20 U.S.C. § 1018a — Procurement flexibility

Page 233 TITLE 20—EDUCATION § 1018a ‘‘(ii) design and technical specifications for software development and systems supporting the delivery of student financial assistance under subchapter IV;’’. Subsec. (b)(2)(A)(iii). Pub. L. 110–315, § 117(2)(B)(ii)(III), substituted ‘‘administration’’ for ‘‘de- livery’’. Subsec. (b)(2)(A)(iv). Pub. L. 110–315, § 117(2)(B)(ii)(IV), inserted ‘‘the Federal’’ after ‘‘supporting’’, substituted ‘‘authorized under subchapter IV’’ for ‘‘under this sub- chapter’’, and struck out ‘‘and’’ after the semicolon. Subsec. (b)(2)(A)(v). Pub. L. 110–315, § 117(2)(B)(ii)(V), substituted ‘‘the administration of the Federal student financial assistance programs authorized under sub- chapter IV; and’’ for ‘‘systems that support those pro- grams.’’ Subsec. (b)(2)(A)(vi). Pub. L. 110–315, § 117(2)(B)(ii)(VI), added cl. (vi). Subsec. (b)(2)(B). Pub. L. 110–315, § 117(2)(B)(iii), sub- stituted ‘‘activities and functions’’ for ‘‘operations and services’’. Subsec. (c). Pub. L. 110–315, § 117(3)(A), substituted ‘‘Performance plan, report, and briefing’’ for ‘‘Perform- ance plan and report’’ in heading. Subsec. (c)(1)(C)(i). Pub. L. 110–315, § 117(3)(B)(i), sub- stituted ‘‘under subchapter IV’’ for ‘‘this subchapter’’. Subsec. (c)(1)(C)(iii). Pub. L. 110–315, § 117(3)(B)(ii), struck out ‘‘information and delivery’’ after ‘‘inte- grating the’’. Subsec. (c)(1)(C)(iv). Pub. L. 110–315, § 117(3)(B)(i), (iii), substituted ‘‘Developing’’ for ‘‘Developing an’’, ‘‘sys- tems’’ for ‘‘delivery and information system’’, and ‘‘under subchapter IV’’ for ‘‘this subchapter’’. Subsec. (c)(2)(A). Pub. L. 110–315, § 117(3)(C)(i), in- serted ‘‘the’’ after ‘‘PBO and’’. Subsec. (c)(2)(B). Pub. L. 110–315, § 117(3)(C)(ii), sub- stituted ‘‘Officers’’ for ‘‘Officer’’. Subsec. (c)(3). Pub. L. 110–315, § 117(3)(D), inserted ‘‘students,’’ after ‘‘consult with’’ in introductory provi- sions. Subsec. (c)(4). Pub. L. 110–315, § 117(3)(E), added par. (4). Subsec. (d)(1). Pub. L. 110–315, § 117(4)(A), struck out after first sentence ‘‘The Secretary shall appoint the Chief Operating Officer within 6 months after October 7, 1998.’’ Subsec. (d)(4)(B). Pub. L. 110–315, § 103(b)(2), sub- stituted ‘‘authorizing committees’’ for ‘‘Committee on Education and the Workforce of the House of Rep- resentatives and the Committee on Labor and Human Resources of the Senate’’. Subsec. (d)(5)(B). Pub. L. 110–315, § 117(4)(B)(i), sub- stituted ‘‘paragraph (4)’’ for ‘‘paragraph (2)’’. Subsec. (d)(5)(C). Pub. L. 110–315, § 117(4)(B)(ii), struck out ‘‘this’’ before ‘‘subparagraph (B)’’. Subsec. (f)(2). Pub. L. 110–315, § 117(5)(A), substituted ‘‘to students, borrowers,’’ for ‘‘to borrowers’’. Subsec. (f)(3)(A). Pub. L. 110–315, § 117(5)(B), sub- stituted ‘‘paragraph (1);’’ for ‘‘paragraph (1)(A);’’. Subsec. (g)(3). Pub. L. 110–315, § 117(6), struck out ‘‘not more than 25’’ before ‘‘technical and professional em- ployees’’. Subsec. (h). Pub. L. 110–315, § 117(7), substituted ‘‘ef- fectiveness’’ for ‘‘organizational effectiveness’’. Subsecs. (i), (j). Pub. L. 110–315, § 117(8)–(10), redesig- nated subsec. (j) as (i), struck out ‘‘, including transi- tion costs’’ before period at end, and struck out former subsec. (i). Text of former subsec. (i) read as follows: ‘‘The Secretary and the Chief Operating Officer, not later than 180 days after October 7, 1998, shall report to Congress on the proposed budget and sources of funding for the operation of the PBO.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2020 AMENDMENT Pub. L. 116–251, § 6, Dec. 22, 2020, 134 Stat. 1132, pro- vided that: ‘‘This Act [see Short Title of 2020 Amend- ment note set out under section 1001 of this title], and the amendments made by this Act, shall take effect on the date that is 180 days after the date of enactment of this Act [Dec. 22, 2020].’’ EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111–39 effective as if enacted on the date of enactment of Pub. L. 110–315 (Aug. 14, 2008), see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title. STUDY OF MARKET MECHANISMS IN FEDERAL STUDENT LOAN PROGRAMS Pub. L. 105–244, title VIII, § 801, Oct. 7, 1998, 112 Stat. 1803, which directed the Comptroller General and Sec- retary of Education, in consultation with a study group, to design and conduct a study to identify and evaluate means of establishing a market mechanism for the delivery of certain student loans made pursuant to title IV of the Higher Education Act (20 U.S.C. 1070 et seq.) and to transmit a final report to congressional committees not later than May 15, 2001, was repealed by Pub. L. 110–315, title IX, § 931(1), Aug. 14, 2008, 122 Stat. 3456. § 1018a. Procurement flexibility (a) Procurement authority Subject to the authority of the Secretary, the Chief Operating Officer of a PBO may exercise the authority of the Secretary to procure prop- erty and services in the performance of func- tions managed by the PBO. For the purposes of this section, the term ‘‘PBO’’ includes the Chief Operating Officer of the PBO and any employee of the PBO exercising procurement authority under the preceding sentence. (b) In general Except as provided in this section, the PBO shall abide by all applicable Federal procure- ment laws and regulations when procuring prop- erty and services. The PBO shall— (1) enter into contracts to carry out the functions set forth in section 1018(b)(2) of this title; (2) obtain the services of experts and con- sultants without regard to section 3109 of title 5 and set pay in accordance with such section; and (3) through the Chief Operating Officer— (A) to the maximum extent practicable, utilize procurement systems that streamline operations, improve internal controls, and enhance management; and (B) assess the efficiency of such systems and assess such systems’ ability to meet PBO requirements. (c) Service contracts (1) Performance-based servicing contracts The Chief Operating Officer shall, to the ex- tent practicable, maximize the use of perform- ance-based servicing contracts, consistent with guidelines for such contracts published by the Office of Federal Procurement Policy, to achieve cost savings and improve service. (2) Fee for service arrangements The Chief Operating Officer shall, when ap- propriate and consistent with the purposes of the PBO, acquire services related to the func- tions set forth in section 1018(b)(2) of this title from any entity that has the capability and capacity to meet the requirements set by the PBO. The Chief Operating Officer is authorized Page 234 TITLE 20—EDUCATION § 1018a to pay fees that are equivalent to those paid by other entities to an organization that pro- vides services that meet the requirements of the PBO, as determined by the Chief Operating Officer. (d) Two-phase source-selection procedures (1) In general The PBO may use a two-phase process for se- lecting a source for a procurement of property or services. (2) First phase The procedures for the first phase of the process for a procurement are as follows: (A) Publication of notice The contracting officer for the procure- ment shall publish a notice of the procure- ment in accordance with section 1708 of title 41 and subsections (e), (f), and (g) of section 637 of title 15, except that the notice shall include only the following: (i) A general description of the scope or purpose of the procurement that provides sufficient information on the scope or pur- pose for sources to make informed busi- ness decisions regarding whether to par- ticipate in the procurement. (ii) A description of the basis on which potential sources are to be selected to sub- mit offers in the second phase. (iii) A description of the information that is to be required under subparagraph (B). (iv) Any additional information that the contracting officer determines appro- priate. (B) Information submitted by offerors Each offeror for the procurement shall submit basic information, such as informa- tion on the offeror’s qualifications, the pro- posed conceptual approach, costs likely to be associated with the proposed conceptual approach, and past performance of the offer- or, together with any additional information that is requested by the contracting officer. (C) Selection for second phase The contracting officer shall select the offerors that are to be eligible to participate in the second phase of the process. The con- tracting officer shall limit the number of the selected offerors to the number of sources that the contracting officer determines is appropriate and in the best interests of the Federal Government. (3) Second phase (A) In general The contracting officer shall conduct the second phase of the source selection process in accordance with sections 3306(a) to (e) and 3308, chapter 37, and section 4702 of title 41. (B) Eligible participants Only the sources selected in the first phase of the process shall be eligible to participate in the second phase. (C) Single or multiple procurements The second phase may include a single pro- curement or multiple procurements within the scope, or for the purpose, described in the notice pursuant to paragraph (2)(A). (4) Procedures considered competitive The procedures used for selecting a source for a procurement under this subsection shall be considered competitive procedures for all purposes. (e) Use of simplified procedures for commercial products and commercial services Whenever the PBO anticipates that commer- cial products or commercial services will be of- fered for a procurement, the PBO may use (con- sistent with the special rules for commercial products and commercial services) the special simplified procedures for the procurement with- out regard to any dollar limitation otherwise applicable to the use of those procedures. (f) Flexible wait periods and deadlines for sub- mission of offers of noncommercial products and services (1) Authority In carrying out a procurement, the PBO may— (A) apply a shorter waiting period for the issuance of a solicitation after the publica- tion of a notice under section 1708 of title 41 than is required under subsection (a)(3)(A) of such section; and (B) notwithstanding subsection (a)(3) of such section, establish any deadline for the submission of bids or proposals that affords potential offerors a reasonable opportunity to respond to the solicitation. (2) Inapplicability to commercial products and services Paragraph (1) does not apply to a procure- ment of a commercial product or a commer- cial service. (3) Consistency with applicable international agreements If an international agreement is applicable to the procurement, any exercise of authority under paragraph (1) shall be consistent with the international agreement. (g) Modular contracting (1) In general The PBO may satisfy the requirements of the PBO for a system incrementally by car- rying out successive procurements of modules of the system. In doing so, the PBO may use procedures authorized under this subsection to procure any such module after the first mod- ule. (2) Utility requirement A module may not be procured for a system under this subsection unless the module is use- ful independently of the other modules or use- ful in combination with another module pre- viously procured for the system. (3) Conditions for use of authority The PBO may use procedures authorized under paragraph (4) for the procurement of an additional module for a system if— (A) competitive procedures were used for awarding the contract for the procurement of the first module for the system; and Page 235 TITLE 20—EDUCATION § 1018a (B) the solicitation for the first module in- cluded— (i) a general description of the entire system that was sufficient to provide po- tential offerors with reasonable notice of the general scope of future modules; (ii) other information sufficient for po- tential offerors to make informed business judgments regarding whether to submit of- fers for the contract for the first module; and (iii) a statement that procedures author- ized under this subsection could be used for awarding subsequent contracts for the procurement of additional modules for the system. (4) Procedures If the procurement of the first module for a system meets the requirements set forth in paragraph (3), the PBO may award a contract for the procurement of an additional module for the system using any of the following pro- cedures: (A) Single-source basis Award of the contract on a single-source basis to a contractor who was awarded a contract for a module previously procured for the system under competitive procedures or procedures authorized under subpara- graph (B). (B) Adequate competition Award of the contract on the basis of of- fers made by— (i) a contractor who was awarded a con- tract for a module previously procured for the system after having been selected for award of the contract under this subpara- graph or other competitive procedures; and (ii) at least one other offeror that sub- mitted an offer for a module previously procured for the system and is expected, on the basis of the offer for the previously procured module, to submit a competitive offer for the additional module. (C) Other Award of the contract under any other procedure authorized by law. (5) Notice requirement (A) Publication Not less than 30 days before issuing a solic- itation for offers for a contract for a module for a system under procedures authorized under subparagraph (A) or (B) of paragraph (4), the PBO shall publish in the Commerce Business Daily a notice of the intent to use such procedures to enter into the contract. (B) Exception Publication of a notice is not required under this paragraph with respect to a use of procedures authorized under paragraph (4) if the contractor referred to in that subpara- graph (who is to be solicited to submit an offer) has previously provided a module for the system under a contract that contained cost, schedule, and performance goals and the contractor met those goals. (C) Content of notice A notice published under subparagraph (A) with respect to a use of procedures described in paragraph (4) shall contain the informa- tion required under section 1708(c) of title 41, other than paragraph (4) of such section, and shall invite the submission of any assertion that the use of the procedures for the pro- curement involved is not in the best interest of the Federal Government together with in- formation supporting the assertion. (6) Documentation The basis for an award of a contract under this subsection shall be documented. However, a justification pursuant to section 3304(e) of title 41 or section 637(h) of title 15 is not re- quired. (7) Simplified source-selection procedures The PBO may award a contract under any other simplified procedures prescribed by the PBO for the selection of sources for the pro- curement of modules for a system, after the first module, that are not to be procured under a contract awarded on a single-source basis. (h) Use of simplified procedures for small busi- ness set-asides for services other than com- mercial services (1) Authority The PBO may use special simplified proce- dures for a procurement of services that are not commercial services if— (A) the procurement is in an amount not greater than $1,000,000; (B) the procurement is conducted as a small business set-aside pursuant to section 644(a) of title 15; and (C) the price charged for supplies associ- ated with the services procured are items of supply expected to be less than 20 percent of the total contract price. (2) Inapplicability to certain procurements The authority set forth in paragraph (1) may not be used for— (A) an award of a contract on a single- source basis; or (B) a contract for construction. (i) Guidance for use of authority (1) Issuance by PBO The Chief Operating Officer of the PBO, in consultation with the Administrator for Fed- eral Procurement Policy, shall issue guidance for the use by PBO personnel of the authority provided in this section. (2) Guidance from OFPP As part of the consultation required under paragraph (1), the Administrator for Federal Procurement Policy shall provide the PBO with guidance that is designed to ensure, to the maximum extent practicable, that the au- thority under this section is exercised by the PBO in a manner that is consistent with the exercise of the authority by the heads of the other performance-based organizations. (3) Compliance with OFPP guidance The head of the PBO shall ensure that the procurements of the PBO under this section Page 236 TITLE 20—EDUCATION § 1018a are carried out in a manner that is consistent with the guidance provided for the PBO under paragraph (2). (j) Limitation on multiagency contracting No department or agency of the Federal Gov- ernment may purchase property or services under contracts entered into or administered by a PBO under this section unless the purchase is approved in advance by the senior procurement official of that department or agency who is re- sponsible for purchasing by the department or agency. (k) Laws not affected Nothing in this section shall be construed to waive laws for the enforcement of civil rights or for the establishment and enforcement of labor standards that are applicable to contracts of the Federal Government. (l) Definitions In this section: (1) Commercial product The term ‘‘commercial product’’ has the meaning given the term in section 103 of title 41. (2) Commercial service The term ‘‘commercial service’’ has the meaning given the term in section 103a of title 41. (3) Competitive procedures The term ‘‘competitive procedures’’ has the meaning given the term in section 152 of title 41. (4) Single-source basis The term ‘‘single-source basis’’, with respect to an award of a contract, means that the con- tract is awarded to a source after soliciting an offer or offers from, and negotiating with, only such source (although such source is not the only source in the marketplace capable of meeting the need) because such source is the most advantageous source for purposes of the award. (5) Special rules for commercial products and commercial services The term ‘‘special rules for commercial products and commercial services’’ means the regulations set forth in the Federal Acquisi- tion Regulation pursuant to sections 1901 and 3305(a) of title 41. (6) Special simplified procedures The term ‘‘special simplified procedures’’ means the procedures applicable to purchases of property and services for amounts not greater than the simplified acquisition thresh- old that are set forth in the Federal Acquisi- tion Regulation pursuant to sections 1901(a)(1) and 3305(a)(1) of title 41. (Pub. L. 89–329, title I, § 142, as added Pub. L. 105–244, title I, § 101(a), Oct. 7, 1998, 112 Stat. 1611; amended Pub. L. 110–315, title I, § 118, Aug. 14, 2008, 122 Stat. 3116; Pub. L. 115–232, div. A, title VIII, § 836(g)(2), Aug. 13, 2018, 132 Stat. 1872.) Editorial Notes CODIFICATION In subsec. (d)(2)(A), ‘‘section 1708 of title 41’’ sub- stituted for ‘‘section 18 of the Office of Federal Pro- curement Policy Act (41 U.S.C. 416)’’ on authority of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts. In subsec. (d)(3)(A), ‘‘sections 3306(a) to (e) and 3308, chapter 37, and section 4702 of title 41’’ substituted for ‘‘sections 303A and 303B of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253a and 253b)’’ on authority of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Con- tracts. In subsec. (f)(1)(A), ‘‘section 1708 of title 41’’ sub- stituted for ‘‘section 18 of the Office of Federal Pro- curement Policy Act (41 U.S.C. 416)’’ on authority of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts. In subsec. (g)(5)(C), ‘‘section 1708(c) of title 41’’ sub- stituted for ‘‘section 18(b) of the Office of Federal Pro- curement Policy Act (41 U.S.C. 416(b))’’ on authority of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts. In subsec. (g)(6), ‘‘section 3304(e) of title 41’’ sub- stituted for ‘‘section 303(f) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(f))’’ on authority of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Con- tracts. PRIOR PROVISIONS A prior section 1018a, Pub. L. 89–329, title I, § 142, as added Pub. L. 100–418, title VI, § 6201, Aug. 23, 1988, 102 Stat. 1515, related to grants for literacy corps pro- grams, prior to the general amendment of this sub- chapter by Pub. L. 102–325. AMENDMENTS 2018—Subsec. (e). Pub. L. 115–232, § 836(g)(2)(A), in heading, substituted ‘‘commercial products and com- mercial services’’ for ‘‘commercial items’’ and, in text, substituted ‘‘that commercial products or commercial services will be offered for a procurement, the PBO may use (consistent with the special rules for commer- cial products and commercial services) the special sim- plified procedures for the procurement without regard to’’ for ‘‘that commercial items will be offered for a procurement, the PBO may use (consistent with the special rules for commercial items) the special sim- plified procedures for the procurement without regard to—’’, struck out par. (1) designation, substituted pe- riod for ‘‘; and’’, and struck out par. (2). Prior to amendment, par. (2) read as follows: ‘‘the expiration of the authority to use special simplified procedures under section 4202(e) of the Clinger-Cohen Act of 1996 (110 Stat. 654; 10 U.S.C. 2304 note).’’ Subsec. (f). Pub. L. 115–232, § 836(g)(2)(B)(i), sub- stituted ‘‘products and services’’ for ‘‘items’’ in head- ing. Subsec. (f)(2). Pub. L. 115–232, § 836(g)(2)(B)(ii), (iii), substituted ‘‘products and services’’ for ‘‘items’’ in heading and ‘‘a commercial product or a commercial service’’ for ‘‘a commercial item’’ in text. Subsec. (h). Pub. L. 115–232, § 836(g)(2)(C)(i), sub- stituted ‘‘services’’ for ‘‘items’’ in heading. Subsec. (h)(1). Pub. L. 115–232, § 836(g)(2)(C)(ii), sub- stituted ‘‘commercial services’’ for ‘‘commercial items’’ in introductory provisions. Subsec. (l)(1), (2). Pub. L. 115–232, § 836(g)(2)(D)(ii), added pars. (1) and (2) and struck out former par. (1) which defined ‘‘commercial item’’. Former par. (2) re- designated (3). Subsec. (l)(3). Pub. L. 115–232, § 836(g)(2)(D)(i), (iii), re- designated par. (2) as (3) and substituted ‘‘in section 152 of title 41.’’ for ‘‘in section 309(b) of the Federal Prop- erty and Administrative Services Act of 1949 (41 U.S.C. 259(b)).’’ Former par. (3) redesignated (4). Subsec. (l)(4). Pub. L. 115–232, § 836(g)(2)(D)(i), redesig- nated par. (3) as (4). Former par. (4) redesignated (5). Subsec. (l)(5). Pub. L. 115–232, § 836(g)(2)(D)(i), (iv), re- designated par. (4) as (5) and substituted, in heading, ‘‘commercial products and commercial services’’ for Page 237 TITLE 20—EDUCATION § 1018b ‘‘commercial items’’ and, in text, ‘‘commercial prod- ucts and commercial services’’ for ‘‘commercial items’’ and ‘‘pursuant to sections 1901 and 3305(a) of title 41.’’ for ‘‘pursuant to section 303(g)(1) of the Federal Prop- erty and Administrative Services Act of 1949 (41 U.S.C. 253(g)(1)) and section 31 of the Office of Federal Pro- curement Policy Act (41 U.S.C. 427).’’ Former par. (5) redesignated (6). Subsec. (l)(6). Pub. L. 115–232, § 836(g)(2)(D)(i), (v), re- designated par. (5) as (6) and substituted ‘‘pursuant to sections 1901(a)(1) and 3305(a)(1) of title 41.’’ for ‘‘pursu- ant to section 303(g)(1)(B) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(g)(1)(A)) and section 31(a)(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 427(a)(1)).’’ 2008—Subsec. (b)(1). Pub. L. 110–315, § 118(1)(A), struck out ‘‘for information systems supporting the programs authorized under subchapter IV’’ after ‘‘enter into con- tracts’’ and ‘‘and’’ after semicolon. Subsec. (b)(2), (3). Pub. L. 110–315, § 118(1)(B), (C), sub- stituted ‘‘; and’’ for period at end of par. (2) and added par. (3). Subsec. (c)(2). Pub. L. 110–315, § 118(2), added par. (2) and struck out former par. (2). Prior to amendment, text read as follows: ‘‘The Chief Operating Officer shall, when appropriate and consistent with the purposes of the PBO, acquire services related to the subchapter IV delivery system from any entity that has the capa- bility and capacity to meet the requirements for the system. The Chief Operating Officer is authorized to pay fees that are equivalent to those paid by other en- tities to an organization that provides an information system or service that meets the requirements of the PBO, as determined by the Chief Operating Officer.’’ Subsec. (d)(2)(B). Pub. L. 110–315, § 118(3), struck out ‘‘on Federal Government contracts’’ after ‘‘perform- ance of the offeror’’. Subsec. (g)(4)(A). Pub. L. 110–315, § 118(4)(A), sub- stituted ‘‘Single-source basis’’ for ‘‘Sole source’’ in heading and ‘‘single-source’’ for ‘‘sole-source’’ in text. Subsec. (g)(7). Pub. L. 110–315, § 118(4)(B), substituted ‘‘single-source’’ for ‘‘sole-source’’. Subsec. (h)(2)(A). Pub. L. 110–315, § 118(5), substituted ‘‘single-source’’ for ‘‘sole-source’’. Subsec. (l)(3). Pub. L. 110–315, § 118(6), added par. (3) and struck out former par. (3). Prior to amendment, text read as follows: ‘‘The term ‘sole-source basis’, with respect to an award of a contract, means that the con- tract is awarded to a source after soliciting an offer or offers from, and negotiating with, only that source.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Amendment by Pub. L. 115–232 effective Jan. 1, 2020, subject to a savings provision, see section 836(h) of Pub. L. 115–232, set out as an Effective Date of 2018 Amend- ment; Savings Provision note under section 453b of Title 6, Domestic Security. § 1018b. Administrative simplification of student aid delivery (a) In general In order to improve the efficiency and effec- tiveness of the student aid delivery system, the Secretary and the Chief Operating Officer shall encourage and participate in the establishment of voluntary consensus standards and require- ments for the electronic transmission of infor- mation necessary for the administration of pro- grams under subchapter IV. (b) Participation in standard setting organiza- tions (1) The Chief Operating Officer shall partici- pate in the activities of standard setting organi- zations in carrying out the provisions of this section. (2) The Chief Operating Officer shall encourage higher education groups seeking to develop com- mon forms, standards, and procedures in support of the delivery of Federal student financial as- sistance to conduct these activities within a standard setting organization. (3) The Chief Operating Officer may pay nec- essary dues and fees associated with partici- pating in standard setting organizations pursu- ant to this subsection. (c) Adoption of voluntary consensus standards Except with respect to the common financial reporting form under section 1090(a) of this title, the Secretary shall consider adopting voluntary consensus standards agreed to by the organiza- tion described in subsection (b) for transactions required under subchapter IV, and common data elements for such transactions, to enable infor- mation to be exchanged electronically between systems administered by the Department and among participants in the Federal student aid delivery system. (d) Use of clearinghouses Nothing in this section shall restrict the abil- ity of participating institutions and lenders from using a clearinghouse or servicer to com- ply with the standards for the exchange of infor- mation established under this section. (e) Data security Any entity that maintains or transmits infor- mation under a transaction covered by this sec- tion shall maintain reasonable and appropriate administrative, technical, and physical safe- guards— (1) to ensure the integrity and confiden- tiality of the information; and (2) to protect against any reasonably antici- pated security threats, or unauthorized uses or disclosures of the information. (f) Definitions (1) Clearinghouse The term ‘‘clearinghouse’’ means a public or private entity that processes or facilitates the processing of nonstandard data elements into data elements conforming to standards adopt- ed under this section. (2) Standard setting organization The term ‘‘standard setting organization’’ means an organization that— (A) is accredited by the American National Standards Institute; (B) develops standards for information transactions, data elements, or any other standard that is necessary to, or will facili- tate, the implementation of this section; and (C) is open to the participation of the var- ious entities engaged in the delivery of Fed- eral student financial assistance. (3) Voluntary consensus standard The term ‘‘voluntary consensus standard’’ means a standard developed or used by a standard setting organization described in paragraph (2). (Pub. L. 89–329, title I, § 143, as added Pub. L. 105–244, title I, § 101(a), Oct. 7, 1998, 112 Stat. 1615.)