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

Subtitle D—Provisions Relating to Major Defense Acquisition Programs

P. L. 114-

House Conference Report. 114-840

(1) in subsection (a)(3), by striking “selection of confidence levels” both places it appears and inserting “discussion of risk”;

(2) in subsection (a)(6)—

(A) by inserting “or approve” after “conduct”;

(B) by striking “major defense acquisition programs” and all that follows through “Authority—” and inserting “all major defense acquisition programs and major subprograms—”; and

(C) in subparagraph (B), by striking “or upon the request” and all that follows through the semicolon at the end and inserting “, upon the request of the Under Secretary of Defense for Acquisition, Technology, and Logistics, or upon the request of the milestone decision authority”;

(3) by redesignating subsections (b), (c), (d), (e), and (f) as subsections (c), (d), (e), (f), and (h), respectively;

(4) by inserting after subsection (a) the following new subsection (b):

“(b) Independent Cost Estimate Required Before Approval.— (1) A milestone decision authority may not approve entering a milestone phase of a major defense acquisition program or major subprogram unless an independent cost estimate has been conducted or approved by the Director of Cost Assessment and Program Evaluation and considered by the milestone decision authority that—

“(A) for the technology maturation and risk reduction phase, includes the identification and sensitivity analysis of key cost drivers that may affect life-cycle costs of the program or subprogram; and

“(B) for the engineering and manufacturing development phase, or production and deployment phase, includes a cost estimate of the full life-cycle cost of the program or subprogram.

“(2) The regulations governing the content and submission of independent cost estimates required by subsection (a) shall require that the independent cost estimate of the full life-cycle cost of a program or subprogram include—

“(A) all costs of development, procurement, military construction, operations and support, and trained manpower to operate, maintain, and support the program or subprogram upon full operational deployment, without regard to funding source or management control; and

“(B) an analysis to support decisionmaking that identifies and evaluates alternative courses of action that may reduce cost and risk, and result in more affordable programs and less costly systems.”;

(5) in subsection (d), as so redesignated, in paragraph (3), by striking “confidence level” and inserting “discussion of risk”;

(6) in subsection (e), as so redesignated—

(A) by amending the subsection heading to read as follows: “Discussion Of Risk In Cost Estimates.—”;

(B) by amending paragraph (1) to read as follows:

“(1) issue guidance requiring a discussion of risk, the potential impacts of risk on program costs, and approaches to mitigate risk in cost estimates for major defense acquisition programs and major subprograms;”;

(C) in paragraph (2)—

(i) by striking “such confidence level provides” and inserting “cost estimates are developed, to the extent practicable, based on historical actual cost information that is based on demonstrated contractor and Government performance and that such estimates provide”; and

(ii) by inserting “or subprogram” after “the program”; and

(D) in paragraph (3), by striking “disclosure required by paragraph (1)” and inserting “information required in the guidance under paragraph (1)”; and

(7) by inserting after subsection (f), as so redesignated, the following new subsection:

“(g) Guidelines And Collection Of Cost Data.— (1) The Director of Cost Assessment and Program Evaluation shall, in consultation with the Under Secretary of Defense for Acquisition, Technology, and Logistics, develop policies, procedures, guidance, and a collection method to ensure that quality acquisition cost data are collected to facilitate cost estimation and comparison across acquisition programs.

“(2) The program manager and contracting officer for each acquisition program in an amount greater than $100,000,000, in consultation with the cost estimating component of the relevant military department or Defense Agency, shall ensure that cost data are collected in accordance with the requirements of paragraph (1).

“(3) The requirement under paragraph (1) may be waived only by the Director of Cost Assessment and Program Evaluation.”.

(b) Conforming Amendments To Add Subprograms.—Section 2334 of such title is further amended—

(1) in subsection (a)(2), by inserting “or major subprogram” before “under chapter 144”;

(2) in paragraphs (3), (4), and (5) of subsection (a) and in subsection (c)(1) (as redesignated by subsection (a) of this section), by striking “major defense acquisition programs and major automated information system programs” and inserting “major defense acquisition programs and major subprograms” each place it appears;

(3) in paragraphs (1) and (2) of subsection (d) (as so redesignated), and in subsection (f)(4) (as so redesignated), by striking “major defense acquisition program or major automated information system program” and inserting “major defense acquisition program or major subprogram” each place it appears;

(4) in subsection (d)(4) (as so redesignated), by inserting before the period “or major subprogram”;

(5) in subsection (e)(3)(B) (as so redesignated), by inserting “or major subprogram” after “major defense acquisition program”; and

(6) in subsection (f)(3) (as so redesignated), by striking “major defense acquisition program and major automated information system program” and inserting “major defense acquisition program and major subprogram”.

(c) Repeal.—Chapter 144 of such title is amended—

(1) by striking section 2434; and

(2) in the table of sections at the beginning of such chapter, by striking the item relating to such section.

The Senate bill contained a provision (sec. 803) that would amend section 2334 of title 10, United States Code, and would repeal section 2434 of title 10, United States Code, in order to remove the ambiguity concerning the roles and responsibilities for the conduct of independent cost estimates (ICEs) by designating the Director of Cost Assessment and Program Evaluation (CAPE) to ensure standards are met.

The Senate bill also contained a provision (sec. 836) that would amend subsection (d) of section 2334 of title 10, United States Code, to remove the requirement for disclosure of confidence levels for baseline estimates of major defense acquisition programs. The House amendment contained a similar provision (sec. 812) that would amend sections 2334 and 2434 of title 10, United States Code, to make clear that CAPE conducts or approves ICEs for all major defense acquisition programs and major automated information systems.

The Senate recedes with an amendment that would require an ICE for the technology maturation and risk reduction phase of a major defense acquisition program or major subprogram that identifies the key contributors to the life-cycle costs of the program or subprogram.

The conferees expect that the procedures to be developed for collecting cost data from acquisition program contractors are cost effective and make use of existing sources of data, to the best extent practicable.