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NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1995
(P.L. 103–337, approved Oct. 5, 1994)
DIVISION A-DEPARTMENT OF
TITLE VIII-ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS
SEC. 816. DEMONSTRATION PROJECT ON PURCHASE OF FIRE, SECURITY, POLICE, PUBLIC WORKS, AND UTILITY SERVICES FROM LOCAL GOVERNMENT AGENCIES.
(a) DEMONSTRATION PROJECT.-The Secretary of Defense may conduct a demonstration project, beginning October 1, 1994, at Monterey, California, under which any fire-fighting, security-guard, police, public works, utility, or other municipal services needed for operation of any Department of Defense asset in Monterey County, California, may be purchased from government agencies located within the county of Monterey. The purchase of such services for the demonstration project may be made notwithstanding section 2465 of title 10, United States Code.
(b) EVALUATION OF PROJECT.-Not later than December 31, 1996, the Secretary of Defense shall submit to Congress a report evaluating the results of the project and making any recommendations the Secretary considers appropriate, including recommendations on whether the purchase authorities used in conducting the project could be used to provide similar services at other locations. SEC. 817. [10 U.S.C. 2687 note] PREFERENCE FOR LOCAL RESIDENTS.
(a) PREFERENCE ALLOWED.-In entering into contracts with private entities for services to be performed at a military installation that is affected by closure or alignment under a base closure law, the Secretary of Defense may give preference, consistent with Federal, State, and local laws and regulations, to entities that plan to hire, to the maximum extent practicable, residents of the vicinity of such military installation to perform such contracts. Contracts for which the preference may be given include contracts to carry out environmental restoration activities or construction work at such military installations. Any such preference may be given for a contract only if the services to be performed under the contract at the military installation concerned can be carried out in a man
ner that is consistent with all other actions at the installation that the Secretary is legally required to undertake.
(b) DEFINITION.-In this section, the term "base closure law" means the following:
(1) The provisions of title II of the Defense Authorization Amendments and Base Closure and Realignment Act (Public Law 100-526; 10 U.S.C. 2687 note).
(2) The Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of Public Law 101–510; 10 U.S.C. 2687 note).
(c) APPLICABILITY.-Any preference given under subsection (a) shall apply only with respect to contracts entered into after the date of the enactment of this Act [Oct. 5, 1994].
(d) TERMINATION.-This section shall cease to be effective on September 30, 1997.
SEC. 818. [10 U.S.C. 2324 note] PAYMENT OF RESTRUCTURING COSTS UNDER DEFENSE CONTRACTS.
(a) CERTIFICATION OF COST SAVINGS.-(1) The Secretary of Defense may not, under section 2324 of title 10, United States Code, pay restructuring costs associated with a business combination undertaken by a defense contractor until the Department of Defense reviews the projected costs and savings that will result for the Department from such business combination and an official of the Department of Defense at the level of Assistant Secretary of Defense or above certifies in writing that projections of future cost savings resulting for the Department from the business combination are based on audited cost data and should result in overall reduced costs to the Department.
(2) The requirements for a review and certification under paragraph (1) shall not apply with respect to any business combination for which restructuring costs were paid or otherwise approved by the Secretary before August 15, 1994.
(b) REQUIREMENT FOR REGULATIONS.-Not later than January 1, 1995, the Secretary of Defense shall prescribe regulations on the allowability of restructuring costs associated with business combinations under defense contracts.
(c) MATTERS TO BE INCLUDED.-At a minimum, the regulations shall
(1) include a definition of the term "restructuring costs"; and
(2) address the issue of contract novations under such contracts.
(d) CONSULTATION.-In developing the regulations, the Secretary of Defense shall consult with the Administrator for Federal Procurement Policy.
(e) REPORT.-Not later than November 13 in each of the years 1995, 1996, and 1997, the Secretary of Defense shall submit to Congress a report on the following:
(1) A description of the procedures being followed within the Department of Defense for evaluating projected costs and savings under a defense contract resulting from a restructuring of a defense contractor associated with a business combination.
(2) A list of all defense contractors for which restructuring costs have been allowed by the Department, along with the
identities of the firms which those contractors have acquired or with which those contractors have combined since July 21, 1993, that qualify the contractors for such restructuring reimbursement.
(3) The Department's experience with business combinations for which the Department has agreed to allow restructuring costs since July 21, 1993, including the following:
(A) The estimated amount of costs associated with each restructuring that have been or will be treated as allowable costs under defense contracts, including the type and amounts of costs that would not have arisen absent the business combination.
(B) The estimated amount of savings associated with each restructuring that are expected to be achieved on defense contracts.
(C) The types of documentation relied on to establish that savings associated with each restructuring will exceed costs associated with the restructuring.
(D) Actual experience on whether savings associated with each restructuring are exceeding costs associated with the restructuring.
(E) Identification of any programmatic or budgetary disruption in the Department of Defense resulting from contractor restructuring.
(f) DEFINITION.-In this section, the term "business combination" includes a merger or acquisition.
(g) COMPTROLLER GENERAL REPORTS. (1) Not later than March 1, 1995, the Comptroller General shall submit to Congress a report on the adequacy of the regulations prescribed under subsection (b) with respect to
(A) whether such regulations are consistent with the purposes of this section, other applicable law, and the Federal Acquisition Regulation; and
(B) whether such regulations establish policies, procedures, and standards to ensure that restructuring costs are paid only when in the best interests of the United States.
(2) The Comptroller General shall report periodically to Congress on the implementation of the policy of the Department of Defense regarding defense industry restructuring.
(3) Not later than December 1, 1997, the Comptroller General shall submit to Congress a final report on the policy of the Department of Defense on defense industry restructuring, including any recommendations the Comptroller considers appropriate.
SEC. 819. DEFENSE ACQUISITION PILOT PROGRAM DESIGNATIONS.
The Secretary of Defense is authorized to designate the following defense acquisition programs for participation, to the extent provided in the Federal Acquisition Streamlining Act of 1994, in the defense acquisition pilot program authorized by section 809 of the National Defense Authorization Act for Fiscal Year 1991 (10 U.S.C. 2430 note): 1
1 Section 809 of the National Defense Authorization Act for Fiscal Year 1991 (P.L. 101-510) is set forth beginning on page 399.