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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle C--Provisions Relating to Major Defense Acquisition Programs

P. L. 114-

House Conference Report. 114-270

(a) Revision to milestone B requirements.—Section 2366b of title 10, United Stated Code, is amended to read as follows:

Ҥ 2366b. Major defense acquisition programs: certification required before Milestone B approval

“(a) Certifications and determination required.—A major defense acquisition program may not receive Milestone B approval until the milestone decision authority—

“(1) has received a preliminary design review and conducted a formal post-preliminary design review assessment, and certifies on the basis of such assessment that the program demonstrates a high likelihood of accomplishing its intended mission;

“(2) further certifies that the technology in the program has been demonstrated in a relevant environment, as determined by the milestone decision authority on the basis of an independent review and assessment by the Assistant Secretary of Defense for Research and Engineering, in consultation with the Deputy Assistant Secretary of Defense for Developmental Test and Evaluation;

“(3) determines in writing that—

“(A) the program is affordable when considering the ability of the Department of Defense to accomplish the program’s mission using alternative systems;

“(B) appropriate trade-offs among cost, schedule, technical feasibility, and performance objectives have been made to ensure that the program is affordable when considering the per unit cost and the total acquisition cost in the context of the total resources available during the period covered by the future-years defense program submitted during the fiscal year in which the certification is made;

“(C) reasonable cost and schedule estimates have been developed to execute, with the concurrence of the Director of Cost Assessment and Program Evaluation, the product development and production plan under the program; and

“(D) funding is available to execute the product development and production plan under the program, through the period covered by the future-years defense program submitted during the fiscal year in which the certification is made, consistent with the estimates described in subparagraph (C) for the program;

“(E) appropriate market research has been conducted prior to technology development to reduce duplication of existing technology and products;

“(F) the Department of Defense has completed an analysis of alternatives with respect to the program;

“(G) the Joint Requirements Oversight Council has accomplished its duties with respect to the program pursuant to section 181(b) of this title, including an analysis of the operational requirements for the program;

“(H) life-cycle sustainment planning, including corrosion prevention and mitigation planning, has identified and evaluated relevant sustainment costs throughout development, production, operation, sustainment, and disposal of the program, and any alternatives, and that such costs are reasonable and have been accurately estimated;

“(I) an estimate has been made of the requirements for core logistics capabilities and the associated sustaining workloads required to support such requirements;

“(J) there is a plan to mitigate and account for any costs in connection with any anticipated de-certification of cryptographic systems and components during the production and procurement of the major defense acquisition program to be acquired;

“(K) the program complies with all relevant policies, regulations, and directives of the Department of Defense; and

“(L) the Secretary of the military department concerned and the Chief of the armed force concerned concur in the trade-offs made in accordance with subparagraph (B); and

“(4) in the case of a space system, performs a cost benefit analysis for any new or follow-on satellite system using a dedicated ground control system instead of a shared ground control system, except that no cost benefit analysis is required to be performed under this paragraph for any Milestone B approval of a space system after December 31, 2019.

“(b) Changes to certifications or determination.— (1) The program manager for a major defense acquisition program that has received certifications or a determination under subsection (a) shall immediately notify the milestone decision authority of any changes to the program or a designated major subprogram of such program that—

“(A) alter the substantive basis for the certifications or determination of the milestone decision authority relating to any component of such certifications or determination specified in paragraph (1), (2), or (3) of subsection (a); or

“(B) otherwise cause the program or subprogram to deviate significantly from the material provided to the milestone decision authority in support of such certifications or determination.

“(2) Upon receipt of information under paragraph (1), the milestone decision authority may withdraw the certifications or determination concerned or rescind Milestone B approval if the milestone decision authority determines that such certifications, determination, or approval are no longer valid.


“(c) Submission to congress.— (1) The certifications and determination under subsection (a) with respect to a major defense acquisition program shall be submitted to the congressional defense committees with the first Selected Acquisition Report submitted under section 2432 of this title after completion of the certification.


“(2) The milestone decision authority shall retain records of the basis for the certifications and determination under paragraphs (1), (2), and (3) of subsection (a).

“(3) At the request of any of the congressional defense committees, the Secretary of Defense shall submit to the committee an explanation of the basis for the certifications and determination under paragraphs (1), (2), and (3) of subsection (a) with respect to a major defense acquisition program. The explanation shall be submitted in unclassified form, but may include a classified annex.

“(d) Waiver for national security.— (1) The milestone decision authority may, at the time of Milestone B approval or at the time that such milestone decision authority withdraws a certification or rescinds Milestone B approval pursuant to subsection (b)(2), waive the applicability to a major defense acquisition program of one or more components (as specified in paragraph (1), (2), or (3) of subsection (a)) of the certification and determination requirements if the milestone decision authority determines that, but for such a waiver, the Department would be unable to meet critical national security objectives.

“(2) Whenever the milestone decision authority makes such a determination and authorizes such a waiver—

“(A) the waiver, the waiver determination, and the reasons for the waiver determination shall be submitted in writing to the congressional defense committees within 30 days after the waiver is authorized; and

“(B) the milestone decision authority shall review the program not less often than annually to determine the extent to which such program currently satisfies the certification and determination components specified in paragraphs (1), (2), and (3) of subsection (a) until such time as the milestone decision authority determines that the program satisfies all such certification and determination components.

“(3) The requirement in paragraph (2)(B) shall not apply to a program for which a certification was required pursuant to section 2433a(c) of this title if the milestone decision authority—

“(A) determines in writing that—

“(i) the program has reached a stage in the acquisition process at which it would not be practicable to meet the certification component that was waived; and

“(ii) the milestone decision authority has taken appropriate alternative actions to address the underlying purposes of such certification component; and

“(B) submits the written determination, and an explanation of the basis for the determination, to the congressional defense committees.

“(e) Designation of certification status in budget documentation.—Any budget request, budget justification material, budget display, reprogramming request, Selected Acquisition Report, or other budget documentation or performance report submitted by the Secretary of Defense to the President regarding a major defense acquisition program receiving a waiver pursuant to subsection (d) shall prominently and clearly indicate that such program has not fully satisfied the certification requirements of this section until such time as the milestone decision authority makes the determination that such program has satisfied all such certification requirements.

“(f) Nondelegation.—The milestone decision authority may not delegate the certification requirement under subsection (a) or the authority to waive any component of such requirement under subsection (d).

“(g) Definitions.—In this section:

“(1) The term ‘major defense acquisition program’ means a Department of Defense acquisition program that is a major defense acquisition program for purposes of section 2430 of this title.

“(2) The term ‘designated major subprogram’ means a major subprogram of a major defense acquisition program designated under section 2430a(a)(1) of this title.

“(3) The term ‘milestone decision authority’, with respect to a major defense acquisition program, means the official within the Department of Defense designated with the overall responsibility and authority for acquisition decisions for the program, including authority to approve entry of the program into the next phase of the acquisition process.

“(4) The term ‘Milestone B approval’ has the meaning provided that term in section 2366(e)(7) of this title.

“(5) The term ‘core logistics capabilities’ means the core logistics capabilities identified under section 2464(a) of this title.”.

(b) Conforming amendment.—Section 2334(a) of title 10, United States Code, is amended in paragraph (6)(A)(i) by striking “any certification under” and inserting “any decision to grant milestone approval pursuant to”.

The Senate amendment contained a similar provision (sec. 845).

The Senate recedes with an amendment that combines these two provisions.

The provision establishes the MDA's responsibility to ensure that an acquisition program has demonstrated sufficient knowledge to enter a development phase and has sound plans in place to deliver the required capability, before granting milestone approval. It specifies the considerations the MDA must take into account, thereby addressing the critical activities that need to precede and occur during the development phase. It further specifies that the MDA must certify that the program has a high likelihood of accomplishing its intended mission based on a formal post-preliminary design review assessment, and that the technology in the program has been demonstrated in a relevant environment based on an independent review and assessment.

House Report 114-201 to accompany H. R. 1735 as it was reported out of the House Armed Services Committee.

Section 826--Required Certification and Determination before Milestone B Approval of Major Defense Acquisition Programs

This section would amend section 2366b of title 10, United States Code, to require the Milestone Decision Authority (MDA) to make a written determination, instead of a certification, for some of the existing certification requirements before approving milestone B. This section would also require an explanation of the basis for the determination to be submitted to a congressional defense committee upon request.

The committee remains concerned that the process used to manage the acquisition of weapon systems is inefficient, cumbersome, and bureaucratic, and that an over-focus on paperwork takes critical time away from conducting day-to-day core program management tasks such as contractor oversight, engineering, and risk management. The committee believes that requiring a determination by the MDA, instead of a legal certification, in certain cases could increase the efficiency and effectiveness of the Department of Defense's acquisition review process, while reducing the time and effort the Department spends on processes that do not appear to provide much added value.

Because the milestone B approval represents a major commitment of resources by the Department, this section retains certain certification requirements, including of the business case itself, that the business case is supported by a preliminary design review, and that the technology to be used has been demonstrated. However, the committee believes some areas, such as market research, may only need a determination by the MDA. In those areas requiring a determination, the committee would retain access to the information needed for oversight and accountability because the Department would be required to make the basis for the determination available to the committee upon request.

Senate Report 114-49 to accompany S. 1376 as it was reported out of the Senate Armed Services Committee.

Revision of Milestone B decision authority responsibilities for major defense acquisition programs (sec. 845)

The committee recommends a provision that would amend section 2366b of title 10, United States Code, to streamline and simplify legislative requirements for Milestone B approval of major defense acquisition programs (MDAPs). This provision would retain the requirements to make key findings related to program risk, but would require the milestone decision authority to make a determination that appropriate steps had been taken to address such risks, rather than the string of specific certifications required by current law. Under the provision, the only certification that would be required would be a certification of the maturity of key technologies, which has been identified by the Government Accountability Office (GAO) as the key to successful acquisition programs.

The committee notes that the Department of Defense (DOD) proposed legislation that would have gone further and eliminated key findings in their entirety, substituting a general requirement for the milestone decision authority to ensure that risks have been reduced and appropriate plans are in place. The committee rejects this approach. Milestone B findings were instituted to instill discipline into a process under which too many MDAPs failed because of unrealistic cost estimates, immature technologies, excessive concurrency, and a failure to perform appropriate system engineering and developmental testing before entering production. The GAO has reported that improved discipline in the acquisition system since the enactment of the Weapon Systems Acquisition Reform Act of 2009 has resulted in improved performance of MDAPs initiated since that time. The committee concludes that we should not now remove this much-needed discipline from the system.

At the same time, the committee acknowledges that the milestone approval process has become too bureaucratic and takes too long. The changes made in the provision recommended by the committee should provide some relief, but more must be done by DOD and the services in implementation and execution of this provision. In February 2015, the GAO reported that it takes over 2 years, on average, to complete the entire set of documents needed for a Milestone B decision. According to GAO: ``A primary reason it takes over 2 years to complete the information required for a milestone decision is the large number of stakeholders that review the documents at the many organizational levels above the program office[. . .] The information and documentation required at milestones can be reviewed by as many as eight different organizational levels before a decision is reached on whether a program is ready for the next acquisition phase. In general, the information is reviewed at each level to gain approval before the program provides the information to the next level. This is done serially, which takes more time.''

The GAO reviewed decision-making practices of commercial companies and found that these companies avoided this kind of layered, sequential decision-making process by using frequent, direct interaction between program officials and senior functional managers to ensure that program documents are sound from the outset. These documents are then subject to one or two levels of review and approval, rather than the multiple levels required by DOD.

The committee concludes that DOD could improve the efficiency of the milestone approval process by first delayering and decentralizing milestone decision authorities as outlined in sections of this Title. In addition, the milestone decision authority should ensure that functional offices in the military services and where appropriate in the Office of the Secretary of Defense (OSD) are regularly consulted as key documents are developed. With the functional offices having informed the development of these documents, they could then be removed as independent approval authorities, except where specifically required by statute. This would enable DOD to institute a streamlined, two- or three-level approval process, including only the Program Executive Officer, the Service Acquisition Executive, and for those programs designated by the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology, and Logistics. The committee notes that this is the chain of command envisioned by the Packard Commission 40 years ago.

The committee directs the Deputy Chief Management Officer, in consultation with the Under Secretary of Defense for Acquisition, Logistics, and Technology and the service acquisition executives, to develop a streamlined process flow for milestone decisions, under which functional offices in the military services and at OSD are regularly consulted on the development of acquisition documents, but no longer serve as independent approval authorities, except where specifically required by statute. The committee expects senior acquisition officials to begin implementation of the new process flow within 1 year of the date of the enactment of this Act.