Summary and Background
S.454, the Weapon Systems Acquisition Reform Act of 2009, aims to address problems in the Department of Defense’s (DOD) process for acquiring weapons systems. The Government Accountability Office (GAO) reported again this year that the Pentagon’s major defense acquisition programs (MDAPs) suffer from significant delays and cost overruns. In its examination of DOD’S.96 MDAPs, GAO found $296 billion in cost overruns in Fiscal Year 2009 dollars and an average delay of 22 months. GAO noted that, “These poor outcomes mean that other critical defense and national priorities may go unfunded and that warfighters may go without the equipment they need to counter the changing threats they face.”
The Weapon Systems Acquisition Reform Act of 2009 will address the underlying problems with DOD’s defense acquisition programs that have led to excessive cost growth in weapons systems and excessive delays in fielding those systems by:
- Requiring DOD to rebuild its system engineering capabilities;
- Reestablishing the position of Director of Developmental Testing;
- Establishing an independent cost estimating office headed by a Senate-confirmed director who reports directly to the Secretary;
- Requiring increased use of competitive prototyping; and
- Strengthening the Nunn-McCurdy statute to require the termination of any program that exceeds its original baseline by more than 50 percent unless it can be justified from the ground up.
Title I: Acquisition Organization
Section 101: Reports on Systems Engineering Capabilities. The bill would require DOD to: 1) assess the extent to which DOD has in place the systems engineering capabilities necessary to ensure that: key acquisition decisions are supported by a rigorous systems analysis and systems engineering process; the systems engineering strategy for each major weapon system includes a robust program for improving reliability, availability, and maintainability as an integral part of design and development and; systems engineering requirements are identified during the Joint Capabilities Integration Development System process and incorporated into contract requirements for each major weapon system; and 2) establish organizations and processes and develop skilled employees needed to fill in identified gaps in such capabilities.
The bill would require a report on these capabilities from: the service acquisition executive of each military department to the Under Secretary of Defense for Acquisition, Technology, and Logistics; and the Under Secretary to the congressional defense committees.
Section 102: Director of Developmental Testing. S.454 would require DOD to reestablish the position of Director of Developmental Test and Evaluation, who would be appointed by the Secretary of Defense and report to the Under Secretary of Defense for Acquisition, Technology, and Logistics and serve as the principal advisor on developmental test and evaluation in the Department. The bill calls on the Under Secretary to provide guidance to the Director to ensure that test and evaluation activities are fully integrated into the Department’s system engineering activities.
This section also requires: 1) the Director to report annually to Congress on the developmental test and evaluation activities of the major defense acquisition programs (MDAPs) and major automated information system programs of the Department; and 2) the service acquisition executive of each military department to report to the Director on their developmental testing organizations and personnel capacity and plans for addressing any shortcomings in capacity.
Section 103: Technological Maturity Assessments. The bill would make it the responsibility of the Director of Defense Research and Engineering (DDR&E) to periodically review and assess the technological maturity of critical technologies used in MDAPs, and submit findings to the Under Secretary. The DDR&E’s determinations would serve as a basis for determining whether a program is ready to enter the acquisition process. The bill also would require the DDR&E to: 1) submit an annual report to the Secretary of Defense and to Congress on the technological maturity and integration risk of these critical technologies; and 2) report to congressional defense and appropriations committees on the additional resources required to implement these assessments.
Section 104: Independent Cost Assessment. S.454 would establish a Director of Independent Cost Assessment to advise the Secretary of Defense, Under Secretary, and Under Secretary of Defense (Comptroller) on cost estimation and cost analyses for MDAPs and major automated information system programs. The bill requires the Director to provide an annual report to the Secretary of Defense, Under Secretary, Comptroller, and Congress summarizing cost estimation and analyses of the Department for the previous year and assessing progress in improving such estimations and analyses. The bill also calls on the Director to report on the monitoring of operating and support costs for MDAPs and submit a report on findings and recommendations to the Secretary of Defense within one year and the transmittal of a final report to Congress 30 days following submission.
Section 105: Role of Combatant Commanders. The bill would require the Joint Requirements Oversight Council (JROC) to seek and consider input from the commanders of the combatant commands in identifying joint military requirements.
Title II: Acquisition Policy
Section 201: Trade-offs of Cost, Schedule and Performance. S.454 would require the Secretary of Defense to develop and implement mechanisms to ensure that trade-offs between cost, schedule, and performance are considered early in the process for developing requirements for major weapon systems. It specifies that such mechanisms shall ensure consultation between Department officials responsible for acquisition, budget, and cost estimating functions. The bill also requires the Under Secretary to ensure that DOD guidance on MDAPs requires that the Milestone Decision Authority conduct an analysis of alternatives during the Material Solution Analysis Phase of each MDAP.
Section 202: Preliminary Design Review (PDR) and Critical Design Review. The bill would require the completion of a PDR and a formal post-PDR assessment before each MDAP receives Milestone B approval. It also directs the Under Secretary to ensure that each MDAP receives a critical design review and a formal post-critical design review assessment in order to ensure an appropriate level of design maturity before a program is approved for System Capability and Manufacturing Process Development.
Section 203: Life-Cycle Competition. S.454 would require the Secretary of Defense to ensure that acquisition plans for each MDAP include measures to ensure competition, or the option of competition, at both the prime contract level and the subcontract level of such program competition throughout the life of a program. Such measures include competitive prototyping, dual-sourcing, funding of a second source for next generation technology, utilization of open architectures to ensure competition for upgrades, periodic competitions for subsystem upgrades, licensing of additional suppliers, government oversight of make-or-buy decisions, periodic system or program reviews, and consideration of competition at the subcontract level and in make or buy decisions as a factor in proposal evaluations. This section also would modify current DOD acquisition regulations to ensure competitive prototyping for MDAPs.
Section 204: Critical Cost Growth in MDAPs. The Nunn-McCurdy provision, as amended, requires DOD to notify Congress about weapons programs that experience significant cost growth – over 30 percent over the original estimate – and certify that weapons systems which experience critical cost growth – over 50 percent over the original estimate – are essential for national security; represent the only available options; and have reasonable new cost estimates and adequate management structures. The bill would enhance the use of Nunn-McCurdy as a management tool by requiring MDAPs that experience critical cost growth: 1) be terminated unless the Secretary certifies (with reasons and supporting documentation) that continuing the program is essential to the national security and the program can be modified to proceed in a cost-effective manner; and 2) receive a new Milestone Approval (and associated certification) prior to the award of any new contract or contract modification extending the scope of the program. In accordance with section 104, a certification as to the reasonableness of costs would have to be supported by an independent cost estimate and a stated confidence level for that estimate.
Section 205: Organizational Conflicts of Interest in the Acquisition of MDAPs. S.454 directs the Under Secretary of Defense to revise the Defense Supplement to the Federal Acquisition Regulation to address organizational conflicts of interest by contractors in the acquisition of major weapon systems. The revised regulations would prohibit systems engineering contractors from participating in the development or construction of the major weapon systems on which they are advising the Department of Defense; and require tightened oversight of organizational conflicts of interests by contractors in the acquisition of major weapon systems. The bill also directs the Secretary of Defense to establish an Organizational Conflict of Interest Board within DOD to advise the Under Secretary, program managers and other Department officials on policies regarding organizational conflicts of interest.
Section 206: Acquisition Excellence. The bill would establish an annual awards program – modeled on the Department’s environmental awards program – to recognize individuals and teams who make significant contributions to the improved cost, schedule, and performance of defense acquisition programs.
On April 2, 2009, the Senate Armed Services Committee agreed to favorably report S.454, the Weapon Systems Acquisition Reform Act of 2009 bill, with an amendment in the nature of a substitute, by a vote of 26 to 0.
On March 31, 2009, the House of Representatives introduced its version of the bill (H.R.1830). The bill was then referred to the House Committee on Armed Services.
Statement of Administration Policy
As of press time, the White House has not issued a Statement of Administration Policy (SAP) for S.454. However, on April 30, 2009, the White House issued Remarks by the President after a meeting with Defense Secretary Gates, Senator McCain, Senator Levin, Representative Skelton, and Representative McHugh in which the President stated that, “These four leaders have put together a procurement reform package that is long overdue. They’ve shown extraordinary courage and extraordinary leadership in moving it forward. It’s fully bipartisan. It has the support of the Department of Defense, and it has my full support.”
The DPC will provide a list of possible amendments as information becomes available.