How To Use the NDAA Pages

Back to NDAA Contents

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

Subtitle C--Provisions Relating to Major Defense Acquisition Programs

P. L. 112-81

House Conference Report 112-329

(a) Assessment of Risk Required-

(1) IN GENERAL- Not later than two days after the President transmits a certification to Congress pursuant to section 27(f) of the Arms Export Control Act (22 U.S.C. 2767(f)) regarding a proposed cooperative project agreement that is expected to result in the award of a Department of Defense contract for the engineering and manufacturing development of a major weapon system, the Secretary of Defense shall submit to the Chairmen of the Committees on Armed Services of the Senate and the House of Representatives a report setting forth a risk assessment of the proposed cooperative project.

(2) PREPARATION- The Secretary shall prepare each report required by paragraph (1) in consultation with the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Assistant Secretary of Defense for Research and Engineering, and the Director of Cost Assessment and Program Evaluation of the Department of Defense.

(b) Elements- The risk assessment on a cooperative project under subsection (a) shall include the following:

(1) An assessment of the design, technical, manufacturing, and integration risks associated with developing and procuring the weapon system to be procured under the cooperative project.

(2) A statement identifying any termination liability that would be incurred under the development contract to be entered into under subsection (a)(1), and a statement of the extent to which such termination liability would not be fully funded by appropriations available or sought in the fiscal year in which the agreement for the cooperative project is signed on behalf of the United States.

(3) An assessment of the advisability of incurring any unfunded termination liability identified under paragraph (2) given the risks identified in the assessment under paragraph (1).

(4) A listing of which, if any, requirements associated with the oversight and management of a major defense acquisition program (as prescribed under Department of Defense Instruction 5000.02 or related authorities) will be waived, or in any way modified, in carrying out the development contract to be entered into under (a)(1), and a full explanation why such requirements need to be waived or modified.

(c) Definitions- In this section:

(1) The term `engineering and manufacturing development' has the meaning given that term in Department of Defense Instruction 5000.02.

(2) 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. 807) that would require a risk assessment in advance of any cooperative agreement with an allied nation that is expected to result in the award of a Department of Defense contract for the engineering and manufacturing development of a major weapon system.

The House bill contained no similar provision.

The House recedes.

Senate Report 112-26

Assessment of risk associated with development of major weapon systems to be procured under cooperative projects with friendly foreign countries (sec. 807)

The committee recommends a provision that would require the Secretary of Defense to submit a risk assessment to the Committees on Armed Services of the Senate and the House of Representatives in advance of any cooperative agreement with an allied nation that is expected to result in the award of a Department of Defense (DOD) contract for the engineering and manufacturing development of a major weapon system. The risk assessment would include an assessment of design, technical, manufacturing, and integration risks associated with the development and acquisition of the weapon system; any termination liability to which the United States would be committed by contract or by the cooperative agreement itself; the trade-off between program risk and potential termination liability; and a listing of any DOD acquisition requirements that are expected to be waived or modified in connection with the program. For the purpose of this provision, the term `engineering and manufacturing development' is intended to encompass the acquisition effort initiated by Milestone B of Department of Defense Instruction 5000.02, or any comparable effort under a modified or successor regulation.

The committee is deeply disappointed by the current status of the Medium Extended Air Defense System (MEADS). After the investment of more than $1.5 billion of taxpayer money, DOD concluded earlier this year that the program remains a high risk for both cost and schedule, and the additional funding that would be needed to meet U.S. standards for fielding the system is unaffordable. However, the Department declined to terminate the program, because the Memorandum of Understanding on which the program is based commits the United States to continued funding up to an agreed upon cost ceiling even if it withdraws from the program. As a result, DOD has requested an additional $406.6 million in funding in fiscal year 2012 for the continued development of a system that it has no intention of fielding (although system components will be available for DOD to purchase).

The committee expects that the risk assessment required by this provision will lead to more informed decisions about cooperative agreements and help avoid mistakes of this kind in the future.