Sec. 5. Climate-conscious contracting of Department of Defense
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Chapter 873 of title 10, United States Code, is amended by adding at the end the following new section: Each Department of Defense contract for the procurement of property or services entered into on or after October 1, 2025, shall include a written estimate by the Department of the total projected energy consumption of all work to be performed under the contract, and a statement of whether the contract will include investments by the contractor or the Department in renewable energy or energy-efficient sources.
In making any determination to enter into a contract described in subsection (a), the Secretary of Defense shall take into account— whether the contractor verifiably produces as much renewable energy as the total energy it consumes; and whether there is any order against the contractor by the Environmental Protection Agency, the Department of Justice, or a State attorney general to pay a fine or take remedial action for a violation of an environmental law or regulation of the United States.
Each prospective contractor with the Department of Defense shall, as a prerequisite of bidding for a contract with the Department, submit a detailed statement to the Department that includes information regarding— the identification of, the evaluation of potential financial impacts of, and any risk-management strategies relating to— physical risks posed to the contractor by climate change; and transition risks posed to the contractor by climate change; a description of any established corporate governance processes and structures to identify, assess, and manage climate-related risks; and an inventory of annual Scopes 1, 2, and 3 greenhouse gas emissions.
Each Department of Defense contract for the procurement of property or services entered into on or after October 1, 2025, shall include a requirement that the contractor pay to the Department of Defense a fee equal to one percent of the value of the contract in the case of a contractor that is not, at the time of the Department’s solicitation of the contract, verifiably producing as much renewable energy as the total energy it consumes. Any contractor required to pay a fee under paragraph
(1)with respect to a contract may not offset the cost of such fee by increasing the amount of the proposal for such contract. The Secretary of Defense may waive the requirements in subsections
(a)and
(b)if the Secretary— determines that such requirements would adversely affect operational safety, force protection, or the national security interests of the United States; or with respect to particular property or services, determines that— market conditions for the property or services have adversely affected (or will in the near future adversely affect) the acquisition of the property or services by the Department of Defense; and the waiver will expedite or facilitate the acquisition of the property or services; and submits to the congressional defense committees a written notification of the waiver, together with a justification for the waiver. The period of any waiver under paragraph
(1)may not exceed 30 days. Any waiver under this subsection may be renewed one or more times, in the manner provided for the initial such waiver under paragraph
(1)and for the period provided for in paragraph (2). . The table of sections at the beginning of chapter 873 of title 10, United States Code, is amended by inserting after the item relating to section 8755 the following new item: 8756. Requirements relating to energy consumption and climate change. . There is established in the Treasury of the United States a fund, to be known as the Energy and Climate Resilience Fund (in this subsection referred to as the Fund ), to be administered by the Secretary of Defense. Amounts deposited in the Fund shall be used only for climate-related improvements that contribute to the continued operational viability and the resilience of the networks, systems, installations, facilities, and other assets and capabilities of the Department of Defense. Notwithstanding section 3302 of title 31, United States Code, fees collected under section 8756(d) of title 10, United States Code, as added by subsection (a)— shall be deposited into the Fund to carry out the activities described in paragraph (2); to the extent and in the amounts provided in advance in appropriations Acts, shall be available to the Secretary of Defense; and shall remain available until expended. In this subsection, the term climate-related improvements means efforts by the Department of Defense to prepare for, or mitigate the effects of, the following: Extreme weather. Rising sea tides and sea levels. Increased flooding. Drought. Desertification. Wildfires. Thawing permafrost. Such other conditions as the Secretary determines necessary. With respect to contracts awarded by the Department of Defense, the Department shall give a preference to qualified contractors. In making any determination to enter into a contract described in paragraph (1), the Secretary of Defense shall take into account— whether the qualified contractor verifiably produces as much renewable energy as the total energy it consumes; whether the qualified contractor verifiably uses green manufacturing technology; and whether there is any order against the qualified contractor by the Environmental Protection Agency, the Department of Justice, or a State attorney general to pay a fine or take remedial action for a violation of an environmental law or regulation of the United States. The Secretary of Defense shall prescribe such procedures as may be necessary for— contractors to verify that they are qualified contractors; qualified contractors meeting the requirements of paragraph
(2)to certify that not more than 25 percent of the amount paid under the contract will be expended on a subcontract to a contractor that is not verifiably meeting those requirements, subject to such necessary and reasonable waivers as the Secretary may prescribe; and recording information on each use of the authority under paragraph (1), including details relevant to the nature of the contract and the qualified contractor, and providing that information to the Comptroller General of the United States. Not later than five years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to the congressional defense committees a report on the individual and aggregate uses of the authority under paragraph (1), using such data as may be available up to that time. The report under subparagraph
(A)shall include— an assessment of the frequency and nature of the use of the authority under paragraph (1); and the tendency of contractors to become qualified contractors in order to qualify for the authority under paragraph (1). In this subsection, the term qualified contractor means a contractor that uses green manufacturing technology. With respect to contracts awarded by the Department of Defense, the Department shall award— in fiscal year 2026, not fewer than five percent of contracts to qualified small businesses; by fiscal year 2031, not fewer than 20 percent of contracts to qualified small businesses; and by fiscal year 2034, not fewer than 50 percent of contracts to qualified small businesses. In making any determination to enter into a contract described in paragraph (1), the Secretary of Defense shall take into account— whether the qualified small business verifiably produces as much renewable energy as the total energy it consumes; whether the qualified small business verifiably uses green manufacturing technology or operates with net zero energy; and whether there is any order against the qualified small business by the Environmental Protection Agency, the Department of Justice, or a State attorney general to pay a fine or take remedial action for a violation of an environmental law or regulation of the United States. The Secretary of Defense shall prescribe such procedures as may be necessary for— contractors to verify that they are qualified small businesses; qualified small businesses meeting the requirements of paragraph
(2)to certify that not more than 25 percent of the amount paid under the contract will be expended on a subcontract to a contractor that is not verifiably meeting those requirements, subject to such necessary and reasonable waivers as the Secretary may prescribe; and recording information on awards under paragraph (1), including details relevant to the nature of the contract and the qualified small business, and providing that information to the Comptroller General of the United States. Not later than five years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to the congressional defense committees a report on the individual and aggregate awards under paragraph (2), using such data as may be available up to that time. The report under subparagraph
(A)shall include— an assessment of the frequency and nature of awards under paragraph (1); and the tendency of small business concerns to become qualified small businesses in order to qualify for awards under paragraph (1). In this subsection: The term qualified small business means a small business concern that verifiably uses green manufacturing technology or operates with net zero energy. The term small business concern has the meaning given that term in section 3 of the Small Business Act ( 15 U.S.C. 632 ).
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Sec. 5
Climate-conscious contracting of Department of Defense
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