Sec. 702. Termination liability

842 words·~4 min read·/bill/113/hr/4412/ih/section-702

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Congress makes the following findings: The International Space Station, the Space Launch System, and the Orion crew capsule will enable the Nation to continue operations in low-Earth orbit and to send its astronauts to deep space. The James Webb Space Telescope will revolutionize our understanding of star and planet formation and how galaxies evolved and advance the search for the origins of our universe. As a result of their unique capabilities and their critical contribution to the future of space exploration, these systems have been designated by Congress and the Administration as priority investments.

While the Space Launch System and the Orion programs, currently under development, have made significant progress, they have not been funded at levels authorized, and as a result congressionally authorized milestones will be delayed by several years. Although the James Webb Space Telescope is making steady progress towards its scheduled 2018 launch, it confronts a number of challenging integration tests that will stress a congressionally imposed development cost cap. In addition, contractors are currently holding program funding, estimated to be in the hundreds of millions of dollars, to cover the potential termination liability should the Government choose to terminate a program for convenience.

As a result, hundreds of millions of taxpayer dollars are unavailable for meaningful work on these programs. According to the Government Accountability Office, the Administration procures most of its goods and services through contracts, and it terminates very few of them. In fiscal year 2010, the Administration terminated 28 of 16,343 active contracts and orders—a termination rate of about 0.17 percent. Providing processes requiring congressional action on termination of these high-priority programs would enable contractors to apply taxpayer dollars to making maximum progress in meeting the established technical goals and schedule milestones of these programs.

Termination liability costs for a covered program shall be provided only pursuant to this subsection. The Administrator may not reserve funds from amounts appropriated for a covered program, or require the reservation of funds by the prime contractor, for potential termination liability costs with respect to a covered program. It is the intent of Congress that funds authorized to be appropriated for covered programs be applied in meeting established technical goals and schedule milestones.

Funds that have been reserved before the date of enactment of this Act for potential termination liability shall be promptly used to make maximum progress in meeting the established goals and milestones of the covered program. The Administrator shall notify the Committee on Science, Space, and Technology of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate not later than 120 days in advance of initiating termination for convenience or termination for cause of a prime contract on a covered program.

If the Administrator initiates termination of a prime contract on a covered program pursuant to paragraph (5), and sufficient unobligated appropriations are not available to cover termination liability costs in the appropriations account that is funding the prime contract being terminated, the Administrator shall provide to Congress a notification that an authorization of appropriations is necessary not later than 120 days in advance of the proposed contract termination settlement for the covered program.

It is the intent of Congress to provide additional authorization for appropriations as may be necessary to pay termination liability costs on prime contracts for covered programs if Congress deems it appropriate that the Administration terminate such prime contracts. The Administration shall be responsible for applying these additional funds for payment of all allowable and reasonable negotiated termination liability costs if the Administration terminates a prime contract for a covered program.

If the Administration terminates a prime contract for a covered program for the convenience of the Federal Government, then the Federal Government is responsible for payment of all allowable and reasonable negotiated termination liability costs on the prime contract. Not later than 6 months after the date of enactment of this Act, and every 6 months thereafter for the duration of the prime contracts on covered programs, the Administrator shall transmit to the Committee on Science, Space, and Technology of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate a report that provides— the estimated termination liability costs for each of the prime contracts; and the basis for how such estimate was determined.

For purposes of this section: The term covered program means the International Space Station, the Space Launch System, the Orion crew capsule, and the James Webb Space Telescope. The term prime contract means a contract entered directly between a person or entity and the Federal Government for the performance of all or the majority of the responsibilities for developing, integrating, fielding, operating, or sustaining a covered program. The term prime contractor means a person or entity contracting directly with the Federal Government on a covered program.

The term termination liability costs means any costs incurred by a prime contractor, or by any subcontractor of a prime contractor, for which the Federal Government is liable as a result of termination of a prime contract by the Administrator.