SEC. 849. IMPROVED LIFE-CYCLE COST
CONTROL.
(a) Modified Guidance For Rapid Fielding Pathway.—Section
804(c)(3) of the National Defense Authorization Act for Fiscal
Year 2016 (Public Law 114–92; 10 U.S.C. 2302 note) is amended—
(1) in subparagraph (C), by striking
“; and” and inserting a semicolon;
(2) in subparagraph (D), by striking the period at the end and
inserting “; and”; and
(3) by adding at the end the following new subparagraph:
“(E) a process for identifying and exploiting opportunities to
use the rapid fielding pathway to reduce total ownership
costs.”.
(b) Life-Cycle Cost Management.—Section
805(2) of such Act (Public Law 114–92; 10 U.S.C. 2302 note) is
amended by inserting “life-cycle cost management,” after
“budgeting,”.
(c) Sustainment Reviews.—
(1) IN GENERAL.—Chapter 144 of title
10, United States Code, is amended by adding at the end the
following new section:
Ҥ 2441. Sustainment reviews
“(a) In General.—The Secretary of each military department
shall conduct a sustainment review of each major weapon system
not later than five years after declaration of initial
operational capability of a major defense acquisition program
and throughout the life cycle of the weapon system to assess
the product support strategy, performance, and operation and
support costs of the weapon system. For any review after the
first one, the Secretary concerned shall use availability and
reliability thresholds and cost estimates as the basis for the
circumstances that prompt such a review. The results of the
sustainment review shall be documented in a memorandum by the
relevant decision authority.
“(b) Elements.—At a minimum, the review required under
subsection (a) shall include the following elements:
“(1) An independent cost estimate
for the remainder of the life cycle of the program.
“(2) A comparison of actual costs to the amount of funds
budgeted and appropriated in the previous five years, and if
funding shortfalls exist, an explanation of the implications
on equipment availability.
“(3) A comparison between the assumed and achieved system
reliabilities.
“(4) An analysis of the most cost-effective source of
repairs and maintenance.
“(5) An evaluation of the cost of consumables and
depot-level repairables.
“(6) An evaluation of the costs of information technology,
networks, computer hardware, and software maintenance and
upgrades.
“(7) As applicable, an assessment of the actual fuel
efficiencies compared to the projected fuel efficiencies as
demonstrated in tests or operations.
“(8) As applicable, a comparison of actual manpower
requirements to previous estimates.
“(9) An analysis of whether accurate and complete data are
being reported in the cost systems of the military
department concerned, and if deficiencies exist, a plan to
update the data and ensure accurate and complete data are
submitted in the future.
“(c) Coordination.—The review required
under subsection (a) shall be conducted in coordination with
the requirements of section 2337 of this title and section 832
of the National Defense Authorization Act for Fiscal Year 2012
(Public Law 112–81; 10 U.S.C. 2430 note).”.
(2) CLERICAL AMENDMENT.—The table of sections at the beginning
of such chapter is amended by adding at the end the following
new item:
“2441. Sustainment reviews.”.
(d) Commercial Operational And Support
Savings Initiative.—
(1) IN GENERAL.—The Secretary of
Defense may establish a commercial operational and support
savings initiative to improve readiness and reduce operations
and support costs by inserting existing commercial items or
technology into military legacy systems through the rapid
development of prototypes and fielding of production items
based on current commercial technology.
(2) PROGRAM PRIORITY.—The commercial operational and support
savings initiative shall fund programs that—
(A) reduce the costs of owning and
operating a military system, including the costs of
personnel, consumables, goods and services, and sustaining
the support and investment associated with the peacetime
operation of a weapon system;
(B) take advantage of the commercial sector’s technological
innovations by inserting commercial technology into fielded
weapon systems; and
(C) emphasize prototyping and experimentation with new
technologies and concepts of operations.
(3) FUNDING PHASES.—
(A) IN GENERAL.—Projects funded
under the commercial operational and support savings
initiative shall consist of two phases, Phase I and Phase
II.
(B) PHASE I.— (i) Funds made available during Phase I shall
be used to perform the non-recurring engineering, testing,
and qualification that are typically needed to adapt a
commercial item or technology for use in a military system.
(ii) Phase I shall include—
(I) establishment of cost and
performance metrics to evaluate project success;
(II) establishment of a transition plan and agreement
with a military department or Defense Agency for
adoption and sustainment of the technology or system;
and
(III) the development, fabrication, and delivery of a
demonstrated prototype to a military department for
installation into a fielded Department of Defense
system.
(iii) Programs shall be terminated
if no agreement is established within two years of project
initiation.
(iv) The Office of the Secretary of Defense may provide up
to 50 percent of Phase I funding for a project. The
military department or Defense Agency concerned may
provide the remainder of Phase I funding, which may be
provided out of operation and maintenance funding.
(v) Phase I funding shall not exceed three years.
(vi) Phase I projects shall be selected based on a
merit-based process using criteria to be established by
the Secretary of Defense.
(C) PHASE II.— (i) Phase II shall
include the purchase of limited production quantities of the
prototype kits and transition to a program of record for
continued sustainment.
(ii) Phase II awards may be made
without competition if general solicitation competitive
procedures were used for the selection of parties for
participation in a Phase I project.
(iii) Phase II awards may be made as firm fixed-price
awards.
(4) TREATMENT AS COMPETITIVE
PROCEDURES.—The use of a merit-based process for selection of
projects under the commercial operational and support savings
initiative shall be considered to be the use of competitive
procedures for purposes of chapter 137 of title 10, United
States Code.
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Improved life-cycle cost control (sec. 849)
The Senate bill contained a provision (sec. 834) that
would make several amendments to improve life-cycle cost
controls. First, this provision would amend section 804(c)(3) of
the National Defense Authorization Act for Fiscal Year 2016
(Public Law 114–92), to require rapid fielding guidance from the
Under Secretary of Defense for Acquisition, Technology, and
Logistics to include direction on a process for identifying and
exploiting opportunities to use the rapid fielding pathway to
reduce total ownership costs. Secondly, this provision would
amend section 805(2) of the National Defense Authorization Act
for Fiscal Year 2016 (NDAA) to include life-cycle cost
management as a procedure that the Secretary of Defense should
establish for alternative acquisition pathways to meet national security needs. Thirdly, this provision would amend section
833(e) of the NDAA for Fiscal Year 2016 to require the Secretary
to also issue guidance on policies to maximize the use of fixedprice
contracts and the ability to implement tradeoffs in total
cost of ownership, schedule, and performance. Fourthly, this
provision would add a new section to chapter 144 of title 10,
United States Code, which would require sustainment reviews of acquisition
programs 5 years after initial operational capability—unless the
program has failed to maintain its availability or reliability
threshold or has breached its affordability cap before that
time. Additionally, this provision would require the Secretary
of Defense to establish a commercial operational and support
savings initiative to insert existing commercial items or
technology into military legacy programs through rapid
development and fielding of prototypes in order to improve
readiness and reduce operations and support costs.
The House amendment contained no similar
provision.
The House recedes with an amendment that would require the
military departments to conduct a sustainment review five years
after declaration of initial operational capability of a major
defense acquisition program and throughout the system’s life
cycle, using availability and reliability thresholds and cost
estimates as the triggers that prompt such a review. The
amendment also would clarify that sustainment reviews would be
conducted in coordination with the requirements of section 2337
of title 10, United States Code, and section 832 of the National
Defense Authorization Act for Fiscal Year 2012 (Public Law 112-
81). The amendment also would authorize a commercial operational
and support savings initiative. |
