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

Subtitle B Provisions Relating to Major Defense Acquisition Programs

DHNDAA Section

Senate Armed Services Report 110-335

SEC. 811. INCLUSION OF MAJOR SUBPROGRAMS TO MAJOR DEFENSE ACQUISITION PROGRAMS UNDER ACQUISITION REPORTING REQUIREMENTS.

(a) Authority To Designate Major Subprograms as Subject to Acquisition Reporting Requirements-

(1) IN GENERAL- Chapter 144 of title 10, United States Code, is amended by inserting after section 2430 the following new section:

`Sec. 2430a. Major subprograms

`(a) Authority To Designate Major Subprograms as Subject to Acquisition Reporting Requirements- (1) If the Secretary of Defense determines that a major defense acquisition program requires the delivery of two or more categories of end items which differ significantly from each other in form and function, the Secretary may designate each such category of end items as a major subprogram for the purposes of acquisition reporting under this chapter.

`(2) The Secretary shall notify the congressional defense committees in writing of any proposed designation pursuant to paragraph (1) not less than 30 days before the date such designation takes effect.

`(b) Reporting Requirements- If the Secretary designates a major subprogram of a major defense acquisition program in accordance with subsection (a), Selected Acquisition Reports, unit cost reports, and program baselines under this chapter shall reflect cost, schedule, and performance information--

`(1) for the major defense acquisition program as a whole; and

`(2) for each major subprogram of the major defense acquisition program so designated.

`(c) Requirement to Cover Entire Major Defense Acquisition Program- If a subprogram of a major defense acquisition program is designated as a major subprogram under subsection (a), all other elements of the major defense acquisition program shall be appropriately organized into one or more subprograms under the major defense acquisition program, each of which subprograms, as so organized, shall be treated as a major subprogram under subsection (a).

`(d) Definitions- Notwithstanding paragraphs (1) and (2) of section 2432(a) of this title, in the case of a major defense acquisition program for which the Secretary has designated one or more major subprograms under this section for the purposes of this chapter--

`(1) the term `program acquisition unit cost' applies at the level of the subprogram and means the total cost for the development and procurement of, and specific military construction for, the major defense acquisition program that is reasonably allocable to each such major subprogram, divided by the relevant number of fully-configured end items to be produced under such major subprogram;

`(2) the term `procurement unit cost' applies at the level of the subprogram and means the total of all funds programmed to be available for obligation for procurement for each such major subprogram, divided by the number of fully-configured end items to be procured under such major subprogram;

`(3) the term `major contract', with respect to a designated major subprogram, means each of the six largest prime, associate, or Government furnished equipment contracts under the subprogram that is in excess of $40,000,000 and that is not a firm-fixed price contract; and

`(4) the term `life cycle cost', with respect to a designated major subprogram, means all costs of development, procurement, military construction, and operations and support, without regard to funding source or management control.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 144 of such title is amended by inserting after the item relating to section 2430 the following new item:

`2430a. Major subprograms.'.

(b) Conforming Amendments to Section 2432- Section 2432 of such title is amended--

(1) in subsection (b)(2)(A), by inserting `for the program (or for each designated subprogram under the program)' after `procurement unit cost';

(2) in subsection (c)--

(A) in paragraph (1)(B)--

(i) by inserting `or designated major subprogram' after `for each major defense acquisition program'; and

(ii) by inserting `or subprogram' after `the program';

(B) in paragraph (1)(C)--

(i) by inserting `or designated major subprogram' after `major defense acquisition program'; and

(ii) by inserting `or subprogram' after `the program'; and

(C) in paragraph (3)(A), by inserting `and each designated major subprogram' after `for each major defense acquisition program';

(3) in subsection (e)--

(A) in paragraph (3), by inserting before the period the following: `for the program (or for each designated major subprogram under the program)';

(B) in paragraph (5), by inserting before the period the following: `(or for each designated major subprogram under the program)';

(C) in paragraph (7), by inserting `or subprogram' after `of the program' each place it appears; and

(D) in paragraph (8), by inserting `and designated major subprograms under the program' after `the program';

(4) in subsection (g)--

(A) by inserting `or designated major subprogram' after `major defense acquisition program'; and

(B) by inserting `or subprogram' after `the program' each place it appears; and

(5) in subsection (h)(2)(C), by inserting `and designated major subprograms under the program' after `the development program'.

(c) Conforming Amendments to Section 2433- Section 2433 of such title is amended--

(1) in subsection (a)--

(A) in paragraph (1), by striking `The terms' and inserting `Except as provided in section 2430a(c) of this title, the terms';

(B) in paragraph (2)--

(i) by inserting `or designated major subprogram' after `major defense acquisition program'; and

(ii) by inserting `or subprogram' after `the program';

(C) in paragraph (4)--

(i) by inserting `or designated major defense subprogram' after `major defense acquisition program' each place it appears; and

(ii) by inserting `or subprogram' after `for the program' each place it appears; and

(D) in paragraph (5)--

(i) by inserting `or designated major defense subprogram' after `major defense acquisition program' each place it appears; and

(ii) by inserting `or subprogram' after `for the program' each place it appears;

(2) in subsection (b)--

(A) in the matter preceding paragraph (1), by inserting `(or of each designated major subprogram under the program)' after `unit costs of the program';

(B) in paragraph (1), by inserting before the period the following: `for the program (or for each designated major subprogram under the program)';

(C) in paragraph (2), by inserting before the period the following: `for the program (or for each designated major subprogram under the program)'; and

(D) in paragraph (5), by inserting `or subprogram' after `the program' each place it appears (other than the last place it appears);

(3) in subsection (c)--

(A) by striking `the program acquisition unit cost for the program or the procurement unit cost for the program' and inserting `the program acquisition unit cost for the program (or for a designated major subprogram under the program) or the procurement unit cost for the program (or for such a subprogram)'; and

(B) by striking `for the program' after `significant cost growth threshold';

(4) in subsection (d)--

(A) in paragraph (1)--

(i) by inserting `or any designated major subprogram under the program' after `major defense acquisition program'; and

(ii) by inserting `or subprogram' after `for the program' each place it appears;

(B) in paragraph (2)--

(i) by inserting `or any designated major subprogram under the program' after `major defense acquisition program'; and

(ii) by inserting `or subprogram' after `for the program' each place it appears; and

(C) in paragraph (3), by striking `such program' and inserting `the program or subprogram concerned';

(5) in subsection (e)--

(A) in paragraph (1)--

(i) in subparagraph (A)--

(I) by inserting `or designated major subprogram' after `major defense acquisition program'; and

(II) by inserting `or subprogram' after `for the program'; and

(ii) in subparagraph (B)--

(I) by inserting `or designated major subprogram' after `major defense acquisition program'; and

(II) by inserting `or subprogram' after `that program'; and

(B) in paragraph (2), in the matter preceding subparagraph (A)--

(i) by inserting `or designated major subprogram' after `major defense acquisition program'; and

(ii) by inserting `or subprogram' after `for the program'; and

(6) in subsection (g)--

(A) in paragraph (1)--

(i) in subparagraph (D)--

(I) by inserting `(and for each designated major subprogram under the program)' after `for the program'; and

(II) by inserting `or subprogram' after `in which the program';

(ii) in subparagraph (E), by inserting `for the program (and for each designated major subprogram under the program)' after `program acquisition cost';

(iii) in subparagraph (F), by inserting before the period the following: `for the program (or for any designated major subprogram under the program)';

(iv) in subparagraph (G)--

(I) by inserting `and each designated major subprogram under the program' after of `the program'; and

(II) by inserting `or subprogram' after `for the program' each place it appears;

(v) in subparagraph (H)--

(I) by inserting `and each designated major subprogram under the program' after `the program' the first place it appears; and

(II) by inserting `or subprogram' after `the program' the second place it appears;

(vi) in subparagraph (J), by inserting `for the program (or for each designated major subprogram under the program)' after `program acquisition unit cost';

(vii) in subparagraph (K), by inserting `for the program (or for each designated major subprogram under the program)' after `procurement unit cost' each place it appears;

(viii) in subparagraph (O), by inserting before the period the following: `for the program (or for any designated major subprogram under the program)';

(ix) in subparagraph (P)--

(I) by inserting `or subprogram' after `the program' the first place it appears; and

(II) by inserting `and any designated major subprogram under the program' after `the program' the second place it appears; and

(x) in subparagraph (Q), by inserting `or any designated major subprogram under the program' after `the program'; and

(B) in paragraph (2)--

(i) by inserting `or designated major subprogram' after `major defense acquisition program';

(ii) by inserting `or subprogram' after `the entire program'; and

(iii) by inserting `or subprogram' after `a program'.

(d) Conforming Amendments to Section 2435- Section 2435 of such title is amended-

(1) in subsection (a)--

(A) in paragraph (1), by inserting `and for each designated major subprogram under the program' after `major defense acquisition program'; and

(B) in paragraph (2), by inserting `or designated major subprogram' after `major defense acquisition program';

(2) in subsection (b)--

(A) by inserting `or any designated major subprogram under the program' after `major defense acquisition program'; and

(B) by inserting `or subprogram' after `the program';

(3) in subsection (c)--

(A) by inserting `or any designated major subprogram under the program' after `major defense acquisition program'; and

(B) by inserting `or subprogram' after `the program' each place it appears;

(4) in subsection (d)--

(A) by inserting `or any designated major subprogram under the program' after `major defense acquisition program' each place it appears;

(B) in paragraph (1)--

(i) by inserting `or subprogram' after `the program' each place it appears; and

(ii) by inserting `or subprogram' after `at program'; and

(C) in paragraph (2), by inserting `or subprogram' after `for the program' each place it appears; and

(5) in subsection (e)--

(A) by inserting `(or in the case of a major defense acquisition program with one or more designated major subprograms, approved baseline descriptions for such subprograms)' after `baseline description';

(B) by striking `the baseline' and inserting `any such baseline description'; and

(C) by inserting `or subprogram' after `of the program'.

Inclusion of major subprograms to major defense acquisition programs under acquisition reporting requirements (sec. 801)

The committee recommends a provision that would authorize the Secretary of Defense to designate as major subprograms of a major defense acquisition program (MDAP) two or more categories of end items to be delivered under the MDAP that differ significantly from each other in form and function. If the Secretary chooses to designate major subprograms under this provision, program acquisition unit costs and procurement unit costs would be reported to Congress for each of the major subprograms, rather than for the MDAP as a whole. Other key information would be reported to Congress both for the MDAP as a whole and for each of the major subprograms.

The underlying assumption for unit cost reporting is that the quantity of items to be provided is relatively uniform in terms of cost and functionality. The committee recognizes that such uniformity may not be present in the case of a `system of systems,' such as the Future Combat Systems and the Ballistic Missile Defense System, which includes multiple end items that differ significantly from each other in form and function. The provision recommended by the committee would authorize the Secretary to break the MDAP into major subprograms only in such cases, to ensure the rational and consistent reporting of unit costs. The committee notes that this authority does not apply to multiple variants of a single system.

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