Laws & Guidance HIGHER EDUCATION
1998 Amendments to the Higher Education Act of 1965
P.L. 105-244

Sec 101--Revision of Title I (cont'd)
PART D--ADMINISTRATIVE PROVISIONS FOR DELIVERY OF STUDENT FINANCIAL ASSISTANCE

`SEC. 141. PERFORMANCE-BASED ORGANIZATION FOR THE DELIVERY OF FEDERAL STUDENT FINANCIAL ASSISTANCE.

`(a) ESTABLISHMENT AND PURPOSE-

`(1) ESTABLISHMENT- There is established in the Department a Performance-Based Organization (hereafter referred to as the 'PBO') which shall be a discrete management unit responsible for managing the operational functions supporting the programs authorized under title IV of this Act, as specified in subsection (b).

`(2) PURPOSES- The purposes of the PBO are--

`(A) to improve service to students and other participants in the student financial assistance programs authorized under title IV, including making those programs more understandable to students and their parents;

`(B) to reduce the costs of administering those programs;

`(C) to increase the accountability of the officials responsible for administering the operational aspects of these programs;

`(D) to provide greater flexibility in the management of the operational functions of the Federal student financial assistance programs;

`(E) to integrate the information systems supporting the Federal student financial assistance programs;

`(F) to implement an open, common, integrated system for the delivery of student financial assistance under title IV; and

`(G) to develop and maintain a student financial assistance system that contains complete, accurate, and timely data to ensure program integrity.

`(b) GENERAL AUTHORITY-

`(1) AUTHORITY OF SECRETARY- Notwithstanding any other provision of this part, the Secretary shall maintain responsibility for the development and promulgation of policy and regulations relating to the programs of student financial assistance under title IV. In the exercise of its functions, the PBO shall be subject to the direction of the Secretary. The Secretary shall--

`(A) request the advice of, and work in cooperation with, the Chief Operating Officer in developing regulations, policies, administrative guidance, or procedures affecting the information systems administered by the PBO, and other functions performed by the PBO;

`(B) request cost estimates from the Chief Operating Officer for system changes required by specific policies proposed by the Secretary; and

`(C) assist the Chief Operating Officer in identifying goals for the administration and modernization of the delivery system for student financial assistance under title IV.

`(2) PBO FUNCTIONS- Subject to paragraph (1), the PBO shall be responsible for administration of the information and financial systems that support student financial assistance programs authorized under this title, excluding the development of policy relating to such programs but including the following:

`(A) The administrative, accounting, and financial management functions of the delivery system for Federal student assistance, including--

`(i) the collection, processing and transmission of applicant data to students, institutions and authorized third parties, as provided for in section 483;

`(ii) design and technical specifications for software development and systems supporting the delivery of student financial assistance under title IV;

`(iii) all software and hardware acquisitions and all information technology contracts related to the delivery and management of student financial assistance under title IV;

`(iv) all aspects of contracting for the information and financial systems supporting student financial assistance programs under this title; and

`(v) providing all customer service, training, and user support related to systems that support those programs.

`(B) Annual development of a budget for the operations and services of the PBO, in consultation with the Secretary, and for consideration and inclusion in the Department??s annual budget submission.

`(3) ADDITIONAL FUNCTIONS- The Secretary may allocate to the PBO such additional functions as the Secretary and the Chief Operating Officer determine are necessary or appropriate to achieve the purposes of the PBO.

`(4) INDEPENDENCE- Subject to paragraph (1), in carrying out its functions, the PBO shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions.

`(5) AUDITS AND REVIEW- The PBO shall be subject to the usual and customary Federal audit procedures and to review by the Inspector General of the Department.

`(6) CHANGES-

`(A) IN GENERAL- The Secretary and the Chief Operating Officer shall consult concerning the effects of policy, market, or other changes on the ability of the PBO to achieve the goals and objectives established in the performance plan described in subsection (c).

`(B) REVISIONS TO AGREEMENT- The Secretary and the Chief Operating Officer may revise the annual performance agreement described in subsection (d)(4) in light of policy, market, or other changes that occur after the Secretary and the Chief Operating Officer enter into the agreement.

`(c) PERFORMANCE PLAN AND REPORT-

`(1) PERFORMANCE PLAN-

`(A) IN GENERAL- Each year, the Secretary and Chief Operating Officer shall agree on, and make available to the public, a performance plan for the PBO for the succeeding 5 years that establishes measurable goals and objectives for the organization.

`(B) CONSULTATION- In developing the 5-year performance plan and any revision to the plan, the Secretary and the Chief Operating Officer shall consult with students, institutions of higher education, Congress, lenders, the Advisory Committee on Student Financial Assistance, and other interested parties not less than 30 days prior to the implementation of the performance plan or revision.

`(C) AREAS- The plan shall include a concise statement of the goals for a modernized system for the delivery of student financial assistance under title IV and identify action steps necessary to achieve such goals. The plan shall address the PBO's responsibilities in the following areas:

`(i) IMPROVING SERVICE- Improving service to students and other participants in student financial aid programs authorized under this title, including making those programs more understandable to students and their parents.

`(ii) REDUCING COSTS- Reducing the costs of administering those programs.

`(iii) IMPROVEMENT AND INTEGRATION OF SUPPORT SYSTEMS- Improving and integrating the information and delivery systems that support those programs.

`(iv) DELIVERY AND INFORMATION SYSTEM- Developing an open, common, and integrated delivery and information system for programs authorized under this title.

`(v) OTHER AREAS- Any other areas identified by the Secretary.

`(2) ANNUAL REPORT- Each year, the Chief Operating Officer shall prepare and submit to Congress, through the Secretary, an annual report on the performance of the PBO, including an evaluation of the extent to which the PBO met the goals and objectives contained in the 5-year performance plan described in paragraph (1) for the preceding year. The annual report shall include the following:

`(A) An independent financial audit of the expenditures of both the PBO and programs administered by the PBO.

`(B) Financial and performance requirements applicable to the PBO under the Chief Financial Officer Act of 1990 and the Government Performance and Results Act of 1993.

`(C) The results achieved by the PBO during the year relative to the goals established in the organization??s performance plan.

`(D) The evaluation rating of the performance of the Chief Operating Officer and senior managers under subsections (d)(4) and (e)(2), including the amounts of bonus compensation awarded to these individuals.

`(E) Recommendations for legislative and regulatory changes to improve service to students and their families, and to improve program efficiency and integrity.

`(F) Other such information as the Director of the Office of Management and Budget shall prescribe for performance based organizations.

`(3) CONSULTATION WITH STAKEHOLDERS- The Chief Operating Officer, in preparing the report described in paragraph (2), shall establish appropriate means to consult with borrowers, institutions, lenders, guaranty agencies, secondary markets, and others involved in the delivery system of student aid under this title--

`(A) regarding the degree of satisfaction with the delivery system; and

`(B) to seek suggestions on means to improve the delivery system.

`(d) CHIEF OPERATING OFFICER-

`(1) APPOINTMENT- The management of the PBO shall be vested in a Chief Operating Officer who shall be appointed by the Secretary to a term of not less than 3 and not more than 5 years, and compensated without regard to chapters 33, 51, and 53 of title 5, United States Code. The Secretary shall appoint the Chief Operating Officer within 6 months after the date of enactment of the Higher Education Amendments of 1998. The appointment shall be made on the basis of demonstrated management ability and expertise in information technology, including experience with financial systems, and without regard to political affiliation or activity.

`(2) REAPPOINTMENT- The Secretary may reappoint the Chief Operating Officer to subsequent terms of not less than 3 and not more than 5 years, so long as the performance of the Chief Operating Officer, as set forth in the performance agreement described in paragraph (4), is satisfactory.

`(3) REMOVAL- The Chief Operating Officer may be removed by--

`(A) the President; or

`(B) the Secretary, for misconduct or failure to meet performance goals set forth in the performance agreement in paragraph (4).

The President or Secretary shall communicate the reasons for any such removal to the appropriate committees of Congress.

`(4) PERFORMANCE AGREEMENT-

`(A) IN GENERAL- Each year, the Secretary and the Chief Operating Officer shall enter into an annual performance agreement, that shall set forth measurable organization and individual goals for the Chief Operating Officer.

`(B) TRANSMITTAL- The final agreement, and any revision to the final agreement, shall be transmitted to the Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate, and made publicly available.

`(5) COMPENSATION-

`(A) IN GENERAL- The Chief Operating Officer is authorized to be paid at an annual rate of basic pay not to exceed the maximum rate of basic pay for the Senior Executive Service under section 5382 of title 5, United States Code, including any applicable locality-based comparability payment that may be authorized under section 5304(h)(2)(B) of such title. The compensation of the Chief Operating Officer shall be considered for purposes of section 207(c)(2)(A) of title 18, United States Code, to be the equivalent of that described under clause (ii) of section 207(c)(2)(A) of such title.

`(B) BONUS- In addition, the Chief Operating Officer may receive a bonus in an amount that does not exceed 50 percent of such annual rate of basic pay, based upon the Secretary??s evaluation of the Chief Operating Officer??s performance in relation to the goals set forth in the performance agreement described in paragraph (2).

`(C) PAYMENT- Payment of a bonus under this subparagraph (B) may be made to the Chief Operating Officer only to the extent that such payment does not cause the Chief Operating Officer??s total aggregate compensation in a calendar year to equal or exceed the amount of the President??s salary under section 102 of title 3, United States Code.

`(e) SENIOR MANAGEMENT-

`(1) APPOINTMENT-

`(A) IN GENERAL- The Chief Operating Officer may appoint such senior managers as that officer determines necessary without regard to the provisions of title 5, United States Code, governing appointments in the competitive service.

`(B) COMPENSATION- The senior managers described in subparagraph (A) may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates.

`(2) PERFORMANCE AGREEMENT- Each year, the Chief Operating Officer and each senior manager appointed under this subsection shall enter into an annual performance agreement that sets forth measurable organization and individual goals. The agreement shall be subject to review and renegotiation at the end of each term.

`(3) COMPENSATION-

`(A) IN GENERAL- A senior manager appointed under this subsection may be paid at an annual rate of basic pay of not more than the maximum rate of basic pay for the Senior Executive Service under section 5382 of title 5, United States Code, including any applicable locality-based comparability payment that may be authorized under section 5304(h)(2)(C) of such title. The compensation of a senior manager shall be considered for purposes of section 207(c)(2)(A) of title 18, United States Code, to be the equivalent of that described under clause (ii) of section 207(c)(2)(A) of such title.

`(B) BONUS- In addition, a senior manager may receive a bonus in an amount such that the manager??s total annual compensation does not exceed 125 percent of the maximum rate of basic pay for the Senior Executive Service, including any applicable locality-based comparability payment, based upon the Chief Operating Officer??s evaluation of the manager??s performance in relation to the goals set forth in the performance agreement described in paragraph (2).

`(4) REMOVAL- A senior manager shall be removable by the Chief Operating Officer, or by the Secretary if the position of Chief Operating Officer is vacant.

`(f) STUDENT LOAN OMBUDSMAN-

`(1) APPOINTMENT- The Chief Operating Officer, in consultation with the Secretary, shall appoint a Student Loan Ombudsman to provide timely assistance to borrowers of loans made, insured, or guaranteed under title IV by performing the functions described in paragraph (3).

`(2) PUBLIC INFORMATION- The Chief Operating Officer shall disseminate information about the availability and functions of the Ombudsman to borrowers and potential borrowers, as well as institutions of higher education, lenders, guaranty agencies, loan servicers, and other participants in those student loan programs.

`(3) FUNCTIONS OF OMBUDSMAN- The Ombudsman shall--

`(A) in accordance with regulations of the Secretary, receive, review, and attempt to resolve informally complaints from borrowers of loans described in paragraph (1), including, as appropriate, attempts to resolve such complaints within the Department of Education and with institutions of higher education, lenders, guaranty agencies, loan servicers, and other participants in the loan programs described in paragraph (1)(A); and

`(B) compile and analyze data on borrower complaints and make appropriate recommendations.

`(4) REPORT- Each year, the Ombudsman shall submit a report to the Chief Operating Officer, for inclusion in the annual report under subsection (c)(2), that describes the activities, and evaluates the effectiveness of the Ombudsman during the preceding year.

`(g) PERSONNEL FLEXIBILITY-

`(1) PERSONNEL CEILINGS- The PBO shall not be subject to any ceiling relating to the number or grade of employees.

`(2) ADMINISTRATIVE FLEXIBILITY- The Chief Operating Officer shall work with the Office of Personnel Management to develop and implement personnel flexibilities in staffing, classification, and pay that meet the needs of the PBO, subject to compliance with title 5, United States Code.

`(3) EXCEPTED SERVICE- The Chief Operating Officer may appoint, without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, not more than 25 technical and professional employees to administer the functions of the PBO. These employees may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates.

`(h) ESTABLISHMENT OF A FAIR AND EQUITABLE SYSTEM FOR MEASURING STAFF PERFORMANCE- The PBO shall establish an annual performance management system, subject to compliance with title 5, United States Code and consistent with applicable provisions of law and regulations, which strengthens the organizational effectiveness of the PBO by providing for establishing goals or objectives for individual, group, or organizational performance (or any combination thereof), consistent with the performance plan of the PBO and its performance planning procedures, including those established under the Government Performance and Results Act of 1993, and communicating such goals or objectives to employees.

`(i) REPORT- The Secretary and the Chief Operating Officer, not later than 180 days after the date of enactment of the Higher Education Amendments of 1998, shall report to Congress on the proposed budget and sources of funding for the operation of the PBO.

`(j) AUTHORIZATION OF APPROPRIATIONS- The Secretary shall allocate from funds made available under section 458 such funds as are appropriate to the functions assumed by the PBO. In addition, there are authorized to be appropriated such sums as may be necessary to carry out the purposes of this part, including transition costs.

`SEC. 142. PROCUREMENT FLEXIBILITY.

`(a) PROCUREMENT AUTHORITY- Subject to the authority of the Secretary, the Chief Operating Officer of a PBO may exercise the authority of the Secretary to procure property and services in the performance of functions managed by the PBO. For the purposes of this section, the term `PBO?? includes the Chief Operating Officer of the PBO and any employee of the PBO exercising procurement authority under the preceding sentence.

`(b) IN GENERAL- Except as provided in this section, the PBO shall abide by all applicable Federal procurement laws and regulations when procuring property and services. The PBO shall--

`(1) enter into contracts for information systems supporting the programs authorized under title IV to carry out the functions set forth in section 141(b)(2); and

`(2) obtain the services of experts and consultants without regard to section 3109 of title 5, United States Code and set pay in accordance with such section.

`(c) SERVICE CONTRACTS-

`(1) PERFORMANCE-BASED SERVICING CONTRACTS- The Chief Operating Officer shall, to the extent practicable, maximize the use of performance-based servicing contracts, consistent with guidelines for such contracts published by the Office of Federal Procurement Policy, to achieve cost savings and improve service.

`(2) FEE FOR SERVICE ARRANGEMENTS- The Chief Operating Officer shall, when appropriate and consistent with the purposes of the PBO, acquire services related to the title IV delivery system from any entity that has the capability and capacity to meet the requirements for the system. The Chief Operating Officer is authorized to pay fees that are equivalent to those paid by other entities to an organization that provides an information system or service that meets the requirements of the PBO, as determined by the Chief Operating Officer.

`(d) TWO-PHASE SOURCE-SELECTION PROCEDURES-

`(1) IN GENERAL- The PBO may use a two-phase process for selecting a source for a procurement of property or services.

`(2) FIRST PHASE- The procedures for the first phase of the process for a procurement are as follows:

`(A) PUBLICATION OF NOTICE- The contracting officer for the procurement shall publish a notice of the procurement in accordance with section 18 of the Office of Federal Procurement Policy Act (41 U.S.C. 416) and subsections (e), (f), and (g) of section 8 of the Small Business Act (15 U.S.C. 637), except that the notice shall include only the following:

`(i) A general description of the scope or purpose of the procurement that provides sufficient information on the scope or purpose for sources to make informed business decisions regarding whether to participate in the procurement.

`(ii) A description of the basis on which potential sources are to be selected to submit offers in the second phase.

`(iii) A description of the information that is to be required under subparagraph (B).

`(iv) Any additional information that the contracting officer determines appropriate.

`(B) INFORMATION SUBMITTED BY OFFERORS- Each offeror for the procurement shall submit basic information, such as information on the offeror??s qualifications, the proposed conceptual approach, costs likely to be associated with the proposed conceptual approach, and past performance of the offeror on Federal Government contracts, together with any additional information that is requested by the contracting officer.

`(C) SELECTION FOR SECOND PHASE- The contracting officer shall select the offerors that are to be eligible to participate in the second phase of the process. The contracting officer shall limit the number of the selected offerors to the number of sources that the contracting officer determines is appropriate and in the best interests of the Federal Government.

`(3) SECOND PHASE-

`(A) IN GENERAL- The contracting officer shall conduct the second phase of the source selection process in accordance with sections 303A and 303B of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253a and 253b).

`(B) ELIGIBLE PARTICIPANTS- Only the sources selected in the first phase of the process shall be eligible to participate in the second phase.

`(C) SINGLE OR MULTIPLE PROCUREMENTS- The second phase may include a single procurement or multiple procurements within the scope, or for the purpose, described in the notice pursuant to paragraph (2)(A).

`(4) PROCEDURES CONSIDERED COMPETITIVE- The procedures used for selecting a source for a procurement under this subsection shall be considered competitive procedures for all purposes.

`(e) USE OF SIMPLIFIED PROCEDURES FOR COMMERCIAL ITEMS- Whenever the PBO anticipates that commercial items will be offered for a procurement, the PBO may use (consistent with the special rules for commercial items) the special simplified procedures for the procurement without regard to--

`(1) any dollar limitation otherwise applicable to the use of those procedures; and

`(2) the expiration of the authority to use special simplified procedures under section 4202(e) of the Clinger-Cohen Act of 1996 (110 Stat. 654; 10 U.S.C. 2304 note).

`(f) FLEXIBLE WAIT PERIODS AND DEADLINES FOR SUBMISSION OF OFFERS OF NONCOMMERCIAL ITEMS-

`(1) AUTHORITY- In carrying out a procurement, the PBO may--

`(A) apply a shorter waiting period for the issuance of a solicitation after the publication of a notice under section 18 of the Office of Federal Procurement Policy Act (41 U.S.C. 416) than is required under subsection (a)(3)(A) of such section; and

`(B) notwithstanding subsection (a)(3) of such section, establish any deadline for the submission of bids or proposals that affords potential offerors a reasonable opportunity to respond to the solicitation.

`(2) INAPPLICABILITY TO COMMERCIAL ITEMS- Paragraph (1) does not apply to a procurement of a commercial item.

`(3) CONSISTENCY WITH APPLICABLE INTERNATIONAL AGREEMENTS- If an international agreement is applicable to the procurement, any exercise of authority under paragraph (1) shall be consistent with the international agreement.

`(g) MODULAR CONTRACTING-

`(1) IN GENERAL- The PBO may satisfy the requirements of the PBO for a system incrementally by carrying out successive procurements of modules of the system. In doing so, the PBO may use procedures authorized under this subsection to procure any such module after the first module.

`(2) UTILITY REQUIREMENT- A module may not be procured for a system under this subsection unless the module is useful independently of the other modules or useful in combination with another module previously procured for the system.

`(3) CONDITIONS FOR USE OF AUTHORITY- The PBO may use procedures authorized under paragraph (4) for the procurement of an additional module for a system if--

`(A) competitive procedures were used for awarding the contract for the procurement of the first module for the system; and

`(B) the solicitation for the first module included--

`(i) a general description of the entire system that was sufficient to provide potential offerors with reasonable notice of the general scope of future modules;

`(ii) other information sufficient for potential offerors to make informed business judgments regarding whether to submit offers for the contract for the first module; and

`(iii) a statement that procedures authorized under this subsection could be used for awarding subsequent contracts for the procurement of additional modules for the system.

`(4) PROCEDURES- If the procurement of the first module for a system meets the requirements set forth in paragraph (3), the PBO may award a contract for the procurement of an additional module for the system using any of the following procedures:

`(A) SOLE SOURCE- Award of the contract on a sole-source basis to a contractor who was awarded a contract for a module previously procured for the system under competitive procedures or procedures authorized under subparagraph (B).

`(B) ADEQUATE COMPETITION- Award of the contract on the basis of offers made by--

`(i) a contractor who was awarded a contract for a module previously procured for the system after having been selected for award of the contract under this subparagraph or other competitive procedures; and

`(ii) at least one other offeror that submitted an offer for a module previously procured for the system and is expected, on the basis of the offer for the previously procured module, to submit a competitive offer for the additional module.

`(C) OTHER- Award of the contract under any other procedure authorized by law.

`(5) NOTICE REQUIREMENT-

`(A) PUBLICATION- Not less than 30 days before issuing a solicitation for offers for a contract for a module for a system under procedures authorized under subparagraph (A) or (B) of paragraph (4), the PBO shall publish in the Commerce Business Daily a notice of the intent to use such procedures to enter into the contract.

`(B) EXCEPTION- Publication of a notice is not required under this paragraph with respect to a use of procedures authorized under paragraph (4) if the contractor referred to in that subparagraph (who is to be solicited to submit an offer) has previously provided a module for the system under a contract that contained cost, schedule, and performance goals and the contractor met those goals.

`(C) CONTENT OF NOTICE- A notice published under subparagraph (A) with respect to a use of procedures described in paragraph (4) shall contain the information required under section 18(b) of the Office of Federal Procurement Policy Act (41 U.S.C. 416(b)), other than paragraph (4) of such section, and shall invite the submission of any assertion that the use of the procedures for the procurement involved is not in the best interest of the Federal Government together with information supporting the assertion.

`(6) DOCUMENTATION- The basis for an award of a contract under this subsection shall be documented. However, a justification pursuant to section 303(f) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(f)) or section 8(h) of the Small Business Act (15 U.S.C. 637(h)) is not required.

`(7) SIMPLIFIED SOURCE-SELECTION PROCEDURES- The PBO may award a contract under any other simplified procedures prescribed by the PBO for the selection of sources for the procurement of modules for a system, after the first module, that are not to be procured under a contract awarded on a sole-source basis.

`(h) USE OF SIMPLIFIED PROCEDURES FOR SMALL BUSINESS SET-ASIDES FOR SERVICES OTHER THAN COMMERCIAL ITEMS-

`(1) AUTHORITY- The PBO may use special simplified procedures for a procurement of services that are not commercial items if--

`(A) the procurement is in an amount not greater than $1,000,000;

`(B) the procurement is conducted as a small business set-aside pursuant to section 15(a) of the Small Business Act (15 U.S.C. 644(a)); and

`(C) the price charged for supplies associated with the services procured are items of supply expected to be less than 20 percent of the total contract price.

`(2) INAPPLICABILITY TO CERTAIN PROCUREMENTS- The authority set forth in paragraph (1) may not be used for--

`(A) an award of a contract on a sole-source basis; or

`(B) a contract for construction.

`(i) GUIDANCE FOR USE OF AUTHORITY-

`(1) ISSUANCE BY PBO- The Chief Operating Officer of the PBO, in consultation with the Administrator for Federal Procurement Policy, shall issue guidance for the use by PBO personnel of the authority provided in this section.

`(2) GUIDANCE FROM OFPP- As part of the consultation required under paragraph (1), the Administrator for Federal Procurement Policy shall provide the PBO with guidance that is designed to ensure, to the maximum extent practicable, that the authority under this section is exercised by the PBO in a manner that is consistent with the exercise of the authority by the heads of the other performance-based organizations.

`(3) COMPLIANCE WITH OFPP GUIDANCE- The head of the PBO shall ensure that the procurements of the PBO under this section are carried out in a manner that is consistent with the guidance provided for the PBO under paragraph (2).

`(j) LIMITATION ON MULTIAGENCY CONTRACTING- No department or agency of the Federal Government may purchase property or services under contracts entered into or administered by a PBO under this section unless the purchase is approved in advance by the senior procurement official of that department or agency who is responsible for purchasing by the department or agency.

`(k) LAWS NOT AFFECTED- Nothing in this section shall be construed to waive laws for the enforcement of civil rights or for the establishment and enforcement of labor standards that are applicable to contracts of the Federal Government.

`(l) DEFINITIONS- In this section:

`(1) COMMERCIAL ITEM- The term `commercial item?? has the meaning given the term in section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12)).

`(2) COMPETITIVE PROCEDURES- The term `competitive procedures?? has the meaning given the term in section 309(b) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 259(b)).

`(3) SOLE-SOURCE BASIS- The term `sole-source basis??, with respect to an award of a contract, means that the contract is awarded to a source after soliciting an offer or offers from, and negotiating with, only that source.

`(4) SPECIAL RULES FOR COMMERCIAL ITEMS- The term `special rules for commercial items?? means the regulations set forth in the Federal Acquisition Regulation pursuant to section 303(g)(1) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(g)(1)) and section 31 of the Office of Federal Procurement Policy Act (41 U.S.C. 427).

`(5) SPECIAL SIMPLIFIED PROCEDURES- The term `special simplified procedures?? means the procedures applicable to purchases of property and services for amounts not greater than the simplified acquisition threshold that are set forth in the Federal Acquisition Regulation pursuant to section 303(g)(1)(B) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(g)(1)(A)) and section 31(a)(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 427(a)(1)).

`SEC. 143. ADMINISTRATIVE SIMPLIFICATION OF STUDENT AID DELIVERY.

`(a) IN GENERAL- In order to improve the efficiency and effectiveness of the student aid delivery system, the Secretary and the Chief Operating Officer shall encourage and participate in the establishment of voluntary consensus standards and requirements for the electronic transmission of information necessary for the administration of programs under title IV.

`(b) PARTICIPATION IN STANDARD SETTING ORGANIZATIONS-

`(1) The Chief Operating Officer shall participate in the activities of standard setting organizations in carrying out the provisions of this section.

`(2) The Chief Operating Officer shall encourage higher education groups seeking to develop common forms, standards, and procedures in support of the delivery of Federal student financial assistance to conduct these activities within a standard setting organization.

`(3) The Chief Operating Officer may pay necessary dues and fees associated with participating in standard setting organizations pursuant to this subsection.

`(c) ADOPTION OF VOLUNTARY CONSENSUS STANDARDS- Except with respect to the common financial reporting form under section 483(a), the Secretary shall consider adopting voluntary consensus standards agreed to by the organization described in subsection (b) for transactions required under title IV, and common data elements for such transactions, to enable information to be exchanged electronically between systems administered by the Department and among participants in the Federal student aid delivery system.

`(d) USE OF CLEARINGHOUSES- Nothing in this section shall restrict the ability of participating institutions and lenders from using a clearinghouse or servicer to comply with the standards for the exchange of information established under this section.

`(e) DATA SECURITY- Any entity that maintains or transmits information under a transaction covered by this section shall maintain reasonable and appropriate administrative, technical, and physical safeguards--

`(1) to ensure the integrity and confidentiality of the information; and

`(2) to protect against any reasonably anticipated security threats, or unauthorized uses or disclosures of the information.

`(f) DEFINITIONS-

`(1) CLEARINGHOUSE- The term `clearinghouse?? means a public or private entity that processes or facilitates the processing of nonstandard data elements into data elements conforming to standards adopted under this section.

`(2) STANDARD SETTING ORGANIZATION- The term `standard setting organization?? means an organization that--

`(A) is accredited by the American National Standards Institute;

`(B) develops standards for information transactions, data elements, or any other standard that is necessary to, or will facilitate, the implementation of this section; and

`(C) is open to the participation of the various entities engaged in the delivery of Federal student financial assistance.

`(3) VOLUNTARY CONSENSUS STANDARD- The term `voluntary consensus standard?? means a standard developed or used by a standard setting organization described in paragraph (2).??.

(b) REPEAL OF OLD GENERAL PROVISIONS- Title XII (20 U.S.C. 1141 et seq.) is repealed.

(c) REPEAL OF TITLE IV DEFINITION- Section 481 (20 U.S.C. 1088) is amended--

(1) by striking subsections (a), (b), and (c); and

(2) by redesignating subsections (d) through (f) as subsections (a) through (c), respectively.

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Last Modified: 09/23/2003