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TITLE X — GENERAL PROVISIONS

House Conference Report 109-360

SEC. 1004. REPORTS ON FEASIBILITY AND DESIRABILITY OF CAPITAL BUDGETING FOR MAJOR DEFENSE ACQUISITION PROGRAMS.

(a) Capital Budgeting Defined- For the purposes of this section, the term `capital budgeting' means a budget process that--

(1) identifies large capital outlays that are expected to be made in future years, together with identification of the proposed means to finance those outlays and the expected benefits of those outlays;

(2) separately identifies revenues and outlays for capital assets from revenues and outlays for an operating budget;

(3) allows for the issue of long-term debt to finance capital investments; and

(4) provides the budget authority for acquiring a capital asset over several fiscal years (rather than in a single fiscal year at the beginning of such acquisition).

(b) Reports Required- Not later than July 1, 2006, the Secretary of Defense and the Secretary of each military department shall each submit to Congress a report analyzing the feasibility and desirability of using a capital budgeting system for the financing of major defense acquisition programs. Each such report shall address the following matters:

(1) The potential long-term effect on the defense industrial base of the United States of continuing with the current full up-front funding system for major defense acquisition programs.

(2) Whether use of a capital budgeting system could create a more effective decisionmaking process for long-term investments in major defense acquisition programs.

(3) The manner in which a capital budgeting system for major defense acquisition programs would affect the budget planning and formulation process of the military departments.

(4) The types of financial mechanisms that would be needed to provide funds for such a capital budgeting system.

The House bill contained a provision (sec. 1004) that would require the Secretary of Defense and the secretaries of the military departments to submit a report to the congressional defense committees on the feasibility and desirability of capital budgeting for major defense acquisition programs by July 1, 2006.

The Senate amendment contained no similar provision.

The Senate recedes.

House Report 109-89

SECTION 1004--REPORTS ON FEASIBILITY AND DESIRABILITY OF CAPITAL BUDGETING FOR MAJOR DEFENSE ACQUISITION PROGRAMS

This section would require the Secretary of Defense and the secretaries of the military departments to submit a report to the congressional defense committees on the feasibility and desirability of capital budgeting for major defense acquisition programs by July 1, 2006