§2325. Restructuring costs

(a) Limitation on Payment of Restructuring Costs.-(1) The Secretary of Defense may not pay, under section 2324 of this title, a defense contractor for restructuring costs associated with a business combination of the contractor that occurs after November 18, 1997, unless the Secretary determines in writing either-

(A) that the amount of projected savings for the Department of Defense associated with the restructuring will be at least twice the amount of the costs allowed; or

(B) that the amount of projected savings for the Department of Defense associated with the restructuring will exceed the amount of the costs allowed and that the business combination will result in the preservation of a critical capability that otherwise might be lost to the Department.

(2) The Secretary may not delegate the authority to make a determination under paragraph (1) to an official of the Department of Defense below the level of an Assistant Secretary of Defense.

(b) Report.-Not later than March 1 in each of 1998, 1999, 2000, 2001, and 2002, the Secretary of Defense shall submit to Congress a report that contains, with respect to business combinations occurring on or after August 15, 1994, the following:

(1) For each defense contractor to which the Secretary has paid, under section 2324 of this title, restructuring costs associated with a business combination, a summary of the following:

(A) An estimate of the amount of savings for the Department of Defense associated with the restructuring that has been realized as of the end of the preceding calendar year.

(B) An estimate of the amount of savings for the Department of Defense associated with the restructuring that is expected to be achieved on defense contracts.

(2) An identification of any business combination for which the Secretary has paid restructuring costs under section 2324 of this title during the preceding calendar year and, for each such business combination-

(A) the supporting rationale for allowing such costs;

(B) factual information associated with the determination made under subsection (a) with respect to such costs; and

(C) a discussion of whether the business combination would have proceeded without the payment of restructuring costs by the Secretary.

(3) For business combinations of major defense contractors that took place during the year preceding the year of the report-

(A) an assessment of any potentially adverse effects that the business combinations could have on competition for Department of Defense contracts (including potential horizontal effects, vertical effects, and organizational conflicts of interest), the national technology and industrial base, or innovation in the defense industry; and

(B) the actions taken to mitigate the potentially adverse effects.

(c) Definition.-In this section, the term "business combination" includes a merger or acquisition.

(Added Pub. L. 105–85, div. A, title VIII, §804(a)(1), Nov. 18, 1997, 111 Stat. 1832 ; amended Pub. L. 106–65, div. A, title X, §1066(a)(19), Oct. 5, 1999, 113 Stat. 771 .)

Prior Provisions

A prior section 2325, added Pub. L. 99–500, §101(c) [title X, §907(a)(1)], Oct. 18, 1986, 100 Stat. 1783–82 , 1783-137, and Pub. L. 99–591, §101(c) [title X, §907(a)(1)], Oct. 30, 1986, 100 Stat. 3341–82 , 3341-137; Pub. L. 99–661, div. A, title IX, formerly title IV, §907(a)(1), Nov. 14, 1986, 100 Stat. 3917 , renumbered title IX, Pub. L. 100–26, §3(5), Apr. 21, 1987, 101 Stat. 273 ; amended Pub. L. 101–189, div. A, title XVI, §1622(c)(5), Nov. 29, 1989, 103 Stat. 1604 ; Pub. L. 101–510, div. A, title VIII, §810, Nov. 5, 1990, 104 Stat. 1595 ; Pub. L. 103–160, div. A, title IX, §904(d)(1), Nov. 30, 1993, 107 Stat. 1728 , directed Secretary of Defense to ensure that requirements of Department of Defense with respect to procurement of supplies be stated in terms of functions to be performed, performance required, or essential physical characteristics, and related to preference for nondevelopmental items in procurement of supplies, prior to repeal by Pub. L. 103–355, title VIII, §8104(b)(1), Oct. 13, 1994, 108 Stat. 3391 . See sections 2376 and 2377 of this title.

Another prior section 2325 was renumbered section 2345 of this title.

Amendments

1999-Subsec. (a)(1). Pub. L. 106–65 inserted "that occurs after November 18, 1997," after "of the contractor" in introductory provisions.

Effective Date

Section 804(c) of Pub. L. 105–85 provided that: "Section 2325(a) of title 10, United States Code, as added by subsection (a), shall apply with respect to business combinations that occur after the date of the enactment of this Act [Nov. 18, 1997]."

GAO Reports

Section 804(b) of Pub. L. 105–85 provided that:

"(1) Not later than April 1, 1998, the Comptroller General shall-

"(A) in consultation with appropriate officials in the Department of Defense-

"(i) identify major market areas affected by business combinations of defense contractors since January 1, 1990; and

"(ii) develop a methodology for determining the savings from business combinations of defense contractors on the prices paid on particular defense contracts; and

"(B) submit to the congressional defense committees [Committees on Armed Services and Appropriations of Senate and House of Representatives] a report describing, for each major market area identified pursuant to subparagraph (A)(i), the changes in numbers of businesses competing for major defense contracts since January 1, 1990.

"(2) Not later than December 1, 1998, the Comptroller General shall submit to the congressional defense committees a report containing the following:

"(A) Updated information on-

"(i) restructuring costs of business combinations paid by the Department of Defense pursuant to certifications under section 818 of the National Defense Authorization Act for Fiscal Year 1995 [Pub. L. 103–337, set out as a note under section 2324 of this title], and

"(ii) savings realized by the Department of Defense as a result of the business combinations for which the payment of restructuring costs was so certified.

"(B) An assessment of the savings from business combinations of defense contractors on the prices paid on a meaningful sample of defense contracts, determined in accordance with the methodology developed pursuant to paragraph (1)(A)(ii), as well as a description of the methodology.

"(C) Any recommendations that the Comptroller General considers appropriate.

"(3) In this subsection, the term 'business combination' has the meaning given that term in section 2325(c) of title 10, United States Code, as added by subsection (a)."