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TITLE III— Operation and Maintenance

Subtitle C — Workplace and Depot Issues

NDAA Section

House Conference Report 110-477


    (a) Comparison of Retirement System Costs- Section 2461(a)(1) of title 10, United States Code, is amended--

      (1) in subparagraph (F), by striking `and' at the end;

      (2) by redesignating subparagraph (G) as subparagraph (H); and

      (3) by inserting after subparagraph (F) the following new subparagraph (G):

      `(G) requires that the contractor shall not receive an advantage for a proposal that would reduce costs for the Department of Defense by--

        `(i) not making an employer-sponsored health insurance plan (or payment that could be used in lieu of such a plan), health savings account, or medical savings account available to the workers who are to be employed to perform the function under the contract;

        `(ii) offering to such workers an employer-sponsored health benefits plan that requires the employer to contribute less towards the premium or subscription share than the amount that is paid by the Department of Defense for health benefits for civilian employees of the Department under chapter 89 of title 5; or

        `(iii) offering to such workers a retirement benefit that, in any year, costs less than the annual retirement cost factor applicable to civilian employees of the Department of Defense under chapter 84 of title 5; and'.

    (b) Conforming Amendments- Such title is further amended--

      (1) by striking section 2467; and

      (2) in section 2461--

        (A) by redesignating subsections (b) through (d) as subsections (c) through (e), respectively; and

        (B) by inserting after subsection (a) the following new subsection (b):

    `(b) Requirement to Consult DOD Employees- (1) Each officer or employee of the Department of Defense responsible for determining under Office of Management and Budget Circular A-76 whether to convert to contractor performance any function of the Department of Defense--

      `(A) shall, at least monthly during the development and preparation of the performance work statement and the management efficiency study used in making that determination, consult with civilian employees who will be affected by that determination and consider the views of such employees on the development and preparation of that statement and that study; and

      `(B) may consult with such employees on other matters relating to that determination.

    `(2)(A) In the case of employees represented by a labor organization accorded exclusive recognition under section 7111 of title 5, consultation with representatives of that labor organization shall satisfy the consultation requirement in paragraph (1).

    `(B) In the case of employees other than employees referred to in subparagraph (A), consultation with appropriate representatives of those employees shall satisfy the consultation requirement in paragraph (1).

    `(C) The Secretary of Defense shall prescribe regulations to carry out this subsection. The regulations shall include provisions for the selection or designation of appropriate representatives of employees referred to in subparagraph (B) for purposes of the consultation required by paragraph (1).'.

    (c) Technical Amendments- Section 2461 of such title, as amended by this section, is further amended--

      (1) in subsection (a)(1)--

        (A) in subparagraph (B), by inserting after `2003' the following: `, or any successor circular'; and

        (B) in subparagraph (D), by striking `and reliability' and inserting `, reliability, and timeliness'; and

      (2) in subsection (c)(2), as redesignated by subsection (b)(2), by inserting `of' after `examination'.

    (d) Clerical Amendment- The table of sections at the beginning of chapter 146 of such title is amended by striking the item relating to section 2467.

Modification to public-private competition requirements before conversion to contractor performance (sec. 322)

The House bill contained a provision (sec. 324) that would modify the provisions of section 2461 of title 10, United States Code, regarding the requirements for public-private competition for the performance of a function.

The Senate amendment contained an identical provision (sec. 365). The conference agreement includes this provision.

House Armed Services Committee Report 110-146


This section would exclude health care and retirement costs from the cost comparison process used for public-private competitions conducted pursuant to section 2461 of title 10, United States Code. This exclusion would apply if the contractor's contribution towards its employees' benefits is less than what the Congress requires the Department of Defense (DOD) to contribute for the benefits of federal civilian employees. This section, however, would not require contractors to provide the same level of health and retirement benefits as DOD. Moreover, contractors would receive full credit for using alternatives to traditional health care and defined benefit pension plans, including health savings accounts, 401(k) plans, individual savings accounts, or profit sharing plans.

This section also would strike 2467 of title 10, United States Code. The requirement at paragraph (b) for monthly consultations with employees affected by public-private competitions would be added to section 2461 of title 10, United States Code.
































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