 1, 1989, and biennially thereafter, the Secretary shall submit a report to Congress that includes

(1) each specific assessment and evaluation made and the results of each assessment and evaluation, and the results achieved with the members of the North Atlantic Treaty Organization, under subsections (a) (1) and (2) and (b);

(2) procurement action initiated on each new major system not complying with the policy of subsection (a);

(3) procurement action initiated on each new major system that is not standardized or interoperable with equipment of other members of the Organization, including a description of the system chosen and the reason for choosing that system;

(4) the identity of

(A) each program of research and development for the armed forces of the United States stationed in Europe that supports, conforms, or both, to common Organization requirements of developing weapon systems for use by the Organization, including a common definition of the military threat to the Organization; and

(B) the common requirements of the Organization to which those programs conform or which they support; (5) action of the Alliance toward common Organization requirements if none exist;

(6) efforts to establish a regular procedure and mechanism in the Organization to determine common military requirements;

(7) a description of each existing and planned program of the Department of Defense that supports the development or procurement of a weapon system or other military equipment originally developed or procured by members of the Organization other than the United States and for which funds have been authorized to be appropriated for the fiscal year in which the report is submitted, including a summary listing of the amount of funds

(A) appropriated for those programs for the fiscal year in which the report is submitted; and

(B) requested, or proposed to be requested, for those programs for each of the 2 fiscal years following the fiscal year for which the report is submitted; and

(8) a description of each weapon system or other military equipment originally developed or procured in the United States and that is being developed or procured by members of the Organization other than the United States during the fiscal year for which the report is submitted.

(e) If the Secretary decides that procurement of equipment manufactured outside the United States is necessary to carry out the policy of subsection (a), the Secretary may determine under section 2 of title III of the Act of March 3, 1933 (41 U.S.C. 10a), that acquiring that equipment manufactured in the United States is inconsistent with the public interest.

(f) The Secretary shall submit the results of each assessment and evaluation made under subsection (a) (1) and (2) to the appropriate North Atlantic Treaty Organization body to become an integral part of the overall Organization review of force goals and development of force plans.

(Added P.L. 97-295, 81(30XA), Oct. 12, 1982, 96 Stat. 1294, and amended P.L. 101-510, § 1311(5), Nov. 5, 1990, 104 Stat. 1670.)

§ 2458. Inventory management policies

(a) POLICY REQUIRED.-The Secretary of Defense shall issue a single, uniform policy on the management of inventory items of the Department of Defense. Such policy shall

(1) establish maximum levels for inventory items sufficient to achieve and maintain only those levels for inventory items necessary for the national defense;

(2) provide guidance to item managers and other appropriate officials on how effectively to eliminate wasteful practices in the acquisition and management of inventory items; and

(3) set forth a uniform system for the valuation of inventory items by the military departments and Defense Agencies. (b) PERSONNEL EVALUATIONS.-The Secretary of Defense shall establish procedures to ensure that, with regard to item managers and other personnel responsible for the acquisition and management of inventory items of the Department of Defense, personnel appraisal systems for such personnel give appropriate consideration to efforts made by such personnel to eliminate wasteful practices and achieve cost savings in the acquisition and management of inventory items.

(Added P.L. 101-510, §323(a)(1), Nov. 5, 1990, 104 Stat. 1530, and amended P.L. 102–190, §347(a), Dec. 5, 1991, 105 Stat. 1347.)

CHAPTER 146-CONTRACTING FOR PERFORMANCE OF CIVILIAN COMMERCIAL OR INDUSTRIAL TYPE FUNCTIONS

Sec.

2461.

2462.

2463.

2464.

2465.

2466.

2467.

2468.

2469.

2470.

2471.

Commercial or industrial type functions: required studies and reports be-
fore conversion to contractor performance.

Contracting for certain supplies and services required when cost is lower.
Reports on savings or costs from increased use of DOD civilian personnel.
Core logistics functions.

Prohibition on contracts for performance of firefighting or security-guard

functions.

Limitations on the performance of depot-level maintenance of materiel. Cost comparisons: requirements with respect to retirement costs and consultation with employees.

Military installations: authority of base commanders over contracting for
commercial activities.

Contracts to perform workloads previously performed by depot-level activi-
ties of the Department of Defense: requirement of competition.
Depot-level activities of the Department of Defense: authority to compete
for maintenance and repair workloads of other Federal agencies.
Persons outside the Department of Defense: lease of excess depot-level
equipment and facilities by.

§ 2461. Commercial or industrial type functions: required studies and reports before conversion to contractor performance

(a) REQUIRED NOTICE TO CONGRESS.-A commercial or industrial type function of the Department of Defense that on October 1, 1980, was being performed by Department of Defense civilian employees may not be converted to performance by a private contractor unless the Secretary of Defense provides to Congress in a timely manner

(1) notification of any decision to study such function for possible performance by a private contractor;

(2) a detailed summary of a comparison of the cost of performance of such function by Department of Defense civilian employees and by private contractor which demonstrates that the performance of such function by a private contractor will result in a cost savings to the Government over the life of the contract and a certification that the entire cost comparison is available;

(3) a certification that the Government calculation for the cost of performance of such function by Department of Defense civilian employees is based on an estimate of the most efficient and cost effective organization for performance of such function by Department of Defense civilian employees; and

(4) a report, to be submitted with the certification required by paragraph (3), showing

(A) the potential economic effect on employees affected, and the potential economic effect on the local community and Federal Government if more than 75 employ

ees are involved, of contracting for performance of such function;

(B) the effect of contracting for performance of such function on the military mission of such function; and

(C) the amount of the bid accepted for the performance of such function by the private contractor whose bid is accepted and the cost of performance of such function by Department of Defense civilian employees, together with costs and expenditures which the Government will incur because of the contract.

(b) CONGRESSIONAL NOTIFICATION OF DECISION TO CONVERT.If, after completion of the studies required for completion of the certification and report required by paragraphs (3) and (4) of subsection (a), a decision is made to convert the function to contractor performance, the Secretary of Defense shall notify Congress of such decision.

(c) ANNUAL REPORTS.-Not later than February 1 of each fiscal year, the Secretary of Defense shall submit to Congress a written report describing the extent to which commercial and industrial type functions were performed by Department of Defense contractors during the preceding fiscal year. The Secretary shall include in each such report an estimate of the percentage of commercial and industrial type functions of the Department of Defense that will be performed by Department of Defense civilian employees, and the percentage of such functions that will be performed by private contractors, during the fiscal year during which the report is submitted.

(d) WAIVER FOR SMALL FUNCTIONS.-Subsections (a) through (c) shall not apply to a commercial or industrial type function of the Department of Defense that is being performed by 45 or fewer Department of Defense civilian employees.

(e) WAIVER FOR THE PURCHASE OF PRODUCTS AND SERVICES OF THE BLIND AND OTHER SEVERELY HANDICAPPED PERSONS.-Subsections (a) through (c) shall not apply to a commercial or industrial type function of the Department of Defense that

(1) is included on the procurement list established pursuant to section 2 of the Act of June 25, 1938 (41 U.S.C. 47), popularly referred to as the Wagner-O'Day Act; or

(2) is planned to be converted to performance by a qualified nonprofit agency for the blind or by a qualified nonprofit agency for other severely handicapped persons in accordance with that Act.

(f) ADDITIONAL LIMITATIONS. (1) A commercial or industrial type function of the Department of Defense that on October 1, 1980, was being performed by Department of Defense civilian employees may not be converted to performance by a private contractor to circumvent a civilian personnel ceiling.

(2) In no case may a commercial or industrial type function being performed by Department of Defense personnel be modified, reorganized, divided, or in any way changed for the purpose of exempting from the requirements of subsection (a) the conversion of

all or any part of such function to performance by a private contractor.1

(g) INAPPLICABILITY DURING WAR OR EMERGENCY.-The provisions of this section shall not apply during war or during a period of national emergency declared by the President or Congress.

(Added P.L. 100-370, 82(aX1), July 19, 1988, 102 Stat. 851, and amended P.L. 101–189, § 1132, Nov. 29, 1989, 103 Stat. 1561.)

§ 2462. Contracting for certain supplies and services required when cost is lower

(a) IN GENERAL.-Except as otherwise provided by law, the Secretary of Defense shall procure each supply or service necessary for or beneficial to the accomplishment of the authorized functions of the Department of Defense (other than functions which the Secretary of Defense determines must be performed by military or Government personnel) from a source in the private sector if such a source can provide such supply or service to the Department at a cost that is lower (after including any cost differential required by law, Executive order, or regulation) than the cost at which the Department can provide the same supply or service.

(b) REALISTIC AND FAIR COST COMPARISONS.-For the purpose of determining whether to contract with a source in the private sector for the performance of a Department of Defense function on the basis of a comparison of the costs of procuring supplies or services from such a source with the costs of providing the same supplies or services by the Department of Defense, the Secretary of Defense shall ensure that all costs considered (including the costs of quality assurance, technical monitoring of the performance of such function, liability insurance, employee retirement and disability benefits, and all other overhead costs) are realistic and fair. (Added P.L. 100-370, § 2(a)(1), July 19, 1988, 102 Stat. 853.)

§ 2463. Reports on savings or costs from increased use of DOD civilian personnel

(a) IN GENERAL.-Whenever during a fiscal year to which this section applies the performance of a commercial or industrial type activity of the Department of Defense that is being performed by 50 or more employees of a private contractor is changed to performance by civilian employees of the Department of Defense, the Secretary of Defense shall maintain data in which a comparison is made of the estimated costs of (1) continued performance of such activity by private contractor employees, and (2) performance of such activity by civilian employees of the Department of Defense.

1Section 8020 of the Department of Defense Appropriations Act, 1995 (P.L. 103–335, 108 Stat. 2621), provides:

SEC. 8020. None of the funds appropriated by this Act shall be available to convert to contractor performance an activity or function of the Department of Defense that, on or after the date of enactment of this Act, is performed by more than ten Department of Defense civilian employees until a most efficient and cost-effective organization analysis is completed on such activity or function and certification of the analysis is made to the Committees on Appropriations of the House of Representatives and the Senate: Provided, That this section shall not apply to a commercial or industrial type function of the Department of Defense that: (1) is included on the procurement list established pursuant to section 2 of the Act of June 25, 1938 (41 U.S.C. 47), popularly referred to as the Javits-Wagner O'Day Act; (2) is planned to be converted to performance by a qualified nonprofit agency for the blind or by a qualified nonprofit agency for other severely handicapped individuals in accordance with that Act; or (3) is planned to be converted to performance by a qualified firm under 51 percent Native American ownership.