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

Subtitle C--Provisions Relating to Major Defense Acquisition Programs

P. L. 114-

House Conference Report. 114-270

(1) IN GENERAL.—Chapter 144 of title 10, United States Code, is amended by inserting after section 2431a (as added by section 821) the following new section:

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

“(a) Requirement.—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) Approach to manage and mitigate risks.—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) Preference for prototyping.—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) Definitions.—In this section, the terms ‘major defense acquisition program’ and ‘major system’ have the meanings provided in section 2431a of this title.”.

(2) CLERICAL AMENDMENT.—The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 2431a, as so added, the following new item:

“2431b. Risk reduction in major defense acquisition programs and major systems.”.

(b) Repeal of superseded provision.—Section 203 of the Weapon Systems Acquisition Reform Act of 2009 (10 U.S.C. 2430 note) is repealed.

The Senate amendment contained a similar provision (sec. 842).

The conference agreement includes a provision that combines these two provisions designed to reduce programmatic risk. The provision mandates that the program acquisition strategy specifically address approaches to manage and mitigate risks, and highlights a number of techniques that support such mitigation. The provision further highlights the importance of prototyping as a risk mitigation approach.

The conferees expect that the risk mitigation aspects of a program acquisition strategy should be addressed with each increment of a program. Further, the conferees expect that the comprehensive approach to risk mitigation should identify: each individual risk to the program; risk management and mitigation activities developed to address the risks; and resources to support those mitigation activities.

House Report 114-201 to accompany H. R. 1735 as it was reported out of the House Armed Services Committee.

Section 823--Revision to Requirements Relating to Risk Management in Development of Major Defense Acquisition Programs and Major Systems

This section would establish a new section in chapter 144 of title 10, United States Code, that requires the program acquisition strategy for each major defense acquisition program or major system to include an identification of major program risks and a risk management and mitigation strategy. This section would also provide acquisition programs with greater flexibility in the ways programmatic risk can be addressed beyond the competitive prototyping requirement in section 203 of the Weapon Systems Acquisition Reform Act of 2009 (Public Law 111-23).

Competitive prototyping remains an acquisition best practice, particularly as a means to reduce risk during technology development and the period leading up to the critical design review. However, the committee recognizes that prototyping may not be appropriate for all defense acquisition programs.

Finally, this section would repeal section 203 of Public Law 111-23.

Senate Report 114-49 to accompany S. 1376 as it was reported out of the Senate Armed Services Committee.

Risk reduction in major defense acquisition programs (sec. 842)

The committee recommends a provision that would require the Secretary of Defense to ensure that the acquisition strategy developed pursuant to section 2431a of title 10, United States Code as amended by this Act shall include a comprehensive approach to continuously identifying and addressing risk and appropriately minimize concurrency.

The provision would require the Secretary of Defense to ensure that the acquisition strategy for a major defense acquisition program identifies and documents the major sources of risk for the program (including technical, cost, and schedule risk) and includes a comprehensive approach to retiring that risk. The proposal would require that the comprehensive approach to retiring risk use some combination of 12 different elements, including prototyping and competitive prototyping, design reviews, program phasing, allocating schedule and funding margins to specific risks, multiple design approaches, and others measures. This provision would establish a preference for competitive prototyping and repeal the requirement for mandatory competitive prototyping in section 203 of the Weapon System Acquisition Reform Act of 2009 (Public Law 111-23).