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Conference Report 107-772 - National Defense Authorization Act for Fiscal Year 2003

Conference Report Section

Legislative History

Section 803(c)(4) of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261; 112 Stat. 2082; 10 U.S.C. 2306a note) is amended--

(1) by striking `2000, 2001, and 2002,' and inserting `2000 through 2006,';

(2) by inserting after `were conducted' the following: `by the Secretary of each military department and the Director of the Defense Logistics Agency'; and

(3) by inserting after `actions taken' the following: `by each Secretary and the Director'.

Conference Report 107-772

The Senate amendment contained a provision (sec. 813) that would extend the requirement that the Secretary of Defense submit to the congressional defense committees an annual report on price trend analyses for commercial items purchased by the Defense Logistics Agency (DLA) and the military departments.  (See Senate Amendment and Senate Report 107-151 below)

 The House bill contained no similar provision. 

The House bill recedes with an amendment that would clarify the requirement for the Secretary of each military department and the Director of the DLA to conduct price trend analyses to identify and address any unreasonable escalation in prices paid for items procured by that military department or agency.

Senate Amendment

SEC. 813. EXTENSION OF REQUIREMENT FOR ANNUAL REPORT ON DEFENSE COMMERCIAL PRICING MANAGEMENT IMPROVEMENT.

Section 803(c)(4) of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261; 112 Stat. 2082; 10 U.S.C. 2306a note) is amended by striking `2000, 2001, and 2002,' and inserting `2000 through 2006,'.

Senate Report 107-151

Extension of requirement for annual report on defense commercial pricing management improvement (sec. 813)

The committee recommends a provision that would extend for three years the requirement in section 803(c)(4) of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 that the Secretary of Defense submit to the congressional defense committees an annual report on price trend analyses for commercial items purchased by the Defense Logistics Agency (DLA) and the military departments.

This provision was enacted in response to testimony from the Department of Defense Inspector General indicating that DLA had paid undiscounted or marginally discounted catalog prices for commercial items, resulting in price increases of as much as 1,430 to 13,163 percent.

The Inspector General reported last year that DLA has implemented a successful price analysis program that the Defense Supply Center, Richmond has used to address unreasonable prices. Earlier this year, the Inspector General reported that DLA had successfully built a strategic supplier alliance with one of its key suppliers that will result in price reductions of $59.0 million, demonstrating the beneficial effects of aggressive price management. Unfortunately, the Inspector General report indicated that the Army, Navy, and Air Force programs have lacked the quantitative depth and analysis of the DLA effort.

The committee continues to believe that an aggressive price trend analysis program can play an important role in ensuring that prices paid on Department of Defense contracts are fair and reasonable.