10 U.S.C. § 3322 — Cost contracts

Page 2468 TITLE 10—ARMED FORCES § 3321 div. A, title XVIII, § 1817(a), Jan. 1, 2021, 134 Stat. 4186, which added this analysis, by substituting ‘‘[Reserved]’’ for ‘‘Preference for fixed-price contracts’’ in item 3324. § 3321. Contracts awarded using procedures other than sealed-bid procedures (a) AUTHORIZED TYPES.—Subject to the limita- tion in section 3322(a) of this title, the other provisions of this chapter, and other applicable provisions of law, the head of an agency, in awarding contracts under chapter 137 legacy provisions 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) REQUIRED WARRANTY.— (1) CONTENT.—Each contract awarded under chapter 137 legacy provisions after using pro- cedures 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 commis- sion, percentage, brokerage, or contingent fee, except a bona fide employee or established commercial or selling agency maintained by the contractor to obtain business. (2) REMEDY FOR BREAKING WARRANTY.—If a contractor breaks such a warranty the United States— (A) may annul the contract without liabil- ity; or (B) may deduct the commission, percent- age, brokerage, or contingent fee from the contract price or consideration. (3) INAPPLICABILITY TO CERTAIN CONTRACTS.— This subsection does not apply— (A) to a contract that is for an amount not greater than the simplified acquisition threshold; or (B) to a contract for the acquisition of commercial products or commercial serv- ices. (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1817(a), (b), (d), Jan. 1, 2021, 134 Stat. 4186.) Editorial Notes CODIFICATION The text of subsec. (a) of section 2306 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1817(b), (d)(1), was based on act Aug. 10, 1956, ch. 1041, 70A Stat. 130; Pub. L. 87–653, § 1(d), Sept. 10, 1962, 76 Stat. 528; Pub. L. 98–369, div. B, title VII, § 2724(a), July 18, 1984, 98 Stat. 1192; Pub. L. 99–145, title XIII, § 1303(a)(15), Nov. 8, 1985, 99 Stat. 739. The text of subsec. (b) of section 2306 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1817(b), (d)(2), was based on act Aug. 10, 1956, ch. 1041, 70A Stat. 130; Pub. L. 98–369, div. B, title VII, § 2724(b), July 18, 1984, 98 Stat. 1193; Pub. L. 103–355, title IV, § 4102(b), Oct. 13, 1994, 108 Stat. 3340; Pub. L. 115–232, div. A, title VIII, § 836(c)(4), Aug. 13, 2018, 132 Stat. 1865. AMENDMENTS 2021—Subsec. (a). Pub. L. 116–283, § 1817(b), (d)(1), transferred subsec. (a) of section 2306 of this title to this section, inserted heading before second sentence, and substituted ‘‘section 3322(a) of this title’’ for ‘‘the preceding sentence’’, ‘‘provisions of this chapter’’ for ‘‘provisions of this section’’, and ‘‘under chapter 137 legacy provisions’’ for ‘‘under this chapter’’. Former first sentence of subsec. (a) designated section 3322(a) of this title. Subsec. (b). Pub. L. 116–283, § 1817(b), (d)(2), trans- ferred subsec. (b) of section 2306 of this title to this sec- tion, inserted heading, and designated first, second, and third sentences as pars. (1) to (3), respectively. Subsec. (b)(1). Pub. L. 116–283, § 1817(d)(2)(A)–(C), in- serted heading and substituted ‘‘under chapter 137 leg- acy provisions’’ for ‘‘under this chapter’’ and ‘‘main- tained by the contractor’’ for ‘‘maintained by him’’. Subsec. (b)(2). Pub. L. 116–283, § 1817(d)(2)(E), inserted heading, inserted dash after ‘‘the United States’’ and subpar. (A) designation before ‘‘may annul’’, sub- stituted ‘‘liability; or’’ for ‘‘liability or’’, and inserted subpar. (B) designation before ‘‘may deduct’’. Subsec. (b)(3). Pub. L. 116–283, § 1817(d)(2)(F), inserted heading, inserted dash after ‘‘does not apply’’ and sub- par. (A) designation before ‘‘to a contract that is’’, sub- stituted ‘‘threshold; or’’ for ‘‘threshold or’’, and in- serted subpar. (B) designation before ‘‘to a contract for the acquisition’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed im- plementation and applicability of existing law, see sec- tion 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title. § 3322. Cost contracts (a) COST-PLUS-A-PERCENTAGE-OF-COST SYSTEM OF CONTRACTING PROHIBITED.—The cost-plus-a- percentage-of-cost system of contracting may not be used. (b) COST-PLUS-A-FIXED-FEE CONTRACTS.—The fee for performing a cost-plus-a-fixed-fee con- tract for experimental, developmental, or re- search 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 engineer- ing 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. (c) ADVANCE NOTICE OF CERTAIN SUB- CONTRACTS.— (1) IN GENERAL.—Except as provided in para- graph (2), each cost contract and each cost- plus-a-fixed-fee contract shall provide for no- tice to the agency by the contractor before the making, under the prime contract, of— (A) a cost-plus-a-fixed-fee subcontract; or (B) a fixed-price subcontract or purchase order involving more than the greater of (i) the simplified acquisition threshold, or (ii) 5 percent of the estimated cost of the prime contract. (2) EXCEPTION.—Paragraph (1) shall not apply to a prime contract with a contractor that maintains a purchasing system approved by the contracting officer for the contract. Page 2469 TITLE 10—ARMED FORCES § 3323 (d) LIMITATION ON CERTAIN OPTIONS.— (1) IN GENERAL.—Except as provided by para- graph (2), a covered contract shall limit the number of low-rate production lots for any production quantities procured using fixed- priced options under such covered contract to not more than one. (2) WAIVER.— (A) IN GENERAL.—The service acquisition executive of the military department con- cerned or, in the case of program that is a joint program, the Secretary of Defense may waive the limit required under paragraph (1) with respect to the number of low-rate pro- duction lots for a production quantity under a covered contract if such service acquisi- tion executive or the Secretary of Defense, as applicable, determines that such waiver is in the best interest of the Department of De- fense. (B) DELEGATION LIMIT.—Neither a service acquisition executive nor the Secretary of Defense may delegate the authority under subparagraph (A) to waive the limit required under paragraph (1) below the level of a serv- ice acquisition executive. (3) DEFINITIONS.—In this subsection: (A) The term ‘‘covered contract’’ means a cost reimbursement contract for the devel- opment of a major system. (B) The term ‘‘low-rate initial production’’ has the same meaning as in section 4231 of this title. (C) The term ‘‘major system’’ has the meaning given such term in section 3041 of this title. (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1817(a), (c), (e), (f), Jan. 1, 2021, 134 Stat. 4186, 4187; Pub. L. 118–159, div. A, title VIII, § 802(a), Dec. 23, 2024, 138 Stat. 1965.) Editorial Notes CODIFICATION For derivation of subsec. (a) of this section, see Codi- fication note related to subsec. (a) of section 2306 of this title set out under section 3321 of this title. The text of subsec. (d) of section 2306 of this title, which was transferred to this section, redesignated as subsec. (b), and amended by Pub. L. 116–283, § 1817(e), (f)(2), was based on act Aug. 10, 1956, ch. 1041, 70A Stat. 131. The text of subsec. (e) of section 2306 of this title, which was transferred to this section, redesignated as subsec. (c), and amended by Pub. L. 116–283, § 1817(e), (f)(3), was based on act Aug. 10, 1956, ch. 1041, 70A Stat. 131; Pub. L. 98–369, div. B, title VII, § 2724, July 18, 1984, 98 Stat. 1193; Pub. L. 102–25, title VII, § 701(d)(3), Apr. 6, 1991, 105 Stat. 114; Pub. L. 103–355, title IV, 4401(c), Oct. 13, 1994, 108 Stat. 3348; Pub. L. 108–136, div. A, title VIII, § 842, Nov. 24, 2003, 117 Stat. 1552. AMENDMENTS 2024—Subsec. (d). Pub. L. 118–159 added subsec. (d). 2021—Subsec. (a). Pub. L. 116–283, § 1817(c), (f)(1), transferred first sentence of subsec. (a) of section 3321 of this title to this section, designated it as subsec. (a), and inserted heading. Subsec. (b). Pub. L. 116–283, § 1817(e), (f)(2), redesig- nated subsec. (d) of section 2306 of this title as subsec. (b) of this section and inserted heading. Subsec. (c). Pub. L. 116–283, § 1817(e), (f)(3), redesig- nated subsec. (e) of section 2306 of this title as subsec. (c) of this section, inserted subsec. and par. headings, and realigned margin of par. (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed im- plementation and applicability of existing law, see sec- tion 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title. CONFORMING REGULATIONS Pub. L. 118–159, div. A, title VIII, § 802(b), Dec. 23, 2024, 138 Stat. 1965, provided that: ‘‘Not later than 120 days after the date of the enactment of this Act [Dec. 23, 2024], the Secretary of Defense shall revise the Depart- ment of Defense Supplement to the Federal Acquisition Regulation to implement subsection (d) of section 3322 of title 10, United States Code, as added by subsection (a) of this section.’’ § 3323. Cost-plus contracting prohibited for mili- tary construction and military family hous- ing projects (a) PROHIBITION.—A contract entered into by the United States in connection with a military construction project or a military family hous- ing project may not use any form of cost-plus contracting. (b) APPLICABILITY.—The prohibition specified in subsection (a)— (1) is in addition to the prohibition specified in section 3322(a) of this title on the use of the cost-plus-a-percentage-of-cost system of con- tracting; and (2) applies notwithstanding a declaration of war or the declaration by the President of a national emergency under section 201 of the National Emergencies Act (50 U.S.C. 1621) that includes the use of the armed forces. (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1817(a), (g), Jan. 1, 2021, 134 Stat. 4186, 4187; Pub. L. 118–31, div. A, title XVIII, § 1801(a)(27), Dec. 22, 2023, 137 Stat. 684.) Editorial Notes CODIFICATION The text of subsec. (c) of section 2306 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1817(g), was based on Pub. L. 112–81, div. B, title XXVIII, § 2801(a), Dec. 31, 2011, 125 Stat. 1684. AMENDMENTS 2023—Subsec. (b)(2). Pub. L. 118–31 struck out period after ‘‘notwithstanding’’. 2021—Subsec. (a). Pub. L. 116–283, § 1817(g)(1), (2), re- designated subsec. (c) of section 2306 of this title as sub- sec. (a) of this section and inserted heading. Former second sentence of subsec. (a) designated subsec. (b). Subsec. (b). Pub. L. 116–283, § 1817(g)(1), (3), designated second sentence of subsec. (a) as subsec. (b), inserted heading, and substituted ‘‘The prohibition specified in subsection (a)— ‘‘(1) is in addition to the prohibition specified in section 3322(a) of this title on the use of the cost-plus- a-percentage-of-cost system of contracting; and ‘‘(2) applies notwithstanding. a declaration’’ for ‘‘This prohibition is in addition to the prohibition specified in subsection (a) on the use of the cost-plus- a-percentage-of-cost system of contracting and applies notwithstanding a declaration’’.