Legislative Initiative Summary
Overview: The Legislative Initiative is a component of the larger Department of Defense (DoD)
acquisition improvement effort known as Better Buying Power. The Legislative Initiative is
focused on streamlining statutory requirements imposed on acquisition Program Managers which
have accumulated in layers over the last several years while retaining the underlying statutory
principles. A team of subject matter experts from the Office of the Under Secretary of Defense
for Acquisition, Technology, and Logistics (AT&L), the Services, and other Office of the
Secretary of Defense (OSD) organizations are concentrating on the two broad areas of
streamlining: reducing the documentation burden in DoD’s acquisition process and reducing the
number of forums performing program oversight on acquisition programs. The Department is
closely engaged with the House and Senate Armed Services Committees on this effort and has
solicited input from industry. The legislative proposals are proposed for inclusion in the Fiscal
Year (FY) 2016 National Defense Authorization Act (NDAA).
Methodology: The team conducted in-depth case studies on several large acquisition programs
across DoD that received recent review at major program milestones.
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The Legislative Initiative assessed the development, staffing, and approval of over 40
documents (regulatory and statutory) required at milestone reviews for major defense
acquisition programs.
Many of these documents contained duplicative and redundant information and did little
to assist the Program Manager in executing the acquisition program or developing the
acquisition strategy.
If enacted, the goal of these proposals is to reduce the number of required stand-alone
documents for major programs by 50%, as reflected in Department of Defense Instruction
(DoDI) 5000.02, the DoD regulation that governs the Defense Acquisition System.
Desired Effects
1. Support tailoring of the defense acquisition process – thereby focusing decision on key
issues and risks in each program;
2. Reduce redundant and unnecessary documentation burdens on the Program Manager
responsible for demonstrating that the program is eligible for approval by Department
officials;
3. Consolidate related statutory requirements in a coherent manner within foundational
statutory provisions; and
4. Relying on data from the annual report, “Performance of the Defense Acquisition
System”, refocus statutory requirements on a broader set of risks common in acquisition
programs while placing a stronger emphasis on sound planning and risk reduction.
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Summary of Legislative Proposals
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“Modification to Requirements Relating to Determination of Contract Type for Major
Development Programs”
Current law, section 818 of the John Warner National Defense Authorization Act for Fiscal
Year 2007 (Public Law 109-364), requires the Milestone Decision Authority (MDA), the
official within the Department designated with the overall responsibility and authority for
acquisition decisions, to select the type of contract for the development phase of an
acquisition program. The current language only lists two types of contracts: cost-type
contract, in which allowable costs are reimbursed, and fixed-price contracts in which the
government pays a set amount, which is not dependent on the amount of time or resources
expended by the vendor. The current statute imposes a requirement to justify the use of
cost-type contracts, which are presumed to lead to cost growth in programs.
In 2014, the Department published a report, “Performance of the Defense Acquisition
System”, that analyzed performance-based data on major acquisition programs. This study
revealed that cost growth was common in both fixed price and cost-type contracts used in
the development of new warfighting capabilities. Moreover, it confirmed that alternate
contract types using incentives -- to include Fixed-Price Incentive Fee contracts in which
the government and the vendor share risk based on an agreed target cost – are best at
controlling costs.
This proposal expands the selection of contract types to include incentive-type contracts,
and provides more general guidance to the MDA regarding the selection of contract type.
Regardless of which is used, the proposal requires that contract types must be justified as
appropriate to address the specific risks inherent in the acquisition program under
consideration.
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“Repeal of Requirement for Stand-Alone Manpower Estimates for Major Defense
Acquisition Programs”
Manpower costs are an important consideration in the development and fielding of new
warfighting capabilities. Typically, these estimates are incorporated in the cost estimates
used to assess the overall cost of an acquisition program. Current law, section 2434 of title
10, United States Code, requires the separate consideration of manpower estimates in
addition to these overall program cost estimate, which results in the staffing of parallel
reports and redundant documentation.
This proposal would eliminate the requirement for consideration by the Secretary of
Defense of a stand-alone manpower estimate. Instead, the proposal clarifies statutory
language to require the inclusion of manpower costs as part of the independent estimate of
life-cycle cost.
In anticipation of one program’s Full Rate Production decision in 2013, the Service incurred
143 days to staff and approve a Manpower Estimate Report, a process separate from the
cost estimation used to inform the Department’s decision. In preparation for another
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program’s Milestone C Defense Acquisition Board (DAB) in 2012, the Service spent 153
days to develop and 365 days to staff a Manpower Estimate Report. The staffing process
for the report continued months after the detailed manpower estimates had already been
incorporated within the Cost Analysis Requirements Description, a document used to
generate the program’s Independent Cost Estimate. In short, the report was staffed after the
information was already used for the intended purpose.
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“Revision of Milestone Decision Authority Responsibilities for Major Defense Acquisition
Programs”
Sections 2366a and 2366b of title 10, United States Code, currently establish a certification
requirement for the Department official serving as the MDA. These requirements impose
specific considerations that must be factored prior to a determination that an acquisition
program should proceed to successive milestones. As written, the requirements of 2366a
and 2366b call for the MDA to certify specific findings prior to milestone approval. This
proposal replaces the exiting certification requirements with a broader set of considerations
that more comprehensively describe key risks in acquisition programs.
The current statute imposes a redundant documentation requirement for many programs,
calling for separate certification on a host of “checklist” items required by other documents
and processes. For example, the milestone certification process at Milestone B requires
Program Managers to separately develop and staff documentation certifying that the system
has a valid military requirement approved by the Joint Requirements Oversight Council and
that proper lifecycle sustainment planning was conducted for the system, to include
corrosion prevention and mitigation planning. These certifications, and the processes they
engender, already duplicate analysis required in other complementary processes. A valid
requirement is already necessary for a Milestone B decision and full lifecycle sustainment
planning is already detailed in the program’s Life-Cycle Sustainment Plan (LCSP), a
separate document.
One Service reported that the Milestone A certification process for a program required 8
pages of text, developed over 14 days, with 180 days of total staffing time. Another Service
reported that the milestone certification process generally takes 7.5 months of total staffing
time for required documentation that reproduces information elsewhere required in the
process.
The revised certification process in our proposal refocuses statutory language on broad risks
in acquisition programs and establishes these considerations as the responsibility of the
Milestone Decision Authority in making program decisions. This approach eliminates
significant duplicative staffing processes and documentation while preserving a mechanism
for required notification to Congress of such decisions.
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“Streamlining Requirements Relating to Defense Business Systems”
Section 2222 of title 10, United States Code, outlines responsibilities for the management,
architecture, accountability, and modernization of defense business systems. As currently
written, responsibility for the management of business systems is divided between the
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DCMO, the USD(AT&L, and the CIO, often with blurred lines and overlapping authorities.
This “regime overlap” results in incredible bureaucratic burdens for PMs responsible for the
development of business systems while diluting and confusing the responsibilities of the
DCMO, USD(AT&L), and CIO.
The proposal amends section 2222 to clarify the responsibilities for the management of
defense business systems – reducing the overlap between the acquisition and business
systems regime and aligns with the approach undertaken by Congress in the FY15 NDAA.
The proposal, also, increases the threshold for a covered business system from $1M over the
future-years defense program (FYDP) to $5M (“in excess of the threshold established for
the use of simplified acquisition procedures pursuant to section 2304(g)(1)(B)”) over the
FYDP.
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“Revision to Life-Cycle Management and Product Support Requirements”
This proposal consolidates various logistics and sustainment related statutory provisions in
to the existing section 2337 of title 10, United States Code. Currently, logistics and
sustainment requirements are disbursed throughout various sections of statute and
legislation. Comprehensive life-cycle sustainment planning and management remains a
critical necessity for all DoD programs.
The proposal to consolidate specific requirements in Title 10 complements efforts to
streamline the Milestone certification requirements and ensure that such considerations are
properly reflected in acquisition strategies and Life-Cycle Sustainment Plans.
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“Acquisition Strategy Required for Each Major Defense Acquisition Program”
Our review of program case studies consistently showed that the acquisition strategy is the
most important document developed and used by Program Managers. It is a comprehensive
document describing the approach for acquiring the system developed, produced and
fielded. It identifies key risks in all phases of the acquisition process and identifies
strategies to mitigate or retire those risks. Current law does not require an acquisition
strategy, though in practice, this document comprehensively addresses most specific
program considerations identified in existing law.
This proposal adds a statutory requirement for DoD major defense acquisition programs to
maintain an acquisition strategy and consolidates various related statutory provisions.
Currently, a number of provisions require content in an undefined (in statute) acquisition
strategy. By codifying the existence of the acquisition strategy and consolidating the
various requirements, our proposal facilitates streamlining of other documentation
requirements, to include some that are eliminated in other proposals.
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“Revision to Requirements Relating to Risk Reduction in Development of Major Defense
Acquisition Programs”
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Section 203 of the Weapon System Acquisition Reform Act of 2009 currently requires the
Department to utilize competitive prototyping prior to Milestone B approval of the
development phase in an acquisition program. This requirement was developed to address a
concern regarding the reliance on immature technologies in past acquisition programs that
experienced cost growth and failed to meet projected schedule goals. Programs that do not
employ competitive prototypes to address these risks are currently required to apply for a
waiver that calls for a cost-benefit analysis and reporting to Congress.
In practice, budget constraints have led to fewer “new start” developmental programs.
Many acquisition programs seek to upgrade existing systems to meet additional
requirements and do not employ as many novel, untested technologies. Full prototyping of
a system may not be cost-effective in these programs. Moreover, the current statute does
not address other measures designed to address technological maturity and attendant risks in
acquisition programs, to include modeling and simulation, systems engineering, use of
multiple designs approaches, and subsystem prototyping, e.g., prototyping of components.
The proposed language provides greater flexibility to the PM and the MDA to tailor their
approach to fit the product being acquired – moving from a single prescriptive requirement
to assess competitive prototyping, to a set of guidelines that addresses a broader set of
approaches to programmatic and technical risk reduction. In addition, the elimination of a
complex waiver process for all developmental programs will further streamline the
documentation requirements imposed on Program Managers. One Service reported that the
waiver process for a program, which entered the acquisition process at Milestone B,
required six months to staff and approve.
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