To amend title 10, United States Code, to provide that defense contractors not be denied reimbursement for certain severance costs incurred because of United States or host country action, and for other purposes.

Amends Federal defense procurement provisions to allow as a reimbursable defense contractor cost the payment to foreign nationals employed by a U.S. defense contractor of severance pay in excess of that normally paid in the United States when necessary to comply with host country law, international bilateral agreements, or host country employment practices.

Allows as a reimbursable cost the payment of severance pay to foreign nationals by a defense contractor when required due to a base closure or curtailment at the request of the host country to the extent that such pay is not reimbursed by the host country.

Amends the National Defense Authorization Act for Fiscal Years 1990 and 1991 to state that the President should endeavor to include in status-of-forces or other international agreements a provision which would require the governments of other countries to grant an exemption, waiver, or determination of nonapplicability of any host nation law, bilateral agreement, or employment practice which establishes severance pay for foreign nationals employed by the U.S. Government or its service contractors at a rate that exceeds the amount typically paid in such industry in the United States. Expresses the sense of the Congress that: (1) the U.S. Government or host nation should pay severance costs if either nation initiates a base closing or curtailment of activities; and (2) U.S. defense contractors should endeavor to minimize potential U.S. liability for severance pay paid to their employees outside the United States.