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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle G Governmentwide Acquisition Improvements

DHNDAA Section

Representative Waxman Summary

SEC. 866. LIMITATIONS ON TIERING OF SUBCONTRACTORS.

(a) Regulations- Not later than one year after the date of the enactment of this Act, the Federal Acquisition Regulation shall be amended, for executive agencies other than the Department of Defense, to minimize the excessive use by contractors of subcontractors, or of tiers of subcontractors, that add no or negligible value, and to ensure that neither a contractor nor a subcontractor receives indirect costs or profit on work performed by a lower-tier subcontractor to which the higher-tier contractor or subcontractor adds no, or negligible, value (but not to limit charges for indirect costs and profit based on the direct costs of managing lower-tier subcontracts).

(b) Covered Contracts- This section applies to any cost-reimbursement type contract or task or delivery order in an amount greater than the simplified acquisition threshold (as defined by section 4 of the Office of Federal Procurement Policy Act (41 U.S.C. 403)).

(c) Rule of Construction- Nothing in this section shall be construed as limiting the ability of the Department of Defense to implement more restrictive limitations on the tiering of subcontractors.

(d) Applicability- The Department of Defense shall continue to be subject to guidance on limitations on tiering of subcontractors issued by the Department pursuant to section 852 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364; 120 Stat. 2340).

(e) Executive Agency Defined- In this section, the term `executive agency' has the meaning given such term in section 4(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(1)).

Prohibiting excessive tiering of subcontractors. Section 866 requires regulations to prevent contractors from billing taxpayers for work that is done by subcontractors and for which the contractor provides no additional value.

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