
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 10USC2306]

 
                         TITLE 10--ARMED FORCES
 
                    Subtitle A--General Military Law
 
                PART IV--SERVICE, SUPPLY, AND PROCUREMENT
 
                   CHAPTER 137--PROCUREMENT GENERALLY
 
Sec. 2306. Kinds of contracts

    (a) The cost-plus-a-percentage-of-cost system of contracting may not 
be used. Subject to the limitation in the preceding sentence, the other 
provisions of this section, and other applicable provisions of law, the 
head of an agency, in awarding contracts under this chapter after using 
procedures other than sealed-bid procedures, may enter into any kind of 
contract that he considers will promote the best interests of the United 
States.
    (b) Each contract awarded under this chapter after using procedures 
other than sealed-bid procedures shall contain a warranty, determined to 
be suitable by the head of the agency, that the contractor has employed 
or retained no person or selling agency to solicit or obtain the 
contract under an understanding or agreement for a commission, 
percentage, brokerage, or contingent fee, except a bona fide employee or 
established commercial or selling agency maintained by him to obtain 
business. If a contractor breaks such a warranty the United States may 
annul the contract without liability or may deduct the commission, 
percentage, brokerage, or contingent fee from the contract price or 
consideration. This subsection does not apply to a contract that is for 
an amount not greater than the simplified acquisition threshold or to a 
contract for the acquisition of commercial items.
    [(c) Repealed. Pub. L. 103-355, title I, Sec. 1021, Oct. 13, 1994, 
108 Stat. 3257.]
    (d) The fee for performing a cost-plus-a-fixed-fee contract for 
experimental, developmental, or research work may not be more than 15 
percent of the estimated cost of the contract, not including the fee. 
The fee for performing a cost-plus-a-fixed-fee contract for 
architectural or engineering services for a public work or utility plus 
the cost of those services to the contractor may not be more than 6 
percent of the estimated cost of that work or project, not including 
fees. The fee for performing any other cost-plus-a-fixed-fee contract 
may not be more than 10 percent of the estimated cost of the contract, 
not including the fee. Determinations under this subsection of the 
estimated costs of a contract or project shall be made by the head of 
the agency at the time the contract is made.
    (e) Each cost contract and each cost-plus-a- fixed-fee contract 
shall provide for notice to the agency by the contractor before the 
making, under the prime contract, of--
        (1) a cost-plus-a-fixed-fee subcontract; or
        (2) a fixed-price subcontract or purchase order involving more 
    than the greater of (A) the simplified acquisition threshold, or (B) 
    5 percent of the estimated cost of the prime contract.

    (f) So-called ``truth-in-negotiations'' provisions relating to cost 
or pricing data to be submitted by certain contractors and 
subcontractors are provided in section 2306a of this title.
    (g) Multiyear contracting authority for the acquisition of services 
is provided in section 2306c of this title.
    (h) Multiyear contracting authority for the purchase of property is 
provided in section 2306b of this title.

(Aug. 10, 1956, ch. 1041, 70A Stat. 130; Pub. L. 87-653, Sec. 1(d), (e), 
Sept. 10, 1962, 76 Stat. 528; Pub. L. 90-378, Sec. 1, July 5, 1968, 82 
Stat. 289; Pub. L. 90-512, Sept. 25, 1968, 82 Stat. 863; Pub. L. 96-513, 
title V, Sec. 511(77), Dec. 12, 1980, 94 Stat. 2926; Pub. L. 97-86, 
title IX, Secs. 907(b), 909(b), Dec. 1, 1981, 95 Stat. 1117, 1118; Pub. 
L. 98-369, div. B, title VII, Sec. 2724, July 18, 1984, 98 Stat. 1192; 
Pub. L. 99-145, title XIII, Sec. 1303(a)(15), Nov. 8, 1985, 99 Stat. 
739; Pub. L. 99-500, Sec. 101(c) [title X, Sec. 952(b)(1), (c)(1)], Oct. 
18, 1986, 100 Stat. 1783-82, 1783-169, and Pub. L. 99-591, Sec. 101(c) 
[title X, Sec. 952(b)(1), (c)(1)], Oct. 30, 1986, 100 Stat. 3341-82, 
3341-169; Pub. L. 99-661, div. A, title IX, formerly title IV, 
Sec. 952(b)(1), (c)(1), Nov. 14, 1986, 100 Stat. 3949, renumbered title 
IX, Pub. L. 100-26, Sec. 3(5), Apr. 21, 1987, 101 Stat. 273; Pub. L. 
101-189, div. A, title VIII, Sec. 805(a), Nov. 29, 1989, 103 Stat. 1488; 
Pub. L. 101-510, div. A, title VIII, Sec. 808, Nov. 5, 1990, 104 Stat. 
1593; Pub. L. 102-25, title VII, Sec. 701(d)(3), Apr. 6, 1991, 105 Stat. 
114; Pub. L. 103-355, title I, Secs. 1021, 1022(b), title IV, 
Secs. 4102(b), 4401(c), title VIII, Sec. 8105(a), Oct. 13, 1994, 108 
Stat. 3257, 3260, 3340, 3348, 3392; Pub. L. 105-85, div. A, title X, 
Sec. 1073(a)(45), Nov. 18, 1997, 111 Stat. 1902; Pub. L. 106-398, Sec. 1 
[[div. A], title VIII, Sec. 802(b)], Oct. 30, 2000, 114 Stat. 1654, 
1654A-205.)

                                          Historical and Revision Notes
-------------------------------------------------------------------------------
---------------------------------
            Revised section                      Source (U.S. Code)            
   Source (Statutes at Large)
-------------------------------------------------------------------------------
---------------------------------
2306(a)...............................  41:153(a) (1st sentence).            Fe
b. 19, 1948, ch. 65, Sec.  4
                                        41:153(b) (1st 14 words of 1st        (
less words after semicolon of
                                         sentence).                           l
ast sentence of (b), and less
2306(b)...............................  41:153(a) (less 1st sentence).        (
c)), 62 Stat. 23.
2306(c)...............................  41:153(b) (2d sentence).
2306(d)...............................  41:153(b) (1st sentence, less 1st
                                         14 words).
2306(e)...............................  41:153(b) (less 1st and 2d
                                         sentences; and less words after
                                         semicolon of last sentence).
-------------------------------------------------------------------------------
---------------------------------

    In subsection (a), the words ``subject to subsections (b)-(e)'' are 
substituted for the words ``Except as provided in subsection (b) of this 
section''. The words ``United States'' are substituted for the word 
``Government''.
    In subsection (b), the words ``under section 2304 of this title'' 
are substituted for the words ``pursuant to section 151(c) of this 
title''. The words ``full amount of such'' and ``violation'' are omitted 
as surplusage.
    In subsection (c), the words ``under section 2304 of this title'' 
are inserted for clarity.

                          Codification

    Pub. L. 99-591 is a corrected version of Pub. L. 99-500.


                            Prior Provisions

    Provisions similar to those in subsec. (h)(11) of this section were 
contained in Pub. L. 100-526, title I, Sec. 104(a), Oct. 24, 1988, 102 
Stat. 2624, which was set out below, prior to repeal by Pub. L. 101-189, 
Sec. 805(b).


                               Amendments

    2000--Subsec. (g). Pub. L. 106-398 amended subsec. (g) generally. 
Prior to amendment, subsec. (g) consisted of pars. (1) to (3) 
authorizing the head of an agency to enter into contracts for periods of 
not more than five years for certain types of services.
    1997--Subsec. (h). Pub. L. 105-85 inserted ``for the purchase of 
property'' after ``Multiyear contracting authority''.
    1994--Subsec. (b). Pub. L. 103-355, Secs. 4102(b), 8105(a), inserted 
at end ``This subsection does not apply to a contract that is for an 
amount not greater than the simplified acquisition threshold or to a 
contract for the acquisition of commercial items.''
    Subsec. (c). Pub. L. 103-355, Sec. 1021, struck out subsec. (c) 
which read as follows: ``No cost contract, cost-plus-a-fixed-fee 
contract, or incentive contract may be made under this chapter unless 
the head of the agency determines that such a contract is likely to be 
less costly to the United States than any other kind of contract or that 
it is impracticable to obtain property or services of the kind or 
quality required except under such a contract.''
    Subsec. (e)(2)(A). Pub. L. 103-355, Sec. 4401(c), substituted 
``simplified acquisition threshold'' for ``small purchase threshold''.
    Subsec. (h). Pub. L. 103-355, Sec. 1022(b), amended subsec. (h) 
generally. Prior to amendment, subsec. (h) related to requirements for 
multiyear contracts for purchase of property, including weapon systems 
and items and services associated with weapons systems.
    1991--Subsec. (e)(2)(A). Pub. L. 102-25 substituted ``the small 
purchase threshold'' for ``the small purchase amount under section 
2304(g) of this title''.
    1990--Subsec. (h)(1). Pub. L. 101-510, Sec. 808(a), struck out 
``(other than contracts described in paragraph (6))'' after ``multiyear 
contracts'' in introductory provisions and substituted ``substantial 
savings of the total anticipated costs of carrying out the program 
through annual contracts'' for ``reduced total costs under the 
contract'' in subpar. (A).
    Subsec. (h)(6). Pub. L. 101-510, Sec. 808(b), struck out ``contracts 
for the construction, alteration, or major repair of improvements to 
real property or'' after ``not apply to''.
    Subsec. (h)(9). Pub. L. 101-510, Sec. 808(c)(1), inserted ``for a 
defense acquisition program that has been specifically authorized by law 
to be carried out using multiyear contract authority'' after ``under 
this subsection'' in introductory provisions.
    Subsec. (h)(9)(C). Pub. L. 101-510, Sec. 808(c)(2), struck out 
subpar. (C) which read as follows: ``The proposed multiyear contract--
        ``(i) achieves a 10 percent savings as compared to the cost of 
    current negotiated contracts, adjusted for changes in quantity and 
    for inflation; or
        ``(ii) achieves a 10 percent savings as compared to annual 
    contracts if no recent contract experience exists.''
    1989--Subsec. (h)(9) to (11). Pub. L. 101-189 added pars. (9) to 
(11).
    1986--Pub. L. 99-500 and Pub. L. 99-591, Sec. 101(c) 
[Sec. 952(c)(1)], Pub. L. 99-661, Sec. 952(c)(1), amended section 
identically, striking out ``: cost or pricing data: truth in 
negotiation'' after ``contracts'' in section catchline.
    Subsec. (f). Pub. L. 99-500 and Pub. L. 99-591, Sec. 101(c) 
[Sec. 952(b)(1)], Pub. L. 99-661, Sec. 952(b)(1), amended generally 
subsec. (f) identically, substituting provision that ``truth-in-
negotiations'' provisions relating to cost and pricing data for 
contractors and subcontractors are provided in section 2306a of this 
title for provision relating to certification by contractors and 
subcontractors on cost and pricing data, circumstances under which such 
certification will be required, circumstances under which such 
certification, although not required, may be requested, and evaluation 
of the accuracy of the data submitted.
    1985--Subsec. (a). Pub. L. 99-145, Sec. 1303(a)(15)(A), inserted a 
period at end.
    Subsec. (b). Pub. L. 99-145, Sec. 1303(a)(15)(B), struck out ``of 
this title'' before ``shall contain''.
    1984--Pub. L. 98-369, Sec. 2724(f), substituted ``Kinds of 
contracts; cost or pricing data: truth in negotiation'' for ``Kinds of 
contracts'' in section catchline.
    Subsec. (a). Pub. L. 98-369, Sec. 2724(a), substituted ``the 
limitation in the preceding sentence, the other provisions of this 
section, and other applicable provisions of law, the head of an agency, 
in awarding contracts under this chapter after using procedures other 
than sealed-bid procedures, may enter into'' for ``this limitation and 
subject to subsections (b)-(f), the head of any agency may, in 
negotiating contracts under section 2304 of this title, make''.
    Subsec. (b). Pub. L. 98-369, Sec. 2724(b), substituted ``awarded 
under this chapter after using procedures other than sealed-bid 
procedures'' for ``negotiated under section 2304''.
    Subsec. (c). Pub. L. 98-369, Sec. 2724(c), substituted ``this 
chapter'' for ``section 2304 of this title,''.
    Subsec. (e)(2). Pub. L. 98-369, Sec. 2724(d), substituted ``the 
greater of (A) the small purchase amount under section 2304(g) of this 
title, or (B)'' for ``$25,000 or''.
    Subsec. (f)(1). Pub. L. 98-369, Sec. 2724(e)(A)(i), (ii), 
substituted ``such contractor's or subcontractor's'' for ``his'' and 
struck out ``he'' before ``submitted was accurate'' in provisions 
preceding subpar. (A).
    Subsec. (f)(1)(A). Pub. L. 98-369, Sec. 2724(3)(A)(iii), (vi), 
(vii), substituted ``prime contract under this chapter entered into 
after using procedures other than sealed-bid procedures, if'' for 
``negotiated prime contract under this title where'', ``$100,000'' for 
``$500,000'', and ``before'' for ``prior to''.
    Subsec. (f)(1)(B). Pub. L. 98-369, Sec. 2724(e)(A)(iv), (vi), (vii), 
substituted ``if'' for ``for which'', ``$100,000'' for ``$500,000'', and 
``before'' for ``prior to''.
    Subsec. (f)(1)(C). Pub. L. 98-369, Sec. 2724(e)(A)(v)-(vii), 
substituted ``when'' for ``where'', ``$100,000'' for ``$500,000'', and 
``before'' for ``prior to''.
    Subsec. (f)(1)(D). Pub. L. 98-369, Sec. 2724(e)(A)(iv), (vi), (vii), 
substituted ``if'' for ``for which'', ``$100,000'' for ``$500,000'', and 
``before'' for ``prior to''.
    Subsec. (f)(2). Pub. L. 98-369, Sec. 2724(e)(B), (D), (E), struck 
out ``negotiated'' before ``price as is practicable'' and before ``is 
based on adequate price competition'', redesignated as par. (3) the 
proviso formerly set out in this par., and as part of the redesignation 
substituted a period for ``: Provided, That'' after ``or noncurrent''.
    Subsec. (f)(3). Pub. L. 98-369, Sec. 2724(e)(E), designated as par. 
(3) the proviso formerly set out in par. (2). Former par. (3) 
redesignated (5).
    Subsec. (f)(4). Pub. L. 98-369, Sec. 2724(e)(F), added par. (4).
    Subsec. (f)(5). Pub. L. 98-369, Sec. 2724(e)(C), redesignated former 
par. (3) as (5) and substituted ``proposal for the contract, the 
discussions conducted on the proposal'' for ``negotiation''.
    1981--Subsec. (f)(1). Pub. L. 97-86, Sec. 907(b), substituted 
``$500,000'' for ``$100,000'' in subpars. (A) to (D).
    Subsec. (g)(1). Pub. L 97-86, Sec. 909(b)(1), struck out ``to be 
performed outside the forty-eight contiguous States and the District of 
Columbia'' after ``(and items of supply related to such services)'' in 
provisions preceding subpar. (A).
    Subsec. (h). Pub. L. 97-86, Sec. 909(b)(2), added subsec. (h).
    1980--Subsec. (f). Pub. L. 96-513, Sec. 511(77)(A), designated 
existing provisions as pars. (1) to (3) and in par. (1), as so 
designated, substituted ``(A)'' to ``(D)'' for ``(1)'' to ``(4)'', 
respectively, ``prior'' for ``Prior'' wherever appearing, and ``clause 
(C)'' for ``(3) above''.
    Subsec. (g). Pub. L. 96-513, Sec. 511(77)(B), in par. (1) 
substituted ``that--'' for ``that:'', in par. (2) substituted ``(A) 
The'' for ``(A) the'', ``(B) Consideration'' for ``(B) consideration'', 
and ``(C) Consideration'' for ``(C) consideration'', and in par. (3) 
substituted ``from--'' for ``from:''.
    1968--Subsec. (f). Pub. L. 90-512 inserted last par.
    Subsec. (g). Pub. L. 90-378 added subsec. (g).
    1962--Subsec. (a). Pub. L. 87-653, Sec. 1(d), substituted 
``subsections (b)-(f)'' for ``subsections (b)-(e)''.
    Subsec. (f). Pub. L. 87-653, Sec. 1(e), added subsec. (f).


                    Effective Date of 1994 Amendment

    For effective date and applicability of amendment by Pub. L. 103-
355, see section 10001 of Pub. L. 103-355, set out as a note under 
section 251 of Title 41, Public Contracts.


                    Effective Date of 1986 Amendment

    Amendment by section 101(c) [title X, Sec. 952(b)(1)] of Pub. L. 99-
500 and Pub. L. 99-591, and section 952(b)(1) of Pub. L. 99-661 
applicable with respect to contracts or modifications on contracts 
entered into after end of 120-day period beginning Oct. 18, 1986, see 
section 101(c) of Pub. L. 99-500 and Pub. L. 99-591, and section 952(d) 
of Pub. L. 99-661, set out as a note under section 2306a of this title.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-369 applicable with respect to any 
solicitation for bids or proposals issued after Mar. 31, 1985, see 
section 2751 of Pub. L. 98-369, set out as a note under section 251 of 
Title 41, Public Contracts.


                    Effective Date of 1980 Amendment

    Amendment by Pub. L. 96-513 effective Dec. 12, 1980, see section 
701(b)(3) of Pub. L. 96-513, set out as a note under section 101 of this 
title.


                    Effective Date of 1962 Amendment

    For effective date of amendment by Pub. L. 87-653 see section 1(h) 
of Pub. L. 87-653, set out as a note under section 2304 of this title.


                          Transition Provision

    Section 805(c) of Pub. L. 101-189 provided that: ``Subparagraph (C) 
of paragraph (9) of section 2306(h) of title 10, United States Code, as 
added by subsection (a), does not apply to programs that are under a 
multiyear contract on the date of the enactment of this Act [Nov. 29, 
1989].''


          Multiyear Procurement Authority; Requests for Relief

    Pub. L. 100-526, title I, Sec. 104(a), Oct. 24, 1988, 102 Stat. 
2624, which provided that if for any fiscal year a multiyear contract 
was to be entered into under 10 U.S.C. 2306(h) was authorized by law for 
a particular procurement program and that authorization was subject to 
certain conditions established by law (including a condition as to cost 
savings to be achieved under the multiyear contract in comparison to 
specified other contracts) and if it appeared (after negotiations with 
contractors) that such savings could not be achieved, but that 
substantial savings could nevertheless be achieved through the use of a 
multiyear contract rather than specified other contracts, the President 
was to submit to Congress a request for relief from the specified cost 
savings that was to be achieved through multiyear contracting for that 
program and that any such request by the President was to include 
details about the request for a multiyear contract, including details 
about the negotiated contract terms and conditions, was repealed and 
restated as subsec. (h)(11) of this section by Pub. L. 101-189, 
Sec. 805(b), (c).


Technical Data and Computer Software Packages; Procurement; Contracting 
 Period; Deferred Ordering Clause; Exemptions; Report to Congressional 
                         Committees; Definitions

    Pub. L. 94-361, title VIII, Sec. 805, July 14, 1976, 90 Stat. 932, 
required that military contracts entered into during Oct. 1, 1976 to 
Sept. 30, 1978 for development or procurement of a major system include 
a deferred ordering clause with an option to purchase from the 
contractor technical data and computer software packages relating to the 
system, directed that such clause require such packages to be 
sufficiently detailed so as to enable procurement of such system or 
subsystem from another contractor, authorized that a particular contract 
may be exempted from the deferred ordering clause if the procuring 
authority reports to the House and Senate Committees on Armed Services 
his intent to so contract with an explanation for the exemption, and set 
out definitions for ``major system'', ``deferred ordering'', and 
``technical data''.

                  Section Referred to in Other Sections

    This section is referred to in sections 2310, 2343 of this title; 
title 50 section 403c.
