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

Subtitle A—Provisions Relating to Major Defense Acquisition Programs

JWNDAA Section

House Conference Report 109-702

(a) ADDITIONAL CERTIFICATION REQUIREMENTS.— Subsection (a) of section 2366a of title 10, United States Code, is amended—

(1) by redesignating paragraph (7) as paragraph (10);

(2) by redesignating paragraphs (1) through (6) as paragraphs (2) through (7), respectively;

(3) by inserting before paragraph (2) (as so redesignated) the following new paragraph (1):

‘‘(1) appropriate market research has been conducted prior to technology development to reduce duplication of existing technology and products;’’;

(4) in paragraph (7) (as so redesignated), by striking ‘‘and’’ at the end; and

(5) by inserting after such paragraph (7) the following new paragraphs:

‘‘(8) reasonable cost and schedule estimates have been developed to execute the product development and production plan under the program;

‘‘(9) 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 paragraph (8) for the program; and’’.

(b) WAIVER FOR NATIONAL SECURITY.—Subsection (c) of such section is amended by striking ‘‘(5), or (6)’’ and inserting ‘‘(5), (6), (7), (8), or (9)’’.

The House bill contained a provision (sec. 806) that would require certification that market research has been conducted prior to technology development to reduce duplication of existing technology and products.

The Senate amendment contained a similar provision (sec. 801).

The provision would require a certification that a program meets validated requirements consistent with the National Military Strategy and contains estimates and funding to execute the product development and production plan under the program. The Senate recedes with a clarifying amendment that would amend section 2366a of title 10, United States Code, to require the Secretary of Defense to include additional certifications before a major defense acquisition program receives Milestone B approval or Key Decision Point B approval in the case of a space program.

House Armed Services Committee Report 109-452

SECTION 806--MARKET RESEARCH REQUIRED FOR MAJOR DEFENSE ACQUISITION PROGRAMS BEFORE PROCEEDING TO MILESTONE B

This section would require certification that market research has been conducted prior to technology development to reduce duplication of existing technology and products. The committee believes that conducting market research before issuing a technology development contract will prevent duplication of existing technology and reduce program costs before a major defense acquisition program receives Milestone B approval. The committee urges the Department to consider new and creative means of ensuring that appropriate market research is conducted to advance technological development of unique capabilities and eliminate reinvention by using proven technologies available in the marketplace.

The committee is concerned that the Department of Defense (DOD) may not comply with the requirements of part 10 of the Federal Acquisition Regulation related to market research, which results in the lack of reasonable inclusion of large and small businesses with cost-effective and superior technologies in defense contracting. The committee is concerned that current DOD acquisition practices might limit the use of innovative solutions from both large and small businesses and fail to create incentives for DOD prime contractors to embrace innovative technologies from large and small businesses that are commercially available. Traditional cost-reimbursable labor contracts under the cost-plus-fixed-fee or cost-plus-award-fee structure may increase the difficulty of offering proven capabilities to the Department by inadvertently rewarding higher expenditures and reducing incentives to cut costs. The committee notes that cost-plus-percentage-of-cost contracts are prohibited by statute and encourages the Department to take action to ensure that the intent of this prohibition is followed.

Senate Armed Services Committee Report 109-254

The committee recommends a provision that would amend chapter 39 of title 10, United States Code, to require the Secretary of Defense to include additional certifications before a major defense acquisition program receives Milestone B approval, or Key Decision Point B approval in the case of a space program.

Section 801 of the National Defense Authorization Act for Fiscal Year 2006 (Public Law 109-163) required the Secretary to make certain certifications regarding the maturity of technology at the initiation of a major acquisition program; the affordability of the program; the completion of an analysis of alternatives with respect to the program; and the validation of the operational requirements for the program by the Joint Requirements Oversight Council. However, the committee understands that the Defense Acquisition Board takes other factors into consideration that must be considered as part of the process for Milestone B approval.

The National Military Strategy provides the overarching guidance for the Department of Defense's execution of the National Security Strategy and a program should be evaluated and validated in that context. Prior into entry into system development and demonstration, the Department conducts an independent cost estimate that includes the total costs of the program. The Secretary should pay particular attention to estimated costs of the program as it enters into full rate production to ensure that the program is affordable within an estimate of the future defense budget.

This provision would ensure that a program certified by the Secretary meets validated requirements consistent with the National Military Strategy; reasonable estimates have been developed to execute the product development and production plan under the program; and funding is available to execute the product development and production plan.