(2) the Office of the Secretary of Defense, the Joint Staff, and the headquarters of the unified and specified combatant commands should more clearly define the necessary operational capabilities and concepts of operations as part of the requirements process and should explicitly consider alternative acquisition programs based on probable levels of resources likely to be approved by Congress and trade-offs among the acquisition programs of the military departments; (3) the Secretary of Defense should ensure that resulting acquisition programs clearly reflect the objectives of national military strategy; and (4) the Secretary of Defense should commission an independent study to assess the degree to which the development and acquisition of weapon systems is currently linked to and determined by the national military strategy and to recommend improvements where necessary or desirable. SEC. 733. REPORT ON FUNDING FOR THE AMMUNITION PRODUCTION BASE (a) SENSE OF CONGRESS.-It is the sense of Congress (1) that the maintenance of the inactive portion of the Government-owned ammunition production base is critical to the defense of the United States; and (2) that sufficient funding should be provided to maintain this base to meet surge requirements and mobilization requirements of the military departments. (b) STUDY OF ALTERNATIVES.-The Secretary of Defense shall study alternatives to the current method of providing funds for maintenance of the ammunition production base in order to determine if there are methods other than the current one which would better ensure that appropriate levels of funds are used for the maintenance of that production base. (c) REPORT.-The Secretary shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the alternative methods considered by the Secretary under subsection (b) for providing funds for the ammunition production base. The Secretary shall include in the report such comments and recommendations with respect to such methods, including recommendations for legislation, as the Secretary considers appropriate. The report shall be submitted not later than December 1, 1988. SEC. 734. SENSE OF CONGRESS CONCERNING DECLASSIFICATION OF CLASSIFIED INFORMATION It is the sense of Congress that the Secretary of Defense should take all reasonable measures to declassify classified material under the control of the Department of Defense that the Secretary determines to be no longer required in the interest of national security to be protected from unauthorized disclosure. SEC. 735. ADVANCE PAYMENTS OF ADMINISTRATIVE CLAIMS (a) INCREASE IN MAXIMUM PAYMENT.-Subsection (a) of section 2736 of title 10, United States Code, is amended to read as follows: "(a)(1) In the case of a person who is injured or killed, or whose property is damaged or lost, under circumstances for which the Secretary of a military department is authorized by law to allow a claim, the Secretary of the military department concerned may Regulations. 10 USC 2736 note. Contracts. 42 USC 8287 note. make a payment to or for the person, or the legal representatives of the person, in advance of the submission of such a claim or, if such a claim is submitted, in advance of the final settlement of the claim. The amount of such a payment may not exceed $100,000. "(2) Payments under this subsection are limited to payments which would otherwise be payable under section 2733 or 2734 of this title or section 715 of title 32. "(3) The Secretary of a military department may delegate the authority to make payments under this subsection to the Judge Advocate General of an armed force under the jurisdiction of the Secretary. The Secretary may delegate such authority to any other officer or employee under the jurisdiction of the Secretary, but only with respect to the payment of amounts of $25,000 or less. "(4) Payments under this subsection shall be made under regulations prescribed by the Secretary of the military department concerned.". (b) EFFECTIVE DATE.-The amendment made by subsection (a) shall apply to any claim which would otherwise be payable under section 2733 or 2734 of title 10, United States Code, or under section 715 of title 32, United States Code, and which has not been finally settled on or before the date of the enactment of this Act. SEC. 736. ENERGY EFFICIENCY INCENTIVE (a) ENERGY CONSERVATION INCENTIVE.—In order to provide additional incentive for the Secretary of a military department to enter into contracts under title VIII of the National Energy Conservation Policy Act (42 U.S.C. 8287 et seq.), the Secretary may use the firstyear energy cost savings (as defined in subsection (d)) realized under any such contract in the manner provided in subsection (b). The amount of savings available for use under subsection (b) shall be determined as provided in subsection (c) and shall remain available for obligation until expended. (b) AUTHORIZED USES OF SAVINGS.-First-year energy cost savings may be used as follows: (1) One-half of the amount of such savings may be used for the acquisition of energy conserving measures at a military installation in addition to any such energy conserving measures provided for that installation under a contract entered into under title VIII of the National Conservation Energy Policy Act. (2) One-half of the amount of such savings may be used for any morale, welfare, or recreation facility or service that is normally provided with appropriated funds, or for any minor military construction project (as defined in section 2805(a) of title 10, United States Code), that will enhance the quality of life of members of the Armed Forces at the military installation at which the energy cost savings were realized. (c) DETERMINATION OF AMOUNT OF SAVINGS.-Not more than 90 days after the end of the first year during which energy savings measures have been in operation under a contract entered into by the Secretary of a military department under title VIII of the National Energy Conservation Policy Act, the Secretary of the military department concerned shall determine the amount of firstyear energy cost savings realized under the terms of the contract during that year by the military department concerned by reason of the energy savings measures acquired and installed at that installation pursuant to that contract. (d) DEFINITION.-For purposes of this section, the term "first-year energy cost savings" means the savings realized by the United States during the first year of a contract entered into by the Secretary of a military department under title VIII of the National Energy Conservation Policy Act. TITLE VIII-ACQUISITION POLICY AND MANAGEMENT PART A-ACQUISITION MANAGEMENT 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.". Business and industry. Science and technology. Contracts. Reports. 10 USC 2330 note. Reports. Reports. (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; (C) capital-to-labor ratios; (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. SEC. 802. COMPETITIVE PROTOTYPE STRATEGIES Section 2365 of title 10, United States Code, is amended by adding at the end the following new subsection: "(e) TERMINATION.-This section shall cease to be effective on September 30, 1991.". SEC. 803. DELEGATION OF AUTHORITY TO APPROVE CERTAIN CONTRACT Section 2304(f) of title 10, United States Code, is amended (1) in paragraph (1)(B)(ii), by striking out "or a delegate" and all that follows through the semicolon and inserting in lieu thereof "(or the head of the procuring activity's delegate designated pursuant to paragraph (6)(A));"; (2) in paragraph (1)(B)(iii), by inserting "or in the case of the Under Secretary of Defense for Acquisition, acting in his capacity as the senior procurement executive for the Department of Defense, the Under Secretary's delegate designated pursuant to paragraph (6)(B)" after "(without further delegation)"; and (3) by adding at the end the following: "(6)(A) The authority of the head of a procuring activity under paragraph (1)(B)(ii) may be delegated only to an officer or employee who "(i) if a member of the armed forces, is a general or flag officer; or “(ii) if a civilian, is serving in a position with a grade under the General Schedule (or any other schedule for civilian officers or employees) that is comparable to or higher than the grade of brigadier general or rear admiral (lower half). "(B) The authority of the Under Secretary of Defense for Acquisition under paragraph (1)(B)(iii) may be delegated only to "(i) an Assistant Secretary of Defense; or "(ii) with respect to the element of the Department of Defense (as specified in section 111(b) of this title), other than a military department, carrying out the procurement action concerned, an officer or employee serving in or assigned or detailed to that element who "(I) if a member of the armed forces, is serving in a grade above brigadier general or rear admiral (lower half); or "(II) if a civilian, is serving in a position with a grade under the General Schedule (or any other schedule for civilian officers or employees) that is comparable to or higher than the grade of major general or rear admiral.". SEC. 804. EVALUATION OF CONTRACTS FOR PROFESSIONAL AND TECHNICAL SERVICES 10 USC 2304 note. (a) ESTABLISHMENT OF CRITERIA.-Within 120 days after the date of the enactment of this Act, the Secretary of Defense shall establish criteria to ensure that proposals for contracts for professional and technical services are evaluated on a basis which does not encourage contractors to propose mandatory uncompensated overtime for professional and technical employees. In establishing such criteria, the Secretary shall consider the recommendations of the advisory committee established under subsection (b). The Secretary shall, Reports. before implementing such criteria, transmit to the Committees on Armed Services of the Senate and House of Representatives a report containing such criteria and the recommendations made by the advisory committee. (b) ADVISORY COMMITTEE.-(1) Within 30 days after the date of the enactment of this Act, the Secretary of Defense shall establish an advisory committee to make recommendations on the criteria to be adopted by the Secretary. The advisory committee shall be composed, at a minimum, of such representatives as the Secretary considers appropriate from the Office of the Under Secretary of Defense for Acquisition, the Office of the Comptroller of the Department of Defense, the Acquisition Executives of the military departments, the Defense Contract Audit Agency, the Office of the Inspector General of the Department of Defense, and professional and technical services industries. (2) In developing the recommendations, the advisory committee shall address the following issues: (A) How the Department of Defense can best be assured that it receives the best quality services for the amounts expended and that the contractors supplying such services follow sound personnel management practices and observe established labormanagement policies and regulations. (B) Whether contract competitions should be structured in a manner that requires offerors to compete on the basis of factors other than the number of hours per week its professional and technical employees of similar annual salaries work. (C) Whether the Department of Defense can allow contractors to maintain different accounting systems (for example, 40-hour work week, full time accounting) and still allow the Department |