[Congressional Bills 111th Congress] [From the U.S. Government Publishing Office] [S. 454 Engrossed in Senate (ES)] 111th CONGRESS 1st Session S. 454 _______________________________________________________________________ AN ACT To improve the organization and procedures of the Department of Defense for the acquisition of major weapon systems, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Weapon Systems Acquisition Reform Act of 2009''. (b) Table of Contents.--The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. TITLE I--ACQUISITION ORGANIZATION Sec. 101. Reports on systems engineering capabilities of the Department of Defense. Sec. 102. Director of Developmental Test and Evaluation. Sec. 103. Assessment of technological maturity of critical technologies of major defense acquisition programs by the Director of Defense Research and Engineering. Sec. 104. Director of Independent Cost Assessment. Sec. 105. Role of the commanders of the combatant commands in identifying joint military requirements. Sec. 106. Clarification of submittal of certification of adequacy of budgets by the Director of the Department of Defense Test Resource Management Center. TITLE II--ACQUISITION POLICY Sec. 201. Consideration of trade-offs among cost, schedule, and performance in the acquisition of major weapon systems. Sec. 202. Preliminary design review and critical design review for major defense acquisition programs. Sec. 203. Ensuring competition throughout the life cycle of major defense acquisition programs. Sec. 204. Critical cost growth in major defense acquisition programs. Sec. 205. Organizational conflicts of interest in the acquisition of major weapon systems. Sec. 206. Awards for Department of Defense personnel for excellence in the acquisition of products and services. Sec. 207. Earned Value Management. Sec. 208. Expansion of national security objectives of the national technology and industrial base. Sec. 209. Plan for elimination of weaknesses in operations that hinder capacity to assemble and assess reliable cost information on acquired assets under major defense acquisition programs. SEC. 2. DEFINITIONS. In this Act: (1) The term ``congressional defense committees'' has the meaning given that term in section 101(a)(16) of title 10, United States Code. (2) The term ``major defense acquisition program'' has the meaning given that term in section 2430 of title 10, United States Code. TITLE I--ACQUISITION ORGANIZATION SEC. 101. REPORTS ON SYSTEMS ENGINEERING CAPABILITIES OF THE DEPARTMENT OF DEFENSE. (a) Reports by Service Acquisition Executives.--Not later than 180 days after the date of the enactment of this Act, the service acquisition executive of each military department shall submit to the Under Secretary of Defense for Acquisition, Technology, and Logistics a report setting forth the following: (1) A description of the extent to which such military department has in place development planning organizations and processes staffed by adequate numbers of personnel with appropriate training and expertise to ensure that-- (A) key requirements, acquisition, and budget decisions made for each major weapon system prior to Milestones A and B are supported by a rigorous systems analysis and systems engineering process; (B) the systems engineering strategy for each major weapon system includes a robust program for improving reliability, availability, maintainability, and sustainability as an integral part of design and development; and (C) systems engineering requirements, including reliability, availability, maintainability, and sustainability requirements, are identified during the Joint Capabilities Integration Development System process and incorporated into contract requirements for each major weapon system. (2) A description of the actions that such military department has taken, or plans to take, to-- (A) establish needed development planning and systems engineering organizations and processes; and (B) attract, develop, retain, and reward systems engineers with appropriate levels of hands-on experience and technical expertise to meet the needs of such military department. (b) Report by Under Secretary of Defense for Acquisition, Technology, and Logistics.--Not later than 270 days after the date of the enactment of this Act, the Under Secretary of Defense for Acquisition, Technology, and Logistics shall submit to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives a report on the system engineering capabilities of the Department of Defense. The report shall include, at a minimum, the following: (1) An assessment by the Under Secretary of the reports submitted by the service acquisition executives pursuant to subsection (a) and of the adequacy of the actions that each military department has taken, or plans to take, to meet the systems engineering and development planning needs of such military department. (2) An assessment of each of the recommendations of the report on Pre-Milestone A and Early-Phase Systems Engineering of the Air Force Studies Board of the National Research Council, including the recommended checklist of systems engineering issues to be addressed prior to Milestones A and B, and the extent to which such recommendations should be implemented throughout the Department of Defense. SEC. 102. DIRECTOR OF DEVELOPMENTAL TEST AND EVALUATION. (a) Establishment of Position.-- (1) In general.--Chapter 4 of title 10, United States Code, is amended by inserting after section 139b the following new section: ``Sec. 139c. Director of Developmental Test and Evaluation ``(a) There is a Director of Developmental Test and Evaluation, who shall be appointed by the Secretary of Defense from among individuals with an expertise in acquisition and testing. ``(b)(1) The Director of Developmental Test and Evaluation shall be the principal advisor to the Secretary of Defense and the Under Secretary of Defense for Acquisition, Technology, and Logistics on developmental test and evaluation in the Department of Defense. ``(2) The individual serving as the Director of Developmental Test and Evaluation may also serve concurrently as the Director of the Department of Defense Test Resource Management Center under section 196 of this title. ``(3) The Director shall be subject to the supervision of the Under Secretary of Defense for Acquisition, Technology, and Logistics and shall report to the Under Secretary. ``(4)(A) The Under Secretary shall provide guidance to the Director to ensure that the developmental test and evaluation activities of the Department of Defense are fully integrated into and consistent with the systems engineering and development processes of the Department. ``(B) The guidance under this paragraph shall ensure, at a minimum, that-- ``(i) developmental test and evaluation requirements are fully integrated into the Systems Engineering Master Plan for each major defense acquisition program; and ``(ii) systems engineering and development planning requirements are fully considered in the Test and Evaluation Master Plan for each major defense acquisition program. ``(c) The Director of Developmental Test and Evaluation shall-- ``(1) develop policies and guidance for the developmental test and evaluation activities of the Department of Defense (including integration and developmental testing of software); ``(2) monitor and review the developmental test and evaluation activities of the major defense acquisition programs and major automated information systems programs of the Department of Defense; ``(3) review and approve the test and evaluation master plan for each major defense acquisition program of the Department of Defense; ``(4) supervise the activities of the Director of the Department of Defense Test Resource Management Center under section 196 of this title, or carry out such activities if serving concurrently as the Director of Developmental Test and Evaluation and the Director of the Department of Defense Test Resource Management Center under subsection (b)(2); ``(5) review the organizations and capabilities of the military departments with respect to developmental test and evaluation and identify needed changes or improvements to such organizations and capabilities; and ``(6) perform such other activities relating to the developmental test and evaluation activities of the Department of Defense as the Under Secretary of Defense for Acquisition, Technology, and Logistics may prescribe. ``(d) The Director of Developmental Test and Evaluation shall have access to all records and data of the Department of Defense (including the records and data of each military department) that the Director considers necessary in order to carry out the Director's duties under this section. ``(e)(1) The Director of Developmental Test and Evaluation shall submit to Congress each year a report on the developmental test and evaluation activities of the major defense acquisition programs and major automated information system programs of the of the Department of Defense. Each report shall include, at a minimum, the following: ``(A) A discussion of any waivers to testing activities included in the Test and Evaluation Master Plan for a major defense acquisition program in the preceding year. ``(B) An assessment of the organization and capabilities of the Department of Defense for test and evaluation. ``(2) The Secretary of Defense may include in any report submitted to Congress under this subsection such comments on such report as the Secretary considers appropriate.''. (2) Clerical amendment.--The table of sections at the beginning of chapter 4 of such title is amended by inserting after the item relating to section 139b the following new item: ``139c. Director of Developmental Test and Evaluation.''. (3) Conforming amendments.-- (A) Section 196(f) of title 10, United States Code, is amended by striking ``the Under Secretary of Defense for Acquisition, Technology, and Logistics'' and all that follows and inserting ``the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Director of Developmental Test and Evaluation.''. (B) Section 139(b) of such title is amended-- (i) by redesignating paragraphs (4) through (6) as paragraphs (5) through (7), respectively; and (ii) by inserting after paragraph (3) the following new paragraph (4): ``(4) review and approve the test and evaluation master plan for each major defense acquisition program of the Department of Defense;''. (b) Reports on Developmental Testing Organizations and Personnel.-- (1) Reports by service acquisition executives.--Not later than 180 days after the date of the enactment of this Act, the service acquisition executive of each military department shall submit to the Director of Developmental Test and Evaluation a report on the extent to which the test organizations of such military department have in place, or have effective plans to develop, adequate numbers of personnel with appropriate expertise for each purpose as follows: (A) To ensure that testing requirements are appropriately addressed in the translation of operational requirements into contract specifications, in the source selection process, and in the preparation of requests for proposals on all major defense acquisition programs. (B) To participate in the planning of developmental test and evaluation activities, including the preparation and approval of a test and evaluation master plan for each major defense acquisition program. (C) To participate in and oversee the conduct of developmental testing, the analysis of data, and the preparation of evaluations and reports based on such testing. (2) First annual report by director of developmental test and evaluation.--The first annual report submitted to Congress by the Director of Developmental Test and Evaluation under section 139c(e) of title 10, United States Code (as added by subsection (a)), shall be submitted not later than one year after the date of the enactment of this Act, and shall include an assessment by the Director of the reports submitted by the service acquisition executives to the Director under paragraph (1). SEC. 103. ASSESSMENT OF TECHNOLOGICAL MATURITY OF CRITICAL TECHNOLOGIES OF MAJOR DEFENSE ACQUISITION PROGRAMS BY THE DIRECTOR OF DEFENSE RESEARCH AND ENGINEERING. (a) Assessment by Director of Defense Research and Engineering.-- (1) In general.--Section 139a of title 10, United States Code, is amended by adding at the end the following new subsection: ``(c)(1) The Director of Defense Research and Engineering shall, in consultation with the Director of Developmental Test and Evaluation, periodically review and assess the technological maturity and integration risk of critical technologies of the major defense acquisition programs of the Department of Defense and report on the findings of such reviews and assessments to the Under Secretary of Defense for Acquisition, Technology, and Logistics. ``(2) The Director shall submit to the Secretary of Defense and to Congress each year a report on the technological maturity and integration risk of critical technologies of the major defense acquisition programs of the Department of Defense.''. (2) First annual report.--The first annual report under subsection (c)(2) of section 139a of title 10, United States Code (as added by paragraph (1)), shall be submitted to Congress not later than March 1, 2011, and shall address the results of reviews and assessments conducted by the Director of Defense Research and Engineering pursuant to subsection (c)(1) of such section (as so added) during the preceding calendar year. (b) Report on Resources for Implementation.--Not later than 120 days after the date of the enactment of this Act, the Director of Defense Research and Engineering shall submit to the congressional defense committees a report describing any additional resources, including specialized workforce, that may be required by the Director, and by other science and technology elements of the Department of Defense, to carry out the following: (1) The requirements under the amendment made by subsection (a). (2) The technological maturity assessments required by section 2366b(a) of title 10, United States Code, as amended by section 202 of this Act. (3) The requirements of Department of Defense Instruction 5000, as revised. (c) Technological Maturity Standards.--For purposes of the review and assessment conducted by the Director of Defense Research and Engineering in accordance with subsection (c) of section 139a of title 10, United States Code (as added by subsection (a)), a critical technology is considered to be mature-- (1) in the case of a major defense acquisition program that is being considered for Milestone B approval, if the technology has been demonstrated in a relevant environment; and (2) in the case of a major defense acquisition program that is being considered for Milestone C approval, if the technology has been demonstrated in a realistic environment. SEC. 104. DIRECTOR OF INDEPENDENT COST ASSESSMENT. (a) Director of Independent Cost Assessment.-- (1) In general.--Chapter 4 of title 10, United States Code, as amended by section 102 of this Act, is further amended by inserting after section 139c the following new section: ``Sec. 139d. Director of Independent Cost Assessment ``(a) There is a Director of Independent Cost Assessment in the Department of Defense, appointed by the President, by and with the advice and consent of the Senate. The Director shall be appointed without regard to political affiliation and solely on the basis of fitness to perform the duties of the Director. ``(b) The Director is the principal advisor to the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology, and Logistics, and the Under Secretary of Defense (Comptroller) on cost estimation and cost analyses for the acquisition programs of the Department of Defense and the principal cost estimation official within the senior management of the Department of Defense. The Director shall-- ``(1) prescribe, by authority of the Secretary of Defense, policies and procedures for the conduct of cost estimation and cost analysis for the acquisition programs of the Department of Defense; ``(2) provide guidance to and consult with the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Under Secretary of Defense (Comptroller), and the Secretaries of the military departments with respect to cost estimation in the Department of Defense in general and with respect to specific cost estimates and cost analyses to be conducted in connection with a major defense acquisition program under chapter 144 of this title or a major automated information system program under chapter 144A of this title; ``(3) establish guidance on confidence levels for cost estimates on major defense acquisition programs, require that all such estimates include confidence levels compliant with such guidance, and require the disclosure of all such confidence levels (including through Selected Acquisition Reports submitted pursuant to section 2432 of this title); ``(4) monitor and review all cost estimates and cost analyses conducted in connection with major defense acquisition programs and major automated information system programs; and ``(5) conduct independent cost estimates and cost analyses for major defense acquisition programs and major automated information system programs for which the Under Secretary of Defense for Acquisition, Technology, and Logistics is the Milestone Decision Authority-- ``(A) in advance of-- ``(i) any certification under section 2366a or 2366b of this title; ``(ii) any certification under section 2433(e)(2) of this title; and ``(iii) any report under section 2445c(f) of this title; and ``(B) whenever necessary to ensure that an estimate or analysis under paragraph (4) is unbiased, fair, and reliable. ``(c)(1) The Director may communicate views on matters within the responsibility of the Director directly to the Secretary of Defense and the Deputy Secretary of Defense without obtaining the approval or concurrence of any other official within the Department of Defense. ``(2) The Director shall consult closely with, but the Director and the Director's staff shall be independent of, the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Under Secretary of Defense (Comptroller), and all other officers and entities of the Department of Defense responsible for acquisition and budgeting. ``(d)(1) The Secretary of a military department shall report promptly to the Director the results of all cost estimates and cost analyses conducted by the military department and all studies conducted by the military department in connection with cost estimates and cost analyses for major defense acquisition programs of the military department. ``(2) The Director may make comments on cost estimates and cost analyses conducted by a military department for a major defense acquisition program, request changes in such cost estimates and cost analyses to ensure that they are fair and reliable, and develop or require the development of independent cost estimates or cost analyses for such program, as the Director determines to be appropriate. ``(3) The Director shall have access to any records and data in the Department of Defense (including the records and data of each military department) that the Director considers necessary to review in order to carry out the Director's duties under this section. ``(e)(1) The Director shall prepare an annual report summarizing the cost estimation and cost analysis activities of the Department of Defense during the previous year and assessing the progress of the Department in improving the accuracy of its costs estimates and analyses. The report shall include an assessment of-- ``(A) the extent to which each of the military departments have complied with policies, procedures, and guidance issued by the Director with regard to the preparation of cost estimates; and ``(B) the overall quality of cost estimates prepared by each of the military departments. ``(2) Each report under this subsection shall be submitted concurrently to the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Under Secretary of Defense (Comptroller), and Congress not later than 10 days after the transmission of the budget for the next fiscal year under section 1105 of title 31. The Director shall ensure that a report submitted under this subsection does not include any information, such as proprietary or source selection sensitive information, that could undermine the integrity of the acquisition process. Each report submitted to Congress under this subsection shall be posted on an Internet website of the Department of Defense that is available to the public. ``(3) The Secretary may comment on any report of the Director to Congress under this subsection. ``(f) The President shall include in the budget transmitted to Congress pursuant to section 1105 of title 31 for each fiscal year a separate statement of estimated expenditures and proposed appropriations for that fiscal year for the Director of Independent Cost Assessment in carrying out the duties and responsibilities of the Director under this section. ``(g) The Secretary of Defense shall ensure that the Director has sufficient professional staff of military and civilian personnel to enable the Director to carry out the duties and responsibilities of the Director under this section.''. (2) Clerical amendment.--The table of sections at the beginning of chapter 4 of such title, as so amended, is further amended by inserting after the item relating to section 139c the following new item: ``139d. Director of Independent Cost Assessment.''. (3) Executive schedule level iv.--Section 5315 of title 5, United States Code, is amended by inserting after the item relating to the Director of Operational Test and Evaluation, Department of Defense the following new item: ``Director of Independent Cost Assessment, Defense of Defense.''. (b) Report on Monitoring of Operating and Support Costs for MDAPs.-- (1) Report to secretary of defense.--Not later than one year after the date of the enactment of this Act, the Director of Independent Cost Assessment under section 139d of title 10 United States Code (as added by subsection (a)), shall review existing systems and methods of the Department of Defense for tracking and assessing operating and support costs on major defense acquisition programs and submit to the Secretary of Defense a report on the finding and recommendations of the Director as a result of the review, including an assessment by the Director of the feasibility and advisability of establishing baselines for operating and support costs under section 2435 of title 10, United States Code. (2) Transmittal to congress.--Not later than 30 days after receiving the report required by paragraph (1), the Secretary shall transmit the report to the congressional defense committees, together with any comments on the report the Secretary considers appropriate. (c) Transfer of Personnel and Functions of Cost Analysis Improvement Group.--The personnel and functions of the Cost Analysis Improvement Group of the Department of Defense are hereby transferred to the Director of Independent Cost Assessment under section 139d of title 10, United States Code (as so added), and shall report directly to the Director. (d) Conforming Amendments.-- (1) Section 181(d) of title 10, United States Code, is amended by inserting ``the Director of Independent Cost Assessment,'' before ``and the Director''. (2) Section 2306b(i)(1)(B) of such title is amended by striking ``Cost Analysis Improvement Group of the Department of Defense'' and inserting ``Director of Independent Cost Assessment''. (3) Section 2366a(a)(4) of such title is amended by striking ``has been submitted'' and inserting ``has been approved by the Director of Independent Cost Assessment''. (4) Section 2366b(a)(1)(C) of such title is amended by striking ``have been developed to execute'' and inserting ``have been approved by the Director of Independent Cost Assessment to provide for the execution of''. (5) Section 2433(e)(2)(B)(iii) of such title is amended by striking ``are reasonable'' and inserting ``have been determined by the Director of Independent Cost Assessment to be reasonable''. (6) Subparagraph (A) of section 2434(b)(1) of such title is amended to read as follows: ``(A) be prepared or approved by the Director of Independent Cost Assessment; and''. (7) Section 2445c(f)(3) of such title is amended by striking ``are reasonable'' and inserting ``have been determined by the Director of Independent Cost Assessment to be reasonable''. (e) Comptroller General of the United States Review of Operating and Support Costs of Major Weapon Systems.-- (1) In general.--Not later than one year after the date of the enactment of this Act, the Comptroller General of the United States shall submit to the congressional defense committees a report on growth in operating and support costs for major weapon systems. (2) Elements.--In preparing the report required by paragraph (1), the Comptroller General shall, at a minimum-- (A) identify the original estimates for operating and support costs for major weapon systems selected by the Comptroller General for purposes of the report; (B) assess the actual operating and support costs for such major weapon systems; (C) analyze the rate of growth for operating and support costs for such major weapon systems; (D) for such major weapon systems that have experienced the highest rate of growth in operating and support costs, assess the factors contributing to such growth; (E) assess measures taken by the Department of Defense to reduce operating and support costs for major weapon systems; and (F) make such recommendations as the Comptroller General considers appropriate. (3) Major weapon system defined.--In this subsection, the term ``major weapon system'' has the meaning given that term in 2379(d) of title 10, United States Code. SEC. 105. ROLE OF THE COMMANDERS OF THE COMBATANT COMMANDS IN IDENTIFYING JOINT MILITARY REQUIREMENTS. (a) In General.--Section 181 of title 10, United States Code, as amended by section 104(d)(1) of this Act, is further amended-- (1) by redesignating subsections (e), (f), and (g) as subsections (f), (g), and (h), respectively; and (2) by adding after subsection (d) the following new subsection (e): ``(e) Input From Combatant Commanders on Joint Military Requirements.--The Council shall seek and consider input from the commanders of the combatant commands in carrying out its mission under paragraphs (1) and (2) of subsection (b) and in conducting periodic reviews in accordance with the requirements of subsection (f). Such input may include, but is not limited to, an assessment of the following: ``(1) Any current or projected missions or threats in the theater of operations of the commander of a combatant command that would justify a new joint military requirement. ``(2) The necessity and sufficiency of a proposed joint military requirement in terms of current and projected missions or threats. ``(3) The relative priority of a proposed joint military requirement in comparison with other joint military requirements. ``(4) The ability of partner nations in the theater of operations of the commander of a combatant command to assist in meeting the joint military requirement or to partner in using technologies developed to meet the joint military requirement.''. (b) Comptroller General of the United States Review of Implementation.--Not later than two years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the implementation of the requirements of subsection (e) of section 181 of title 10, United States Code (as amended by subsection (a)), for the Joint Requirements Oversight Council to solicit and consider input from the commanders of the combatant commands. The report shall include, at a minimum, an assessment of the extent to which the Council has effectively sought, and the commanders of the combatant commands have provided, meaningful input on proposed joint military requirements. SEC. 106. CLARIFICATION OF SUBMITTAL OF CERTIFICATION OF ADEQUACY OF BUDGETS BY THE DIRECTOR OF THE DEPARTMENT OF DEFENSE TEST RESOURCE MANAGEMENT CENTER. Section 196(e)(2) of title 10, United States Code, is amended-- (1) by redesignating subparagraph (B) as subparagraph (C); and (2) by inserting after subparagraph (A) the following new subparagraph (B): ``(B) If the Director of the Center is not serving concurrently as the Director of Developmental Test and Evaluation under subsection (b)(2) of section 139c of this title, the certification of the Director of the Center under subparagraph (A) shall, notwithstanding subsection (c)(4) of such section, be submitted directly and independently to the Secretary of Defense.''. TITLE II--ACQUISITION POLICY SEC. 201. CONSIDERATION OF TRADE-OFFS AMONG COST, SCHEDULE, AND PERFORMANCE IN THE ACQUISITION OF MAJOR WEAPON SYSTEMS. (a) Consideration of Trade-Offs.-- (1) In general.--The Secretary of Defense shall develop and implement mechanisms to ensure that trade-offs between cost, schedule, and performance are considered as part of the process for developing requirements for major weapon systems. (2) Elements.--The mechanisms required under this subsection shall ensure, at a minimum, that-- (A) Department of Defense officials responsible for acquisition, budget, and cost estimating functions are provided an appropriate opportunity to develop estimates and raise cost and schedule matters before performance requirements are established for major weapon systems; and (B) consideration is given to fielding major weapon systems through incremental or spiral acquisition, while deferring technologies that are not yet mature, and capabilities that are likely to significantly increase costs or delay production, until later increments or spirals. (3) Major weapons system defined.--In this subsection, the term ``major weapon system'' has the meaning given that term in section 2379(d) of title 10, United States Code. (b) Duties of Joint Requirements Oversight Council.--Section 181(b)(1) of title 10, United States Code, is amended-- (1) in subparagraph (A), by striking ``and'' at the end; (2) in subparagraph (B), by striking the period at the end and inserting ``; and''; and (3) by adding at the end the following new subparagraph: ``(C) in ensuring the consideration of trade-offs among cost, schedule and performance for joint military requirements in consultation with the advisors specified in subsection (d);''. (c) Review of Joint Military Requirements.-- (1) JROC submittal of recommended requirements to under secretary for atl.--Upon recommending a new joint military requirement, the Joint Requirements Oversight Council shall transmit the recommendation to the Under Secretary of Defense for Acquisition, Technology, and Logistics for review and concurrence or non-concurrence in the recommendation. (2) Review of recommended requirements.--The Under Secretary for Acquisition, Technology, and Logistics shall review each recommendation transmitted under paragraph (1) to determine whether or not the Joint Requirements Oversight Council has, in making such recommendation-- (A) taken appropriate action to solicit and consider input from the commanders of the combatant commands in accordance with the requirements of section 181(e) of title 10, United States Code (as amended by section 105); (B) given appropriate consideration to trade-offs among cost, schedule, and performance in accordance with the requirements of section 181(b)(1)(C) of title 10, United States Code (as amended by subsection (b)); and (C) given appropriate consideration to issues of joint portfolio management, including alternative material and non-material solutions, as provided in Chairman of the Joint Chiefs of Staff Instruction 3170.01G. (3) Non-concurrence of under secretary for atl.--If the Under Secretary for Acquisition, Technology, and Logistics determines that the Joint Requirements Oversight Council has failed to take appropriate action in accordance with subparagraphs (A), (B), and (C) of paragraph (2) regarding a joint military requirement, the Under Secretary shall return the recommendation to the Council with specific recommendations as to matters to be considered by the Council to address any shortcoming identified by the Under Secretary in the course of the review under paragraph (2). (4) Notice on continuing disagreement on requirement.--If the Under Secretary for Acquisition, Technology, and Logistics and the Joint Requirements Oversight Council are unable to reach agreement on a joint military requirement that has been returned to the Council by the Under Secretary under paragraph (4), the Under Secretary shall transmit notice of lack of agreement on the requirement to the Secretary of Defense. (5) Resolution of continuing disagreement.--Upon receiving notice under paragraph (4) of a lack of agreement on a joint military requirement, the Secretary of Defense shall make a final determination on whether or not to validate the requirement. (d) Analysis of Alternatives.-- (1) Requirement at material solution analysis phase.--The Under Secretary of Defense for Acquisition, Technology, and Logistics shall ensure that Department of Defense guidance on major defense acquisition programs requires the Milestone Decision Authority to conduct an analysis of alternatives (AOA) during the Material Solution Analysis Phase of each major defense acquisition program. (2) Elements.--Each analysis of alternatives under paragraph (1) shall, at a minimum-- (A) solicit and consider alternative approaches proposed by the military departments and Defense Agencies to meet joint military requirements; and (B) give full consideration to possible trade-offs between cost, schedule, and performance for each of the alternatives so considered. (e) Duties of Milestone Decision Authority.--Section 2366b(a)(1)(B) of title 10, United States Code, is amended by inserting ``appropriate trade-offs between cost, schedule, and performance have been made to ensure that'' before ``the program is affordable''. SEC. 202. PRELIMINARY DESIGN REVIEW AND CRITICAL DESIGN REVIEW FOR MAJOR DEFENSE ACQUISITION PROGRAMS. (a) Preliminary Design Review.--Section 2366b(a) of title 10, United States Code, as amended by section 201(d) of this Act, is further amended-- (1) in paragraph (1), by striking ``and'' at the end; (2) by redesignating paragraph (2) as paragraph (3); (3) by inserting after paragraph (1) the following new paragraph (2): ``(2) has received a preliminary design review (PDR) and conducted a formal post-preliminary design review assessment, and certifies on the basis of such assessment that the program demonstrates a high likelihood of accomplishing its intended mission; and''; and (4) in paragraph (3), as redesignated by paragraph (2) of this section-- (A) in subparagraph (D), by striking the semicolon and inserting ``, as determined by the Milestone Decision Authority on the basis of an independent review and assessment by the Director of Defense Research and Engineering; and''; (B) by striking subparagraph (E); and (C) by redesignating subparagraph (F) as subparagraph (E). (b) Critical Design Review.--The Under Secretary of Defense for Acquisition, Technology, and Logistics shall ensure that Department of Defense guidance on major defense acquisition programs requires a critical design review and a formal post-critical design review assessment for each major defense acquisition program to ensure that such program has attained an appropriate level of design maturity before such program is approved for System Capability and Manufacturing Process Development. SEC. 203. ENSURING COMPETITION THROUGHOUT THE LIFE CYCLE OF MAJOR DEFENSE ACQUISITION PROGRAMS. (a) Ensuring Competition.--The Secretary of Defense shall ensure that the acquisition plan for each major defense acquisition program includes measures to ensure competition, or the option of competition, at both the prime contract level and the subcontract level of such program throughout the life cycle of such program as a means to incentivize contractor performance. (b) Measures To Ensure Competition.--The measures to ensure competition, or the option of competition, utilized for purposes of subsection (a) may include, but are not limited to, measures to achieve the following, in appropriate cases where such measures are cost- effective: (1) Competitive prototyping. (2) Dual-sourcing. (3) Funding of a second source for interchangeable, next- generation prototype systems or subsystems. (4) Utilization of modular, open architectures to enable competition for upgrades. (5) Periodic competitions for subsystem upgrades. (6) Licensing of additional suppliers. (7) Requirements for Government oversight or approval of make or buy decisions to ensure competition at the subsystem level. (8) Periodic system or program reviews to address long-term competitive effects of program decisions. (9) Consideration of competition at the subcontract level and in make or buy decisions as a factor in proposal evaluations. (c) Competitive Prototyping.--The Secretary of Defense shall modify the acquisition regulations of the Department of Defense to ensure with respect to competitive prototyping for major defense acquisition programs the following: (1) That the acquisition strategy for each major defense acquisition program provides for two or more competing teams to produce prototypes before Milestone B approval (or Key Decision Point B approval in the case of a space program) unless the milestone decision authority for such program waives the requirement on the basis of a determination that-- (A) but for such waiver, the Department would be unable to meet critical national security objectives; or (B) the cost of producing competitive prototypes exceeds the potential life-cycle benefits of such competition, including the benefits of improved performance and increased technological and design maturity that may be achieved through prototyping. (2) That if the milestone decision authority waives the requirement for prototypes produced by two or more teams for a major defense acquisition program under paragraph (1), the acquisition strategy for the program provides for the production of at least one prototype before Milestone B approval (or Key Decision Point B approval in the case of a space program) unless the milestone decision authority waives such requirement on the basis of a determination that-- (A) but for such waiver, the Department would be unable to meet critical national security objectives; or (B) the cost of producing a prototype exceeds the potential life-cycle benefits of such prototyping, including the benefits of improved performance and increased technological and design maturity that may be achieved through prototyping. (3) That whenever a milestone decision authority authorizes a waiver under paragraph (1) or (2), the waiver, the determination upon which the waiver is based, and the reasons for the determination are submitted in writing to the congressional defense committees not later than 30 days after the waiver is authorized. (4) That prototypes may be required under paragraph (1) or (2) for the system to be acquired or, if prototyping of the system is not feasible, for critical subsystems of the system. (d) Comptroller General of the United States Review of Certain Waivers.-- (1) Notice to comptroller general.--Whenever a milestone decision authority authorizes a waiver of the requirement for prototypes under paragraph (1) or (2) of subsection (c) on the basis of excessive cost, the milestone decision authority shall submit a notice on the waiver, together with the rational for the waiver, to the Comptroller General of the United States at the same time a report on the waiver is submitted to the congressional defense committees under paragraph (3) of that subsection. (2) Comptroller general review.--Not later than 60 days after receipt of a notice on a waiver under paragraph (1), the Comptroller General shall-- (A) review the rationale for the waiver; and (B) submit to the congressional defense committees a written assessment of the rationale for the waiver. (e) Applicability.--This section shall apply to any acquisition plan for a major defense acquisition program that is developed or revised on or after the date that is 60 days after the date of the enactment of this Act. SEC. 204. CRITICAL COST GROWTH IN MAJOR DEFENSE ACQUISITION PROGRAMS. (a) Authorized Actions in Event of Critical Cost Growth.--Section 2433(e)(2) of title 10, United States Code, is amended-- (1) by redesignating subparagraph (C) as subparagraph (E); (2) by striking subparagraph (B); and (3) by inserting after subparagraph (A) the following new subparagraphs (B), (C), and (D): ``(B) terminate such acquisition program and submit the report required by subparagraph (D), unless the Secretary determines that the continuation of such program is essential to the national security of the United States and submits a written certification in accordance with subparagraph (C)(i) accompanied by a report setting forth the assessment carried out pursuant to subparagraph (A) and the basis for each determination made in accordance with clauses (I) through (IV) of subparagraph (C)(i), together with supporting documentation; ``(C) if the program is not terminated-- ``(i) submit to Congress, before the end of the 60- day period beginning on the day the Selected Acquisition Report containing the information described in subsection (g) is required to be submitted under section 2432(f) of this title, a written certification stating that-- ``(I) such acquisition program is essential to national security; ``(II) there are no alternatives to such acquisition program which will provide equal or greater capability to meet a joint military requirement (as that term is defined in section 181(h)(1) of this title) at less cost; ``(III) the new estimates of the program acquisition unit cost or procurement unit cost were arrived at in accordance with the requirements of section 139d of this title and are reasonable; and ``(IV) the management structure for the acquisition program is adequate to manage and control program acquisition unit cost or procurement unit cost; ``(ii) rescind the most recent Milestone approval (or Key Decision Point approval in the case of a space program) for such program and withdraw any associated certification under section 2366a or 2366b of this title; and ``(iii) require a new Milestone approval (or Key Decision Point approval in the case of a space program) for such program before entering into a new contract, exercising an option under an existing contract, or otherwise extending the scope of an existing contract under such program; ``(D) if the program is terminated, submit to Congress a written report setting forth-- ``(i) an explanation of the reasons for terminating the program; ``(ii) the alternatives considered to address any problems in the program; and ``(iii) the course the Department plans to pursue to meet any continuing joint military requirements otherwise intended to be met by the program; and''. (b) Total Expenditure for Procurement Resulting in Treatment as MDAP.--Section 2430(a)(2) of such title is amended by inserting ``, including all planned increments or spirals,'' after ``an eventual total expenditure for procurement''. SEC. 205. ORGANIZATIONAL CONFLICTS OF INTEREST IN THE ACQUISITION OF MAJOR WEAPON SYSTEMS. (a) Revised Regulations Required.--Not later than 180 days after the date of the enactment of this Act, the Under Secretary of Defense for Acquisition, Technology, and Logistics shall revise the Defense Supplement to the Federal Acquisition Regulation to address organizational conflicts of interest by contractors in the acquisition of major weapon systems. (b) Elements.--The revised regulations required by subsection (a) shall, at a minimum-- (1) ensure that the Department of Defense receives advice on systems architecture and systems engineering matters with respect to major weapon systems from federally funded research and development centers or other sources independent of the prime contractor; (2) require that a contract for the performance of systems engineering and technical assistance (SETA) functions with regard to a major weapon system contains a provision prohibiting the contractor or any affiliate of the contractor from having a direct financial interest in the development or construction of the weapon system or any component thereof; (3) provide for an exception to the requirement in paragraph (2) for an affiliate that is separated from the contractor by structural mechanisms, approved by the Secretary of Defense, that are similar to those required for special security agreements under rules governing foreign ownership, control, or influence over United States companies that have access to classified information, including, at a minimum-- (A) establishment of the affiliate as a separate business entity, geographically separated from related entities, with its own employees and management and restrictions on transfers for personnel; (B) a governing board for the affiliate that has organizational separation from related entities and governance procedures that require the board to act solely in the interest of the affiliate, without regard to the interests of related entities, except in specified circumstances; (C) complete informational separation, including the execution of non-disclosure agreements; (D) initial and recurring training on organizational conflicts of interest and protections against organizational conflicts of interest; and (E) annual compliance audits in which Department of Defense personnel are authorized to participate; (4) prohibit the use of the exception in paragraph (3) for any category of systems engineering and technical assistance functions (including, but not limited to, advice on source selection matters) for which the potential for an organizational conflict of interest or the appearance of an organizational conflict of interest makes mitigation in accordance with that paragraph an inappropriate approach; (5) authorize waiver of the requirement in paragraph (2) in cases in which the agency head determines in writing that-- (A) the financial interest of the contractor or its affiliate in the development or construction of the weapon system is not substantial and does not include a prime contract, a first-tier subcontract, or a joint venture or similar relationship with a prime contractor or first-tier subcontractor; or (B) the contractor-- (i) has unique systems engineering capabilities that are not available from other sources; (ii) has taken appropriate actions to mitigate any organizational conflict of interest; and (iii) has made a binding commitment to comply with the requirement in paragraph (2) by not later than January 1, 2011; and (6) provide for fair and objective ``make-buy'' decisions by the prime contractor on a major weapon system by-- (A) requiring prime contractors to give full and fair consideration to qualified sources other than the prime contractor for the development or construction of major subsystems and components of the weapon system; (B) providing for government oversight of the process by which prime contractors consider such sources and determine whether to conduct such development or construction in-house or through a subcontract; (C) authorizing program managers to disapprove the determination by a prime contractor to conduct development or construction in-house rather than through a subcontract in cases in which-- (i) the prime contractor fails to give full and fair consideration to qualified sources other than the prime contractor; or (ii) implementation of the determination by the prime contractor is likely to undermine future competition or the defense industrial base; and (D) providing for the consideration of prime contractors ``make-buy'' decisions in past performance evaluations. (c) Organizational Conflict of Interest Review Board.-- (1) Establishment required.--Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall establish within the Department of Defense a board to be known as the ``Organizational Conflict of Interest Review Board''. (2) Duties.--The Board shall have the following duties: (A) To advise the Under Secretary of Defense for Acquisition, Technology, and Logistics on policies relating to organizational conflicts of interest in the acquisition of major weapon systems. (B) To advise program managers on steps to comply with the requirements of the revised regulations required by this section and to address organizational conflicts of interest in the acquisition of major weapon systems. (C) To advise appropriate officials of the Department on organizational conflicts of interest arising in proposed mergers of defense contractors. (d) Major Weapon System Defined.--In this section, the term ``major weapon system'' has the meaning given that term in section 2379(d) of title 10, United States Code. SEC. 206. AWARDS FOR DEPARTMENT OF DEFENSE PERSONNEL FOR EXCELLENCE IN THE ACQUISITION OF PRODUCTS AND SERVICES. (a) In General.--Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall commence carrying out a program to recognize excellent performance by individuals and teams of members of the Armed Forces and civilian personnel of the Department of Defense in the acquisition of products and services for the Department of Defense. (b) Elements.--The program required by subsection (a) shall include the following: (1) Procedures for the nomination by the personnel of the military departments and the Defense Agencies of individuals and teams of members of the Armed Forces and civilian personnel of the Department of Defense for eligibility for recognition under the program. (2) Procedures for the evaluation of nominations for recognition under the program by one or more panels of individuals from the government, academia, and the private sector who have such expertise, and are appointed in such manner, as the Secretary shall establish for purposes of the program. (c) Award of Cash Bonuses.--As part of the program required by subsection (a), the Secretary may award to any individual recognized pursuant to the program a cash bonus authorized by any other provision of law to the extent that the performance of such individual so recognized warrants the award of such bonus under such provision of law. SEC. 207. EARNED VALUE MANAGEMENT. (a) Enhanced Tracking of Contractor Performance.--Not later than 180 days after the date of the enactment of this Act, the Under Secretary of Defense for Acquisition, Technology, and Logistics shall review the existing guidance and, as necessary, prescribe additional guidance governing the implementation of the Earned Value Management (EVM) requirements and reporting for contracts to ensure that the Department of Defense-- (1) applies uniform EVM standards to reliably and consistently measure contract or project performance; (2) applies such standards to establish appropriate baselines at the award of a contract or commencement of a program, whichever is earlier; (3) ensures that personnel responsible for administering and overseeing EVM systems have the training and qualifications needed to perform this function; and (4) has appropriate mechanisms in place to ensure that contractors establish and use approved EVM systems. (b) Enforcement Mechanisms.--For the purposes of subsection (a)(4), mechanisms to ensure that contractors establish and use approved EVM systems shall include-- (1) consideration of the quality of the contractors' EVM systems and the timeliness of the contractors' EVM reporting in any past performance evaluation for a contract that includes an EVM requirement; and (2) increased government oversight of the cost, schedule, scope, and performance of contractors that do not have approved EVM systems in place. SEC. 208. EXPANSION OF NATIONAL SECURITY OBJECTIVES OF THE NATIONAL TECHNOLOGY AND INDUSTRIAL BASE. (a) In General.--Subsection (a) of section 2501 of title 10, United States Code, is amended by adding at the end the following new paragraph: ``(6) Maintaining critical design skills to ensure that the armed forces are provided with systems capable of ensuring technological superiority over potential adversaries.''. (b) Notification of Congress Upon Termination of Mdaps of Effects on National Security Objectives.--Such section is further amended by adding at the end the following new subsection: ``(c) Notification of Congress Upon Termination of Major Defense Acquisition Program of Effects on Objectives.--(1) Upon the termination of a major defense acquisition program, the Secretary of Defense shall notify Congress of the effects of such termination on the national security objectives for the national technology and industrial base set forth in subsection (a), and the measures, if any, that have been taken or should be taken to mitigate those effects. ``(2) In this subsection, the term `major defense acquisition program' has the meaning given that term in section 2430 of this title.''. SEC. 209. PLAN FOR ELIMINATION OF WEAKNESSES IN OPERATIONS THAT HINDER CAPACITY TO ASSEMBLE AND ASSESS RELIABLE COST INFORMATION ON ACQUIRED ASSETS UNDER MAJOR DEFENSE ACQUISITION PROGRAMS. (a) In General.--Not later than 180 days after the date of the enactment of this Act, the Chief Management Officer of the Department of Defense shall submit to Congress a report setting forth a plan to identify and address weaknesses in operations that hinder the capacity to assemble and assess reliable cost information on the systems and assets to be acquired under major defense acquisition programs. (b) Elements.--The report required under subsection (a) shall include the following: (1) Mechanisms to identify any weaknesses in operations under major defense acquisition programs that hinder the capacity to assemble and assess reliable cost information on the systems and assets to be acquired under such programs in accordance with applicable accounting standards. (2) Mechanisms to address weaknesses in operations under major defense acquisition programs identified pursuant to the utilization of the mechanisms set forth under paragraph (1). (3) A description of the proposed implementation of the mechanisms set forth pursuant to paragraph (2) to address the weaknesses described in that paragraph, including-- (A) the actions to be taken to implement such mechanisms; (B) a schedule for carrying out such mechanisms; and (C) metrics for assessing the progress made in carrying out such mechanisms. (4) A description of the organization and resources required to carry out mechanisms set forth pursuant to paragraphs (1) and (2). (5) In the case of the financial management practices of each military department applicable to major defense acquisition programs-- (A) a description of any weaknesses in such practices; and (B) a description of the actions to be taken to remedy such weaknesses. (c) Consultation.-- (1) In general.--In preparing the report required by subsection (a), the Chief Management Officer of the Department of Defense shall seek and consider input from each of the following: (A) The Chief Management Officer of the Department of the Army. (B) The Chief Management Officer of the Department of the Navy. (C) The Chief Management Officer of the Department of the Air Force. (2) Financial management practices.--In preparing for the report required by subsection (a) the matters covered by subsection (b)(5) with respect to a particular military department, the Chief Management Officer of the Department of Defense shall consult specifically with the Chief Management Officer of the military department concerned. Passed the Senate May 7, 2009. Attest: Secretary. 111th CONGRESS 1st Session S. 454 _______________________________________________________________________ AN ACT To improve the organization and procedures of the Department of Defense for the acquisition of major weapon systems, and for other purposes.