10 U.S. Code § 2410p - Contracts: limitations on lead system integrators

(a) In General.— Except as provided in subsection (b), no entity performing lead system integrator functions in the acquisition of a major system by the Department of Defense may have any direct financial interest in the development or construction of any individual system or element of any system of systems.
(b) Exception.— An entity described in subsection (a) may have a direct financial interest in the development or construction of an individual system or element of a system of systems if—
(1) the Secretary of Defense certifies to the Committees on Armed Services of the Senate and the House of Representatives that—
(A) the entity was selected by the Department of Defense as a contractor to develop or construct the system or element concerned through the use of competitive procedures; and
(B) the Department took appropriate steps to prevent any organizational conflict of interest in the selection process; or
(2) the entity was selected by a subcontractor to serve as a lower-tier subcontractor, through a process over which the entity exercised no control.
(c) Construction.— Nothing in this section shall be construed to preclude an entity described in subsection (a) from performing work necessary to integrate two or more individual systems or elements of a system of systems with each other.

Source

(Added Pub. L. 109–364, div. A, title VIII, § 807(a)(1),Oct. 17, 2006, 120 Stat. 2315.)
Effective Date

Pub. L. 109–364, div. A, title VIII, § 807(a)(3),Oct. 17, 2006, 120 Stat. 2316, provided that: “Section 2410p of title 10, United States Code, as added by paragraph (1), shall apply with respect to contracts entered into after December 31, 2006.”
Update of Regulations on Lead System Integrators

Pub. L. 109–364, div. A, title VIII, § 807(b),Oct. 17, 2006, 120 Stat. 2316, provided that: “Not later than December 31, 2006, the Secretary of Defense shall update the acquisition regulations of the Department of Defense in order to specify fully in such regulations the matters with respect to lead system integrators set forth in section 805(b) of the National Defense Authorization Act for Fiscal Year 2006 (Public Law 109–163; 119 Stat. 3372) and the amendments made by subsection (a) [enacting this section].”
Prohibition on New Lead Systems Integrators

Pub. L. 110–181, div. A, title VIII, § 802,Jan. 28, 2008, 122 Stat. 206, as amended by Pub. L. 110–417, [div. A], title I, § 112,Oct. 14, 2008, 122 Stat. 4374, provided that:
“(a) Prohibitions on the Use of Lead Systems Integrators.—
“(1) Prohibition on new lead systems integrators.—Effective October 1, 2010, the Department of Defense may not award a new contract for lead systems integrator functions in the acquisition of a major system to any entity that was not performing lead systems integrator functions in the acquisition of the major system prior to the date of the enactment of this Act [Jan. 28, 2008].
“(2) Prohibition on lead systems integrators beyond low-rate initial production.—Effective on the date of the enactment of this Act, the Department of Defense may award a new contract for lead systems integrator functions in the acquisition of a major system only if—
“(A) the major system has not yet proceeded beyond low-rate initial production; or
“(B) the Secretary of Defense determines in writing that it would not be practicable to carry out the acquisition without continuing to use a contractor to perform lead systems integrator functions and that doing so is in the best interest of the Department.
“(3) Requirements relating to determinations.—A determination under paragraph (2)(B)—
“(A) shall specify the reasons why it would not be practicable to carry out the acquisition without continuing to use a contractor to perform lead systems integrator functions (including a discussion of alternatives, such as the use of the Department of Defense workforce, or a system engineering and technical assistance contractor);
“(B) shall include a plan for phasing out the use of contracted lead systems integrator functions over the shortest period of time consistent with the interest of the national defense;
“(C) may not be delegated below the level of the Under Secretary of Defense for Acquisition, Technology, and Logistics; and
“(D) shall be provided to the Committees on Armed Services of the Senate and the House of Representatives at least 45 days before the award of a contract pursuant to the determination.
“(b) Acquisition Workforce.—
“(1) Requirement.—The Secretary of Defense shall ensure that the acquisition workforce is of the appropriate size and skill level necessary—
“(A) to accomplish inherently governmental functions related to acquisition of major systems; and
“(B) to effectuate the purpose of subsection (a) to minimize and eventually eliminate the use of contractors to perform lead systems integrator functions.
“(2) Report.—The Secretary shall include an update on the progress made in complying with paragraph (1) in the annual report required by section 820 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109–364; 120 Stat. 2330) [10 U.S.C. 1701 note].
“(c) Exception for Contracts for Other Management Services.—The Department of Defense may continue to award contracts for the procurement of services the primary purpose of which is to perform acquisition support functions with respect to the development or production of a major system, if the following conditions are met with respect to each such contract:
“(1) The contract prohibits the contractor from performing inherently governmental functions.
“(2) The Department of Defense organization responsible for the development or production of the major system ensures that Federal employees are responsible for—
“(A) determining courses of action to be taken in the best interest of the government; and
“(B) determining best technical performance for the warfighter.
“(3) The contract requires that the prime contractor for the contract may not advise or recommend the award of a contract or subcontract for the development or production of the major system to an entity owned in whole or in part by the prime contractor.
“(d) Definitions.—In this section:
“(1) Lead systems integrator.—The term ‘lead systems integrator’ means—
“(A) a prime contractor for the development or production of a major system, if the prime contractor is not expected at the time of award to perform a substantial portion of the work on the system and the major subsystems; or
“(B) a prime contractor under a contract for the procurement of services the primary purpose of which is to perform acquisition functions closely associated with inherently governmental functions with respect to the development or production of a major system.
“(2) Major system.—The term ‘major system’ has the meaning given such term in section 2302d of title 10, United States Code.
“(3) Low-rate initial production.—The term ‘low-rate initial production’ has the meaning given such term in section 2400 of title 10, United States Code.
“(e) Status of Future Combat Systems Program Lead System Integrator.—
“(1) Lead systems integrator.—In the case of the Future Combat Systems program, the prime contractor of the program shall be considered to be a lead systems integrator until 45 days after the Secretary of the Army certifies in writing to the congressional defense committees [Committees on Armed Services and Appropriations of the Senate and the House of Representatives] that such contractor is no longer serving as the lead systems integrator.
“(2) New contracts.—In applying subsection (a)(1) or (a)(2), any modification to the existing contract for the Future Combat Systems program, for the purpose of entering into full-rate production of major systems or subsystems, shall be considered a new contract.”

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