S. 454 Conference Report: Conference Report for S. 454/H.R. 2101 - Weapons Acquisition System Reform Through Enhancing Technical Knowledge and Oversight Act of 2009

S. 454

Conference Report for S. 454/H.R. 2101 - Weapons Acquisition System Reform Through Enhancing Technical Knowledge and Oversight Act of 2009

Date
May 21, 2009 (111th Congress, 1st Session)

Staff Contact
Communications

Floor Situation

This conference report is expected to be considered on the floor on May 21, 2009. In the House, this legislation was introduced by Rep. Ike Skelton (D-MO) and Rep. John McHugh (R-NY) on April 27, 2009. The House passed that bill, H.R. 2101, on May 13, 2009 by a vote of 428-0. House and Senate conferees agreed to the conference report on May 19, 2009.

Bill Summary

The conference report reforms the Department of Defense's weapons acquisition process and requires the President to nominate a senior official within DoD for cost assessment and program evaluation. The conference report also requires the Secretary to assign responsibility to independent officials within the Pentagon for oversight of developmental test and evaluation, systems engineering, and performance assessment.

Acquisition Organization: The conference report codifies the position of Director of Cost Assessment and Program Evaluation within DoD. The Director takes on the cost estimation function outlined in both House and Senate bills, and also takes over the functions of the Director of Program Analysis and Evaluation (PA&E), including responsibility for the Cost Analysis Improvement Group (CAIG). The Director would report to Congress annually and would complete a report providing recommendations on tracking operating and support costs.

The conference report requires the Secretary to select officials to serve as the Director for Developmental Test & Evaluation and Director for Systems Engineering, with responsibilities for issuing joint guidance relating to the integration of developmental test and systems engineering. These Directors would be responsible for leading the developmental test and systems engineering workforces within DoD. The conference report requires the Directors to submit a joint annual report to Congress. This conference report requires military departments and defense agencies to develop and implement plans to ensure they have the appropriate resources for developmental testing and systems engineering, and the Directors are required to assess these plans. The conference report allows the Director for Developmental Test and Evaluation to be dual-hatted as the Director of the Test Resource Management Center, an existing position responsible for developing the Department's test and evaluation strategy.

The conference report directs the Secretary to designate a principal official for conducting performance assessments and root cause analysis for major defense acquisition programs. This official would responsible for issuing guidance related to performance assessment for acquisition programs, for analyzing the root causes of poor performance, and for submitting an annual report on the official's activities to Congress.

Under this legislation, the Director of Defense Research & Engineering would conduct an assessment of the technological maturity and technological integration risk of programs at key points during the development of a major defense acquisition program. Finally, the Joint Requirements Oversight Council (JROC) would be required to seek input from combatant commanders when assessing military requirements.

Acquisition Policy: The conference report requires the Secretary to ensure that mechanisms are developed and implemented to consider trade-offs among cost, schedule, and performance objectives in establishing requirements for defense acquisition programs.

The Director of Cost Assessment and Program Evaluation must issue guidance in advance of all Analyses of Alternatives (AOA). Each alternative considered must evaluate trade-offs among cost, schedule, and performance objectives, as well as whether the alternative can meet the cost and schedule objectives established by the JROC. The legislation requires the milestone decision authority, prior to granting a Milestone B certification (when a final decision is made to proceed with system development on a project), to certify that appropriate trade-offs among cost, schedule, and performance have been made to ensure that the program is affordable.

The conference report requires that the acquisition strategy for each program includes measures to preserve the option of competition throughout the life of the program. Additionally, the Secretary would ensure that competition is considered through the operation and sustainment phase of a major weapon system.

The conference report requires a program manager to notify the Milestone Decision Authority, if at any time prior to a Milestone B decision, the estimate of the total program cost grows by more than 25 percent or the program schedule for initial operational capability grows by more than 25 percent. The Milestone Decision Authority would then have to review the program and consider termination if an acceptable alternative exists. This section would apply to existing and new programs that are pre-Milestone B. Under this provision, programs entering into system development on the basis of a waiver to any of the criteria for Milestone B must be reviewed at least annually until they meet all of the criteria. This requirement would apply to existing programs, as well as new programs.

The legislation modifies the "Nunn-McCurdy" law, which relates to significant and critical cost threshold breaches on major defense acquisition programs. The official responsible for performance assessment would have to perform a root cause analysis following any critical Nunn-McCurdy breach. In addition, if a program is not terminated following a Nunn-McCurdy breach, but is restructured, the no new contracts could be awarded until the program receives a new milestone certification (to ensure that the restructured program meets all of the same criteria that a new program would have to meet). The restriction on contracting actions could be waived by the Under Secretary of Defense for Acquisition, Technology, and Logistics in certain circumstances.

The conference report also clarifies the definition of "major defense acquisition program" and requires the Secretary to revise defense regulations in order to achieve a consistent policy with respect to contractors' organizational conflicts of interest.

Additional Provisions: The conference report requires the Secretary to recognize excellent performance by individuals and teams of personnel in the acquisition of products and services at DoD. Additionally, the conference report requires that DoD consider the effects of the termination of major defense acquisition programs on the industrial base. Finally, the conference report requires a report on the implementation of earned value management systems and two assessments by GAO on costs and financial information collected on major defense acquisition programs.

 

Background

H.R. 2101 was passed by the House on May 13, 2009 by a vote of 428-0. The Senate passed a slightly different version of the bill by a vote of 93-0 (S. 454). These bills reflect bipartisan efforts to reform the Department of Defense's weapons acquisition process which is often characterized by over-budget costs.

The Government Accountability Office (GAO) found that as of 2009 the Department of Defense (DOD) had $296 billion of cost growth on 96 major weapons systems. A 20% improvement could save the American taxpayer as much as $30 billion. The report found that the major programs considered would eventually cost $1.6 trillion. Included among these programs are the Joint Strike Fighter, the Army's Future Combat System vehicles, the ballistic-missile defense system, the Virginia-class submarine, and the V-22 Osprey tilt-rotor aircraft.

Weapons systems cost overruns are often due to inadequate technical knowledge which leads to unrealistic cost and time estimates for project completion. Expensive complications also arise when technical requirements are changed during the course of a project. The net effect of this trend is that fewer weapons are finally purchased and that they are delayed in reaching the battlefield.

 

Cost

The Congressional Budget Office estimated that implementing H.R. 2101 would cost $55 million over five years, assuming the appropriation of necessary funds. The Senate version was estimated to cost about $90 million over five years, assuming the appropriation of the necessary funds.