S2049-118

1. Short title This Act may be cited as the Stop Pentagon Price Gouging Act.

2. Strengthening Truth in Negotiations Act provisions Section 3702(a)(1) of title 10, United States Code, is amended by striking only expected to receive one bid shall be required and replacing with only expected to have one offeror, or for which award of a cost-reimbursement contract is contemplated regardless of the number of offers received, shall be required. Section 3703(a) of title 10, United States Code, is amended— in paragraph (1)(A), by striking adequate competition and all that follows through bids and inserting adequate price competition for other than the award of a cost-reimbursement contract that results in at least two responsive and viable competing offerors; and in paragraph (2), by inserting based on adequate price competition that results in at least two responsive and responsible offers after commercial service. Section 3503(a)(2) of title 41, United States Code, is by inserting after commercial service the following: based on adequate price competition that results in at least two responsive and responsible offers.

3. Revision of definition of term commercial item for purposes of Federal procurement statutes providing procedures for procurement of commercial items Section 103 of title 41, United States Code, is amended by striking of a type each place it appears. Section 103(1)(B) of title 41, United States Code, is amended by striking , or offered for sale, lease, or license,. Section 103a(2) of title 41, United States Code, is amended by striking offered and. Section 103(6)(B) of title 41, United States Code, is amended by striking substantial quantities and inserting like quantities. Section 103a(2) of title 41, United States Code, is amended by striking substantial quantities and inserting like quantities.

4. Progress payment incentive pilot The Secretary of Defense, acting through the Under Secretary of Defense for Acquisition and Sustainment, shall establish and implement a pilot program, to be known as the Progress Payment Incentive Pilot Program, to make accelerated progress payments contingent upon responsiveness to Department of Defense requests for cost or pricing information. The purpose of the pilot program is to reward Department of Defense contractors who work with the Department in the pre-award process to prevent excessive costs and establish guardrails against excessive prices. Under the pilot program, the Department of Defense may not award to traditional business contractors progress payments in excess of 50 percent. The Department of Defense may increase the rate of progress payments to 80 percent if the division of the company provides certified cost or pricing information within 30 days of the Department’s request for the information. The progress payment rate may not exceed 95 percent. In this section: The term traditional defense contractor means a contractor (other than an institute of higher education) that is currently performing or has currently performed for at least the one-year period preceding the solicitation of sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to full coverage under the cost accounting standards prescribed pursuant to section 1502 of title 41, United States Code, and the regulations implementing such section. The term progress payments means payments provided for under section 3804 of title 10, United States Code.

5. Disclosure by traditional defense contractors Not later than 60 days after the date of the enactment of this Act, the Secretary of Defense shall amend the Department of Defense Supplement to the Federal Acquisition Regulation to provide that traditional contractors shall be required to annually report to the Under Secretary of Defense for Acquisition and Sustainment the following information with regard to the covered year, as compared with the year preceding that covered year: The percentage change in the volume of goods or services sold and the percentage change in the average sales price of those goods or services, which shall be broken down by material product categories, when relevant, and presented in a tabular format. The gross margins of the traditional contractor, which shall be broken down by material product categories, when relevant, and presented in a tabular format. Presented in tabular format, the share of the increase in revenue of the large defense contractor that is attributable to— a change in the cost of goods or services sold by the traditional defense contractor; and a change in the volume of goods or services sold by the covered issuer. The percentage change in the costs of the traditional contractor, which shall be broken down by category and presented in tabular format. In dollars, the change in the costs of the traditional defense contractor, which shall be presented in tabular format. A detailed narrative disclosure of the pricing strategy of the traditional defense contractor, which shall include— an explanation for any increase in the gross margins of material product categories, including— all material causes for such an increase; an explanation of how each such material cause affected such an increase; and a description of the relative importance of each such material cause with respect to such an increase. An explanation for the decisions made by the traditional defense contractor with respect to the prices of goods and services sold by the large defense contractor. If the large defense contractor increased prices at a rate that was greater than the rate at which the costs incurred by the traditional defense contractor increased, the rationale and objectives for increasing prices in such a manner. A description of conditions under which the large defense contractor plans to modify pricing after the date on which the traditional defense contractor submits the report. The Under Secretary of Defense for Acquisition and Sustainment shall annually publish on a publicly available internet website the previous year’s reports received under subsection (a). In this section, the term traditional contractor means a contractor (other than an institute of higher education) that is currently performing or has currently performed for at least the one-year period preceding the solicitation of sources by the Department of Defense for the procurement or transaction of any contract or subcontract for the Department of Defense that is subject to full coverage under the cost accounting standards prescribed pursuant to section 1502 of title 41, United States Code, and the regulations implementing such section.