Back to NDAA Contents

Conference Report 107-772 - National Defense Authorization Act for Fiscal Year 2003

Conference Report Section

Legislative History

SEC. 243. DEFENSE ACQUISITION CHALLENGE PROGRAM.

(a) IN GENERAL- Chapter 139 of title 10, United States Code, is amended by inserting after section 2359a (as added by section 242) the following new section:

`Sec. 2359b. Defense Acquisition Challenge Program

`(a) PROGRAM REQUIRED- (1) The Secretary of Defense, acting through the Under Secretary of Defense for Acquisition, Technology, and Logistics, shall carry out a program to provide opportunities for the increased introduction of innovative and cost-saving technology in acquisition programs of the Department of Defense.

`(2) The program, to be known as the Defense Acquisition Challenge Program (hereinafter in this section referred to as the `Challenge Program'), shall provide any person or activity within or outside the Department of Defense with the opportunity to propose alternatives, to be known as challenge proposals, at the component, subsystem, or system level of an existing Department of Defense acquisition program that would result in improvements in performance, affordability, manufacturability, or operational capability of that acquisition program.

`(b) PANELS- The Under Secretary shall establish one or more panels of highly qualified scientists and engineers (hereinafter in this section referred to as `Panels') to provide preliminary evaluations of challenge proposals under subsection (c).

`(c) PRELIMINARY EVALUATION BY PANELS- (1) Under procedures prescribed by the Under Secretary, a person or activity within or outside the Department of Defense may submit challenge proposals to a Panel, through the unsolicited proposal process or in response to a broad agency announcement.

`(2) The Under Secretary shall establish procedures pursuant to which appropriate officials of the Department of Defense may identify proposals submitted through the unsolicited proposal process as challenge proposals. The procedures shall provide for the expeditious referral of such proposals to a Panel for preliminary evaluation under this subsection.

`(3) The Under Secretary shall issue on an annual basis not less than one such broad agency announcement inviting interested parties to submit challenge proposals. Such announcements may also identify particular technology areas and acquisition programs that will be given priority in the evaluation of challenge proposals.

`(4) Under procedures established by the Under Secretary, a Panel shall carry out a preliminary evaluation of each challenge proposal submitted in response to a broad agency announcement, or submitted through the unsolicited proposal process and identified as a challenge proposal in accordance with paragraph (2), to determine each of the following:



`(A) Whether the challenge proposal has merit.



`(B) Whether the challenge proposal is likely to result in improvements in performance, affordability, manufacturability, or operational capability at the component, subsystem, or system level of an acquisition program.

`(C) Whether the challenge proposal could be implemented in the acquisition program rapidly, at an acceptable cost, and without unacceptable disruption to the acquisition program.

`(5) The Under Secretary may establish procedures to ensure that the Challenge Program does not become an avenue for the repetitive submission of proposals that have been previously reviewed and found not to have merit.

`(6) If a Panel determines that a challenge proposal satisfies each of the criteria specified in paragraph (4), the person or activity submitting that challenge proposal shall be provided an opportunity to submit such challenge proposal for a full review and evaluation under subsection (d).

`(d) FULL REVIEW AND EVALUATION- (1) Under procedures prescribed by the Under Secretary, for each challenge proposal submitted for a full review and evaluation as provided in subsection (c)(6), the office carrying out the acquisition program to which the proposal relates shall, in consultation with the prime system contractor carrying out such program, conduct a full review and evaluation of the proposal.

`(2) The full review and evaluation shall, independent of the determination of a Panel under subsection (c)(4), determine each of the matters specified in subparagraphs (A), (B), and (C) of such subsection. The full review and evaluation shall also include--

`(A) an assessment of the cost of adopting the challenge proposal and implementing it in the acquisition program; and



`(B) consideration of any intellectual property issues associated with the challenge proposal.



`(e) ACTION UPON FAVORABLE FULL REVIEW AND EVALUATION- (1) Under procedures prescribed by the Under Secretary, each challenge proposal determined under a full review and evaluation to satisfy each of the criteria specified in subsection (c)(4) with respect to an acquisition program shall be considered by the office carrying out the applicable acquisition program and the prime system contractor for incorporation into the acquisition program as a new technology insertion at the component, subsystem, or system level.

`(2) The Under Secretary shall encourage the adoption of each challenge proposal referred to in paragraph (1) by providing suitable incentives to the office carrying out the acquisition program and the prime system contractor carrying out such program.

`(f) ACCESS TO TECHNICAL RESOURCES- (1) Under procedures established by the Under Secretary, the technical resources of the laboratories, research, development, and engineering centers, test and evaluation activities, and other elements of the Department may be called upon to support the activities of the Challenge Program.

`(2) Funds available to carry out this program may be used to compensate such laboratories, centers, activities, and elements for technical assistance provided to a Panel pursuant to paragraph (1).

`(g) ELIMINATION OF CONFLICTS OF INTEREST- In carrying out each preliminary evaluation under subsection (c) and full review under subsection (d), the Under Secretary shall ensure the elimination of conflicts of interest.

`(h) LIMITATION ON USE OF FUNDS- Funds made available for the Challenge Program may be used only for activities authorized by this section, and not for implementation of challenge proposals.

`(i) ANNUAL REPORT- The Under Secretary shall submit an annual report on the Challenge Program to Congress. The report shall be submitted at the same time as the President submits the budget for a fiscal year to Congress under section 1105(a) of title 31, and shall cover the conduct of the Challenge Program for the preceding fiscal year. The report shall include the number and scope of challenge proposals submitted, preliminarily evaluated, subjected to full review and evaluation, and adopted. No report is required for a fiscal year in which the Challenge Program is not carried out.

`(j) TERMINATION OF AUTHORITY- The Secretary may not carry out the Challenge Program under this section after September 30, 2007.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 2359a (as added by section 242) the following new item:

Conference Report 107-772

The House bill contained a provision (sec. 216) that would require the Secretary of Defense to establish the Defense Acquisition Challenge Program, a pilot program to promote the insertion of unique and innovative technologies (`challenge proposals') into existing Department of Defense (DOD) acquisition programs.  (See H. R. 4586 and House Report 107-436)

The Senate amendment contained no similar provision.

The Senate recedes with an amendment that would provide that the Secretary act through the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD(AT&L)), in carrying out the program. The amendment would provide that the Under Secretary prescribe procedures for the submission of challenge proposals through the unsolicited proposal process or in response to a broad agency announcement issued to solicit challenge proposals. The amendment would also provide that the Under Secretary establish panels to carry out preliminary evaluations of challenge proposals and prescribe criteria to be considered in those evaluations and would establish additional criteria to be considered by the program office and the prime system contractor in consideration of those challenge proposals referred for a full review and evaluation.

The conferees believe that the panels will be an important tool in the preliminary screening and identification of meritorious challenge proposals and that the amended provision would provide the USD(AT&L) the flexibility needed to prescribe proper panel make-up. The composition of the panels may change ranging from a technical level review by knowledgeable scientists and technologists to a very senior level blue ribbon panel, depending on the issue or technology being reviewed. The conferees expect that review panels would take a `best value' approach in evaluation of challenge proposals.

The conferees believe that the use of the broad agency announcement and the unsolicited proposal process under procedures prescribed by the USD(AT&L) will provide the Department the ability to manage the submission of challenge proposals and to identify specific technology areas of interest and areas that could be transitioned rapidly into fielded programs under a broad agency announcement, while at the same time allowing prospective contractors the opportunity to propose innovations for a program at any time under the unsolicited proposal process. The conferees believe that the authority for appropriate DOD officials to identify and refer unsolicited challenge proposals to a panel would permit their expeditious review under appropriate circumstances. Upon completion of a preliminary review by a panel, those challenge proposals with merit would be requested to submit a more detailed proposal to be reviewed by the Government program office and the prime system contractor for the impacted program. The conferees note that the detailed analyses should include a cost estimate and examination of relevant industrial base issues.

The conferees believe that the challenge program could provide an excellent avenue for accelerating the introduction of new and innovative technology into defense acquisition programs and that program offices and prime contractors should be encouraged to incorporate such approaches as new technology insertions by appropriate incentives, such as share-in savings approaches.

The conferees also believe that the Under Secretary should establish procedures for adoption of those extraordinary challenge proposals that, based on their evaluation, promise such far-reaching improvements in performance, affordability, manufacturability, or operational capability that a termination of a contract for the convenience of the Government and an award of a contract for insertion of the technology would be justified.

H. R. 4586

SEC. 216. DEFENSE ACQUISITION CHALLENGE PROGRAM.

(a) IN GENERAL- (1) Chapter 139 of title 10, United States Code, is amended by inserting after section 2359a (as added by section 215) the following new section:

`Sec. 2359b. Defense Acquisition Challenge Program

`(a) PROGRAM REQUIRED- The Secretary of Defense shall carry out a program to provide opportunities for the increased introduction of innovative and cost-saving technology in acquisition programs of the Department of Defense. The program, to be known as the Defense Acquisition Challenge Program (hereinafter in this section referred to as the `Challenge Program'), shall provide any person or activity within or outside the Department of Defense with the opportunity to propose alternatives, to be known as challenge proposals, at the component, subsystem, or system level of an existing Department of Defense acquisition program that would result in improvements in performance, affordability, manufacturability, or operational capability of that acquisition program.

`(b) PANEL- (1) In carrying out the Challenge Program, the Secretary shall establish a panel of highly qualified scientists and engineers (hereinafter in this section referred to as the `Panel') under the auspices of the Under Secretary of Defense for Acquisition, Technology, and Logistics. The duty of the Panel shall be to carry out evaluations of challenge proposals under subsection (c).

`(2) A member of the Panel may not participate in any evaluation of a challenge proposal under subsection (c) if at any time within the previous five years that member has, in any capacity, participated in or been affiliated with the acquisition program for which the challenge proposal is submitted.

`(c) EVALUATION BY PANEL- (1) Under procedures prescribed by the Secretary, a person or activity within or outside the Department of Defense may submit challenge proposals to the Panel.

`(2) The Panel shall carry out an evaluation of each challenge proposal submitted under paragraph (1) to determine each of the following criteria:

`(A) Whether the challenge proposal has merit.



`(B) Whether the challenge proposal is likely to result in improvements in performance, affordability, manufacturability, or operational capability at the component, subsystem, or system level of the applicable acquisition program.

`(C) Whether the challenge proposal could be implemented rapidly in the applicable acquisition program.

`(3) If the Panel determines that a challenge proposal satisfies each of the criteria specified in paragraph (2), the person or activity submitting that challenge proposal shall be provided an opportunity to submit such challenge proposal for a full review and evaluation under subsection (d).

`(d) FULL REVIEW AND EVALUATION- (1) Under procedures prescribed by the Secretary, for each challenge proposal submitted for a full review and evaluation as provided in subsection (c)(3), the office carrying out the applicable acquisition program, and the prime system contractor carrying out such program, shall jointly conduct a full review and evaluation of the challenge proposal.

`(2) The full review and evaluation shall, independent of the determination of the Panel under subsection (c)(2), determine each of the matters specified in subparagraphs (A), (B), and (C) of such subsection.

`(e) ACTION UPON FAVORABLE FULL REVIEW AND EVALUATION- (1) Under procedures prescribed by the Secretary, each challenge proposal determined under a full review and evaluation to satisfy each of the criteria specified in subsection (c)(2) shall be considered by the prime system contractor for incorporation into the applicable acquisition program as a new technology insertion at the component, subsystem, or system level.

`(2) The Secretary shall encourage the adoption of each challenge proposal referred to in paragraph (1) by providing suitable incentives to the office carrying out the applicable acquisition program and the prime system contractor carrying out such program.

`(f) ACCESS TO TECHNICAL RESOURCES- The Secretary shall ensure that the Panel (in carrying out evaluations of challenge proposals under subsection (c)) and each office and prime system contractor (in conducting a full review and evaluation under subsection (d)) have the authority to call upon the technical resources of the laboratories, research, development, and engineering centers, test and evaluation activities, and other elements of the Department.

`(g) ELIMINATION OF CONFLICTS OF INTEREST- In carrying out each evaluation under subsection (c) and full review under subsection (d), the Secretary shall ensure the elimination of conflicts of interest.

`(h) REPORT- The Secretary shall submit to Congress, with the submission of the budget request for the Department of Defense for each fiscal year during which the Challenge Program is carried out, a report on the Challenge Program for that fiscal year. The report shall include the number and scope of challenge proposals submitted, evaluated, subjected to full review, and adopted.

`(i) SUNSET- The authority to carry out this section shall terminate on September 30, 2007.'.

(2) The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 2359a (as added by section 215) the following new item:

`2359b. Defense Acquisition Challenge Program.'.

(b) INITIAL FUNDING- (1) Of the funds authorized to be appropriated by section 201(4) for Defense-wide research, development, test, and evaluation for fiscal year 2003, $25,000,000 shall be available in program element 0603826D8Z for the Defense Acquisition Challenge Program required by section 2359b of title 10, United States Code, as added by subsection (a).

(2) The funds provided under paragraph (1) may be used only for review and evaluation of challenge proposals, and not for implementation of challenge proposals.

House Report 107-436

SECTION 216--DEFENSE ACQUISITION CHALLENGE PROGRAM

This provision would require the Secretary of Defense to establish a pilot program, the Defense Acquisition Challenge Program, to provide a person, institution, industrial corporation, or activity within or outside the Department of Defense the opportunity to propose the insertion of unique and innovative technologies (`challenge proposals') at the component, subsystem, or system level of an existing DOD acquisition program that, compared to the incumbent component, subsystem, or system, would result in substantially superior improvements in performance, affordability, manufacturability, or operational capability of that acquisition program.

The provision would require the Secretary to establish procedures under which challenge proposals would be submitted for review and evaluation by a panel of scientists and engineers established under the auspices of the Under Secretary of Defense (Acquisition, Technology, and Logistics). The committee believes that these procedures should provide for the solicitation of component, subsystem, or system-level technologies that, if incorporated in the appropriate defense acquisition program would result in substantial improvements in the program and could be transitioned rapidly into a fielded program, a block change, or a spirally developmental increment. The committee expects that the review panel would take a `best value' approach that encompasses consideration of such criteria as potential improvement in performance, affordability, manufacturability, and operational capability. Those proposals with merit would be requested to submit a proposal to be reviewed by the government program office and the prime system contractor for the impacted program. The program office-prime contractor team would then conduct an independent review of the merits of the challenge proposal, including whether the challenge proposal is likely to result in improvements in performance, affordability, manufacturability, or operational capability at the component, subsystem, or system level of the applicable acquisition program and whether the challenge proposal could be implemented rapidly in the program through changes in fielded systems, through block changes to the component, subsystem, or system, or through a spiral development increment. Each challenge proposal determined under a favorable full review and evaluation by the program office and prime contractor to satisfy the criteria outlined above would then be considered by the prime system contractor for incorporation into the acquisition program as a new technology insertion at the component, subsystem, or system level.

The committee believes that the challenge program could provide an excellent avenue for accelerating the introduction of new and innovative technology into defense acquisition programs and that appropriate incentives, such as share-in-saving or other appropriate incentives, should be established to encourage the program office and the prime contractor to adopt successful challenge proposals that meet the criteria outlined above.