§ 2430. Major defense acquisition program defined

• (a)
  • (1) Except as provided under paragraph (2), in this chapter, the term “major defense acquisition program” means a Department of Defense acquisition program that is not a highly sensitive classified program (as determined by the Secretary of Defense) and—
    • (A) that is designated by the Secretary of Defense as a major defense acquisition program; or
    • (B) in the case of a program that is not a program for the acquisition of an automated information system (either a product or a service), that is estimated by the Secretary of Defense to require an eventual total expenditure for research, development, test, and evaluation of more than $300,000,000 (based on fiscal year 1990 constant dollars) or an eventual total expenditure for procurement, including all planned increments or spirals, of more than $1,800,000,000 (based on fiscal year 1990 constant dollars).
  • (2) In this chapter, the term “major defense acquisition program” does not include—
    • (A) an acquisition program or project that is carried out using the rapid fielding or rapid prototyping acquisition pathway under section 804 of the National Defense Authorization Act for Fiscal Year 2016 ( Public Law 114–92 ; 10 U.S.C. 2302 note); or
    • (B) an acquisition program for a defense business system (as defined in section 2222(i)(1) of this title ) carried out using the acquisition guidance issued pursuant to section 883(e) of the National Defense Authorization Act for Fiscal Year 2016 ( Public Law 114–92 ; 10 U.S.C. 2223a note).
• (b) The Secretary of Defense may adjust the amounts (and the base fiscal year) provided in subsection (a)(1)(B) on the basis of Department of Defense escalation rates. An adjustment under this subsection shall be effective after the Secretary transmits a written notification of the adjustment to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives.
• (c) For purposes of subsection (a)(1)(B), the Secretary shall consider, as applicable, the following:
  • (1) The estimated level of resources required to fulfill the relevant joint military requirement, as determined by the Joint Requirements Oversight Council pursuant to section 181 of this title .
  • (2) The cost estimate referred to in section 2366a(a)(6) of this title .
  • (3) The cost estimate referred to in section 2366b(a)(1)(C) of this title .
  • (4) The cost estimate within a baseline description as required by section 2435 of this title .
• (d)
  • (1) The milestone decision authority for a major defense acquisition program reaching Milestone A after October 1, 2016 , shall be the service acquisition executive of the military department that is managing the program, unless the Secretary of Defense designates, under paragraph (2), another official to serve as the milestone decision authority.
  • (2) The Secretary of Defense may designate an alternate milestone decision authority for a program with respect to which—
    • (A) subject to paragraph (5), the Secretary determines that the program is addressing a joint requirement;
    • (B) the Secretary determines that the program is best managed by a Defense Agency;
    • (C) the program has incurred a unit cost increase greater than the significant cost threshold or critical cost threshold under section 2433 of this title ;
    • (D) the program is critical to a major interagency requirement or technology development effort, or has significant international partner involvement; or
    • (E) the Secretary determines that an alternate official serving as the milestone decision authority will best provide for the program to achieve desired cost, schedule, and performance outcomes.
  • (3)
    • (A) After designating an alternate milestone decision authority under paragraph (2) for a program, the Secretary of Defense may revert the position of milestone decision authority for the program back to the service acquisition executive upon request of the Secretary of the military department concerned. A decision on the request shall be made within 180 days after receipt of the request from the Secretary of the military department concerned.
    • (B) If the Secretary of Defense denies the request for reversion of the milestone decision authority back to the service acquisition executive, the Secretary shall report to the congressional defense committees on the basis of the Secretary’s decision that an alternate official serving as milestone decision authority will best provide for the program to achieve desired cost, schedule, and performance outcomes. No such reversion is authorized after a program has incurred a unit cost increase greater than the significant cost threshold or critical cost threshold under section 2433 of this title , except in exceptional circumstances.
  • (4)
    • (A) For each major defense acquisition program, the Secretary of the military department concerned and the Chief of the armed force concerned shall, in each Selected Acquisition Report required under section 2432 of this title , certify that program requirements are stable and funding is adequate to meet cost, schedule, and performance objectives for the program and identify and report to the congressional defense committees on any increased risk to the program since the last report.
    • (B) The Secretary of Defense shall review the acquisition oversight process for major defense acquisition programs and shall limit outside requirements for documentation to an absolute minimum on those programs where the service acquisition executive of the military department that is managing the program is the milestone decision authority and ensure that any policies, procedures, and activities related to oversight efforts conducted outside of the military departments with regard to major defense acquisition programs shall be implemented in a manner that does not unnecessarily increase program costs or impede program schedules.
  • (5) The authority of the Secretary of Defense to designate an alternative milestone decision authority for a program with respect to which the Secretary determines that the program is addressing a joint requirement, as set forth in paragraph (2)(A), shall apply only for a major defense acquisition program that reaches Milestone A after October 1, 2016 , and before October 1, 2019 .

§ 2430a. Major subprograms

• (a)
  • (1)
    • (A) 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.
    • (B) If the Secretary of Defense determines that a major defense acquisition program requires the delivery of two or more increments or blocks, the Secretary may designate each such increment or block 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)
  • (1) 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—
    • (A) for the major defense acquisition program as a whole (other than as provided in paragraph (2)); and
    • (B) for each major subprogram of the major defense acquisition program so designated.
  • (2) For a major defense acquisition program for which a designation of a major subprogram has been made under subsection (a), unit costs under this chapter shall be submitted in accordance with the definitions in subsection (d).
• (c) 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) 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.

§ 2431. Weapons development and procurement schedules

• (a) The Secretary of Defense shall submit to Congress each calendar year, not later than 45 days after the President submits the budget to Congress under section 1105 of title 31 , budget justification documents regarding development and procurement schedules for each weapon system for which fund authorization is required by section 114(a) of this title , and for which any funds for procurement are requested in that budget. The documents shall include data on operational testing and evaluation for each weapon system for which funds for procurement are requested (other than funds requested only for the procurement of units for operational testing and evaluation, or long lead-time items, or both). A weapon system shall also be included in the annual documents required under this subsection in each year thereafter until procurement of that system has been completed or terminated, or the Secretary of Defense certifies, in writing, that such inclusion would not serve any useful purpose and gives his reasons therefor.
• (b) Any documents required to be submitted under subsection (a) shall include detailed and summarized information with respect to each weapon system covered and shall specifically include each of the following:
  • (1) The development schedule, including estimated annual costs until development is completed.
  • (2) The planned procurement schedule, including the best estimate of the Secretary of Defense of the annual costs and units to be procured until procurement is completed.
  • (3) To the extent required by the second sentence of subsection (a), the result of all operational testing and evaluation up to the time of the submission of the documents, or, if operational testing and evaluation has not been conducted, a statement of the reasons therefor and the results of such other testing and evaluation as has been conducted.
  • (4)
    • (A) The most efficient production rate, the most efficient acquisition rate, and the minimum sustaining rate, consistent with the program priority established for such weapon system by the Secretary concerned.
    • (B) In this paragraph:
      • (i) The term “most efficient production rate” means the maximum rate for each budget year at which the weapon system can be produced with existing or planned plant capacity and tooling, with one shift a day running for eight hours a day and five days a week.
      • (ii) The term “minimum sustaining rate” means the production rate for each budget year that is necessary to keep production lines open while maintaining a base of responsive vendors and suppliers.
• (c) In the case of any weapon system for which procurement funds have not been previously requested and for which funds are first requested by the President in any fiscal year after the Budget for that fiscal year has been submitted to Congress, the same documentation requirements shall be applicable to that system in the same manner and to the same extent as if funds had been requested for that system in that budget.

§ 2431a. Acquisition strategy

• (a) There shall be an acquisition strategy for each major defense acquisition program, each major automated information system, and each major system approved by a milestone decision authority.
• (b) For each acquisition strategy required by subsection (a), the Under Secretary of Defense for Acquisition and Sustainment, or the milestone decision authority, when the milestone decision authority is the service acquisition executive of the military department that is managing the program, is responsible for issuing and maintaining the requirements for—
  • (1) the content of the strategy; and
  • (2) the review and approval process for the strategy.
• (c)
  • (1) In issuing requirements for the content of an acquisition strategy for a major defense acquisition program, major automated information system, or major system, the Under Secretary, or the milestone decision authority, when the milestone decision authority is the service acquisition executive of the military department that is managing the program, shall ensure that—
    • (A) the strategy clearly describes the proposed top-level business and technical management approach for the program or system, in sufficient detail to allow the milestone decision authority to assess the viability of the proposed approach, the method of implementing laws and policies, and program objectives;
    • (B) the strategy contains a clear explanation of how the strategy is designed to be implemented with available resources, such as time, funding, and management capacity;
    • (C) the strategy is tailored to address program requirements and constraints; and
    • (D) the strategy considers the items listed in paragraph (2).
  • (2) Each strategy shall, where appropriate, consider the following:
    • (A) An approach that delivers required capability in increments, each depending on available mature technology, and that recognizes up front the need for future capability improvements.
    • (B) Acquisition approach, including industrial base considerations in accordance with section 2440 of this title .
    • (C) Risk management, including such methods as competitive prototyping at the system, subsystem, or component level.
    • (D) Business strategy, including measures to ensure competition at the system and subsystem level throughout the life-cycle of the program or system in accordance with section 2337 of this title .
    • (E) Contracting strategy, including—
      • (i) contract type and how the type selected relates to level of program risk in each acquisition phase;
      • (ii) how the plans for the program or system to reduce risk enable the use of fixed-price elements in subsequent contracts and the timing of the use of those fixed price elements;
      • (iii) market research; and
      • (iv) consideration of small business participation.
    • (F) Intellectual property strategy in accordance with section 2320 of this title .
    • (G) International involvement, including foreign military sales and cooperative opportunities, in accordance with section 2350a of this title .
    • (H) Multiyear procurement in accordance with section 2306b of this title .
    • (I) Integration of current intelligence assessments into the acquisition process.
    • (J) Requirements related to logistics, maintenance, and sustainment in accordance with sections 2464 and 2466 of this title.
• (d)
  • (1) The milestone decision authority shall review and approve, as appropriate, the acquisition strategy for a major defense acquisition program, major automated information system, or major system at each of the following times:
    • (A) Milestone A approval.
    • (B) The decision to release the request for proposals for development of the program or system.
    • (C) Milestone B approval.
    • (D) Each subsequent milestone.
    • (E) Review of any decision to enter into full-rate production.
    • (F) When there has been—
      • (i) a significant change to the cost of the program or system;
      • (ii) a critical change to the cost of the program or system;
      • (iii) a significant change to the schedule of the program or system; or
      • (iv) a significant change to the performance of the program or system.
    • (G) Any other time considered relevant by the milestone decision authority.
  • (2) If the milestone decision authority revises an acquisition strategy for a program or system because of a change described in paragraph (1)(F), the milestone decision authority shall provide notice of the revision to the congressional defense committees.
• (e) In this section:
  • (1) The term “major defense acquisition program” has the meaning provided in section 2430 of this title .
  • (2) The term “major system” has the meaning provided in section 2302(5) of this title .
  • (3) The term “Milestone A approval” means a decision to enter into technology maturation and risk reduction pursuant to guidance prescribed by the Secretary of Defense for the management of Department of Defense acquisition programs.
  • (4) The term “Milestone B approval” has the meaning provided in section 2366(e)(7) of this title .
  • (5) The term “milestone decision authority”, with respect to a major defense acquisition program, major automated information system, or major system, means the official within the Department of Defense designated with the overall responsibility and authority for acquisition decisions for the program or system, including authority to approve entry of the program or system into the next phase of the acquisition process.
  • (6) The term “management capacity”, with respect to a major defense acquisition program, major automated information system, or major system, means the capacity to manage the program or system through the use of highly qualified organizations and personnel with appropriate experience, knowledge, and skills.
  • (7) The term “significant change to the cost”, with respect to a major defense acquisition program or major system, means a significant cost growth threshold, as that term is defined in section 2433(a)(4) of this title .
  • (8) The term “critical change to the cost”, with respect to a major defense acquisition program or major system, means a critical cost growth threshold, as that term is defined in section 2433(a)(5) of this title .
  • (9) The term “significant change to the schedule”, with respect to a major defense acquisition program, major automated information system, or major system, means any schedule delay greater than six months in a reported event.

§ 2431b. Risk management and mitigation in major defense acquisition programs and major systems

• (a) The Secretary of Defense shall ensure that the initial acquisition strategy (required under section 2431a of this title ) approved by the milestone decision authority and any subsequent revisions include the following:
  • (1) A comprehensive approach for managing and mitigating risk (including technical, cost, and schedule risk) during each of the following periods or when determined appropriate by the milestone decision authority:
    • (A) The period preceding engineering manufacturing development, or its equivalent.
    • (B) The period preceding initial production.
    • (C) The period preceding full-rate production.
  • (2) An identification of the major sources of risk in each of the periods listed in paragraph (1) to improve programmatic decisionmaking and appropriately minimize and manage program concurrency.
• (b) The comprehensive approach to manage and mitigate risk included in the acquisition strategy for purposes of subsection (a)(1) shall, at a minimum, include consideration of risk mitigation techniques such as the following:
  • (1) Prototyping (including prototyping at the system, subsystem, or component level and competitive prototyping, where appropriate) and, if prototyping at either the system, subsystem, or component level is not used, an explanation of why it is not appropriate.
  • (2) Modeling and simulation, the areas that modeling and simulation will assess, and identification of the need for development of any new modeling and simulation tools in order to support the comprehensive strategy.
  • (3) Technology demonstrations and decision points for disciplined transition of planned technologies into programs or the selection of alternative technologies.
  • (4) Multiple design approaches.
  • (5) Alternative designs, including any designs that meet requirements but do so with reduced performance.
  • (6) Phasing of program activities or related technology development efforts in order to address high-risk areas as early as feasible.
  • (7) Manufacturability and industrial base availability.
  • (8) Independent risk element assessments by outside subject matter experts.
  • (9) Schedule and funding margins for identified risks.
• (c) To the maximum extent practicable and consistent with the economical use of available financial resources, the milestone decision authority for each major defense acquisition program shall ensure that the acquisition strategy for the program provides for—
  • (1) the production of competitive prototypes at the system or subsystem level before Milestone B approval; or
  • (2) if the production of competitive prototypes is not practicable, the production of single prototypes at the system or subsystem level.
• (d)
  • (1) The term “concurrency” means, with respect to an acquisition strategy, the combination or overlap of program phases or activities.
  • (2) The terms “major defense acquisition program” and “major system” have the meanings provided in section 2431a of this title .

§ 2432. Selected Acquisition Reports

• (a) In this section:
  • (1) The term “program acquisition unit cost”, with respect to a major defense acquisition program, means the amount equal to (A) the total cost for development and procurement of, and system-specific military construction for, the acquisition program, divided by (B) the number of fully-configured end items to be produced for the acquisition program.
  • (2) The term “procurement unit cost”, with respect to a major defense acquisition program, means the amount equal to (A) the total of all funds programmed to be available for obligation for procurement for the program, divided by (B) the number of fully-configured end items to be procured.
  • (3) The term “major contract”, with respect to a major defense acquisition program, means each of the six largest prime, associate, or Government-furnished equipment contracts under the program that is in excess of $40,000,000 and that is not a firm, fixed price contract.
  • (4) The term “full life-cycle cost”, with respect to a major defense acquisition program, means all costs of development, procurement, military construction, and operations and support, without regard to funding source or management control.
• (b)
  • (1) The Secretary of Defense shall submit to Congress at the end of each fiscal-year quarter a report on current major defense acquisition programs and any program that is estimated by the Secretary of Defense to require an eventual total expenditure for research, development, test, and evaluation of more than $300,000,000 (based on fiscal year 1990 constant dollars) or an eventual total expenditure for procurement, including all planned increments or spirals, of more than $1,800,000,000 (based on fiscal year 1990 constant dollars). Except as provided in paragraphs (2) and (3), each such report shall include a status report on each defense acquisition program that at the end of such quarter is a major defense acquisition program. Reports under this section shall be known as Selected Acquisition Reports.
  • (2) A status report on a major defense acquisition program need not be included in the Selected Acquisition Report for the second, third, or fourth quarter of a fiscal year if such a report was included in a previous Selected Acquisition Report for that fiscal year and during the period since that report there has been—
    • (A) less than a 15 percent increase in program acquisition unit cost and current procurement unit cost for the program (or for each designated subprogram under the program); and
    • (B) less than a six-month delay in any program schedule milestone shown in the Selected Acquisition Report.
  • (3)
    • (A) The Secretary of Defense may waive the requirement for submission of Selected Acquisition Reports for a program for a fiscal year if—
      • (i) the program has not entered system development and demonstration;
      • (ii) a reasonable cost estimate has not been established for such program; and
      • (iii) the system configuration for such program is not well defined.
    • (B) The Secretary shall submit to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives a written notification of each waiver under subparagraph (A) for a program for a fiscal year not later than 60 days before the President submits the budget to Congress pursuant to section 1105 of title 31 in that fiscal year.
• (c)
  • (1) Each Selected Acquisition Report for the first quarter for a fiscal year shall include—
    • (A) the same information, in detailed and summarized form, as is provided in reports submitted under section 2431 of this title ;
    • (B) for each major defense acquisition program or designated major subprogram included in the report—
      • (i) the Baseline Estimate (as that term is defined in section 2433(a)(2) of this title ), along with the associated risk and sensitivity analysis of that estimate;
      • (ii) the original Baseline Estimate (as that term is defined in section 2435(d)(1) of this title ), along with the associated risk and sensitivity analysis of that estimate;
      • (iii) if the original Baseline Estimate was adjusted or revised pursuant to section 2435(d)(2) of this title , such adjusted or revised estimate, along with the associated risk and sensitivity analysis of that estimate; and
      • (iv) the primary risk parameters associated with the current procurement cost for the program (as that term is used in section 2432(e)(4) of this title );
    • (C) a summary of the history of significant developments from the date each major defense acquisition program or designated major subprogram included in the report was first included in a Selected Acquisition Report and program highlights since the last Selected Acquisition Report;
    • (D) the significant schedule and technical risks for each such program or subprogram, identified at each major milestone and as of the quarter for which the current report is submitted;
    • (E) the current program acquisition cost and program acquisition unit cost for each such program or subprogram included in the report and the history of those costs from the December 2001 reporting period to the end of the quarter for which the current report is submitted;
    • (F) the current procurement unit cost for each such program or subprogram included in the report and the history of that cost from the December 2001 reporting period to the end of the quarter for which the current report is submitted;
    • (G) for each major defense acquisition program that receives Milestone B approval after January 1, 2019 , a brief summary description of the key elements of the modular open system approach as defined in section 2446a of this title or, if a modular open system approach was not used, the rationale for not using such an approach; and
    • (H) such other information as the Secretary of Defense considers appropriate.
  • (2) Each Selected Acquisition Report for the first quarter of a fiscal year shall be designed to provide to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives the information such Committees need to perform their oversight functions. Whenever the Secretary of Defense proposes to make changes in the content of a Selected Acquisition Report, the Secretary shall submit a notice of the proposed changes to such committees. The changes shall be considered approved by the Secretary, and may be incorporated into the report, only after the end of the 60-day period beginning on the date on which the notice is received by those committees.
  • (3) In addition to the material required by paragraphs (1) and (2), each Selected Acquisition Report for the first quarter of a fiscal year shall include the following:
    • (A) A full life-cycle cost analysis for each major defense acquisition program and each designated major subprogram included in the report that is in the system development and demonstration stage or has completed that stage. The Secretary of Defense shall ensure that this subparagraph is implemented in a uniform manner, to the extent practicable, throughout the Department of Defense.
    • (B) If the system that is included in that major defense acquisition program has an antecedent system, a full life-cycle cost analysis for that system.
  • (4) Selected Acquisition Reports for the first quarter of a fiscal year shall be known as comprehensive annual Selected Acquisition Reports.
• (d)
  • (1) Each Selected Acquisition Report for the second, third, and fourth quarters of a fiscal year shall include—
    • (A) with respect to each major defense acquisition program that was included in the most recent comprehensive annual Selected Acquisition Report, the information described in subsection (e); and
    • (B) with respect to each major defense acquisition program that was not included in the most recent comprehensive annual Selected Acquisition Report, the information described in subsection (c).
  • (2) Selected Acquisition Reports for the second, third, and fourth quarters of a fiscal year shall be known as Quarterly Selected Acquisition Reports.
• (e) Information to be included under this subsection in a Quarterly Selected Acquisition Report with respect to a major defense acquisition program is as follows:
  • (1) The quantity of items to be purchased under the program.
  • (2) The program acquisition cost.
  • (3) The program acquisition unit cost for the program (or for each designated major subprogram under the program).
  • (4) The current procurement cost for the program.
  • (5) The current procurement unit cost for the program (or for each designated major subprogram under the program).
  • (6) The reasons for any change in program acquisition cost, program acquisition unit cost, procurement cost, or procurement unit cost or in program schedule from the previous Selected Acquisition Report.
  • (7) The reasons for any significant changes (from the previous Selected Acquisition Report) in the total program cost for development and procurement of the software component of the program or subprogram, schedule milestones for the software component of the program or subprogram, or expected performance for the software component of the program or subprogram that are known, expected, or anticipated by the program manager.
  • (8) The major contracts under the program and designated major subprograms under the program and the reasons for any cost or schedule variances under those contracts since the last Selected Acquisition Report.
  • (9) Program highlights since the last Selected Acquisition Report.
• (f) Each comprehensive annual Selected Acquisition Report shall be submitted within 30 days after the date on which the President transmits the Budget to Congress for the following fiscal year, and each Quarterly Selected Acquisition Report shall be submitted within 45 days after the end of the fiscal-year quarter.
• (g) The requirements of this section with respect to a major defense acquisition program or designated major subprogram shall cease to apply after 90 percent of the items to be delivered to the United States under the program or subprogram (shown as the total quantity of items to be purchased under the program or subprogram in the most recent Selected Acquisition Report) have been delivered or 90 percent of planned expenditures under the program or subprogram have been made.
• (h)
  • (1) Total program reporting under this section shall apply to a major defense acquisition program when funds have been appropriated for such program and the Secretary of Defense has decided to proceed to system development and demonstration of such program. Reporting may be limited to the development program as provided in paragraph (2) before a decision is made by the Secretary of Defense to proceed to system development and demonstration if the Secretary notifies the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives of the intention to submit a limited report under this subsection not less than 15 days before a report is due under this section.
  • (2) A limited report under this subsection shall include the following:
    • (A) The same information, in detail and summarized form, as is provided in reports submitted under subsections (b)(1) and (b)(3) of section 2431 of this title .
    • (B) Reasons for any change in the development cost and schedule.
    • (C) The major contracts under the development program and designated major subprograms under the program and the reasons for any cost or schedule variances under those contracts since the last Selected Acquisition Report.
    • (D) Program highlights since the last Selected Acquisition Report.
    • (E) Other information as the Secretary of Defense considers appropriate.
  • (3) The submission requirements for a limited report under this subsection shall be the same as for quarterly Selected Acquisition Reports for total program reporting.
• (i) A Selected Acquisition Report required under this section shall be submitted in unclassified form without any designation relating to dissemination control, but may contain a classified annex.
• (j) The requirements under this section shall terminate after the final submission covering fiscal year 2021.

§ 2433. Unit cost reports

• (a) In this section:
  • (1) Except as provided in section 2430a(d) of this title , the terms “program acquisition unit cost”, “procurement unit cost”, and “major contract” have the same meanings as provided in section 2432(a) of this title .
  • (2) The term “Baseline Estimate”, with respect to a unit cost report that is submitted under this section to the service acquisition executive designated by the Secretary concerned on a major defense acquisition program or designated major subprogram, means the cost estimate included in the baseline description for the program or subprogram under section 2435 of this title .
  • (3) The term “procurement program” means a program for which funds for procurement are authorized to be appropriated in a fiscal year.
  • (4) The term “significant cost growth threshold” means the following:
    • (A) In the case of a major defense acquisition program or designated major defense subprogram, a percentage increase in the program acquisition unit cost for the program or subprogram of—
      • (i) at least 15 percent over the program acquisition unit cost for the program or subprogram as shown in the current Baseline Estimate for the program or subprogram; or
      • (ii) at least 30 percent over the program acquisition unit cost for the program or subprogram as shown in the original Baseline Estimate for the program or subprogram.
    • (B) In the case of a major defense acquisition program or designated major defense subprogram that is a procurement program, a percentage increase in the procurement unit cost for the program or subprogram of—
      • (i) at least 15 percent over the procurement unit cost for the program or subprogram as shown in the current Baseline Estimate for the program or subprogram; or
      • (ii) at least 30 percent over the procurement unit cost for the program or subprogram as shown in the original Baseline Estimate for the program or subprogram.
  • (5) The term “critical cost growth threshold” means the following:
    • (A) In the case of a major defense acquisition program or designated major defense subprogram, a percentage increase in the program acquisition unit cost for the program or subprogram of—
      • (i) at least 25 percent over the program acquisition unit cost for the program or subprogram as shown in the current Baseline Estimate for the program or subprogram; or
      • (ii) at least 50 percent over the program acquisition unit cost for the program or subprogram as shown in the original Baseline Estimate for the program or subprogram.
    • (B) In the case of a major defense acquisition program or designated major defense subprogram that is a procurement program, a percentage increase in the procurement unit cost for the program or subprogram of—
      • (i) at least 25 percent over the procurement unit cost for the program or subprogram as shown in the current Baseline Estimate for the program or subprogram; or
      • (ii) at least 50 percent over the procurement unit cost for the program or subprogram as shown in the original Baseline Estimate for the program or subprogram.
  • (6) The term “original Baseline Estimate” has the same meaning as provided in section 2435(d) of this title .
• (b) The program manager for a major defense acquisition program (other than a program not required to be included in the Selected Acquisition Report for that quarter under section 2432(b)(3) of this title ) shall, on a quarterly basis, submit to the service acquisition executive designated by the Secretary concerned a written report on the unit costs of the program (or of each designated major subprogram under the program). Each report shall be submitted not more than 30 calendar days after the end of that quarter. The program manager shall include in each such unit cost report the following information with respect to the program (as of the last day of the quarter for which the report is made):
  • (1) The program acquisition unit cost for the program (or for each designated major subprogram under the program).
  • (2) In the case of a procurement program, the procurement unit cost for the program (or for each designated major subprogram under the program).
  • (3) Any cost variance or schedule variance in a major contract under the program since the contract was entered into.
  • (4) Any changes from program schedule milestones or program performances reflected in the baseline description established under section 2435 of this title that are known, expected, or anticipated by the program manager.
  • (5) Any significant changes in the total program cost for development and procurement of the software component of the program or subprogram, schedule milestones for the software component of the program or subprogram, or expected performance for the software component of the program or subprogram that are known, expected, or anticipated by the program manager.
• (c) If the program manager of a major defense acquisition program for which a unit cost report has previously been submitted under subsection (b) determines at any time during a quarter that there is reasonable cause to believe that 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), as applicable, has increased by a percentage equal to or greater than the significant cost growth threshold; and if a unit cost report indicating an increase of such percentage or more has not previously been submitted to the service acquisition executive designated by the Secretary concerned, then the program manager shall immediately submit to such service acquisition executive a unit cost report containing the information, determined as of the date of the report, required under subsection (b).
• (d)
  • (1) When a unit cost report is submitted to the service acquisition executive designated by the Secretary concerned under this section with respect to a major defense acquisition program or any designated major subprogram under the program, the service acquisition executive shall determine whether the current program acquisition unit cost for the program or subprogram has increased by a percentage equal to or greater than the significant cost growth threshold, or the critical cost growth threshold, for the program or subprogram.
  • (2) When a unit cost report is submitted to the service acquisition executive designated by the Secretary concerned under this section with respect to a major defense acquisition program or any designated major subprogram under the program that is a procurement program, the service acquisition executive, in addition to the determination under paragraph (1), shall determine whether the procurement unit cost for the program or subprogram has increased by a percentage equal to or greater than the significant cost growth threshold, or the critical cost growth threshold, for the program or subprogram.
  • (3) If, based upon the service acquisition executive’s determination, the Secretary concerned determines that the current program acquisition unit cost has increased by a percentage equal to or greater than the significant cost growth threshold or critical cost growth threshold or that the procurement unit cost has increased by a percentage equal to or greater than the significant cost growth threshold or critical cost growth threshold, the Secretary shall notify Congress in writing of such determination and of the increase with respect to the program or subprogram concerned. In the case of a determination based on a quarterly report submitted in accordance with subsection (b), the Secretary shall submit the notification to Congress within 45 days after the end of the quarter. In the case of a determination based on a report submitted in accordance with subsection (c), the Secretary shall submit the notification to Congress within 45 days after the date of that report. The Secretary shall include in the notification the date on which the determination was made.
• (e)
  • (1)
    • (A) Except as provided in subparagraph (B), whenever the Secretary concerned determines under subsection (d) that the program acquisition unit cost or the procurement unit cost of a major defense acquisition program or designated major subprogram has increased by a percentage equal to or greater than the significant cost growth threshold for the program or subprogram, a Selected Acquisition Report shall be submitted to Congress for the first fiscal-year quarter ending on or after the date of the determination or for the fiscal-year quarter which immediately precedes the first fiscal-year quarter ending on or after that date. The report shall include the information described in section 2432(e) of this title and shall be submitted in accordance with section 2432(f) of this title .
    • (B) Whenever the Secretary makes a determination referred to in subparagraph (A) in the case of a major defense acquisition program or designated major subprogram during the second quarter of a fiscal year and before the date on which the President transmits the budget for the following fiscal year to Congress pursuant to section 1105 of title 31 , the Secretary is not required to file a Selected Acquisition Report under subparagraph (A) but shall include the information described in subsection (g) regarding that program or subprogram in the comprehensive annual Selected Acquisition Report submitted in that quarter.
  • (2) If the program acquisition unit cost or procurement unit cost of a major defense acquisition program or designated major subprogram (as determined by the Secretary under subsection (d)) increases by a percentage equal to or greater than the critical cost growth threshold for the program or subprogram, the Secretary of Defense shall take actions consistent with the requirements of section 2433a of this title .
  • (3) If a determination of an increase by a percentage equal to or greater than the significant cost growth threshold is made by the Secretary under subsection (d) and a Selected Acquisition Report containing the information described in subsection (g) is not submitted to Congress under paragraph (1), or if a determination of an increase by a percentage equal to or greater than the critical cost growth threshold is made by the Secretary under subsection (d) and the certification of the Secretary of Defense is not submitted to Congress under paragraph (2), funds appropriated for military construction, for research, development, test, and evaluation, and for procurement may not be obligated for a major contract under the program. The prohibition on the obligation of funds for a major defense acquisition program shall cease to apply at the end of a period of 30 days of continuous session of Congress (as determined under section 8677(b)(2) of this title ) beginning on the date—
    • (A) on which Congress receives the Selected Acquisition Report under paragraph (1) or (2)(B) with respect to that program, in the case of a determination of an increase by a percentage equal to or greater than the significant cost growth threshold (as determined in subsection (d)); or
    • (B) on which Congress has received both the Selected Acquisition Report under paragraph (1) or (2)(B) and the certification of the Secretary of Defense under paragraph (2)(A) with respect to that program, in the case of an increase by a percentage equal to or greater than the critical cost growth threshold (as determined under subsection (d)).
• (f) Any determination of a percentage increase under this section shall be stated in terms of constant base year dollars (as described in section 2430 of this title ).
• (g)
  • (1) Except as provided in paragraph (2), each report under subsection (e) with respect to a major defense acquisition program shall include the following:
    • (A) The name of the major defense acquisition program.
    • (B) The date of the preparation of the report.
    • (C) The program phase as of the date of the preparation of the report.
    • (D) The estimate of the program acquisition cost for the program (and for each designated major subprogram under the program) as shown in the Selected Acquisition Report in which the program or subprogram was first included, expressed in constant base-year dollars and in current dollars.
    • (E) The current program acquisition cost for the program (and for each designated major subprogram under the program) in constant base-year dollars and in current dollars.
    • (F) A statement of the reasons for any increase in program acquisition unit cost or procurement unit cost for the program (or for any designated major subprogram under the program).
    • (G) The completion status of the program and each designated major subprogram under the program (i) expressed as the percentage that the number of years for which funds have been appropriated for the program or subprogram is of the number of years for which it is planned that funds will be appropriated for the program or subprogram, and (ii) expressed as the percentage that the amount of funds that have been appropriated for the program or subprogram is of the total amount of funds which it is planned will be appropriated for the program or subprogram.
    • (H) The fiscal year in which information on the program and each designated major subprogram under the program was first included in a Selected Acquisition Report (referred to in this paragraph as the “base year”) and the date of that Selected Acquisition Report in which information on the program or subprogram was first included.
    • (I) The type of the Baseline Estimate that was included in the baseline description under section 2435 of this title and the date of the Baseline Estimate.
    • (J) The current change and the total change, in dollars and expressed as a percentage, in the program acquisition unit cost for the program (or for each designated major subprogram under the program), stated both in constant base-year dollars and in current dollars.
    • (K) The current change and the total change, in dollars and expressed as a percentage, in the procurement unit cost for the program (or for each designated major subprogram under the program), stated both in constant base-year dollars and in current dollars and the procurement unit cost for the program (or for each designated major subprogram under the program) for the succeeding fiscal year expressed in constant base-year dollars and in current year dollars.
    • (L) The quantity of end items to be acquired under the program and the current change and total change, if any, in that quantity.
    • (M) The identities of the military and civilian officers responsible for program management and cost control of the program.
    • (N) The action taken and proposed to be taken to control future cost growth of the program.
    • (O) Any changes made in the performance or schedule milestones of the program and the extent to which such changes have contributed to the increase in program acquisition unit cost or procurement unit cost for the program (or for any designated major subprogram under the program).
    • (P) The following contract performance assessment information with respect to each major contract under the program or subprogram:
      • (i) The name of the contractor.
      • (ii) The phase that the contract is in at the time of the preparation of the report.
      • (iii) The percentage of work under the contract that has been completed.
      • (iv) Any current change and the total change, in dollars and expressed as a percentage, in the contract cost.
      • (v) The percentage by which the contract is currently ahead of or behind schedule.
      • (vi) A narrative providing a summary explanation of the most significant occurrences, including cost and schedule variances under major contracts of the program and any designated major subprogram under the program, contributing to the changes identified and a discussion of the effect these occurrences will have on future program costs and the program schedule.
    • (Q) In any case in which one or more problems with the software component of the program or any designated major subprogram under the program significantly contributed to the increase in program unit costs, the action taken and proposed to be taken to solve such problems.
  • (2) If a program acquisition unit cost increase or a procurement unit cost increase for a major defense acquisition program or designated major subprogram that results in a report under this subsection is due to termination or cancellation of the entire program or subprogram, only the information specified in clauses (A) through (F) of paragraph (1) and the percentage change in program acquisition unit cost or procurement unit cost that resulted in the report need be included in the report. The certification of the Secretary of Defense under subsection (e) is not required to be submitted for termination or cancellation of a program or subprogram.
• (h) Reporting under this section shall not apply if a program has received a limited reporting waiver under section 2432(h) of this title .

§ 2433a. Critical cost growth in major defense acquisition programs

• (a) If the program acquisition unit cost or procurement unit cost of a major defense acquisition program or designated subprogram (as determined by the Secretary under section 2433(d) of this title ) increases by a percentage equal to or greater than the critical cost growth threshold for the program or subprogram, the Secretary of Defense, after consultation with the Joint Requirements Oversight Council regarding program requirements, shall—
  • (1) determine the root cause or causes of the critical cost growth in accordance with applicable statutory requirements and Department of Defense policies, procedures, and guidance; and
  • (2) in consultation with the Director of Cost Assessment and Program Evaluation, carry out an assessment of—
    • (A) the projected cost of completing the program if current requirements are not modified;
    • (B) the projected cost of completing the program based on reasonable modification of such requirements;
    • (C) the rough order of magnitude of the costs of any reasonable alternative system or capability; and
    • (D) the need to reduce funding for other programs due to the growth in cost of the program.
• (b)
  • (1) After conducting the reassessment required by subsection (a) with respect to a major defense acquisition program, the Secretary shall terminate the program unless the Secretary submits to Congress, before the end of the 60-day period beginning on the day the Selected Acquisition Report containing the information described in section 2433(g) of this title is required to be submitted under section 2432(f) of this title , a written certification in accordance with paragraph (2).
  • (2) A certification described by this paragraph with respect to a major defense acquisition program is a written certification that—
    • (A) the continuation of the program is essential to the national security;
    • (B) there are no alternatives to the program which will provide acceptable capability to meet the joint military requirement (as defined in section 181(g)(1) of this title ) at less cost;
    • (C) the new estimates of the program acquisition unit cost or procurement unit cost have been determined by the Director of Cost Assessment and Program Evaluation to be reasonable;
    • (D) the program is a higher priority than programs whose funding must be reduced to accommodate the growth in cost of the program; and
    • (E) the management structure for the program is adequate to manage and control program acquisition unit cost or procurement unit cost.
  • (3) A written certification under paragraph (2) shall be accompanied by a report presenting the root cause analysis and assessment carried out pursuant to subsection (a) and the basis for each determination made in accordance with subparagraphs (A) through (E) of paragraph (2), together with supporting documentation.
• (c)
  • (1) If the Secretary elects not to terminate a major defense acquisition program pursuant to subsection (b), the Secretary shall—
    • (A) restructure the program in a manner that addresses the root cause or causes of the critical cost growth, as identified pursuant to subsection (a), and ensures that the program has an appropriate management structure as set forth in the certification submitted pursuant to subsection (b)(2)(E);
    • (B) rescind the most recent Milestone approval for the program and withdraw any associated certification under section 2366a or 2366b of this title;
    • (C) require a new Milestone approval for the program before taking any contract action to enter a new contract, exercise an option under an existing contract, or otherwise extend the scope of an existing contract under the program, except to the extent determined necessary by the Milestone Decision Authority, on a non-delegable basis, to ensure that the program can be restructured as intended by the Secretary without unnecessarily wasting resources;
    • (D) include in the report specified in paragraph (2) a description of all funding changes made as a result of the growth in cost of the program, including reductions made in funding for other programs to accommodate such cost growth; and
    • (E) conduct regular reviews of the program in accordance with the requirements of section 205 of the Weapon Systems Acquisition Reform Act of 2009.
  • (2) For purposes of paragraph (1)(D), the report specified in this paragraph is the first Selected Acquisition Report for the program submitted pursuant to section 2432 of this title after the President submits a budget pursuant to section 1105 of title 31 , in the calendar year following the year in which the program was restructured.
  • (3)
    • (A) The requirements of subparagraphs (B), (C), and (E) of paragraph (1) shall not apply to a program or subprogram if—
      • (i) the Milestone Decision Authority determines in writing, on the basis of a cost assessment and root cause analysis conducted pursuant to subsection (a), that—
        • (I) but for a change in the quantity of items to be purchased under the program or subprogram, the program acquisition unit cost or procurement unit cost for the program or subprogram would not have increased by a percentage equal to or greater than the cost growth thresholds for the program or subprogram set forth in subparagraph (B); and
        • (II) the change in quantity of items described in subclause (I) was not made as a result of an increase in program cost, a delay in the program, or a problem meeting program requirements;
      • (ii) the Secretary determines in writing that the cost to the Department of Defense of complying with such requirements is likely to exceed the benefits to the Department of complying with such requirements; and
      • (iii) the Secretary submits to Congress, before the end of the 60-day period beginning on the day the Selected Acquisition Report containing the information described in section 2433(g) of this title is required to be submitted under section 2432(f) of this title —
        • (I) a copy of the written determination under clause (i) and an explanation of the basis for the determination; and
        • (II) a copy of the written determination under clause (ii) and an explanation of the basis for the determination.
    • (B) The cost growth thresholds specified in this subparagraph are as follows:
      • (i) In the case of a major defense acquisition program or designated major defense subprogram, a percentage increase in the program acquisition unit cost for the program or subprogram of—
        • (I) 5 percent over the program acquisition unit cost for the program or subprogram as shown in the current Baseline Estimate for the program or subprogram; and
        • (II) 10 percent over the program acquisition unit cost for the program or subprogram as shown in the original Baseline Estimate for the program or subprogram.
      • (ii) In the case of a major defense acquisition program or designated major defense subprogram that is a procurement program, a percentage increase in the procurement unit cost for the program or subprogram of—
        • (I) 5 percent over the procurement unit cost for the program or subprogram as shown in the current Baseline Estimate for the program or subprogram; and
        • (II) 10 percent over the procurement unit cost for the program or subprogram as shown in the original Baseline Estimate for the program or subprogram.
• (d) If a major defense acquisition program is terminated pursuant to subsection (b), the Secretary shall submit to Congress a written report setting forth—
  • (1) an explanation of the reasons for terminating the program;
  • (2) the alternatives considered to address any problems in the program; and
  • (3) the course the Department plans to pursue to meet any continuing joint military requirements otherwise intended to be met by the program.

§ 2435. Baseline description

• (a)
  • (1) The Secretary of a military department shall establish a baseline description for each major defense acquisition program and for each designated major subprogram under the program under the jurisdiction of such Secretary.
  • (2) The baseline shall include sufficient parameters to describe the cost estimate (referred to as the “Baseline Estimate” in section 2433 of this title ), schedule, performance, supportability, and any other factor of such major defense acquisition program or designated major subprogram.
• (b) No amount appropriated or otherwise made available to the Department of Defense for carrying out a major defense acquisition program or any designated major subprogram under the program may be obligated after the program or subprogram enters system development and demonstration without an approved baseline description unless such obligation is specifically approved by the Under Secretary of Defense for Acquisition and Sustainment.
• (c) A baseline description for a major defense acquisition program or any designated major subprogram under the program shall be prepared under this section—
  • (1) before the program or subprogram enters system development and demonstration;
  • (2) before the program or subprogram enters production and deployment; and
  • (3) before the program or subprogram enters full rate production.
• (d)
  • (1) In this chapter, the term “original Baseline Estimate”, with respect to a major defense acquisition program or any designated major subprogram under the program, means the baseline description established with respect to the program or subprogram under subsection (a) prepared before the program or subprogram enters system development and demonstration, or at program or subprogram initiation, whichever occurs later, without adjustment or revision (except as provided in paragraph (2)).
  • (2) An adjustment or revision of the original baseline description of a major defense acquisition program or any designated major subprogram under the program may be treated as the original Baseline Estimate for the program or subprogram for purposes of this chapter only if the percentage increase in the program acquisition unit cost or procurement unit cost under such adjustment or revision exceeds the critical cost growth threshold for the program or subprogram under section 2433 of this title , as determined by the Secretary of the military department concerned under subsection (d) of such section.
  • (3) In the event of an adjustment or revision of the original baseline description of a major defense acquisition program or any designated major subprogram under the program, the Secretary of Defense shall include in the next Selected Acquisition Report to be submitted under section 2432 of this title after such adjustment or revision a notification to the congressional defense committees of such adjustment or revision, together with the reasons for such adjustment or revision.
• (e) The Secretary of Defense shall prescribe regulations governing the following:
  • (1) The content of baseline descriptions under this section.
  • (2) The submission to the Secretary of the military department concerned and the Under Secretary of Defense for Acquisition and Sustainment by the program manager for a program for which there is an approved baseline description (or in the case of a major defense acquisition program with one or more designated major subprograms, approved baseline descriptions for such subprograms) under this section of reports of deviations from any such baseline description of the cost, schedule, performance, supportability, or any other factor of the program or subprogram.
  • (3) Procedures for review of such deviation reports within the Department of Defense.
  • (4) Procedures for submission to, and approval by, the Secretary of Defense of revised baseline descriptions.

§ 2436. Major defense acquisition programs: incentive program for contractors to purchase capital assets manufactured in United States

• (a) The Secretary of Defense shall plan and establish an incentive program in accordance with this section for contractors to purchase capital assets manufactured in the United States in part with funds available to the Department of Defense.
• (b) The Secretary of Defense may use the Defense Industrial Capabilities Fund, established under section 814 of the National Defense Authorization Act for Fiscal Year 2004, for incentive payments under the program established under this section.
• (c) The incentive program shall apply to contracts for the procurement of a major defense acquisition program.
• (d) The Secretary of Defense shall provide consideration in source selection in any request for proposals for a major defense acquisition program for offerors with eligible capital assets.

§ 2437. Development of major defense acquisition programs: sustainment of system to be replaced

• (a)
  • (1) The Secretary of Defense shall require that, whenever a new major defense acquisition program begins development, the defense acquisition authority responsible for that program shall develop a plan (to be known as a “sustainment plan”) for the existing system that the system under development is intended to replace. Any such sustainment plan shall provide for an appropriate level of budgeting for sustaining the existing system until the replacement system to be developed under the major defense acquisition program is fielded and assumes the majority of responsibility for the mission of the existing system. This section does not apply to a major defense acquisition that reaches initial operational capability before October 1, 2008 .
  • (2) In this section, the term “defense acquisition authority” means the Secretary of a military department or the commander of the United States Special Operations Command.
• (b) The Secretary of Defense shall require that each sustainment plan under this section include, at a minimum, the following:
  • (1) The milestone schedule for the development of the major defense acquisition program, including the scheduled dates for low-rate initial production, initial operational capability, full-rate production, and full operational capability and the date as of when the replacement system is scheduled to assume the majority of responsibility for the mission of the existing system.
  • (2) An analysis of the existing system to assess the following:
    • (A) Anticipated funding levels necessary to—
      • (i) ensure acceptable reliability and availability rates for the existing system; and
      • (ii) maintain mission capability of the existing system against the relevant threats.
    • (B) The extent to which it is necessary and appropriate to—
      • (i) transfer mature technologies from the new system or other systems to enhance the mission capability of the existing system against relevant threats; and
      • (ii) provide interoperability with the new system during the period from initial fielding until the new system assumes the majority of responsibility for the mission of the existing system.
• (c) Subsection (a) shall not apply to a major defense acquisition program if the Secretary of Defense determines that—
  • (1) the existing system is no longer relevant to the mission;
  • (2) the mission has been eliminated;
  • (3) the mission has been consolidated with another mission in such a manner that another existing system can adequately meet the mission requirements; or
  • (4) the duration of time until the new system assumes the majority of responsibility for the existing system’s mission is sufficiently short so that mission availability, capability, interoperability, and force protection requirements are maintained.
• (d) The Secretary of Defense may waive the applicability of subsection (a) to a major defense acquisition program if the Secretary determines that, but for such a waiver, the Department would be unable to meet national security objectives. Whenever the Secretary makes such a determination and authorizes such a waiver, the Secretary shall submit notice of such waiver and of the Secretary’s determination and the reasons therefor in writing to the congressional defense committees.

§ 2438. Performance assessments and root cause analyses

• (a)
  • (1) The Secretary of Defense shall designate a senior official in the Office of the Secretary of Defense as the principal official of the Department of Defense responsible for conducting and overseeing performance assessments and root cause analyses for major defense acquisition programs.
  • (2) The Secretary shall ensure that the senior official designated under paragraph (1) is not responsible for program execution.
  • (3) The Secretary shall assign to the senior official designated under paragraph (1) appropriate staff and resources necessary to carry out the senior official’s function under this section.
• (b) The senior official designated under subsection (a) shall be responsible for the following:
  • (1) Carrying out performance assessments of major defense acquisition programs in accordance with the requirements of subsection (c) periodically or when requested by the Secretary of Defense, the Under Secretary of Defense for Acquisition and Sustainment, the Secretary of a military department, or the head of a Defense Agency.
  • (2) Conducting root cause analyses for major defense acquisition programs in accordance with the requirements of subsection (d) when required by section 2433a(a)(1) of this title , or when requested by the Secretary of Defense, the Under Secretary of Defense for Acquisition and Sustainment, the Secretary of a military department, or the head of a Defense Agency.
  • (3) Issuing policies, procedures, and guidance governing the conduct of performance assessments and root cause analyses by the military departments and the Defense Agencies.
  • (4) Evaluating the utility of performance metrics used to measure the cost, schedule, and performance of major defense acquisition programs, and making such recommendations to the Secretary of Defense as the official considers appropriate to improve such metrics.
  • (5) Advising acquisition officials on performance issues regarding a major defense acquisition program that may arise—
    • (A) before certification under section 2433a of this title ;
    • (B) before entry into full-rate production; or
    • (C) in the course of consideration of any decision to request authorization of a multiyear procurement contract for the program.
• (c) For purposes of this section, a performance assessment with respect to a major defense acquisition program is an evaluation of the following:
  • (1) The cost, schedule, and performance of the program, relative to current metrics, including performance requirements and baseline descriptions.
  • (2) The extent to which the level of program cost, schedule, and performance predicted relative to such metrics is likely to result in the timely delivery of a level of capability to the warfighter that is consistent with the level of resources to be expended and provides superior value to alternative approaches that may be available to meet the same military requirement.
• (d) For purposes of this section and section 2433a of this title , a root cause analysis with respect to a major defense acquisition program is an assessment of the underlying cause or causes of shortcomings in cost, schedule, or performance of the program, including the role, if any, of—
  • (1) unrealistic performance expectations;
  • (2) unrealistic baseline estimates for cost or schedule;
  • (3) immature technologies or excessive manufacturing or integration risk;
  • (4) unanticipated design, engineering, manufacturing, or technology integration issues arising during program performance;
  • (5) changes in procurement quantities;
  • (6) inadequate program funding or funding instability;
  • (7) poor performance by government or contractor personnel responsible for program management; or
  • (8) any other matters.
• (e) The Secretary of Defense shall ensure that the senior official designated under subsection (a) has the support of other Department of Defense officials with relevant capabilities and expertise needed to carry out the requirements of this section.

§ 2439. Negotiation of price for technical data before development, production, or sustainment of major weapon systems

The Secretary of Defense shall ensure, to the maximum extent practicable, that the Department of Defense, before selecting a contractor for the engineering and manufacturing development of a major weapon system, production of a major weapon system, or sustainment of a major weapon system, negotiates a price for technical data to be delivered under a contract for such development, production, or sustainment.

§ 2440. Technology and industrial base plans

The Secretary of Defense shall prescribe regulations requiring consideration of the national technology and industrial base, in accordance with the strategy required by section 2501 of this title , in the development and implementation of acquisition plans for each major defense acquisition program.

§ 2441. Sustainment reviews

• (a) The Secretary of each military department shall conduct a sustainment review of each major weapon system not later than five years after declaration of initial operational capability of a major defense acquisition program and throughout the life cycle of the weapon system to assess the product support strategy, performance, and operation and support costs of the weapon system. For any review after the first one, the Secretary concerned shall use availability and reliability thresholds and cost estimates as the basis for the circumstances that prompt such a review. The results of the sustainment review shall be documented in a memorandum by the relevant decision authority. The Secretary concerned shall make the memorandum and supporting documentation for each sustainment review available to the Under Secretary of Defense for Acquisition and Sustainment within 30 days after the review is completed.
• (b) At a minimum, the review required under subsection (a) shall include the following elements:
  • (1) An independent cost estimate for the remainder of the life cycle of the program.
  • (2) A comparison of actual costs to the amount of funds budgeted and appropriated in the previous five years, and if funding shortfalls exist, an explanation of the implications on equipment availability.
  • (3) A comparison between the assumed and achieved system reliabilities.
  • (4) An analysis of the most cost-effective source of repairs and maintenance.
  • (5) An evaluation of the cost of consumables and depot-level repairables.
  • (6) An evaluation of the costs of information technology, networks, computer hardware, and software maintenance and upgrades.
  • (7) As applicable, an assessment of the actual fuel efficiencies compared to the projected fuel efficiencies as demonstrated in tests or operations.
  • (8) As applicable, a comparison of actual manpower requirements to previous estimates.
  • (9) An analysis of whether accurate and complete data are being reported in the cost systems of the military department concerned, and if deficiencies exist, a plan to update the data and ensure accurate and complete data are submitted in the future.
• (c) The review required under subsection (a) shall be conducted in coordination with the requirements of sections 2337 and 2337a of this title.

§ 2442. Prohibition on use of lowest price technically acceptable source selection process

• (a) The Department of Defense shall not use a lowest price technically acceptable source selection process for the engineering and manufacturing development contract of a major defense acquisition program.
• (b) In this section:
  • (1) The term “lowest price technically acceptable source selection process” has the meaning given that term in part 15 of the Federal Acquisition Regulation.
  • (2) The term “major defense acquisition program” has the meaning given that term in section 2430 of this title .
  • (3) The term “engineering and manufacturing development contract” means a prime contract for the engineering and manufacturing development of a major defense acquisition program.

§ 2443. Sustainment factors in weapon system design

• (a) The Secretary of Defense shall ensure that the defense acquisition system gives ample emphasis to sustainment factors, particularly those factors that are affected principally by the design of a weapon system, in the development of a weapon system.
• (b) The Secretary shall ensure that reliability and maintainability are included in the performance attributes of the key performance parameter on sustainment during the development of capabilities requirements.
• (c)
  • (1) The program manager of a weapon system shall include in the solicitation for and terms of a covered contract for the weapon system clearly defined and measurable requirements for engineering activities and design specifications for reliability and maintainability.
  • (2) If the program manager determines that engineering activities and design specifications for reliability or maintainability should not be a requirement in a covered contract or a solicitation for such a contract, the program manager shall document in writing the justification for the decision.
  • (3) The Secretary shall ensure that sustainment factors, including reliability and maintainability, are given ample emphasis in the process for source selection. The Secretary shall encourage the use of objective reliability and maintainability criteria in the evaluation of competitive proposals.
• (d)
  • (1) The Secretary shall ensure that the Department of Defense uses best practices for responding to the positive or negative performance of a contractor in meeting the sustainment requirements of a covered contract for a weapon system. The Secretary shall encourage the use of incentive fees and penalties as appropriate and authorized in paragraph (2) in all covered contracts for weapons systems.
  • (2) The Secretary of Defense is authorized to include in any covered contract provisions for the payment of incentive fees to the contractor based on achievement of design specification requirements for reliability and maintainability of weapons systems under the contract, or the imposition of penalties to be paid by the contractor to the Government for failure to achieve such design specification requirements. Information about such fees or penalties shall be included in the solicitation for any covered contract that includes such fees or penalties.
  • (3) In carrying out paragraph (2), the program manager shall base determinations of a contractor’s performance on reliability and maintainability data collected during the program. Such data collection and associated evaluation metrics shall be described in detail in the covered contract. To the maximum extent practicable, such data shall be shared with appropriate contractor and government organizations.
  • (4) The Secretary of Defense shall notify the congressional defense committees upon entering into a covered contract that includes incentive fees or penalties authorized in paragraph (2).
• (e) In this section, the term “covered contract”, with respect to a weapon system, means a contract—
  • (1) for the engineering and manufacturing development of a weapon system, including embedded software; or
  • (2) for the production of a weapon system, including embedded software.

§ 2446a. Requirement for modular open system approach in major defense acquisition programs; definitions

• (a) A major defense acquisition program that receives Milestone A or Milestone B approval after January 1, 2019 , shall be designed and developed, to the maximum extent practicable, with a modular open system approach to enable incremental development and enhance competition, innovation, and interoperability.
• (b) In this chapter:
  • (1) The term “modular open system approach” means, with respect to a major defense acquisition program, an integrated business and technical strategy that—
    • (A) employs a modular design that uses major system interfaces between a major system platform and a major system component, between major system components, or between major system platforms;
    • (B) is subjected to verification to ensure major system interfaces comply with, if available and suitable, widely supported and consensus-based standards;
    • (C) uses a system architecture that allows severable major system components at the appropriate level to be incrementally added, removed, or replaced throughout the life cycle of a major system platform to afford opportunities for enhanced competition and innovation while yielding—
      • (i) significant cost savings or avoidance;
      • (ii) schedule reduction;
      • (iii) opportunities for technical upgrades;
      • (iv) increased interoperability, including system of systems interoperability and mission integration; or
      • (v) other benefits during the sustainment phase of a major weapon system; and
    • (D) complies with the technical data rights set forth in section 2320 of this title .
  • (2) The term “major system platform” means the highest level structure of a major weapon system that is not physically mounted or installed onto a higher level structure and on which a major system component can be physically mounted or installed.
  • (3) The term “major system component”—
    • (A) means a high level subsystem or assembly, including hardware, software, or an integrated assembly of both, that can be mounted or installed on a major system platform through well-defined major system interfaces; and
    • (B) includes a subsystem or assembly that is likely to have additional capability requirements, is likely to change because of evolving technology or threat, is needed for interoperability, facilitates incremental deployment of capabilities, or is expected to be replaced by another major system component.
  • (4) The term “major system interface”—
    • (A) means a shared boundary between a major system platform and a major system component, between major system components, or between major system platforms, defined by various physical, logical, and functional characteristics, such as electrical, mechanical, fluidic, optical, radio frequency, data, networking, or software elements; and
    • (B) is characterized clearly in terms of form, function, and the content that flows across the interface in order to enable technological innovation, incremental improvements, integration, and interoperability.
  • (5) The term “program capability document” means, with respect to a major defense acquisition program, a document that specifies capability requirements for the program, such as a capability development document or a capability production document.
  • (6) The terms “program cost targets” and “fielding target” have the meanings provided in section 2448a(a) of this title .
  • (7) The term “major defense acquisition program” has the meaning provided in section 2430 of this title .
  • (8) The term “major weapon system” has the meaning provided in section 2379(f) of this title .

§ 2446b. Requirement to address modular open system approach in program capabilities development and acquisition weapon system design

• (a) A program capability document for a major defense acquisition program shall identify and characterize—
  • (1) the extent to which requirements for system performance are likely to evolve during the life cycle of the system because of evolving technology, threat, or interoperability needs; and
  • (2) for requirements that are expected to evolve, the minimum acceptable capability that is necessary for initial operating capability of the major defense acquisition program.
• (b) The Director of Cost Assessment and Performance Evaluation, in formulating study guidance for analyses of alternatives for major defense acquisition programs and performing such analyses under section 139a(d)(4) of this title , shall ensure that any such analysis for a major defense acquisition program includes consideration of evolutionary acquisition, prototyping, and a modular open system approach.
• (c) In the case of a major defense acquisition program that uses a modular open system approach, the acquisition strategy required under section 2431a of this title shall—
  • (1) clearly describe the modular open system approach to be used for the program;
  • (2) differentiate between the major system platform and major system components being developed under the program, as well as major system components developed outside the program that will be integrated into the major defense acquisition program;
  • (3) clearly describe the evolution of major system components that are anticipated to be added, removed, or replaced in subsequent increments;
  • (4) identify additional major system components that may be added later in the life cycle of the major system platform;
  • (5) clearly describe how intellectual property and related issues, such as technical data deliverables, that are necessary to support a modular open system approach, will be addressed; and
  • (6) clearly describe the approach to systems integration and systems-level configuration management to ensure mission and information assurance.
• (d) The milestone decision authority for a major defense acquisition program that uses a modular open system approach shall ensure that a request for proposals for the development or production phases of the program shall describe the modular open system approach and the minimum set of major system components that must be included in the design of the major defense acquisition program.
• (e) A major defense acquisition program may not receive Milestone B approval under section 2366b of this title until the milestone decision authority determines in writing—
  • (1) in the case of a program that uses a modular open system approach, that—
    • (A) the program incorporates clearly defined major system interfaces between the major system platform and major system components, between major system components, and between major system platforms;
    • (B) such major system interfaces are consistent with the widely supported and consensus-based standards that exist at the time of the milestone decision, unless such standards are unavailable or unsuitable for particular major system interfaces; and
    • (C) the Government has arranged to obtain appropriate and necessary intellectual property rights with respect to such major system interfaces upon completion of the development of the major system platform; or
  • (2) in the case of a program that does not use a modular open system approach, that the use of a modular open system approach is not practicable.
• (f) The Secretaries of the military departments shall issue guidance to implement the requirements of this section.

§ 2446c. Requirements relating to availability of major system interfaces and support for modular open system approach

The Secretary of each military department shall—

• (1) coordinate with the other military departments, the defense agencies, defense and other private sector entities, national standards-setting organizations, and, when appropriate, with elements of the intelligence community with respect to the specification, identification, development, and maintenance of major system interfaces and standards for use in major system platforms, where practicable;
• (2) ensure that major system interfaces incorporate commercial standards and other widely supported consensus-based standards that are validated, published, and maintained by recognized standards organizations to the maximum extent practicable;
• (3) ensure that sufficient systems engineering and development expertise and resources are available to support the use of a modular open system approach in requirements development and acquisition program planning;
• (4) ensure that necessary planning, programming, and budgeting resources are provided to specify, identify, develop, and sustain the modular open system approach, associated major system interfaces, systems integration, and any additional program activities necessary to sustain innovation and interoperability;
• (5) ensure that adequate training in the use of a modular open system approach is provided to members of the requirements and acquisition workforce; and
• (6) issue guidance to implement the requirements of this section.

§ 2447a. Weapon system component or technology prototype projects: display of budget information

• (a) In the defense budget materials for any fiscal year, the Secretary of Defense shall, with respect to advanced component development and prototype activities (within the research, development, test, and evaluation budget), set forth the amounts requested for each of the following:
  • (1) Acquisition programs of record.
  • (2) Development, prototyping, and experimentation of weapon system components or other technologies, including those based on commercial products and technologies, separate from acquisition programs of record.
  • (3) Other budget line items as determined by the Secretary of Defense.
• (b) For purposes of subsection (a)(2), the amounts requested for development, prototyping, and experimentation of weapon system components or other technologies shall be—
  • (1) structured into either capability, weapon system component, or technology portfolios that reflect the priority areas for prototype projects; and
  • (2) justified with general descriptions of the types of capability areas and technologies being funded or expected to be funded during the fiscal year concerned.
• (c) In this section, the terms “budget” and “defense budget materials” have the meaning given those terms in section 234 of this title and the term “commercial product” has the meaning given that term in section 103 of title 41 .

§ 2447b. Weapon system component or technology prototype projects: oversight

• (a) The Secretary of each military department shall establish an oversight board or identify a similar existing group of senior advisors for managing prototype projects for weapon system components and other technologies and subsystems, including the use of funds for such projects, within the military department concerned.
• (b) Each oversight board shall be comprised of senior officials with—
  • (1) expertise in requirements; research, development, test, and evaluation; acquisition; sustainment; or other relevant areas within the military department concerned;
  • (2) awareness of technology development activities and opportunities in the Department of Defense, industry, and other sources; and
  • (3) awareness of the component capability requirements of major weapon systems, including scheduling and fielding goals for such component capabilities.
• (c) The functions of each oversight board are as follows:
  • (1) To issue a strategic plan every three years that prioritizes the capability and weapon system component portfolio areas for conducting prototype projects, based on assessments of—
    • (A) high priority warfighter needs;
    • (B) capability gaps or readiness issues with major weapon systems;
    • (C) opportunities to incrementally integrate new components into major weapon systems based on commercial technology or science and technology efforts that are expected to be sufficiently mature to prototype within three years; and
    • (D) opportunities to reduce operation and support costs of major weapon systems.
  • (2) To annually recommend funding levels for weapon system component or technology development and prototype projects across capability or weapon system component portfolios.
  • (3) To annually recommend to the service acquisition executive of the military department concerned specific weapon system component or technology development and prototype projects, subject to the requirements and limitations in section 2447c of this title .
  • (4) To ensure projects are managed by experts within the Department of Defense who are knowledgeable in research, development, test, and evaluation and who are aware of opportunities for incremental deployment of component capabilities and other technologies to major weapon systems or directly to support warfighting capabilities.
  • (5) To ensure projects are conducted in a manner that allows for appropriate experimentation and technology risk.
  • (6) To ensure projects have a plan for technology transition of the prototype into a fielded system, program of record, or operational use, as appropriate, upon successful achievement of technical and project goals.
  • (7) To ensure necessary technical, contracting, and financial management resources are available to support each project.
  • (8) To submit to the congressional defense committees a semiannual notification that includes the following:
    • (A) each weapon system component or technology prototype project initiated during the preceding six months, including an explanation of each project and its required funding.
    • (B) the results achieved from weapon system component prototype and technology projects completed and tested during the preceding six months.

§ 2447c. Requirements and limitations for weapon system component or technology prototype projects

• (a) A prototype project shall be completed within two years of its initiation.
• (b) A prototype project shall be selected by the service acquisition executive of the military department concerned through a merit-based selection process that identifies the most promising, innovative, and cost-effective prototypes that address one or more of the elements set forth in subsection (c)(1) of section 2447b of this title and are expected to be successfully demonstrated in a relevant environment.
• (c) Prototype projects shall be funded through contracts, cooperative agreements, or other transactions.
• (d)
  • (1) Each prototype project may not exceed a total amount of $10,000,000 (based on fiscal year 2017 constant dollars), unless—
    • (A) the Secretary of the military department, or the Secretary’s designee, approves a larger amount of funding for the project, not to exceed $50,000,000; and
    • (B) the Secretary, or the Secretary’s designee, submits to the congressional defense committees, within 30 days after approval of such funding for the project, a notification that includes—
      • (i) the project;
      • (ii) expected funding for the project; and
      • (iii) a statement of the anticipated outcome of the project.
  • (2) The Secretary of Defense may adjust the amounts (and the base fiscal year) provided in paragraph (1) on the basis of Department of Defense escalation rates.
• (e) Prototype projects that exceed the duration and funding limits established in this section shall be pursued under the rapid prototyping process established by section 804 of the National Defense Authorization Act for Fiscal Year 2016 ( Public Law 114–92 ; 10 U.S.C. 2302 note). In addition, nothing in this subchapter shall affect the authority to carry out prototype projects under section 2371b or any other section of this title related to prototyping.

§ 2447d. Mechanisms to speed deployment of successful weapon system component or technology prototypes

• (a) A weapon system component or technology prototype project may be selected by the service acquisition executive of the military department concerned for a follow-on production contract or other transaction without the use of competitive procedures, notwithstanding the requirements of section 2304 of this title , if—
  • (1) the follow-on production project addresses a high priority warfighter need or reduces the costs of a weapon system;
  • (2) competitive procedures were used for the selection of parties for participation in the original prototype project;
  • (3) the participants in the original prototype project successfully completed the requirements of the project; and
  • (4) a prototype of the system to be procured was demonstrated in a relevant environment.
• (b)
  • (1) The Secretary of a military department may, as specified in advance by appropriations Acts, transfer funds that remain available for obligation in procurement appropriation accounts of the military department to fund the low-rate initial production of the rapid fielding project until required funding for full-rate production can be submitted and approved through the regular budget process of the Department of Defense.
  • (2) The funds transferred under this subsection to fund the low-rate initial production of a rapid fielding project shall be for a period not to exceed two years, the amount for such period may not exceed $50,000,000, and the special transfer authority provided in this subsection may not be used more than once to fund procurement of a particular new or upgraded system.
  • (3) The special transfer authority provided in this subsection is in addition to any other transfer authority available to the Department of Defense.
• (c) Within 30 days after the service acquisition executive of a military department selects a weapon system component or technology project for a follow-on production contract or other transaction, the service acquisition executive shall notify the congressional defense committees of the selection and provide a brief description of the rapid fielding project.

§ 2447e. Definition of weapon system component

In this subchapter, the term “weapon system component” has the meaning given the term “major system component” in section 2446a of this title .

§ 2448a. Program cost, fielding, and performance goals in planning major defense acquisition programs

• (a)
  • (1) Before funds are obligated for technology development, systems development, or production of a major defense acquisition program, the designated milestone decision authority for the program shall ensure, by establishing the goals described in paragraph (2), that the program will—
    • (A) be affordable;
    • (B) incorporate program planning that anticipates the evolution of capabilities to meet changing threats, technology insertion, and interoperability; and
    • (C) be fielded when needed.
  • (2) The goals described in this paragraph are goals for—
    • (A) the procurement unit cost and sustainment cost (referred to in this section as the “program cost targets”);
    • (B) the date for initial operational capability (referred to in this section as the “fielding target”); and
    • (C) technology maturation, prototyping, and a modular open system approach to evolve system capabilities and improve interoperability.
• (b) In this section:
  • (1) The term “procurement unit cost” has the meaning provided in section 2432(a)(2) of this title .
  • (2) The term “initial capabilities document” has the meaning provided in section 2366a(d)(2) of this title .

§ 2448b. Independent technical risk assessments

• (a) With respect to a major defense acquisition program, the Secretary of Defense shall conduct or approve independent technical risk assessments—
  • (1) before any decision to grant Milestone A approval for the program pursuant to section 2366a of this title , that identifies critical technologies and manufacturing processes that need to be matured; and
  • (2) before any decision to grant Milestone B approval for the program pursuant to section 2366b of this title , any decision to enter into low-rate initial production or full-rate production, or at any other time considered appropriate by the Secretary, that includes the identification of any critical technologies or manufacturing processes that have not been successfully demonstrated in a relevant environment.
• (b) The Secretary shall issue guidance and a framework for the conduct, execution, and approval of independent technical risk assessments.