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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle B--Provisions Relating to Major Defense Acquisition Programs

P. L. 111-

Joint Explanatory Statement of the Committees on Armed Services of the U. S. Senate and House of Representatives on H. R. 6523

From H. R. 6523

SEC. 812. MANAGEMENT OF MANUFACTURING RISK IN MAJOR DEFENSE ACQUISITION PROGRAMS.

(a) Guidance Required- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall issue comprehensive guidance on the management of manufacturing risk in major defense acquisition programs.

(b) Elements- The guidance issued under subsection (a) shall, at a minimum--

(1) require the use of manufacturing readiness levels as a basis for measuring, assessing, reporting, and communicating manufacturing readiness and risk on major defense acquisition programs throughout the Department of Defense;

(2) provide guidance on the definition of manufacturing readiness levels and how manufacturing readiness levels should be used to assess manufacturing risk and readiness in major defense acquisition programs;

(3) specify manufacturing readiness levels that should be achieved at key milestones and decision points for major defense acquisition programs;

(4) identify tools and models that may be used to assess, manage, and reduce risks that are identified in the course of manufacturing readiness assessments for major defense acquisition programs; and

(5) require appropriate consideration of the manufacturing readiness and manufacturing readiness processes of potential contractors and subcontractors as a part of the source selection process for major defense acquisition programs.

(c) Manufacturing Readiness Expertise- The Secretary shall ensure that--

(1) the acquisition workforce chapter of the annual strategic workforce plan required by section 115b of title 10, United States Code, includes an assessment of the critical manufacturing readiness knowledge and skills needed in the acquisition workforce and a plan of action for addressing any gaps in such knowledge and skills; and

(2) the need of the Department for manufacturing readiness knowledge and skills is given appropriate consideration, comparable to the consideration given to other program management functions, as the Department identifies areas of need for funding through the Defense Acquisition Workforce Development Fund established in accordance with the requirements of section 1705 of title 10, United States Code.

(d) Major Defense Acquisition Program Defined- In this section, the term `major defense acquisition program' has the meaning given that term in section 2430(a) of title 10, United States Code.

From S. 3454, National Defense Authorization Act for Fiscal Year 2011

SEC. 803. MANAGEMENT OF MANUFACTURING RISK IN MAJOR DEFENSE ACQUISITION PROGRAMS.

(a) Guidance Required- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall issue comprehensive guidance on the management of manufacturing risk in major defense acquisition programs.

(b) Elements- The guidance issued under subsection (a) shall, at a minimum--

(1) require the use of manufacturing readiness levels as a basis for measuring, assessing, reporting, and communicating manufacturing readiness and risk on major defense acquisition programs throughout the Department of Defense;

(2) provide guidance on the definition of manufacturing readiness levels and how manufacturing readiness levels should be used to assess manufacturing risk and readiness in major defense acquisition programs;

(3) specify manufacturing readiness levels that should be achieved at key milestones and decision points for major defense acquisition programs;

(4) identify tools and models that may be used to manage and reduce risks that are identified in the course of manufacturing readiness assessments for major defense acquisition programs; and

(5) require appropriate consideration of the manufacturing readiness and manufacturing readiness processes of potential contractors and subcontractors as a part of the source selection process for major defense acquisition programs.

(c) Manufacturing Readiness Expertise- The Secretary shall ensure that--

(1) the acquisition workforce chapter of the annual strategic workforce plan required by section 115b of title 10, United States Code, includes an assessment of the critical manufacturing readiness knowledge and skills needed in the acquisition workforce and a plan of action for addressing any gaps in such knowledge and skills; and

(2) the need of the Department for manufacturing readiness knowledge and skills is given appropriate consideration, comparable to the consideration given to other program management functions, as the Department identifies areas of need for funding through the Defense Acquisition Workforce Development Fund established in accordance with the requirements of section 1705 of title 10, United States Code.

(d) Major Defense Acquisition Program Defined- In this section, the term `major defense acquisition program' has the meaning given that term in section 2430(a) of title 10, United States Code.

The Senate committee-reported bill contained a provision (sec. 803) that would require the Secretary of Defense to issue guidance on the management of manufacturing risk in major defense acquisition programs.

The House bill contained no similar provision.

The agreement includes the Senate provision with a technical amendment.

From S. Rpt. 111-201, to accompany S. 3454, NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2011

Management of manufacturing risk in major defense acquisition programs (sec. 803)

The committee recommends a provision that would require the Secretary of Defense to issue comprehensive guidance on the management of manufacturing risk in major defense acquisition programs. The provision would also require the Secretary to ensure that manufacturing readiness knowledge and skills are given appropriate consideration as the Department of Defense (DOD) identifies areas of need for funding through the Defense Acquisition Workforce Development Fund established pursuant to section 1705 of title 10, United States Code.

In April 2010, the Government Accountability Office (GAO) reported that billions of dollars in cost growth occur as programs transition from development to production. According to GAO, much of this cost growth is due to `inattention to manufacturing during planning and design, poor supplier management, and a deficit in manufacturing knowledge among the acquisition workforce. Essentially, programs did not identify and resolve manufacturing risks early in development, but carried risks into production where they emerged as significant problems.'

GAO reports that commercial firms have addressed similar problems through `a disciplined, gated process that emphasizes manufacturing criteria early in development.' DOD has attempted to develop a similar process, based on Manufacturing Readiness Levels, but implementation has been slow. The committee concludes that the costs imposed by the Department's failure to manage manufacturing risk require a stronger and more rapid response.