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

Subtitle C--Provisions Relating to Major Defense Acquisition Programs

P. L. 112-81

House Conference Report 112-329

(a) Guidance Required- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall issue guidance on actions to be taken to assess, manage, and control Department of Defense costs for the operation and support of major weapon systems.

(b) Elements- The guidance required by subsection (a) shall, at a minimum--

(1) be issued in conjunction with the comprehensive guidance on life-cycle management and the development and implementation of product support strategies for major weapon systems required by section 805 of the National Defenese Authorization Act for Fiscal Year 2010 (Public Law 111-84; 123 Stat. 2403; 10 U.S.C. 2301 note);

(2) require the military departments to retain each estimate of operating and support costs that is developed at any time during the life cycle of a major weapon system, together with supporting documentation used to develop the estimate;

(3) require the military departments to update estimates of operating and support costs periodically throughout the life cycle of a major weapon system, to determine whether preliminary information and assumptions remain relevant and accurate, and identify and record reasons for variances;

(4) establish standard requirements for the collection of data on operating and support costs for major weapon systems and require the military departments to revise their Visibility and Management of Operating and Support Costs (VAMOSC) systems to ensure that they collect complete and accurate data in compliance with such requirements and make such data available in a timely manner;

(5) establish standard requirements for the collection and reporting of data on operating and support costs for major weapon systems by contractors performing weapon system sustainment functions in an appropriate format, and develop contract clauses to ensure that contractors comply with such requirements;

(6) require the military departments--

(A) to collect and retain data from operational and developmental testing and evaluation on the reliability and maintainability of major weapon systems; and

(B) to use such data to inform system design decisions, provide insight into sustainment costs, and inform estimates of operating and support costs for such systems;

(7) require the military departments to ensure that sustainment factors are fully considered at key life cycle management decision points and that appropriate measures are taken to reduce operating and support costs by influencing system design early in development, developing sound sustainment strategies, and addressing key drivers of costs;

(8) require the military departments to conduct an independent logistics assessment of each major weapon system prior to key acquisition decision points (including milestone decisions) to identify features that are likely to drive future operating and support costs, changes to system design that could reduce such costs, and effective strategies for managing such costs;

(9) include--

(A) reliability metrics for major weapon systems; and

(B) requirements on the use of metrics under subparagraph (A) as triggers--

(i) to conduct further investigation and analysis into drivers of those metrics; and

(ii) to develop strategies for improving reliability, availability, and maintainability of such systems at an affordable cost; and

(10) require the military departments to conduct periodic reviews of operating and support costs of major weapon systems after such systems achieve initial operational capability to identify and address factors resulting in growth in operating and support costs and adapt support strategies to reduce such costs.

(c) Retention of Data on Operating and Support Costs-

(1) IN GENERAL- The Director of Cost Assessment and Program Evaluation shall be responsible for developing and maintaining a database on operating and support estimates, supporting documentation, and actual operating and support costs for major weapon systems.

(2) SUPPORT- The Secretary of Defense shall ensure that the Director, in carrying out such responsibility--

(A) promptly receives the results of all cost estimates and cost analyses conducted by the military departments with regard to operating and support costs of major weapon systems;

(B) has timely access to any records and data of the military departments (including classified and proprietary information) that the Director considers necessary to carry out such responsibility; and

(C) with the concurrence of the Under Secretary of Defense for Acquisition, Technology, and Logistics, may direct the military departments to collect and retain information necessary to support the database.

(d) Major Weapon System Defined- In this section, the term `major weapon system' has the meaning given that term in section 2379(f) of title 10, United States Code.

The Senate amendment contained a provision (sec. 803) that would require the Department of Defense to take action to assess, manage, and control operation and support costs for major weapon systems.

The House bill contained no similar provision.

The House recedes with an amendment to ensure that the provision references, and is consistent with, the life-cycle management and product support requirements in section 805 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84).

Senate Report 112-26

Assessment, management, and control of operating and support costs for major weapon systems (sec. 803)

The committee recommends a provision that would require the Secretary of Defense to issue guidance on actions to be taken to assess, manage, and control Department of Defense (DOD) costs for the operation and support (O&S) of major weapon systems. The required steps would include efforts to improve DOD processes for estimating O&S costs, collection and retention of data on O&S costs, and use of such data to inform system design and maintenance decisions. The Department would also be required to conduct independent logistics assessments prior to key decision points in the acquisition process and to use those assessments to identify and address factors that drive up O&S costs.

O&S costs are estimated to make up as much as 70 percent of the total life cycle cost of DOD's major weapon systems. In November 2009, the DOD Weapon System Acquisition Reform Product Support Assessment concluded that inadequate visibility of O&S costs `has been a long-standing barrier to effectively assessing, managing, and validating the benefits or shortcomings of product support strategies.' In July 2010, the Government Accountability Office (GAO) reported that without such visibility, `DOD officials do not have important information necessary for analyzing the rate of O&S cost growth for major weapon systems, identifying cost drivers, and developing plans for managing and controlling these costs.' The provision recommended by the committee would address these problems by requiring the implementation of key recommendations of the DOD Product Support Assessment, the GAO report, and a separate review completed by the DOD Director of Cost Assessment and Program Evaluation in June 2010.