(a) Conditions for progress payments
Section 3804 of title 10, United States Code, is amended—
in subsection (a)—
in the subsection heading, by striking commensurate with work ;
by inserting (1) before The Secretary of Defense ; and
by adding at the end the following new paragraphs:
After finding substantial evidence that a covered condition applies for a contract, the Secretary of Defense may reduce a progress payment, increase the rate of liquidation, or both for such contract.
After finding substantial evidence that a covered condition applies for a contract, the Secretary of Defense may suspend a progress payment for such contract only if—
the relevant contracting officer submits to the prime contractor for such contract a written statement of the substantial evidence that a covered condition applies and provides the prime contractor ten calendar days to submit a written rebuttal;
the head of the contracting activity reviews such statement and any rebuttal and recommends the suspension of the progress payment for such contract; and
the service acquisition executive notifies the Committees on Armed Services of the House of Representatives and the Senate in writing of the suspension of progress payments for such contract and of the substantial evidence that a covered condition applies.
Any suspension of progress payments under paragraph (3) shall last not more than 60 calendar days if—
the prime contractor submits to the relevant contracting officer a written corrective action plan addressing the covered condition that was the basis for the suspension;
the prime contractor initiates corrective action consistent with the submitted written plan within such 60-day period; and
the service acquisition executive or portfolio acquisition executive, as applicable, after consultation with the head of the contracting activity and the relevant contracting officer, determines that both the corrective action plan and the initiated corrective action are sufficient to address the covered condition and meet the cost, schedule, performance, delivery, quality, readiness, sustainment, and financial-interest objectives of the Department.
The 60-day limitation in subparagraph (A) shall not apply if the service acquisition executive or portfolio acquisition executive, as applicable, determines such limitation would materially impair the ability of the Department to protect the interests of the Government interests or would create a material risk to the Department.
by adding at the end the following new subsection:
(d) Covered condition defined
In this section, the term covered condition means any of the conditions listed in section 52.232-16(c) of the Federal Acquisition Regulation (or successor regulation).
(b) Conforming regulations
Not later than 120 days after the date of the enactment of this Act, the Secretary of Defense shall revise the Department of Defense Supplement to the Federal Acquisition Regulation carry out the amendments made by this section.
(c) Technical amendment
Section 3804 of title 10, United States Code, is amended by striking defense contract each place it appears and inserting contract .