
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-117 Section 8008]
[CITE: 10USC2306b]

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

    (a) In General.--To the extent that funds are otherwise available 
for obligation, the head of an agency may enter into multiyear contracts 
for the purchase of property whenever the head of that agency finds each 
of the following:
        (1) That the use of such a contract will result in substantial 
    savings of the total anticipated costs of carrying out the program 
    through annual contracts.
        (2) That the minimum need for the property to be purchased is 
    expected to remain substantially unchanged during the contemplated 
    contract period in terms of production rate, procurement rate, and 
    total quantities.
        (3) That there is a reasonable expectation that throughout the 
    contemplated contract period the head of the agency will request 
    funding for the contract at the level required to avoid contract 
    cancellation.
        (4) That there is a stable design for the property to be 
    acquired and that the technical risks associated with such property 
    are not excessive.
        (5) That the estimates of both the cost of the contract and the 
    anticipated cost avoidance through the use of a multiyear contract 
    are realistic.
        (6) In the case of a purchase by the Department of Defense, that 
    the use of such a contract will promote the national security of the 
    United States.

    (b) Regulations.--(1) Each official named in paragraph (2) shall 
prescribe acquisition regulations for the agency or agencies under the 
jurisdiction of such official to promote the use of multiyear 
contracting as authorized by subsection (a) in a manner that will allow 
the most efficient use of multiyear contracting.
    (2)(A) The Secretary of Defense shall prescribe the regulations 
applicable to the Department of Defense.
    (B) The Secretary of Transportation shall prescribe the regulations 
applicable to the Coast Guard, except that the regulations prescribed by 
the Secretary of Defense shall apply to the Coast Guard when it is 
operating as a service in the Navy.
    (C) The Administrator of the National Aeronautics and Space 
Administration shall prescribe the regulations applicable to the 
National Aeronautics and Space Administration.
    (c) Contract Cancellations.--The regulations may provide for 
cancellation provisions in multiyear contracts to the extent that such 
provisions are necessary and in the best interests of the United States. 
The cancellation provisions may include consideration of both recurring 
and nonrecurring costs of the contractor associated with the production 
of the items to be delivered under the contract.
    (d) Participation by Subcontractors, Vendors, and Suppliers.--In 
order to broaden the defense industrial base, the regulations shall 
provide that, to the extent practicable--
        (1) multiyear contracting under subsection (a) shall be used in 
    such a manner as to seek, retain, and promote the use under such 
    contracts of companies that are subcontractors, vendors, or 
    suppliers; and
        (2) upon accrual of any payment or other benefit under such a 
    multiyear contract to any subcontractor, vendor, or supplier company 
    participating in such contract, such payment or benefit shall be 
    delivered to such company in the most expeditious manner 
    practicable.

    (e) Protection of Existing Authority.--The regulations shall provide 
that, to the extent practicable, the administration of this section, and 
of the regulations prescribed under this section, shall not be carried 
out in a manner to preclude or curtail the existing ability of an 
agency--
        (1) to provide for competition in the production of items to be 
    delivered under such a contract; or
        (2) to provide for termination of a prime contract the 
    performance of which is deficient with respect to cost, quality, or 
    schedule.

    (f) Cancellation or Termination for Insufficient Funding.--In the 
event funds are not made available for the continuation of a contract 
made under this section into a subsequent fiscal year, the contract 
shall be canceled or terminated. The costs of cancellation or 
termination may be paid from--
        (1) appropriations originally available for the performance of 
    the contract concerned;
        (2) appropriations currently available for procurement of the 
    type of property concerned, and not otherwise obligated; or
        (3) funds appropriated for those payments.

    (g) Contract Cancellation Ceilings Exceeding $100,000,000.--Before 
any contract described in subsection (a) that contains a clause setting 
forth a cancellation ceiling in excess of $100,000,000 may be awarded, 
the head of the agency concerned shall give written notification of the 
proposed contract and of the proposed cancellation ceiling for that 
contract to the Committee on Armed Services and the Committee on 
Appropriations of the Senate and the Committee on Armed Services and the 
Committee on Appropriations of the House of Representatives, and such 
contract may not then be awarded until the end of a period of 30 days 
beginning on the date of such notification.
    (h) Defense Acquisitions of Weapon Systems.--In the case of the 
Department of Defense, the authority under subsection (a) includes 
authority to enter into the following multiyear contracts in accordance 
with this section:
        (1) A multiyear contract for the purchase of a weapon system, 
    items and services associated with a weapon system, and logistics 
    support for a weapon system.
        (2) A multiyear contract for advance procurement of components, 
    parts, and materials necessary to the manufacture of a weapon 
    system, including a multiyear contract for such advance procurement 
    that is entered into in order to achieve economic-lot purchases and 
    more efficient production rates.

    (i) Defense Acquisitions Specifically Authorized by Law.--(1) A 
multiyear contract may not be entered into for any fiscal year under 
this section for a defense acquisition program that has been 
specifically authorized by law to be carried out using multiyear 
contract authority unless each of the following conditions is satisfied:
        (A) The Secretary of Defense certifies to Congress that the 
    current future-years defense program fully funds the support costs 
    associated with the multiyear program.
        (B) The proposed multiyear contract provides for production at 
    not less than minimum economic rates given the existing tooling and 
    facilities.

    (2) If for any fiscal year a multiyear contract to be entered into 
under this section is authorized by law for a particular procurement 
program and that authorization is 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 appears (after negotiations with contractors) that 
such savings cannot be achieved, but that substantial savings could 
nevertheless be achieved through the use of a multiyear contract rather 
than specified other contracts, the President may submit to Congress a 
request for relief from the specified cost savings that must be achieved 
through multiyear contracting for that program. Any such request by the 
President shall include details about the request for a multiyear 
contract, including details about the negotiated contract terms and 
conditions.
    (3) In the case of the Department of Defense, a multiyear contract 
in an amount equal to or greater than $500,000,000 may not be entered 
into for any fiscal year under this section unless the contract is 
specifically authorized by law in an Act other than an appropriations 
Act.
    (j) Defense Contract Options for Varying Quantities.--The Secretary 
of Defense may instruct the Secretary of the military department 
concerned to incorporate into a proposed multiyear contract negotiated 
priced options for varying the quantities of end items to be procured 
over the period of the contract.
    (k) Multiyear Contract Defined.--For the purposes of this section, a 
multiyear contract is a contract for the purchase of property for more 
than one, but not more than five, program years. Such a contract may 
provide that performance under the contract during the second and 
subsequent years of the contract is contingent upon the appropriation of 
funds and (if it does so provide) may provide for a cancellation payment 
to be made to the contractor if such appropriations are not made.
    (l) Various Additional Requirements With Respect to Multiyear 
Defense Contracts.--(1)(A) The head of an agency may not initiate a 
contract described in subparagraph (B) unless the congressional defense 
committees are notified of the proposed contract at least 30 days in 
advance of the award of the proposed contract.
    (B) Subparagraph (A) applies to the following contracts:
        (i) A multiyear contract--
            (I) that employs economic order quantity procurement in 
        excess of $20,000,000 in any one year of the contract; or
            (II) that includes an unfunded contingent liability in 
        excess of $20,000,000.

        (ii) Any contract for advance procurement leading to a multiyear 
    contract that employs economic order quantity procurement in excess 
    of $20,000,000 in any one year.

    (2) The head of an agency may not initiate a multiyear contract for 
which the economic order quantity advance procurement is not funded at 
least to the limits of the Government's liability.
    (3) The head of an agency may not initiate a multiyear procurement 
contract for any system (or component thereof) if the value of the 
multiyear contract would exceed $500,000,000 unless authority for the 
contract is specifically provided in an appropriations Act.
    (4) Not later than the date of the submission of the President's 
budget request under section 1105 of title 31, the Secretary of Defense 
shall submit a report to the congressional defense committees each year, 
providing the following information with respect to each multiyear 
contract (and each extension of an existing multiyear contract) entered 
into, or planned to be entered into, by the head of an agency during the 
current or preceding year, shown for each year in the current future-
years defense program and in the aggregate over the period of the 
current future-years defense program:
        (A) The amount of total obligational authority under the 
    contract (or contract extension) and the percentage that such amount 
    represents of--
            (i) the applicable procurement account; and
            (ii) the agency procurement total.

        (B) The amount of total obligational authority under all 
    multiyear procurements of the agency concerned (determined without 
    regard to the amount of the multiyear contract (or contract 
    extension)) under multiyear contracts in effect at the time the 
    report is submitted and the percentage that such amount represents 
    of--
            (i) the applicable procurement account; and
            (ii) the agency procurement total.

        (C) The amount equal to the sum of the amounts under 
    subparagraphs (A) and (B), and the percentage that such amount 
    represents of--
            (i) the applicable procurement account; and
            (ii) the agency procurement total.

        (D) The amount of total obligational authority under all 
    Department of Defense multiyear procurements (determined without 
    regard to the amount of the multiyear contract (or contract 
    extension)), including any multiyear contract (or contract 
    extension) that has been authorized by the Congress but not yet 
    entered into, and the percentage that such amount represents of the 
    procurement accounts of the Department of Defense treated in the 
    aggregate.

    (5) The head of an agency may not enter into a multiyear contract 
(or extend an existing multiyear contract), the value of which would 
exceed $500,000,000 (when entered into or when extended, as the case may 
be), until the Secretary of Defense submits to the congressional defense 
committees a report containing the information described in paragraph 
(4) with respect to the contract (or contract extension).
    (6) The head of an agency may not terminate a multiyear procurement 
contract until 10 days after the date on which notice of the proposed 
termination is provided to the congressional defense committees.
    (7) The execution of multiyear contracting authority shall require 
the use of a present value analysis to determine lowest cost compared to 
an annual procurement.
    (8) This subsection does not apply to the National Aeronautics and 
Space Administration or to the Coast Guard.
    (9) In this subsection, the term ``congressional defense 
committees'' means the following:
        (A) The Committee on Armed Services of the Senate and the 
    Subcommittee on Defense of the Committee on Appropriations of the 
    Senate.
        (B) The Committee on Armed Services of the House of 
    Representatives and the Subcommittee on National Security of the 
    Committee on Appropriations of the House of Representatives.

    (10) In this subsection:
        (A) The term ``applicable procurement account'' means, with 
    respect to a multiyear procurement contract (or contract extension), 
    the appropriation account from which payments to execute the 
    contract will be made.
        (B) The term ``agency procurement total'' means the procurement 
    accounts of the agency entering into a multiyear procurement 
    contract (or contract extension) treated in the aggregate.

(Added Pub. L. 103-355, title I, Sec. 1022(a)(1), Oct. 13, 1994, 108 
Stat. 3257; amended Pub. L. 104-106, div. A, title XV, Sec. 1502(a)(10), 
div. E, title LVI, Sec. 5601(b), Feb. 10, 1996, 110 Stat. 503, 699; Pub. 
L. 105-85, div. A, title VIII, Sec. 806(a)(1), (b)(1), (c), title X, 
Sec. 1073(a)(47), (48)(A), Nov. 18, 1997, 111 Stat. 1834, 1835, 1903; 
Pub. L. 106-65, div. A, title VIII, Sec. 809, title X, Sec. 1067(1), 
Oct. 5, 1999, 113 Stat. 705, 774; Pub. L. 106-398, Sec. 1 [[div. A], 
title VIII, Secs. 802(c), 806], Oct. 30, 2000, 114 Stat. 1654, 1654A-
205, 1654A-207.)


                               Amendments

    2000--Subsec. (k). Pub. L. 106-398, Sec. 1 [[div. A], title VIII, 
Sec. 802(c)], struck out ``or services'' after ``purchase of property''.
    Subsec. (l)(4). Pub. L. 106-398, Sec. 1 [[div. A], title VIII, 
Sec. 806(1)(A)], in introductory provisions, substituted ``Not later 
than the date of the submission of the President's budget request under 
section 1105 of title 31, the Secretary of Defense shall submit a report 
to the congressional defense committees each year, providing the 
following information with respect to each multiyear contract (and each 
extension of an existing multiyear contract) entered into, or planned to 
be entered into, by the head of an agency during the current or 
preceding year'' for ``The head of an agency may not enter into a 
multiyear contract (or extend an existing multiyear contract) until the 
Secretary of Defense submits to the congressional defense committees a 
report with respect to that contract (or contract extension) that 
provides the following information''.
    Subsec. (l)(4)(B). Pub. L. 106-398, Sec. 1 [[div. A], title VIII, 
Sec. 806(1)(B)], substituted ``in effect at the time the report is 
submitted'' for ``in effect immediately before the contract (or contract 
extension) is entered into'' in introductory provisions.
    Subsec. (l)(5) to (10). Pub. L. 106-398, Sec. 1 [[div. A], title 
VIII, Sec. 806(2), (3)], added par. (5) and redesignated former pars. 
(5) to (9) as (6) to (10), respectively.
    1999--Subsec. (g). Pub. L. 106-65, Sec. 1067(1), substituted ``and 
the Committee on Armed Services'' for ``and the Committee on National 
Security''.
    Subsec. (l)(4) to (7). Pub. L. 106-65, Sec. 809(1), (2), added par. 
(4) and redesignated former pars. (4) to (6) as (5) to (7), 
respectively. Former par. (7) redesignated (8).
    Subsec. (l)(8). Pub. L. 106-65, Sec. 809(1), redesignated par. (7) 
as (8).
    Subsec. (l)(8)(B). Pub. L. 106-65, Sec. 1067(1), substituted 
``Committee on Armed Services'' for ``Committee on National Security''.
    Subsec. (l)(9). Pub. L. 106-65, Sec. 809(3), added par. (9).
    1997--Pub. L. 105-85, Sec. 1073(a)(48)(A), inserted ``: acquisition 
of property'' in section catchline.
    Subsec. (a). Pub. L. 105-85, Sec. 806(c)(1), substituted ``finds 
each of the following:'' for ``finds--'' in introductory provisions, 
capitalized first letter of first word in pars. (1) to (6), and 
substituted a period for semicolon at end of pars. (1) to (4) and for 
``; and'' at end of par. (5).
    Subsec. (d)(1). Pub. L. 105-85, Sec. 806(c)(2), substituted 
``subsection (a)'' for ``paragraph (1)''.
    Subsec. (i)(1)(A). Pub. L. 105-85, Sec. 806(c)(3), substituted 
``future-years'' for ``five-year''.
    Subsec. (i)(3). Pub. L. 105-85, Sec. 806(a)(1), added par. (3).
    Subsec. (k). Pub. L. 105-85, Sec. 1073(a)(47), substituted ``this 
section'' for ``this subsection''.
    Subsec. (l). Pub. L. 105-85, Sec. 806(b)(1), added subsec. (l).
    1996--Subsec. (g). Pub. L. 104-106, Sec. 1502(a)(10), substituted 
``the Committee on Armed Services and the Committee on Appropriations of 
the Senate and the Committee on National Security and the Committee on 
Appropriations of the'' for ``the Committees on Armed Services and on 
Appropriations of the Senate and''.
    Subsecs. (k), (l). Pub. L. 104-106, Sec. 5601(b), redesignated 
subsec. (l) as (k) and struck out former subsec. (k) which read as 
follows: ``Inapplicability to Automatic Data Processing Contracts.--This 
section does not apply to contracts for the purchase of property to 
which section 111 of the Federal Property and Administrative Services 
Act of 1949 (40 U.S.C. 759) applies.''


                    Effective Date of 1997 Amendment

    Section 806(a)(2) of Pub. L. 105-85 provided that: ``Paragraph (3) 
of section 2306b(i) of title 10, United States Code, as added by 
paragraph (1), shall not apply with respect to a contract authorized by 
law before the date of the enactment of this Act [Nov. 18, 1997].''
    Section 806(b)(2) of Pub. L. 105-85 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall take effect on 
October 1, 1998.''


                    Effective Date of 1996 Amendment

    Amendment by section 5601(b) of Pub. L. 104-106 effective 180 days 
after Feb. 10, 1996, see section 5701 of Pub. L. 104-106, set out as an 
Effective Date note under section 1401 of Title 40, Public Buildings, 
Property, and Works.


                             Effective Date

    For effective date and applicability of section, see section 10001 
of Pub. L. 103-355, set out as an Effective Date of 1994 Amendment note 
under section 251 of Title 41, Public Contracts.


                     Multiyear Procurement Contracts

    Pub. L. 105-56, title VIII, Sec. 8008, Oct. 8, 1997, 111 Stat. 1221, 
provided that:
    ``(a) None of the funds provided in this Act [see Tables for 
classification] shall be available to initiate: (1) a multiyear contract 
that employs economic order quantity procurement in excess of 
$20,000,000 in any one year of the contract or that includes an unfunded 
contingent liability in excess of $20,000,000; or (2) a contract for 
advance procurement leading to a multiyear contract that employs 
economic order quantity procurement in excess of $20,000,000 in any one 
year, unless the congressional defense committees have been notified at 
least 30 days in advance of the proposed contract award: Provided, That 
no part of any appropriation contained in this Act shall be available to 
initiate a multiyear contract for which the economic order quantity 
advance procurement is not funded at least to the limits of the 
Government's liability: Provided further, That no part of any 
appropriation contained in this Act shall be available to initiate 
multiyear procurement contracts for any systems or component thereof if 
the value of the multiyear contract would exceed $500,000,000 unless 
specifically provided in this Act: Provided further, That no multiyear 
procurement contract can be terminated without 10-day prior notification 
to the congressional defense committees [Committee on Armed Services and 
Subcommittee on National Security of the Committee on Appropriations of 
the House of Representatives and Committee on Armed Services and 
Subcommittee on Defense of the Committee on Appropriations of the 
Senate]: Provided further, That the execution of multiyear authority 
shall require the use of a present value analysis to determine lowest 
cost compared to an annual procurement.
    ``Funds appropriated in title III of this Act [111 Stat. 1211] may 
be used for multiyear procurement contracts as follows:
        ``Apache Longbow radar;
        ``AV-8B aircraft; and
        ``Family of Medium Tactical Vehicles.
    ``(b) None of the funds provided in this Act and hereafter may be 
used to submit to Congress (or to any committee of Congress) a request 
for authority to enter into a contract covered by those provisions of 
subsection (a) that precede the first proviso of that subsection 
unless--
        ``(1) such request is made as part of the submission of the 
    President's Budget for the United States Government for any fiscal 
    year and is set forth in the Appendix to that budget as part of 
    proposed legislative language for appropriations bills for the next 
    fiscal year; or
        ``(2) such request is formally submitted by the President as a 
    budget amendment; or
        ``(3) the Secretary of Defense makes such request in writing to 
    the congressional defense committees.''
    Similar provisions were contained in the following appropriation 
acts:
    Pub. L. 106-259, title VIII, Sec. 8008, Aug. 9, 2000, 114 Stat. 675.
    Pub. L. 106-79, title VIII, Sec. 8008, Oct. 25, 1999, 113 Stat. 
1232.
    Pub. L. 105-262, title VIII, Sec. 8008, Oct. 17, 1998, 112 Stat. 
2298.
    Pub. L. 104-208, div. A, title I, Sec. 101(b) [title VIII, 
Sec. 8009], Sept. 30, 1996, 110 Stat. 3009-71, 3009-89.
    Pub. L. 104-61, title VIII, Sec. 8010, Dec. 1, 1995, 109 Stat. 653.
    Pub. L. 103-335, title VIII, Sec. 8010, Sept. 30, 1994, 108 Stat. 
2618.
    Pub. L. 103-139, title VIII, Sec. 8011, Nov. 11, 1993, 107 Stat. 
1439.
    Pub. L. 102-396, title IX, Sec. 9013, Oct. 6, 1992, 106 Stat. 1903.
    Pub. L. 102-172, title VIII, Sec. 8013, Nov. 26, 1991, 105 Stat. 
1173.
    Pub. L. 101-511, title VIII, Sec. 8014, Nov. 5, 1990, 104 Stat. 
1877.
    Pub. L. 101-165, title IX, Sec. 9021, Nov. 21, 1989, 103 Stat. 1133.

                  Section Referred to in Other Sections

    This section is referred to in section 2306 of this title.
