Stop Pentagon Price Gouging Act

II ★(Star Print) 118TH CONGRESS 1ST SESSION S. 2049 To prevent price gouging at the Department of Defense. IN THE SENATE OF THE UNITED STATES JUNE 20, 2023 Ms. WARREN (for herself and Mr. BRAUN) introduced the following bill; which was read twice and referred to the Committee on Armed Services A BILL To prevent price gouging at the Department of Defense. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stop Pentagon Price 4 Gouging Act’’. 5 SEC. 2. STRENGTHENING TRUTH IN NEGOTIATIONS ACT 6 PROVISIONS. 7 (a) REQUIRED COST OR PRICING DATA AND CER- 8 TIFICATION.—Section 3702(a)(1) of title 10, United 9 States Code, is amended by striking ‘‘only expected to re- 10 ceive one bid shall be required’’ and replacing with ‘‘only 11 expected to have one offeror, or for which award of a cost- 12 VerDate Sep 11 2014 00:02 Jul 20, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2049.IS S2049 kjohnson on DSK79L0C42PROD with BILLS 2 S 2049 IS1S reimbursement contract is contemplated regardless of the 1 number of offers received, shall be required’’. 2 (b) EXCEPTIONS.—Section 3703(a) of title 10, 3 United States Code, is amended— 4 (1) in paragraph (1)(A), by striking ‘‘adequate 5 competition’’ and all that follows through ‘‘bids’’ and 6 inserting ‘‘adequate price competition for other than 7 the award of a cost-reimbursement contract that re- 8 sults in at least two responsive and viable competing 9 offerors’’; and 10 (2) in paragraph (2), by inserting ‘‘based on 11 adequate price competition that results in at least 12 two responsive and responsible offers’’ after ‘‘com- 13 mercial service’’. 14 (c) CONFORMING AMENDMENT RELATED TO CIVIL- 15 IAN CONTRACTS.—Section 3503(a)(2) of title 41, United 16 States Code, is by inserting after ‘‘commercial service’’ the 17 following: ‘‘based on adequate price competition that re- 18 sults in at least two responsive and responsible offers’’. 19 VerDate Sep 11 2014 00:02 Jul 20, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2049.IS S2049 kjohnson on DSK79L0C42PROD with BILLS 3 S 2049 IS1S SEC. 3. REVISION OF DEFINITION OF TERM ‘‘COMMERCIAL 1 ITEM’’ FOR PURPOSES OF FEDERAL PRO- 2 CUREMENT STATUTES PROVIDING PROCE- 3 DURES FOR PROCUREMENT OF COMMERCIAL 4 ITEMS. 5 (a) ELIMINATION OF ‘‘OF A TYPE’’ CRITERION.— 6 Section 103 of title 41, United States Code, is amended 7 by striking ‘‘of a type’’ each place it appears. 8 (b) ELIMINATION OF ITEMS AND SERVICES MERELY 9 OFFERED FOR SALE, LEASE, OR LICENSE.— 10 (1) ITEMS.—Section 103(1)(B) of title 41, 11 United States Code, is amended by striking ‘‘, or of- 12 fered for sale, lease, or license,’’. 13 (2) SERVICES.—Section 103a(2) of title 41, 14 United States Code, is amended by striking ‘‘offered 15 and’’. 16 (c) ADJUSTMENT OF THRESHOLD RELATING TO 17 PRIOR SALES.— 18 (1) COMMERCIAL PRODUCTS.—Section 19 103(6)(B) of title 41, United States Code, is amend- 20 ed by striking ‘‘substantial quantities’’ and inserting 21 ‘‘like quantities’’. 22 (2) COMMERCIAL SERVICES.—Section 103a(2) 23 of title 41, United States Code, is amended by strik- 24 ing ‘‘substantial quantities’’ and inserting ‘‘like 25 quantities’’. 26 VerDate Sep 11 2014 00:02 Jul 20, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2049.IS S2049 kjohnson on DSK79L0C42PROD with BILLS 4 S 2049 IS1S SEC. 4. PROGRESS PAYMENT INCENTIVE PILOT. 1 (a) PILOT PROGRAM.—The Secretary of Defense, 2 acting through the Under Secretary of Defense for Acqui- 3 sition and Sustainment, shall establish and implement a 4 pilot program, to be known as the ‘‘Progress Payment In- 5 centive Pilot Program’’, to make accelerated progress pay- 6 ments contingent upon responsiveness to Department of 7 Defense requests for cost or pricing information. 8 (b) PURPOSE.—The purpose of the pilot program is 9 to reward Department of Defense contractors who work 10 with the Department in the pre-award process to prevent 11 excessive costs and establish guardrails against excessive 12 prices. 13 (c) PROGRESS PAYMENTS.— 14 (1) LIMITATIONS FOR TRADITIONAL CONTRAC- 15 TORS.—Under the pilot program, the Department of 16 Defense may not award to traditional business con- 17 tractors progress payments in excess of 50 percent. 18 (2) EXCEPTIONS.—The Department of Defense 19 may increase the rate of progress payments to 80 20 percent if the division of the company provides cer- 21 tified cost or pricing information within 30 days of 22 the Department’s request for the information. The 23 progress payment rate may not exceed 95 percent. 24 (d) DEFINITIONS.—In this section: 25 VerDate Sep 11 2014 00:02 Jul 20, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2049.IS S2049 kjohnson on DSK79L0C42PROD with BILLS 5 S 2049 IS1S (1) TRADITIONAL DEFENSE CONTRACTOR.— 1 The term ‘‘traditional defense contractor’’ means a 2 contractor (other than an institute of higher edu- 3 cation) that is currently performing or has currently 4 performed for at least the one-year period preceding 5 the solicitation of sources by the Department of De- 6 fense for the procurement or transaction, any con- 7 tract or subcontract for the Department of Defense 8 that is subject to full coverage under the cost ac- 9 counting standards prescribed pursuant to section 10 1502 of title 41, United States Code, and the regu- 11 lations implementing such section. 12 (2) PROGRESS PAYMENTS.—The term 13 ‘‘progress payments’’ means payments provided for 14 under section 3804 of title 10, United States Code. 15 SEC. 5. DISCLOSURE BY TRADITIONAL DEFENSE CONTRAC- 16 TORS. 17 (a) ANNUAL REPORTING.—Not later than 60 days 18 after the date of the enactment of this Act, the Secretary 19 of Defense shall amend the Department of Defense Sup- 20 plement to the Federal Acquisition Regulation to provide 21 that traditional contractors shall be required to annually 22 report to the Under Secretary of Defense for Acquisition 23 and Sustainment the following information with regard to 24 VerDate Sep 11 2014 00:02 Jul 20, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2049.IS S2049 kjohnson on DSK79L0C42PROD with BILLS 6 S 2049 IS1S the covered year, as compared with the year preceding 1 that covered year: 2 (1) The percentage change in the volume of 3 goods or services sold and the percentage change in 4 the average sales price of those goods or services, 5 which shall be broken down by material product cat- 6 egories, when relevant, and presented in a tabular 7 format. 8 (2) The gross margins of the traditional con- 9 tractor, which shall be broken down by material 10 product categories, when relevant, and presented in 11 a tabular format. 12 (3) Presented in tabular format, the share of 13 the increase in revenue of the large defense con- 14 tractor that is attributable to— 15 (A) a change in the cost of goods or serv- 16 ices sold by the traditional defense contractor; 17 and 18 (B) a change in the volume of goods or 19 services sold by the covered issuer. 20 (4) The percentage change in the costs of the 21 traditional contractor, which shall be broken down 22 by category and presented in tabular format. 23 VerDate Sep 11 2014 00:02 Jul 20, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2049.IS S2049 kjohnson on DSK79L0C42PROD with BILLS 7 S 2049 IS1S (5) In dollars, the change in the costs of the 1 traditional defense contractor, which shall be pre- 2 sented in tabular format. 3 (6) A detailed narrative disclosure of the pric- 4 ing strategy of the traditional defense contractor, 5 which shall include— 6 (A) an explanation for any increase in the 7 gross margins of material product categories, 8 including— 9 (i) all material causes for such an in- 10 crease; 11 (ii) an explanation of how each such 12 material cause affected such an increase; 13 and 14 (iii) a description of the relative im- 15 portance of each such material cause with 16 respect to such an increase. 17 (B) An explanation for the decisions made 18 by the traditional defense contractor with re- 19 spect to the prices of goods and services sold by 20 the large defense contractor. 21 (C) If the large defense contractor in- 22 creased prices at a rate that was greater than 23 the rate at which the costs incurred by the tra- 24 ditional defense contractor increased, the ra- 25 VerDate Sep 11 2014 00:02 Jul 20, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2049.IS S2049 kjohnson on DSK79L0C42PROD with BILLS 8 S 2049 IS1S tionale and objectives for increasing prices in 1 such a manner. 2 (D) A description of conditions under 3 which the large defense contractor plans to 4 modify pricing after the date on which the tra- 5 ditional defense contractor submits the report. 6 (b) PUBLICATION.—The Under Secretary of Defense 7 for Acquisition and Sustainment shall annually publish on 8 a publicly available internet website the previous year’s re- 9 ports received under subsection (a). 10 (c) TRADITIONAL CONTRACTOR DEFINED.—In this 11 section, the term ‘‘traditional contractor’’ means a con- 12 tractor (other than an institute of higher education) that 13 is currently performing or has currently performed for at 14 least the one-year period preceding the solicitation of 15 sources by the Department of Defense for the procure- 16 ment or transaction of any contract or subcontract for the 17 Department of Defense that is subject to full coverage 18 under the cost accounting standards prescribed pursuant 19 to section 1502 of title 41, United States Code, and the 20 regulations implementing such section. 21 Æ VerDate Sep 11 2014 00:02 Jul 20, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\S2049.IS S2049 kjohnson on DSK79L0C42PROD with BILLS