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SEC. 101. COST
ASSESSMENT AND PROGRAM EVALUATION.
(a) Director of Cost Assessment and Program Evaluation-
(1) IN GENERAL- Chapter 4
of title 10, United States Code, is amended by inserting after
section 139b the following new section:
-`Sec. 139c. Director of
Cost Assessment and Program Evaluation
`(a) Appointment- There
is a Director of Cost Assessment and Program Evaluation in the
Department of Defense, appointed by the President, by and with
the advice and consent of the Senate.
`(b) Independent Advice to Secretary of Defense- (1) The
Director of Cost Assessment and Program Evaluation is the
principal advisor to the Secretary of Defense and other senior
officials of the Department of Defense, and shall provide
independent analysis and advice to such officials, on the
following matters:
`(A) Matters assigned
to the Director pursuant to this section and section 2334 of
this title.
`(B) Matters assigned to the Director by the Secretary
pursuant to section 113 of this title.
`(2) The Director may
communicate views on matters within the responsibility of the
Director directly to the Secretary of Defense and the Deputy
Secretary of Defense without obtaining the approval or
concurrence of any other official within the Department of
Defense.
`(c) Deputy Directors- There are two Deputy Directors within
the Office of the Director of Cost Assessment and Program
Evaluation, as follows:
`(1) The Deputy
Director for Cost Assessment.
`(2) The Deputy Director for Program Evaluation.
`(d) Responsibilities-
The Director of Cost Assessment and Program Evaluation shall
serve as the principal official within the senior management
of the Department of Defense for the following:
`(1) Cost estimation
and cost analysis for acquisition programs of the Department
of Defense, and carrying out the duties assigned pursuant to
section 2334 of this title.
`(2) Analysis and advice on matters relating to the planning
and programming phases of the Planning, Programming,
Budgeting and Execution system, and the preparation of
materials and guidance for such system, as directed by the
Secretary of Defense, working in coordination with the Under
Secretary of Defense (Comptroller).
`(3) Analysis and advice for resource discussions relating
to requirements under consideration in the Joint
Requirements Oversight Council pursuant to section 181 of
this title.
`(4) Formulation of study guidance for analyses of
alternatives for major defense acquisition programs and
performance of such analyses, as directed by the Secretary
of Defense
`(5) Review, analysis, and evaluation of programs for
executing approved strategies and policies, ensuring that
information on programs is presented accurately and
completely, and assessing the effect of spending by the
Department of Defense on the United States economy.
`(6) Assessments of special access and compartmented
intelligence programs, in coordination with the Under
Secretary of Defense for Acquisition, Technology, and
Logistics and the Under Secretary of Defense for
Intelligence and in accordance with applicable policies.
`(7) Assessments of alternative plans, programs, and
policies with respect to the acquisition programs of the
Department of Defense.
`(8) Leading the development of improved analytical skills
and competencies within the cost assessment and program
evaluation workforce of the Department of Defense and
improved tools, data, and methods to promote performance,
economy, and efficiency in analyzing national security
planning and the allocation of defense resources.'.
(2) CLERICAL AMENDMENT- The table of sections at the
beginning of chapter 4 of such title is amended by inserting
after the item relating to section 139b the following new
item:
`139c. Director of Cost Assessment and Program Evaluation.'.
(3) EXECUTIVE SCHEDULE LEVEL IV- Section 5315 of title 5,
United States Code, is amended by inserting after the item
relating to the Director of Operational Test and Evaluation,
Department of Defense the following new item:
`Director of Cost Assessment and Program Evaluation,
Department of Defense.'.
(b) Independent Cost
Estimation and Cost Analysis-
(1) IN GENERAL- Chapter
137 of title 10, United States Code, is amended by adding at
the end the following new section:
-`Sec. 2334. Independent
cost estimation and cost analysis
`(a) In General- The
Director of Cost Assessment and Program Evaluation shall
ensure that the cost estimation and cost analysis processes of
the Department of Defense provide accurate information and
realistic estimates of cost for the acquisition programs of
the Department of Defense. In carrying out that
responsibility, the Director shall--
`(1) prescribe, by
authority of the Secretary of Defense, policies and
procedures for the conduct of cost estimation and cost
analysis for the acquisition programs of the Department of
Defense;
`(2) provide guidance to and consult with the Secretary of
Defense, the Under Secretary of Defense for Acquisition,
Technology, and Logistics, the Under Secretary of Defense
(Comptroller), the Secretaries of the military departments,
and the heads of the Defense Agencies with respect to cost
estimation in the Department of Defense in general and with
respect to specific cost estimates and cost analyses to be
conducted in connection with a major defense acquisition
program under chapter 144 of this title or a major automated
information system program under chapter 144A of this title;
`(3) issue guidance relating to the proper selection of
confidence levels in cost estimates generally, and
specifically, for the proper selection of confidence levels
in cost estimates for major defense acquisition programs and
major automated information system programs;
`(4) issue guidance relating to full consideration of
life-cycle management and sustainability costs in major
defense acquisition programs and major automated information
system programs;
`(5) review all cost estimates and cost analyses conducted
in connection with major defense acquisition programs and
major automated information system programs;
`(6) conduct independent cost estimates and cost analyses
for major defense acquisition programs and major automated
information system programs for which the Under Secretary of
Defense for Acquisition, Technology, and Logistics is the
Milestone Decision Authority--
`(A) in advance of--
`(i) any
certification under section 2366a or 2366b of this
title;
`(ii) any decision to enter into low-rate initial
production or full-rate production;
`(iii) any certification under section 2433a of this
title; and
`(iv) any report under section 2445c(f) of this title;
and
`(B) at any other
time considered appropriate by the Director or upon the
request of the Under Secretary of Defense for Acquisition,
Technology, and Logistics; and
`(7) periodically
assess and update the cost indexes used by the Department to
ensure that such indexes have a sound basis and meet the
Department's needs for realistic cost estimation.
`(b) Review of Cost
Estimates, Cost Analyses, and Records of the Military
Departments and Defense Agencies- The Secretary of Defense
shall ensure that the Director of Cost Assessment and Program
Evaluation--
`(1) promptly receives
the results of all cost estimates and cost analyses
conducted by the military departments and Defense Agencies,
and all studies conducted by the military departments and
Defense Agencies in connection with such cost estimates and
cost analyses, for major defense acquisition programs and
major automated information system programs of the military
departments and Defense Agencies; and
`(2) has timely access to any records and data in the
Department of Defense (including the records and data of
each military department and Defense Agency and including
classified and proprietary information) that the Director
considers necessary to review in order to carry out any
duties under this section.
`(c) Participation,
Concurrence, and Approval in Cost Estimation- The Director of
Cost Assessment and Program Evaluation may--
`(1) participate in the
discussion of any discrepancies between an independent cost
estimate and the cost estimate of a military department or
Defense Agency for a major defense acquisition program or
major automated information system program of the Department
of Defense;
`(2) comment on deficiencies in the methodology or execution
of any cost estimate or cost analysis developed by a
military department or Defense Agency for a major defense
acquisition program or major automated information system
program;
`(3) concur in the choice of a cost estimate within the
baseline description or any other cost estimate (including
the confidence level for any such cost estimate) for use at
any event specified in subsection (a)(6); and
`(4) participate in the consideration of any decision to
request authorization of a multiyear procurement contract
for a major defense acquisition program.
`(d) Disclosure of
Confidence Levels for Baseline Estimates of Major Defense
Acquisition Programs- The Director of Cost Assessment and
Program Evaluation, and the Secretary of the military
department concerned or the head of the Defense Agency
concerned (as applicable), shall each--
`(1) disclose in
accordance with paragraph (2) the confidence level used in
establishing a cost estimate for a major defense acquisition
program or major automated information system program, the
rationale for selecting such confidence level, and, if such
confidence level is less than 80 percent, the justification
for selecting a confidence level of less than 80 percent;
and
`(2) include the disclosure required by paragraph (1)--
`(A) in any decision
documentation approving a cost estimate within the
baseline description or any other cost estimate for use at
any event specified in subsection (a)(6); and
`(B) in the next Selected Acquisition Report pursuant to
section 2432 of this title in the case of a major defense
acquisition program, or the next quarterly report pursuant
to section 2445c of this title in the case of a major
automated information system program.
`(e) Annual Report on
Cost Assessment Activities- (1) The Director of Cost
Assessment and Program Evaluation shall prepare an annual
report summarizing the cost estimation and cost analysis
activities of the Department of Defense during the previous
year and assessing the progress of the Department in improving
the accuracy of its cost estimates and analyses. Each report
shall include, for the year covered by such report, an
assessment of--
`(A) the extent to
which each of the military departments and Defense Agencies
have complied with policies, procedures, and guidance issued
by the Director with regard to the preparation of cost
estimates for major defense acquisition programs and major
automated information systems;
`(B) the overall quality of cost estimates prepared by each
of the military departments and Defense Agencies for major
defense acquisition programs and major automated information
system programs; and
`(C) any consistent differences in methodology or approach
among the cost estimates prepared by the military
departments, the Defense Agencies, and the Director.
`(2) Each report under
this subsection shall be submitted concurrently to the
Secretary of Defense, the Under Secretary of Defense for
Acquisition, Technology, and Logistics, the Under Secretary of
Defense (Comptroller), and the congressional defense
committees not later than 10 days after the transmittal to
Congress of the budget of the President for the next fiscal
year (as submitted pursuant to section 1105 of title 31).
`(3)(A) Each report submitted to the congressional defense
committees under this subsection shall be submitted in
unclassified form, but may include a classified annex.
`(B) The Director shall ensure that a report submitted under
this subsection does not include any information, such as
proprietary or source selection sensitive information, that
could undermine the integrity of the acquisition process.
`(C) The unclassified version of each report submitted to the
congressional defense committees under this subsection shall
be posted on an Internet website of the Department of Defense
that is available to the public.
`(4) The Secretary of Defense may comment on any report of the
Director to the congressional defense committees under this
subsection.
`(f) Staff- The Secretary
of Defense shall ensure that the Director of Cost Assessment
and Program Evaluation has sufficient professional staff of
military and civilian personnel to enable the Director to
carry out the duties and responsibilities of the Director
under this section.'.
(2) CLERICAL AMENDMENT- The table of sections at the beginning
of chapter 137 of such title is amended by adding at the end
the following new item:
`2334. Independent cost
estimation and cost analysis.'.
(c) Transfer of Personnel
and Functions-
(1) TRANSFER OF
FUNCTIONS- The functions of the Office of Program Analysis and
Evaluation of the Department of Defense, including the
functions of the Cost Analysis Improvement Group, are hereby
transferred to the Office of the Director of Cost Assessment
and Program Evaluation.
(2) TRANSFER OF PERSONNEL TO DEPUTY DIRECTOR FOR INDEPENDENT
COST ASSESSMENT- The personnel of the Cost Analysis
Improvement Group are hereby transferred to the Deputy
Director for Cost Assessment in the Office of the Director of
Cost Assessment and Program Evaluation.
(3) TRANSFER OF PERSONNEL TO DEPUTY DIRECTOR FOR PROGRAM
ANALYSIS AND EVALUATION- The personnel (other than the
personnel transferred under paragraph (2)) of the Office of
Program Analysis and Evaluation are hereby transferred to the
Deputy Director for Program Evaluation in the Office of the
Director of Cost Assessment and Program Evaluation.
(d) Conforming Amendments-
(1) Section 181(d) of
title 10, United States Code, is amended by striking `Director
of the Office of Program Analysis and Evaluation' and
inserting `Director of Cost Assessment and Program
Evaluation'.
(2) Section 2306b(i)(1)(B) of such title is amended by
striking `Cost Analysis Improvement Group of the Department of
Defense' and inserting `Director of Cost Assessment and
Program Analysis'.
(3) Section 2366a(a)(4) of such title is amended by inserting
`, with the concurrence of the Director of Cost Assessment and
Program Evaluation,' after `has been submitted'.
(4) Section 2366b(a)(1)(C) of such title is amended by
inserting `, with the concurrence of the Director of Cost
Assessment and Program Evaluation,' after `have been developed
to execute'.
(5) Subparagraph (A) of section 2434(b)(1) of such title is
amended to read as follows:
`(A) be prepared or
approved by the Director of Cost Assessment and Program
Evaluation; and'.
(6) Section 2445c(f)(3)
of such title is amended by striking `are reasonable' and
inserting `have been determined, with the concurrence of the
Director of Cost Assessment and Program Evaluation, to be
reasonable'.
(e) Report on Monitoring of
Operating and Support Costs for Major Defense Acquisition
Programs-
(1) REPORT TO SECRETARY
OF DEFENSE- Not later than one year after the date of the
enactment of this Act, the Director of Cost Assessment and
Program Evaluation under section 139c of title 10 United
States Code (as added by subsection (a)), shall review
existing systems and methods of the Department of Defense for
tracking and assessing operating and support costs on major
defense acquisition programs and submit to the Secretary of
Defense a report on the finding and recommendations of the
Director as a result of the review, including an assessment by
the Director of the feasibility and advisability of
establishing baselines for operating and support costs under
section 2435 of title 10, United States Code.
(2) TRANSMITTAL TO CONGRESS- Not later than 30 days after
receiving the report required by paragraph (1), the Secretary
shall transmit the report to the congressional defense
committees, together with any comments on the report the
Secretary considers appropriate.
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Cost assessment and program evaluation
(sec. 101)
The Senate bill contained a provision (sec. 104) that would
establish a Director of Independent Cost Assessment in the
Department of Defense (DOD) to ensure that cost estimates for
major defense acquisition programs and major automated
information system programs are fair, reliable, and unbiased.
The House amendment contained a provision (sec. 102) that would
require the Secretary of Defense to designate an official within
the Office of the Secretary of Defense to perform this function.
The House recedes with an amendment that would establish a
Director of Cost Assessment and Performance Evaluation, who would
be responsible for ensuring that cost estimates are fair,
reliable, and unbiased, and for performing program analysis and
evaluation functions currently performed by the Director of
Program Analysis and Evaluation. The provision would also codify
the cost estimating requirements from the Senate bill and the
House amendment in a new section 2334 of title 10, United States
Code. |
SECTION 102--OVERSIGHT OF COST
ESTIMATION
This section would require the official
responsible for cost estimation to establish policies and
procedures governing the conduct of cost estimation and cost
analysis in general, and in particular for major defense
acquisition programs (MDAP) and major automated information
systems (MAIS). It would require the official to issue guidance
on the selection of confidence levels for cost estimates and
guidance relating to the consideration of lifecycle management
and sustainability costs for MDAPs and MAISs. This section would
require the official to issue independent cost estimates for
MDAPs and MAISs at milestone A, milestone B, entry into low-rate
initial production, entry into full-rate production, and after a
breach of the significant or critical cost growth thresholds
(Nunn-McCurdy breach).
This section would authorize the official
to promptly receive the results of all cost estimates for MDAPs
and MAISs conducted by the military departments and to comment on
them. The official would also have access to all records of the
military departments that the official deems necessary. The
official would participate in formulating study guidance for an
analysis of alternatives for a MDAP, discussions of resources
associated with requirements, and discussions regarding a
decision to request multi-year procurement authority for a MDAP.
The official would have the sole authority to select the
confidence level used in establishing a baseline description or
budget estimate for a MDAP. The baseline description or budget
estimate used at critical points in the acquisition process for a
MDAP could be selected only with the official's concurrence. The
official would be required to disclose the confidence level
selected for a MDAP, the rationale for such confidence level, and
justify the decision if the confidence level is less than 80
percent. The official would be responsible for the Department's
Cost Analysis Improvement Group. This section would require the
official to submit an annual activities report to the
congressional defense committees by March 1 each year in
unclassified form with a classified annex if necessary.
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