[Senate Report 113-216]
[From the U.S. Government Publishing Office]
113th Congress Report
SENATE
2d Session 113-216
_______________________________________________________________________
Calendar No. 485
NEVER CONTRACT WITH THE ENEMY ACT
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 675
TO PROHIBIT CONTRACTING WITH THE ENEMY
July 23, 2014.--Ordered to be printed
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Gabrielle A. Batkin, Staff Director
John P. Kilvington, Deputy Staff Director
Mary Beth Schultz, Chief Counsel
Troy H. Cribb, Chief Counsel for Governmental Affairs
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Andrew C. Dockham, Minority Chief Counsel
Kathryn M. Edelman, Minority Senior Investigator
Laura W. Kilbride, Chief Clerk
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background.......................................................1
III. Legislative History..............................................4
IV. Section-by-Section Analysis of the Bill, as Reported.............5
V. Estimated Cost of Legislation....................................9
VI. Evaluation of Regulatory Impact.................................10
VII. Changes in Existing Law.........................................10
Calendar No. 485
113th Congress Report
SENATE
2d Session 113-216
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NEVER CONTRACT WITH THE ENEMY ACT
_______
July 23, 2014.--Ordered to be printed
_______
Mr. Carper, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 675]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 675), to prohibit
contracting with the enemy, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill, as amended, do pass.
I. Purpose and Summary
The Never Contract with the Enemy Act provides federal
agencies with streamlined procedures for stopping money from
federal contracts, grants and cooperative agreements from going
to people and entities who actively oppose U.S. forces engaged
in hostilities.
II. Background and Need for Legislation
The U.S. government contracts with many individuals and
companies around the world in order to support U.S. government
activities and promote U.S. interests, especially in times of
major deployments of U.S. forces.\1\
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\1\For purposes of the discussion in this report, the term
``contract'' includes contracts, grants and cooperative agreements and
the term ``contractor'' includes contractors, recipients of grants and
cooperative agreements.
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In 2008, Congress established the Commission on Wartime
Contracting in Iraq and Afghanistan and tasked it with
examining a range of issues related to wartime contracting,
including the extent of waste, fraud, abuse and mismanagement
of wartime contracts.\2\ The Commission identified diversion of
U.S. government funds to insurgents in Afghanistan as a major
concern. In their final report to Congress, the Commissioners
recounted that experts they interviewed believed that extortion
of funds from U.S. construction projects and transportation
contracts was the second-largest funding source for the
insurgents (the first being money from the drug trade).\3\
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\2\The independent and bipartisan Commission was established by
section 841 of the National Defense Authorization Act for Fiscal Year
2008, Public Law 110-181 (Jan. 28, 2008).
\3\Commission on Wartime Contracting in Iraq and Afghanistan, Final
Report to Congress (Aug. 31, 2011), p. 73.
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Another issue examined by the Commission was the use of
suspension and debarment procedures in Iraq and Afghanistan to
protect the government's interest in doing business only with
responsible contractors. Suspensions and debarments are
administrative remedies that allow agencies to bar additional
U.S. government business with particular contractors in order
to protect the government from fraud, noncompliance with
contractual terms or applicable laws, poor performance, or
other behavior that puts taxpayer dollars at risk of misuse. In
2011, the Commission reported to Congress that agency officials
cited the complexity of suspension and debarment procedures as
a reason for not using those tools as often as they believed
would be warranted in a wartime environment.\4\
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\4\Commission on Wartime Contracting in Iraq and Afghanistan,
Second Interim Report to Congress (Feb. 24, 2011), p. 50.
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In the context of these concerns, Congress, in the National
Defense Authorization Act for Fiscal Year 2012, directed the
Secretary of Defense to develop a process under which the
Combatant Commander of the Central Command (CENTCOM)\5\ would
identify persons or entities actively supporting an insurgency
or otherwise actively opposing U.S. or coalition forces in a
contingency operation in the CENTCOM theater.\6\ Section 841
further authorized the head of a contracting activity (i.e.,
the person designated by the head of an agency to manage the
agency's contracting functions), pursuant to a request from the
Combatant Commander, to restrict, terminate or void contracts
that would provide funds directly or indirectly to such persons
or entities.
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\5\CENTCOM is a unified command of the U.S. military whose
geographic area of responsibility includes Afghanistan and Iraq.
\6\Section 841 of the National Defense Authorization Act for Fiscal
Year 2012, Public Law 112-81 (Dec. 31, 2011). A ``contingency
operation'' is defined under 10 U.S.C. 101(a)(13) as ``a military
operation that--(A) is designated by the Secretary of Defense as an
operation in which members of the armed forces are or may become
involved in military actions, operations or hostilities against an
enemy of the United States or against an opposing military force; or
(B) results in the call or order to, or retention on, active duty of
members of the uniformed services under [other portions of this title],
or any other provision of law during a war or during a national
emergency declared by the President or Congress.''
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Section 841 also required the Secretary of Defense to
develop a contract clause requiring funding recipients to
exercise due diligence to prevent funds from directly or
indirectly flowing to persons or entities actively supporting
an insurgency or otherwise actively opposing U.S. or coalition
forces. Section 841 applies to Department of Defense contracts
in excess of $100,000 that are to be performed in the CENTCOM
theater.
Congress revisited and expanded the section 841 authority
in section 831 of the National Defense Authorization Act for
Fiscal Year 2014.\7\ Section 831 requires the Secretary of
Defense to establish programs in each combatant command to
identify persons actively opposing U.S. or coalition forces
involved in a contingency operation in which members of the
armed forces are actively engaged in hostilities.\8\ Section
831 lays out a process similar to section 841 for restricting,
terminating or voiding contracts, and it mandates a clause for
Department of Defense contracts, requiring contractors to
exercise due diligence to ensure that funds are not directly or
indirectly given to enemies, as defined by the bill. The
authorities and requirements of section 831 apply to contracts
whose estimated value is in excess of $20,000. Section 831 also
requires the establishment of a process allowing a recipient of
funds to contest action taken under the section 831 authority
within 30 days of notice of the action.
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\7\Section 831, National Defense Authorization Act for Fiscal Year
2014, Public Law 113-66 (Dec. 26, 2013).
\8\Combatant Commands covered by section 831 are: the United States
Central Command, the United States European Command, the United States
Africa Command, the United States Southern Command, and the United
States Pacific Command.
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According to Department of Defense officials, as of May
2014, the Department has used the section 841 authority 12
times and has designated 29 entities as enemies, as defined by
that section. As a result, ten subcontracts worth $31 million
were terminated. In two instances, the Department made no
contract or subcontract terminations because the entities
identified as enemies did not have existing contracts. All 29
entities were added to the prohibited source list for future
contracts. Additionally, the Department is processing 11
additional actions under the authorities of sections 841 and
831.\9\
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\9\E-mail correspondence from the Office of Legislative Affairs,
Office of the Secretary of Defense, to staff of Senator Ayotte (May 20,
2014).
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The Special Inspector General for Afghanistan
Reconstruction has pointed out several reasons that Congress
may want to consider granting the Department of State and the
U.S. Agency for International Development (USAID) similar
authorities to those in place at the Department of Defense.\10\
The Department of State and USAID have numerous contracts in
Afghanistan, and the two civilian agencies contract with many
of the same contractors used by the Department of Defense. In
addition, the Department of State and USAID will have an
enduring presence in the country after the drawdown of U.S.
military personnel.
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\10\Special Inspector General for Afghanistan Reconstruction
(``SIGAR''), SIGAR Audit 13-6 (April 2013) and SIGAR Audit 13-14 (July
2013).
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Building on the experience of the Department of Defense
under sections 841 and 831, the Never Contract with the Enemy
Act, S. 675, provides an effective tool to the Departments of
Defense and State, USAID, and other civilian agencies to
quickly cut off funds flowing to enemies of the United States.
The bill requires the Secretary of Defense, in conjunction with
the Director of National Intelligence and in consultation with
the Secretary of State, to establish a program to identify
people and entities that provide funds under a contract
directly or indirectly, to people and entities who actively
oppose U.S. or coalition forces involved in a contingency
operation in which members of the armed forces are actively
engaged in hostilities.\11\ The Secretary will also identify
those who fail to exercise due diligence to ensure that U.S.
government funds do not flow to enemies.
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\11\The bill uses the term ``covered person or entity'' to refer to
a person or entity that is actively opposing United States or coalition
forces involved in a contingency operation in which members of the
armed forces are actively engaged in hostilities.
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This information would then be shared with heads of
executive agencies and the commanders of the combatant
commands. S. 675 then gives the heads of agencies and the
combatant commanders the discretion to provide this information
to the appropriate head of contracting activity (or other
appropriate official in the case of grants and cooperative
agreements). The bill provides those senior agency officials
with an effective tool that will enable them to respond quickly
and appropriately. Specifically, it authorizes those officials
to restrict, terminate, or void contracts where funds would
flow directly or indirectly to enemies, or where a contractor
fails to exercise due diligence to ensure that funds do not
flow directly or indirectly to enemies.
S. 675 also requires the federal agencies responsible for
rules governing contracts and grants to develop a clause to be
included in contracts, requiring the recipient of the funding
to exercise due diligence to prevent funds from directly or
indirectly flowing to those who actively oppose U.S. or
coalition forces involved in a contingency operation in which
members of the armed forces are actively engaged in
hostilities.\12\ The bill ensures that the process for
promulgating regulations governing this clause will include an
opportunity for the public to comment on the definition of the
``due diligence'' required by the bill. S. 675 also requires
agencies to provide written notification to contractors of any
action taken under the bill to restrict, terminate or void a
contract, and to allow the contractor to challenge the action
by requesting administrative review not later than 30 days
after receipt of notice of the action.
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\12\Specifically, the bill requires amendment of (1) the Federal
Acquisition Regulation, which is the government-wide regulatory
framework for procurement and is overseen by the Federal Acquisition
Regulatory Council, consisting of the Administrator for Federal
Procurement Policy at the Office of Management and Budget, the
Secretary of Defense, the Administrator of the General Services
Administration, and the Administrator of NASA; (2) the Defense Federal
Acquisition Regulation Supplement, which is maintained by the
Department of Defense; and (3) the Uniform Administrative Requirements,
Cost Principles, and Account Requirements, which is the government-wide
guidance for grants issued by the Office of Management and Budget.
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In order to help agencies get the information they need to
avoid entering into contracts and other agreements with enemies
(as defined by the bill), the bill requires the Secretary of
Defense, in consultation with the Director of the Office of
Management and Budget to carry out a program that will allow
agencies to share information on funds that may be flowing to
enemies. The program will be designed to facilitate and
encourage the sharing of risk and threat information between
agencies and combatant commands. Also, the bill ensures that
actions taken to terminate or otherwise restrict contracts will
be entered into the Federal Awardee Performance and Integrity
Information System, which is a repository of information
related to the business ethics and performance records of
federal contractors.
The bill provides for the repeal of the authorities granted
under section 841 and section 831 upon implementation of the
new authorities of S.675. The bill also includes a sunset date
of December 31, 2019 for both the process and authorities for
restricting, terminating or voiding contracts. This sunset will
allow Congress to assess the use, or non-use, of the
authorities and consider reauthorization or amendment as
appropriate.
III. Legislative History
On April 9, 2013, Senators Kelly Ayotte and Richard
Blumenthal introduced S. 675. The bill was referred to the
Committee on Homeland Security and Governmental Affairs. The
bill is cosponsored by Senators Boozman, Burr, Chambliss,
Manchin, Moran, Roberts, Shaheen, and Vitter.
The Committee considered the bill at a business meeting on
May 21, 2014. Senator Ayotte offered a substitute amendment,
which made a number of changes to the bill to align the
proposed government-wide authorities with those already in
place for the Department of Defense under section 841 of the
National Defense Authorization Act for Fiscal Year 2012 and
section 831 of the National Defense Authorization Act for
Fiscal Year 2014. The substitute also incorporates some
suggestions provided to Committee staff by officials of the
Department of State and USAID, including a provision clarifying
that the authorities in the bill shall be in addition to, and
not the exclusion of, any other authorities available to
agencies to implement policies similar to those set out in the
bill.
The Committee adopted the substitute amendment and then
ordered S. 675 reported favorably, both by voice vote. Members
present for both votes were: Carper, Pryor, Landrieu,
McCaskill, Tester, Begich, Coburn, Johnson, Portman, and Enzi.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
Section 1 establishes the short title of the bill as the
``Never Contract with the Enemy Act.''
Section 2. Prohibition on providing funds to the enemy
Subsection 2(a) requires the Secretary of Defense, in
conjunction with the Director of National Intelligence and in
consultation with the Secretary of State, to establish a
program in each combatant command to identify people and
entities that provide funds received under a contract, grant or
cooperative agreement directly or indirectly to an enemy
(defined as a ``covered person or entity'' in Section 4 below),
or who fail to exercise due diligence to ensure that funds
received under a contract, grant or cooperative agreement are
not provided directly or indirectly to an enemy.
Subsection 2(b) provides that upon identification of a
person or entity, pursuant to subsection 2(a), the head of an
executive agency or the commander of a covered combatant
command shall be notified of the identification in writing.
Upon receipt of the notification, the head of the executive
agency or the commander of the combatant command may notify the
heads of contracting activities, or other appropriate officials
of the agency or command, in writing of such identification.
Under subsection 2(c), not later than 270 days after
enactment of the Act, the Federal Acquisition Regulation, the
Defense Federal Acquisition Regulation Supplement, and the
Uniform Administrative Requirements, Cost Principles, and
Account Requirements for Federal Awards (referred to hereafter
as ``applicable regulations'')\13\ shall be revised to provide
that certain actions may be taken upon written notice from the
head of an executive agency or the commander of a combatant
command to the head of contracting activity (the person
designated by the head of an agency to carry out contract
functions). Specifically, subsection 2(c) provides that the
head of contracting activity may:
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\13\See footnote 12.
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(1) restrict the award of contracts, grants, or
cooperative agreements upon written determination that
a contract, grant or cooperative agreement so awarded
would provide funds received under such contract, grant
or cooperative agreement directly or indirectly to an
enemy;
(2) terminate for default any contract, grant or
cooperative agreement upon a written determination that
the contractor, or the recipient of the grant or
cooperative agreement, has failed to exercise due
diligence to ensure that none of the funds received
under the contract, grant or cooperative agreement are
provided directly or indirectly to an enemy; or
(3) void in whole or in part any contract, grant or
cooperative agreement upon a written determination that
the contract, grant or cooperative agreement provides
funds directly or indirectly to an enemy.
Subsection 2(d) provides that within 270 days after the
date of enactment, the applicable regulations shall be revised
to require a clause to be included in each contract, grant, or
cooperative agreement that will require the recipient of the
funds to exercise due diligence to ensure that funds are not
provided directly or indirectly to an enemy. The clause will
also notify the recipient of the funds of the authority of the
head of contracting authority (or other appropriate official in
the case of grants or cooperative agreements) to terminate the
contract, grant or cooperative agreement. This subsection also
ensures that the process for amending regulations will include
an opportunity for public comment on the standards of due
diligence required by the Act.
Subsection 2(e) requires, within 270 days of enactment,
implementation of regulations to require that any head of
contracting activity, or other official, taking action under
subsection (c) to terminate or void a contract, grant or
cooperative agreement notify in writing the recipient of the
contract, grant or cooperative agreement of the action. This
subsection also requires revision of the applicable
regulations, so that the recipient of a contract, grant or
cooperative agreement subject to such action has an opportunity
to challenge the action by requesting administrative review not
later than 30 days after receipt of the notice of the action.
Under subsection 2(f), the Secretary of Defense, in
conjunction with the Director of National Intelligence and in
consultation with the Secretary of State, shall annually review
the list of covered persons or entities previously covered by a
notice under subsection (b) in order to determine whether those
persons or entities continue to warrant identification pursuant
to subsection (a). If it is determined that a person or entity
no longer warrants identification, then the Secretary of
Defense shall notify the head of an executive agency or
commander, as the case may be, in writing of such a
determination. Classified information relied upon to make an
identification in accordance with subsection (a) may not be
disclosed to the recipient of a contract, grant or cooperative
agreement in the absence of a protective order issued by a
court of jurisdiction established under Article I or Article
III of the Constitution.
Subsection 2(g) provides that the commander of a combatant
command may delegate in writing the responsibilities granted by
this section to any deputy specified by the commander. The
authority provided by subsection (c) to terminate, void or
restrict grants may not be delegated below the level of head of
contracting activity, or equivalent official in the case of
grants or cooperative agreements.
Subsection 2(h) requires the Secretary of Defense, in
consultation with the Director of the Office of Management and
Budget, to carry out a program through which agency components
may provide information to heads of executive agencies and
commanders of combatant commands relating to persons or
entities who may be providing funds, directly or indirectly, to
enemies. The program shall be designed to facilitate and
encourage the sharing of risk and threat information between
agencies and combatant commands. Upon an action taken under
subsection (c), the head of contracting activity shall provide
for the inclusion in the Federal Awardee Performance and
Integrity Information System, or other formal system of records
on contractors, a notice of such action. The head of
contracting activity that receives a notice pursuant to
subsection (b) shall submit to the head of the executive agency
concerned or the appropriate combatant command a report on the
action taken, if any, pursuant to subsection (c), including any
determination not to take action.
Pursuant to subsection 2(i), by March 1 of 2016, 2017, and
2018, the Director of the Office of Management and Budget shall
submit to the appropriate committees of Congress a report on
the use of the authorities in this section in the preceding
calendar year, including instances in which an executive agency
exercised authority to terminate, void, or restrict a contract,
grant or cooperative agreement, or instances in which an agency
did not exercise authority to take action pursuant to
subsection (c). The reports required by this subsection may be
submitted in unclassified form but with a classified annex, or
in classified form.
Subsection 2(j) provides that nothing in this section shall
apply to the authorized intelligence or law enforcement
activities of the U.S. government.
Subsection 2(k) makes clear that, except as provided in
subsection (l), the authorities in this section shall be in
addition to, and not to the exclusion of, any other authorities
available to executive agencies to implement similar policies
and purposes.
Subsection 2(l) provides that, 270 days after enactment,
section 841 of the National Defense Authorization Act for
Fiscal Year 2012, and section 831 of the National Defense
Authorization Act for Fiscal Year 2014 are repealed. The
Secretary of Defense may use and modify the regulations and
procedures established under those provisions for purposes of
satisfying the requirements of this section.
Under subsection 2(m), the provisions of this section cease
to be effective on December 31, 2019.
Section 3. Additional access to records
Subsection 3(a) requires revision of applicable
regulations, within 270 days after enactment, to allow for
inclusion in contracts, grants and cooperative agreements a
clause that authorizes the head of the executive agency to
examine any records of the recipient or sub-recipient upon a
written determination that funds under the contract, grant or
cooperative agreement may have been provided directly or
indirectly to a covered person or entity. A similar clause may
be included in any subcontract or subgrant under a covered
contract, grant or cooperative agreement with an estimated
value in excess of $50,000.
Under subsection 3(b), by March 1 of 2016, 2017, and 2018,
the Director of the Office of Management and Budget shall
submit to the appropriate committees of Congress a report on
the use of authorities provided by this section.
Subsection 3(c) provides that 270 days after the date of
enactment, section 842 of the National Defense Authorization
Act of Fiscal Year 2012, which provided similar authority to
the Department of Defense, is repealed. The Secretary of
Defense may use and modify the requirements and procedures
established under section 842 for purposes of satisfying the
requirements of this section.
Section 4. Definitions
Section 4 provides that for purposes of this Act:
(1) The term ``appropriate committees of Congress'' means:
the Committee on Armed Services, the Committee on Homeland
Security and Governmental Affairs, the Committee on Foreign
Relations, and the Committee on Appropriations of the Senate;
and the Committee on Armed Services, the Committee on Oversight
and Government Reform, the Committee on Foreign Affairs, and
the Committee on Appropriations of the House of
Representatives.
(2) The term ``contingency operation'' has the meaning
given that term in section 101(a)(13) of title 10, United
States Code.\14\
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\14\See footnote 6.
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(3) The term ``contract'' includes a contract for
commercial items but is not limited to a contract for
commercial items.
(4) The term ``covered combatant command'' means the
following: the United States Africa Command, the United States
Central Command, the United States European Command, the United
States Pacific Command, and the United States Southern Command.
(5) The term ``covered contract, grant or cooperative
agreement'' means a contract, grant or cooperative agreement
with an estimated value in excess of $50,000 that is performed
outside the United States, including its possessions and
territories.
(6) The term ``covered person or entity'' means a person or
entity that is actively opposing United States or coalition
forces in a contingency operation in which members of the armed
forces are actively engaged in hostilities.
(7) The term ``executive agency'' has the meaning given
that term in section 133 of title 41, United States Code, which
includes the major departments of the executive branch, the
military departments, other government agencies (other than the
United States Postal Service or the Postal Regulatory
Commission) and wholly owned government corporations.
(8) The term ``head of contracting activity'' has the
meaning given that term in subpart 601 part 1 of the Federal
Acquisition Regulation. The head of contracting activity is the
person to whom an agency head delegates the authority to manage
the contracting functions for the agency.
V. Congressional Budget Office (CBO) Cost Estimate
June 20, 2014.
Hon. Tom Carper,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 675, the Never
Contract With the Enemy Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is David Newman.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 675--Never Contract With the Enemy Act
S. 675 would require the Department of Defense (DoD) to
identify entities that use resources received from the federal
government to provide aid to a person or group that is actively
opposing U.S. or allied armed forces in overseas contingency
operations. The bill also would require DoD to identify
entities that do not take sufficient care to ensure that
government resources are not being used to support the enemy.
The bill would require that contracts, grants, or
cooperative agreements that are used or performed outside the
United States and have a value of $50,000 or more include a
clause giving federal agencies the right to examine the
business records of the other party if the agency has reason to
believe the recipient is supporting the enemy.
S. 675 would require DoD to develop a program under which
information on those entities found to be aiding the enemy may
be provided to other federal agencies. The bill would authorize
all federal agencies to cancel contractual agreements with such
entities and to bar them from receiving additional contracts,
grants, or cooperative agreements with the federal government.
The bill also would require annual reports on the use of the
authority during the 2016-2018 period.
DoD currently conducts a similar program and notifies
military commands engaged in overseas contingency operations of
entities that have been identified as supporters of the enemy.
Certain military commands are authorized under current law to
cancel contracts with those identified. The department reports
such cancelled contracts in the Federal Awardee Performance and
Integrity Information System. DoD indicates that it would post
the list of all entities identified as supporters of the enemy
to that system where the information would be available to
other federal agencies.
CBO estimates that providing access to the list of enemy
supporters and authorizing other federal agencies to cancel
contracts and disbar contractors would have discretionary costs
of less than $500,000 over the 2015-2019 period; any spending
would be subject to the availability of appropriated funds.
Pay-as-you-go procedures do not apply to this legislation
because it would not affect direct spending or revenues.
S. 675 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is David Newman.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
VI. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill.
The Committee agrees with the Congressional Budget Office
that the bill contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments,
or private entities. The enactment of this legislation would
not have significant regulatory impact within the meaning of
the rule.
VII. Changes in Existing Statute Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 675 as reported are shown as follows (existing law proposed
to be omitted is enclosed in brackets, new matter is printed in
italic, and existing law in which no change is proposed is
shown in roman):\15\
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\15\Subsection 1(l) of the bill provides that these changes are
effective 270 days after the date of enactment of the Act.
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NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2012
(Public Law 112-81)
DIVISION A--DEPARTMENT OF DEFENSE AUTHORIZATIONS
* * * * * * *
TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED
MATTERS
* * * * * * *
Subtitle D--Provisions Relating to Contracts in Support of Contingency
Operations in Iraq and Afghanistan
* * * * * * *
[SEC. 841. PROHIBITION ON CONTRACTING WITH THE ENEMY IN THE UNITED
STATES CENTRAL COMMAND THEATER OF OPERATIONS.
[(a) Prohibition.--
[(1) In general.--Not later than 30 days after the
date of the enactment of this Act, the Secretary of
Defense shall revise the Department of Defense
Supplement to the Federal Acquisition Regulation to
authorize the head of a contracting activity, pursuant
to a request from the Commander of the United States
Central Command under subsection (c)(2)--
[(A) to restrict the award of Department of
Defense contracts, grants, or cooperative
agreements that the head of the contracting
activity determines in writing would provide
funding directly or indirectly to a person or
entity that has been identified by the
Commander of the United States Central Command
as actively supporting an insurgency or
otherwise actively opposing United States or
coalition forces in a contingency operation in
the United States Central Command theater of
operations;
[(B) to terminate for default any Department
contract, grant, or cooperative agreement upon
a written determination by the head of the
contracting activity that the contractor, or
the recipient of the grant or cooperative
agreement, has failed to exercise due diligence
to ensure that none of the funds received under
the contract, grant, or cooperative agreement
are provided directly or indirectly to a person
or entity who is actively supporting an
insurgency or otherwise actively opposing
United States or coalition forces in a
contingency operation in the United States
Central Command theater of operations; or
[(C) to void in whole or in part any
Department contract, grant, or cooperative
agreement upon a written determination by the
head of the contracting activity that the
contract, grant, or cooperative agreement
provides funding directly or indirectly to a
person or entity that has been identified by
the Commander of the United States Central
Command as actively supporting an insurgency or
otherwise actively opposing United States or
coalition forces in a contingency operation in
the United States Central Command theater of
operations.
[(2) Treatment as void.--For purposes of this
section:
[(A) A contract, grant, or cooperative
agreement that is void is unenforceable as
contrary to public policy.
[(B) A contract, grant, or cooperative
agreement that is void in part is unenforceable
as contrary to public policy with regard to a
segregable task or effort under the contract,
grant, or cooperative agreement.
[(b) Contract Clause.--
[(1) In general.--Not later than 30 days after the
date of the enactment of this Act, the Secretary shall
revise the Department of Defense Supplement to the
Federal Acquisition Regulation to require that--
[(A) the clause described in paragraph (2)
shall be included in each covered contract,
grant, and cooperative agreement of the
Department that is awarded on or after the date
of the enactment of this Act; and
[(B) to the maximum extent practicable, each
covered contract, grant, and cooperative
agreement of the Department that is awarded
before the date of the enactment of this Act
shall be modified to include the clause
described in paragraph (2).
[(2) Clause described.--The clause described in this
paragraph is a clause that--
[(A) requires the contractor, or the
recipient of the grant or cooperative
agreement, to exercise due diligence to ensure
that none of the funds received under the
contract, grant, or cooperative agreement are
provided directly or indirectly to a person or
entity who is actively supporting an insurgency
or otherwise actively opposing United States or
coalition forces in a contingency operation;
and
[(B) notifies the contractor, or the
recipient of the grant or cooperative
agreement, of the authority of the head of the
contracting activity to terminate or void the
contract, grant, or cooperative agreement, in
whole or in part, as provided in subsection
(a).
[(3) Covered contract, grant, or cooperative
agreement.--In this subsection, the term ``covered
contract, grant, or cooperative agreement'' means a
contract, grant, or cooperative agreement with an
estimated value in excess of $100,000 that will be
performed in the United States Central Command theater
of operations.
[(c) Identification of Contracts With Supporters of the
Enemy.--
[(1) In general.--Not later than 30 days after the
date of the enactment of this Act, the Secretary,
acting through the Commander of the United States
Central Command, shall establish a program to use
available intelligence to review persons and entities
who receive United States funds through contracts,
grants, and cooperative agreements performed in the
United States Central Command theater of operations and
identify any such persons and entities who are actively
supporting an insurgency or otherwise actively opposing
United States or coalition forces in a contingency
operation.
[(2) Notice to contracting activities.--If the
Commander of the United States Central Command, acting
pursuant to the program required by paragraph (1),
identifies a person or entity as actively supporting an
insurgency or otherwise actively opposing United States
or coalition forces in a contingency operation, the
Commander may notify the head of a contracting activity
in writing of such identification and request that the
head of the contracting activity exercise the authority
provided in subsection (a) with regard to any
contracts, grants, or cooperative agreements that
provide funding directly or indirectly to the person or
entity.
[(3) Protection of classified information.--
Classified information relied upon by the Commander of
the United States Central Command to make an
identification in accordance with this subsection may
not be disclosed to a contractor or a recipient of a
grant or cooperative agreement with respect to which an
action is taken pursuant to the authority provided in
subsection (a), or to their representatives, in the
absence of a protective order issued by a court of
competent jurisdiction established under Article III of
the Constitution of the United States that specifically
addresses the conditions upon which such classified
information may be so disclosed.
[(d) Nondelegation of Responsibilities.--
[(1) Contract actions.--The authority provided by
subsection (a) to restrict, terminate, or void
contracts, grants, and cooperative agreements may not
be delegated below the level of the head of a
contracting activity.
[(2) Identification of support of enemy.--The
authority to make an identification under subsection
(c)(1) may not be delegated below the level of the
Commander of the United States Central Command.
[(e) Reports.--Not later than March 1 of each of 2013,
2014, and 2015, the Secretary shall submit to the congressional
defense committees a report on the use of the authority
provided by this section in the preceding calendar year. Each
report shall identify, for the calendar year covered by such
report, each instance in which the Department of Defense
exercised the authority to restrict, terminate, or void
contracts, grants, and cooperative agreements pursuant to
subsection (a) and explain the basis for the action taken. Any
report under this subsection may be submitted in classified
form.
[(f) Other Definition.--In this section, the term
``contingency operation'' has the meaning given that term in
section 101(a)(13) of title 10, United States Code.
[(g) Sunset.--The authority to restrict, terminate, or void
contracts, grants, and cooperative agreements pursuant to
subsection (a) shall cease to be effective on the date that is
three years after the date of the enactment of this Act.]
NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2014
(Public Law 113-66)
DIVISION A--DEPARTMENT OF DEFENSE AUTHORIZATIONS
* * * * * * *
TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED
MATTERS
* * * * * * *
Subtitle D--Provisions Relating to Contracts in Support of Contingency
Operations in Iraq and Afghanistan
* * * * * * *
[SEC. 831. PROHIBITION ON CONTRACTING WITH THE ENEMY.
[(a) Authority To Terminate or Void Contracts, Grants, and
Cooperative Agreements and To Restrict Future Award.--
[(1) Identification of persons and entities.--The
Secretary of Defense shall establish in each covered
combatant command a program to identify persons or
entities, within the area of responsibility of such
covered combatant command, that--
[(A) provide funds received under a contract,
grant, or cooperative agreement of the
Department of Defense directly or indirectly to
a covered person or entity; or
[(B) fail to exercise due diligence to ensure
that none of the funds received under a
contract, grant, or cooperative agreement of
the Department of Defense are provided directly
or indirectly to a covered person or entity.
[(2) Notice of persons or entities identified.--Upon
the identification of a person or entity as meeting
subparagraph (A) or (B) of paragraph (1), the commander
of the combatant command concerned, and any deputies of
the commander specified by the commander for purposes
of this section, shall be notified in writing of such
identification of such person or entity.
[(3) Responsive actions.--Upon receipt of a notice
under paragraph (2), the commander of the combatant
command concerned may, in consultation with the Under
Secretary of Defense for Policy, the Under Secretary of
Defense for Acquisition, Technology, and Logistics, and
the appropriate Chief of Mission, notify the heads of
appropriate contracting activities, in writing, of such
identification and request that the heads of such
contracting activities exercise the authorities
provided pursuant to paragraph (4) and the Department
of Defense Supplement to the Federal Acquisition
Regulation, as revised, with respect to any contract,
grant, or cooperative agreement that provides funding
directly or indirectly to the person or entity covered
by the notice.
[(4) Authorities. Not later than 30 days after the
date of the enactment of this Act, the Secretary of
Defense shall revise the Department of Defense
Supplement to the Federal Acquisition Regulation to
authorize the head of a contracting activity in each
covered combatant command, pursuant to a request from
the commander of a covered combatant command under
paragraph (3)--
[(A) to prohibit, limit, or otherwise place
restrictions on the award of any Department of
Defense contract, grant, or cooperative
agreement to a person or entity identified
pursuant to paragraph (1)(A);
[(B) to terminate for default any Department
contract, grant, or cooperative agreement
awarded to a person or entity identified
pursuant to paragraph (1)(B); or
[(C) to void in whole or in part any
Department contract, grant, or cooperative
agreement awarded to a person or entity
identified pursuant to paragraph (1)(A).
[(b) Contract Clause.--
[(1) In general.--Not later than 30 days after the
date of the enactment of this Act, the Department of
Defense Supplement to the Federal Acquisition
Regulation shall be revised to require that--
[(A) the clause described in paragraph (2)
shall be included in each covered contract,
grant, and cooperative agreement of the
Department of Defense that is awarded on or
after the date of the enactment of this Act;
and
[(B) to the maximum extent practicable, each
covered contract, grant, and cooperative
agreement of the Department of Defense that is
awarded before the date of the enactment of
this Act shall be modified to include the
clause described in paragraph (2).
[(2) Clause described.--The clause described in this
paragraph is a clause that--
[(A) requires the contractor, or the
recipient of the grant or cooperative
agreement, to exercise due diligence to ensure
that none of the funds received under the
contract, grant, or cooperative agreement are
provided directly or indirectly to a covered
person or entity; and
[(B) notifies the contractor, or the
recipient of the grant or cooperative
agreement, of the authority of the head of the
contracting activity to terminate or void the
contract, grant, or cooperative agreement, in
whole or in part.
[(3) Covered contract, grant, or cooperative
agreement.--In this subsection, the term ``covered
contract, grant, or cooperative agreement'' means a
contract, grant, or cooperative agreement with an
estimated value in excess of $50,000.
[(4) Treatment as void.--For purposes of subsection
(a)(4) and the exercise under subsection (a)(3) of the
authorities in the Department of Defense Supplement to
the Federal Acquisition Regulation pursuant to this
subsection:
[(A) A contract, grant, or cooperative
agreement that is void is unenforceable as
contrary to public policy.
[(B) A contract, grant, or cooperative
agreement that is void in part is unenforceable
as contrary to public policy with regard to a
segregable task or effort under the contract,
grant, or cooperative agreement.
[(c) Requirements Following Contract Actions.--Not later
than 30 days after the date of the enactment of this Act, the
Department of Defense Supplement to the Federal Acquisition
Regulation shall be revised as follows:
[(1) To require that any head of contracting activity
taking an action pursuant to subsection (a)(3) or
(a)(4) to terminate, void, or restrict a contract,
grant, or cooperative agreement notify in writing the
contractor or recipient of the grant or cooperative
agreement, as applicable, of the action.
[(2) To permit, in such manner as the Department of
Defense Supplement to the Federal Acquisition
Regulation as so revised shall provide, the contractor
or recipient of a grant or cooperative agreement
subject to an action taken pursuant to subsection
(a)(3) or (a)(4) to terminate or void the contract,
grant, or cooperative agreement, as the case may be, an
opportunity to challenge the action by requesting
administrative review within 30 days after receipt of
notice of the action.
[(d) Annual Review.--The commanders of the covered
combatant commands shall, on an annual basis, review the lists
of persons and entities previously identified pursuant to
subsection (a)(1) in order to determine whether or not such
persons and entities continue to warrant identification
pursuant to that subsection. If a commander determines pursuant
to such a review that a person or entity no longer warrants
identification pursuant to subsection (a)(1), the commander
shall notify the heads of contracting activities of the
Department of Defense in writing of such determination.
[(e) Protection of Classified Information.--Classified
information relied upon to make an identification pursuant to
subsection (a)(1) may not be disclosed to a contractor or a
recipient of a grant or cooperative agreement with respect to
which an action is taken pursuant to subsection (a)(3) or
(a)(4) or to their representatives, in the absence of a
protective order issued by a court of competent jurisdiction
established under Article I or Article III of the Constitution
of the United States that specifically addresses the conditions
upon which such classified information may be so disclosed.
[(f) Delegation.--
[(1) Responsibilities relating to identification and
review.--The commander of a covered combatant command
may delegate the responsibilities in subsection (a)(3)
to any deputies of the commander specified by the
commander pursuant to that subsection. The commander
may delegate any responsibilities under subsection (d)
to the deputy commander of the combatant command. Any
delegation of responsibilities under this paragraph
shall be made in writing.
[(2) Nondelegation of responsibility for contract
actions.--The authority provided by subsections (a)(3)
and (a)(4) to terminate, void, or restrict contracts,
grants, and cooperative agreements may not be delegated
below the level of head of contracting activity.
[(g) Inclusion of Information on Contract Actions in
FAPIIS.--Upon the termination, voiding, or restriction of a
contract, grant, or cooperative agreement pursuant to
subsection (a)(3) or (a)(4), the head of contracting activity
concerned shall provide for the inclusion in the Federal
Awardee Performance and Integrity Information System (FAPIIS),
or other formal system of records on contractors or entities,
of appropriate information on the termination, voiding, or
restriction of the contract, grant, or cooperative agreement.
[(1) In general.--Not later than March 1 each year
through 2019, the Secretary of Defense shall submit to
the congressional defense committees a report on the
use of the authorities in this section in the preceding
calendar year, including the following:
[(A) For each instance in which a contract,
grant, or cooperative agreement was terminated
or voided, or entry into contracts, grants, and
cooperative agreements was restricted, pursuant
to subsection (a)(3) or (a)(4), the following:
[(i) An explanation of the basis for
the action taken.
[(ii) The value of the contract,
grant, or cooperative agreement
terminated or voided.
[(iii) The value of all contracts,
grants, or cooperative agreements of
the Department of Defense in force with
the person or entity concerned at the
time the contract, grant, or
cooperative agreement was terminated or
voided.
[(iv) Information on how the goods or
services covered by the terminated or
voided contract, grant, or cooperative
agreement were otherwise obtained by
the commander of the combatant command
concerned.
[(B) For each instance in which a contract,
grant, or cooperative agreement of a person or
entity identified pursuant to subsection (a)(1)
was not terminated or voided pursuant to
subsection (a)(3) or (a)(4), or the future
award of contracts, grants, and cooperative
agreements to such person or entity was not
restricted pursuant to subsection (a)(3) or
(a)(4), an explanation why such action was not
taken.
[(2) Form.--Any report under this subsection may be
submitted in classified form.
[(i) Other Definitions.--In this section:
[(1) The term ``covered combatant command'' means
United States Central Command, United States European
Command, United States Africa Command, United States
Southern Command, or United States Pacific Command.
[(2) The term ``head of contracting activity'' has
the meaning given that term in subpart 601 of part 1 of
the Federal Acquisition Regulation.
[(3) The term ``covered person or entity'' means a
person or entity that is actively opposing United
States or coalition forces involved in a contingency
operation in which members of the armed forces are
actively engaged in hostilities.
[(j) Sunset.--The provisions of this section shall cease to
be effective on December 31, 2018.]