Report No. 97-311

DEPARTMENT OF DEFENSE AUTHORIZATION ACT, 1982

November 3, 1981. – Ordered to be printed.

CONFERENCE REPORT

(To accompany S.815)

TITLE IX—GENERAL PROVISIONS

 REPORTS ON UNIT COSTS OF MAJOR DEFENSE SYSTEMS

   Sec. 917 (a)(1) The program manager (as designated by the Secretary concerned) for each major defense system included in the Selected Acquisition Report dated March 31, 1981, and submitted to Congress pursuant to section 811 of the Department of Defense Appropriation Authorization Act, 1976 (Public Law 94-106; 10 U.S.C. 139 note), shall submit to the Secretary concerned, within seven days after the end of each quarter of fiscal year 1982, a written report on the major defense system included in such selected acquisition report for which such manager has responsibility.  The program manager shall include in each such report --

(A)    the total program acquisition unit cost for such major defense system as of the last day of such quarter; and

(B)   in the case of a major defense system for which procurement funds are authorized to be appropriated by this Act, the current procurement unit cost for such major defense system as of the last day of such quarter.

2)      If at any time during any quarter of fiscal year 1982, the program manager of a major defense system referred to in paragraph (1) has reasonable cause to believe that (A) the total program acquisition unit cost, or (B) in the case of a major defense system for which procurement funds are authorized to be appropriated by this Act, the current procurement unit cost has exceeded the applicable percentage increase specified in subsection (b), such manager shall immediately submit to the Secretary concerned a report containing the information, as of the date of such report, required by paragraph (1).

3)      The program manager shall also include in each report submitted pursuant to paragraph (1) or (2) any change from the Selection Acquisition Report of March 31, 1981, in schedule milestones or system performances with respect to such system that are known, expected, or anticipated by such manager.

  (b)(1) If the Secretary concerned determines, on the basis of any report submitted to him pursuant to subsection (a), that the total program acquisition unit cost (including any increase for expected inflation) for any major defense system for which no procurement funds are authorized to be appropriated by this Act has increased by more than 15 percent over the total program acquisition unit cost for such system reflected in the Selected Acquisition Report of March 31, 1981, then (except as provided in paragraph (3)) no additional funds may be obligated in connection with such system after the end of the 30-day period beginning on the day on which the Secretary makes such determination.  The Secretary shall notify the Congress promptly in writing of such increase upon making such a determination with respect to any such major defense system and shall include in such notice the date on which such determination was made.

  (2) If the Secretary concerned determines, on the basis of a report submitted to him pursuant to subsection (a), that –

  (A) the procurement unit cost of a major defense system for which procurement funds are authorized to be appropriated by this Act has increased by more than 15 percent over the procurement unit cost derived from the Selected Acquisition Report of March 31, 1981, or

  (B) the total program acquisition unit cost (including any increase for expected inflation) of such system has increased by more than 15 percent over the total program acquisition unit cost for such system as reflected in the Selected Acquisition Report of March 31, 1981, or

then (except as provided in paragraph (3)) no additional funds may be obligated in connection with such system after the end of the 30-day period on the day which the Secretary makes such determination.  The Secretary shall notify the Congress promptly in writing of such increase upon making such a determination with respect to any such major defense system and shall include in such notice the date on which such determination was made.

  (3) The prohibition contained in paragraphs (1) and (2) on the obligation of funds shall not apply in the case of any major defense system to which such prohibition would otherwise apply if the Secretary concerned submits to the Congress, before the end of the 30-day period referred to in paragraph (1) or (2), a written report which includes –

  (A) a statement of the reasons for such increase in total program acquisition unit cost or procurement unit cost;

  (B) the identities of the military and civilian officers responsible for program management and cost control of the major defense system;

  (C) the action taken and proposed to be taken to control future cost growth of such system;

  (D) any changes made in the performance or schedule milestones of such system and the degree to which such changes have contributed to the increase in total program acquisition unit cost or procurement unit cost;

          (E) the identities of the principal contractors for the major defense system; and

  (F) an index of all testimony and documents formally provided to the Congress on the estimated cost of such system.

    (c)(1) If the Secretary concerned –

  (A) on the basis of a report submitted to him pursuant to subsection (a), determines (i) that the total program acquisition unit cost (including an increase for expected inflation) for a major defense system has increased by more than 25 percent over the total program acquisition unit cost or such system reflected in the Selected Acquisition Report of March 31, 1981, or (ii) in the case of any such system for which procurement funds are authorized to be appropriated by this Act, that the current procurement unit cost of such system has increased by more than 25 percent over the procurement unit cost derived from the Selected Acquisition Report of March 31, 1981, and

  (B) has submitted a report to the Congress with respect to such system pursuant to subsection (b)(3),

then (except as provided in paragraph (2)) no additional funds may be obligated in connection with such system after the end of the 60-day period beginning on the day on which the Secretary makes such determination.

  (2) The prohibition contained in paragraph (1) on the obligation of funds shall not apply in the case of a major defense system to which such prohibition would otherwise apply if the Secretary of Defense submits to the Congress, before the end of the 60-day period referred to in such paragraph, a written certification stating that -

              (A) such system is essential to the national security;

  (B) there are no alternatives to such system which will provide equal or greater military capability at less cost;

(C) the new estimates of the total program acquisition unit cost or procurement unit cost are reasonable; and

(D) the management structure for such major defense system is adequate to manage and control total program acquisition unit cost or procurement unit cost.

      (d) As used in this section:

(1) The term “total program acquisition unit cost” means, in the case of a major defense system, the amount equal to (A) the total cost for development and procurement of, and system-specific military construction for, such system, divided by (B) the number of fully configured end items to be produced for such a system.

(2) The term “procurement unit cost” means, in the case of a major defense system, the amount equal to (A) the total of all procurement funds available for such system in any fiscal year, divided by (B) the number of fully-configured end items to be procured with such funds during such fiscal year.

(3) The term “Secretary concerned” has the same meaning as provided in section 101(8) of title 10, United States Code.

      (e) Section 811 of the Department of Defense Appropriation Authorization Act, 1976 (Public Law 94-106; 10 U.S.C. 139 note), is amended by addition at the end thereof the following new subsection:

      “(c)(1) Each report required to be submitted under subsection (a) shall include the history of the total program acquisition unit cost of each major defense system from the date on which funds were first authorized to be appropriated for such system.

      “(2) As used in this subsection, the term ‘total program acquisition unit cost’ means the amount equal to (A) the total cost for development and procurement of, and system-specific military construction for, a major defense system, divided by (B) the number of fully configured end items to be produced for such a system.”

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